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EXHIBIT 99.2
AMENDED AND RESTATED ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of January 2, 1998 ("Amended Assignment
Agreement") is by and between PennCorp Financial Group, Inc., a Delaware
corporation ("PennCorp"), Xxxxx X. Xxxxx, an individual ("Stone"), Xxxxxx X.
Xxxxxx, an individual ("Xxxxxx"), the Xxxxxx Xxxxx Xxxxxx, Xx. Trust dated
December 21, 1995 and the Xxxxxxx Xxxxxxxxx Xxxxxx Trust dated December 21, 1995
(Stone, Xxxxxx and the Trusts each a "Seller" and collectively, the "Sellers").
PRELIMINARY STATEMENT
WHEREAS, the Sellers collectively beneficially own 676,768 shares of Class
A common stock, $.01 par value (the "Shares") of Southwestern Financial
Corporation, a Delaware corporation (the "Company") and Stone and Xxxxxx own
warrants to purchase 335,564 shares of Class A common stock of the Company (the
"Warrants"), all as shown on the signature pages hereto;
WHEREAS, the Sellers desire to sell and PennCorp desires to purchase from
the Sellers, the Shares and, subject to Section 1(b) below, the Warrants;
WHEREAS, Stone, Xxxxxx and PennCorp are parties to an Assignment Agreement,
dated as of January 31, 1997, pursuant to which they agreed to sell, and
PennCorp agreed to buy from them, the Shares and, under the circumstances
specified therein, the Warrants; and
WHEREAS, Xxxxxx has advised PennCorp that he had previously transferred an
aggregate of 60,000 shares of Class A common stock of the Company to the Trusts
and that each Trust should have been a party to the January 31, 1997 Assignment
Agreement;
WHEREAS, Stone, Xxxxxx and PennCorp have agreed to revise the terms on
which the purchase of the Shares and, if applicable, the Warrants shall occur.
NOW THEREFORE, in consideration of the promises and the mutual agreements
set forth below, the Sellers and PennCorp hereby agree as follows:
1. (a) If the Closing (as defined in that certain Transfer Agreement dated
as of the date hereof among PennCorp, Knightsbridge Capital, L.L.C. and the
Sellers (the "Transfer Agreement")) shall occur, PennCorp hereby agrees to pay
on the Closing Date (as defined in the Transfer Agreement) each of the
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Sellers the amount of $18.81047 per Share for the Shares in immediately
available funds by wire transfer of immediately available funds (the "First
Payment"); provided, however, that if the Closing shall not have occurred on or
before February 28, 1998, the First Payment shall bear interest at the rate of
13% per annum from and including March 1, 1998 through the date of the Closing.
The aggregate amount of the First Payment is $12,730,326.56, which the Sellers
acknowledge and agree that they shall share pro rata in accordance with their
respective ownership interests in the Company.
(b) The parties acknowledge and agree that Stone and Xxxxxx, among
others, are parties to an Amended Stipulation and Compromise of Settlement
relating to a proposed settlement (the "Proposed Settlement") of the shareholder
derivative cases styled Xxxxxx Energy Systems Retirement Plan v. Xxxxx X. Xxxxx
et al. and Penncorp Financial Group, Inc., C.A. No. 14775, and Xxxxxx v. Xxxxx
X. Xxxxx, et al., C.A. No. 14795, each filed in the Chancery Court of the State
of Delaware. PennCorp acknowledges and agrees that if the Proposed Settlement
(as currently proposed or as modified by the Chancery Court) is approved by the
Chancery Court, and the order of the Chancery Court approving the Proposed
Settlement has become final and nonappealable, Stone and Xxxxxx shall, pursuant
to such Proposed Settlement, reconvey the Warrants to the Company for no
additional consideration. PennCorp acknowledges and agrees that in such event,
it will have no right to purchase the Warrants. In such event, however, PennCorp
agrees to pay each of the Sellers, as additional consideration for the Shares
sold pursuant to Section 1(a) hereof, $0.22146 per Share, which shall be paid by
wire transfer of immediately available funds on the date set forth in the last
sentence of this Section 1(b) (the "Accepted Settlement Payment"). The aggregate
amount of the Accepted Settlement Payment is $149,875.41, which the Sellers
acknowledge and agree that they shall share pro rata in accordance with their
respective ownership interests in the Company; provided, however, that if the
Accepted Settlement Payment is not made until a date after March 1, 1998, the
amount of the Accepted Settlement Payment shall bear interest at the rate of 13%
per annum from and including March 1998 through the date of payment.
Sellers and PennCorp further agree, however, that if the Chancery Court
fails to approve the Proposed Settlement (as currently proposed or as modified
by the Chancery Court), or if the order approving the Proposed Settlement is
vacated, then in lieu of, and not in addition to the Accepted Settlement
Payment, (x) PennCorp shall pay each of the Sellers, as additional consideration
for the Shares sold pursuant to Section 1(a)
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hereof, $1.76201 per Share and (y) Stone and Xxxxxx shall assign and PennCorp
shall purchase the Warrants, in lieu of reconveying the Warrants to Southwestern
Financial Corporation, at a price of $10.57248 per Warrant (representing a per
share price of $20.57248 minus the exercise price of $10 per share payable under
the Warrants), which shall be paid to Stone and Xxxxxx by wire transfer of
immediately available funds on the date set forth in the last sentence of this
Section 1(b) (the "Rejected Settlement Payment"). In the event PennCorp shall be
required to make the Rejected Settlement Payment, it shall also pay the Sellers
interest on the amount of the First Payment and on the amount of the Rejected
Settlement Payment at the rate of 13% per annum from January 1, 1998 through and
including the date of the Closing. The date on which PennCorp shall be obligated
to make the Accepted Settlement Payment or the Rejected Settlement Payment, as
the case may be, shall be the third business day following the earliest of (i)
the date on which the Chancery Court disapproves the Proposed Settlement, (ii)
the date on which the order of the Chancery Court approving the Proposed
Settlement shall have been vacated, or (iii) the date on which the order of the
Chancery Court approving the Proposed Settlement shall become final and
nonappealable.
(c) As a further inducement to the Sellers to sell the Shares and, if
applicable, the Warrants, PennCorp agrees to make the following additional
payment to the Sellers, without duplication of any other payment made pursuant
to this paragraph (c), if the circumstances specified below shall occur (each a
"Price Protection Payment"):
(A) If during the 12-month period ending November 25, 1998,
PennCorp enters into a definitive agreement to sell all the common
stock of the Company (or all or substantially all the assets of the
Company) for a purchase price (if other than in cash, as determined by
PennCorp's financial advisor and, in any event, calculated on an
enterprise value basis) in excess of $489,580,285.08 then, upon
consummation of the transaction contemplated by such definitive
agreement, PennCorp shall pay (X) to Stone 50% of an amount in cash
equal to [(I) the difference between (x) the purchase price paid for
the Company and (y) $489,580,285.08 multiplied by (II) (x) .0507, if
the Proposed Settlement is approved or (y) .0740, if the Proposed
Settlement is not approved] (the "Company Sale Amount"), (Y) to Xxxxxx
41.14% of the Company Sale Amount and (Z) to each Trust 4.43% of the
Company Sale Amount;
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(B) if during the 12-month period ending November 25, 1998, the
Company enters into a definitive agreement to sell all the common
stock of Southwestern Life Insurance Company (or all or substantially
all the assets of Southwestern Life Insurance Company) for a purchase
price (if other than in cash, as determined by PennCorp's financial
advisor and, in any event, calculated on an enterprise value basis) in
excess of $293,748,171.05 then, upon consummation of the transaction
contemplated by such definitive agreement, PennCorp shall pay (X) to
Stone 50% of an amount in cash equal to [(I) the difference between
(x) the purchase price paid for Southwestern Life Insurance Company
and (y) $293,748,171.05 multiplied by (II) (x) .0507, if the Proposed
Settlement is approved or (y) .0740, if the Proposed Settlement is not
approved] (the "Southwestern Life Sale Amount"), (Y) to Xxxxxx 41.14%
of the Southwestern Sale Amount and (Z) to each Trust 4.43% of the
Southwestern Sale Amount;
(C) if during the 12-month period ending November 25, 1998, the
Company enters into a definitive agreement to sell all the common
stock of Union Bankers Insurance Company (or all or substantially all
the assets of Union Bankers Insurance Company) for a purchase price
(if other than in cash, as determined by PennCorp's financial advisor
and, in any event, calculated on an enterprise value basis) in excess
of $195,832,114.03 then, upon consummation of the transaction
contemplated by such definitive agreement, PennCorp shall pay (X) to
Stone 50% of an amount in cash equal to [(I) the difference between
(x) the purchase price paid for Union Bankers Insurance Company and
(y) $195,832,114.03 multiplied by (II) (x) .0507, if the Proposed
Settlement is approved or (y) .0740 if the Proposed Settlement is not
approved] (the "Union Bankers Sale Amount"), (Y) to Xxxxxx 41.14% of
the Union Bankers Sale Amount and (Z) to each Trust 4.43% of the Union
Bankers Sale Amount; or
(D) if during the 12-month period ending November 25, 1998,
PennCorp enters into a definitive agreement to merge with a third
party or to sell all or substantially all its assets, for a per share
purchase price (if other than in cash, as determined by PennCorp's
financial advisor) in excess of $37.09, then, upon consummation of the
transaction contemplated by such definitive agreement, PennCorp shall
pay to (X)
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to Stone 50% of an amount in cash equal to {(I) if the Proposed
Settlement is approved, [[(A) 2,092,023 multiplied by (B) the
difference between (x) the per share purchase price received in such
transaction and (y) $37.09, minus $6,277,000], multiplied by .1630] or
(II) if the Proposed Settlement is not approved, [[(A) 2,156,186
multiplied by (B) the difference between (x) the per share purchase
price received in such transaction and (y) $37.09, minus $7,907,000],
multiplied by .2256} (the "PennCorp Sale Amount"), (Y) to Xxxxxx
41.14% of the PennCorp Sale Amount and (Z) to each Trust 4.43% of the
PennCorp Sale Amount.
In the event that the Company, Southwestern Life Insurance Company or Union
Bankers Insurance Company are sold in a single transaction in which one or more
other direct or indirect subsidiaries of PennCorp also is sold to the same or a
related purchaser (a "Group Sale"), the amount of the purchase price allocable
to the Company, Southwestern Life Insurance Company or Union Bankers Insurance
Company for purposes of this Amended Assignment Agreement shall be determined by
reference to the purchase price allocated to the Company, Southwestern Life
Insurance Company or Union Bankers by the seller and purchaser involved in such
Group Sale. In addition, the parties acknowledge and agree that if one or more
of the events referred to in clauses (A) through (D) above occur during the
period ending November 25, 1998, (x) the aggregate amount of the payments to be
made pursuant to this paragraph (c) shall be calculated so as not to produce
duplicative results and (y) if both Southwestern Life Insurance Company and
Union Bankers Insurance Company are sold (or there is executed an agreement for
their sale), then any payment to be made pursuant to this paragraph (c) shall be
made only to the extent the sum of the purchase prices for Southwestern Life
Insurance Company and Union Bankers Insurance Company exceeds $489,580,285.08.
2. Upon receipt of the First Payment, each Seller shall be deemed to have
sold, assigned, conveyed and transferred all of his right, title and interest in
and to the Shares to PennCorp and thereafter shall be entitled to receive,
solely under the circumstances specified above, the Approved Settlement Payment,
the Rejected Settlement Payment or the Price Protection Payment, as the case may
be.
3. Each Seller hereby represents and warrants as to himself the following
to PennCorp:
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(a) Such Seller is or as of the Closing Date will be the record and
beneficial owner of the Shares and of the Warrants to be sold to PennCorp,
and owns the Shares and Warrants free and clear of any liens, claims, or
encumbrances of any kind;
(b) Assuming this Assignment Agreement constitutes the valid and
binding obligation of PennCorp, this Assignment Agreement constitutes a
valid and bind obligation of such Seller, enforceable against such Seller
in accordance with its terms, except to the extent that such enforceability
may be limited by or subject to bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditor's rights generally and
that equitable remedies are subject to the discretion of the courts; and
(c) The execution and delivery of this Assignment Agreement do not,
and the consummation of the transactions contemplated by this Assignment
Agreement and compliance with the provisions hereof will not require the
consent of any person under any agreement, permit, concession, franchise,
license or similar instrument or undertaking to which such Seller is a
party or by which such Seller's assets is bound or affected, or contravene
any law, rule or regulation of any state or of the United States or any
political subdivision thereof or therein, or any order, writ, judgement,
injunction, decree, determination or award currently in effect.
4. PennCorp hereby represents and warrants the following to each Seller:
(a) PennCorp has the requisite power and authority to enter into this
Assignment Agreement and to consummate the transaction contemplated by this
Assignment Agreement, and the execution and delivery of this Assignment
Agreement by PennCorp and the consummation by PennCorp of the transaction
contemplated hereby have been duly authorized by all necessary action on
the part of PennCorp, and this Assignment Agreement has been duly executed
and delivered by PennCorp and, assuming this Assignment Agreement
constitutes the valid and binding obligation of each Seller, constitutes a
valid and bind obligation of PennCorp, enforceable against PennCorp in
accordance with its terms, except to the extent that such enforceability
may be limited by or subject to bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditor's rights generally and
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that equitable remedies are subject to the discretion of the courts; and
(b) The execution and delivery of this Assignment Agreement do not,
and the consummation of the transactions contemplated by this Assignment
Agreement and compliance with the provisions hereof will not require the
consent of any person under any agreement, permit, concession, franchise,
license or similar instrument or undertaking to which PennCorp is a party
or by which PennCorp's assets is bound or affected, or contravene any law,
rule or regulation of any state or of the United States or any political
subdivision thereof or therein, or any order, writ, judgement, injunction,
decree, determination or award currently in effect.
5. (a) The Sellers, concurrently with the receipt of the First Payment,
agree to deliver or cause to be delivered to PennCorp (i) a receipt from the
Sellers, in form and substance reasonably satisfactory to PennCorp, evidencing
the delivery of such payment by PennCorp and (ii) certificates representing the
Shares, duly endorsed (or accompanied by duly executed stock powers).
(b) Stone and Xxxxxx, concurrently with the receipt of the Approved
Settlement Payment, if any, agree to deliver or cause to be delivered to
PennCorp (i) a receipt from the Sellers, in form and substance reasonably
satisfactory to PennCorp, evidencing the delivery of such payment by PennCorp
and (ii) certificates representing the Warrants, duly endorsed (or accompanied
by duly executed stock powers).
(c) Stone and Xxxxxx, concurrently with the receipt of the Rejected
Settlement Payment, if any, agree to deliver or cause to be delivered to
PennCorp (i) a receipt from the Sellers, in form and substance reasonably
satisfactory to PennCorp, evidencing the delivery of such payment by PennCorp
and (ii) certificates representing the Warrants, duly endorsed (or accompanied
by duly executed stock powers).
6. All notices, requests, demands and other communications required or
permitted hereunder shall be xxxx in writing by hand- delivery, first-class mail
(registered or return receipt requested), telex, telecopier or air courier
guaranteeing overnight delivery:
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If to PennCorp Financial Group, Inc.:
PennCorp Financial Group, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Xxxxx X. Xxxxx:
Xxxxx X. Xxxxx
c/o PennCorp Financial Group, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Xxxxxx X. Xxxxxx:
c/o PennCorp Financial, Inc.
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
7. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, applicable to contracts executed in and
to be performed entirely within that state.
8. This Assignment Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended Assignment
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PENNCORP FINANCIAL GROUP, INC.
By:/s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X Xxxxxxxxx
Title: Senior Vice President,
General Counsel and
Secretary
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
338,384 shares of Common Stock
167,827 Warrants
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
278,384 shares of Common Stock
167,827 Warrants
XXXXXX XXXXX XXXXXX, XX. TRUST
DATED DECEMBER 21, 1995
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Its: Trustee
30,000 shares of Common Stock
XXXXXXX XXXXXXXXX XXXXXX TRUST
DATED DECEMBER 21, 1995
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Its: Trustee
30,000 shares of Common Stock
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