Exhibit 2.1
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Agreement and Plan of Merger dated as of May 17, 1999 among Allianz Life
Insurance Company of North America, Nova New Co., and Life USA Holding, Inc.
AGREEMENT AND PLAN OF MERGER
AMONG
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA,
NOVA NEW CO.
AND
LIFE USA HOLDING, INC.
DATED AS OF MAY 17, 1999
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
Recitals 1
ARTICLE I THE MERGER 1
Section 1.1 The Merger 1
Section 1.2 Effective Time 2
Section 1.3 Effects of the Merger 2
Section 1.4 Charter and By-Laws; Directors and Officers 2
Section 1.5 Conversion of Securities 2
Section 1.6 Payment Agent 3
Section 1.7 Transfer Taxes; Withholding 4
Section 1.8 Return of Payment Fund 4
Section 1.9 No Further Ownership Rights in Company Common Stock 4
Section 1.10 Closing of Company Transfer Books 4
Section 1.11 Lost Certificates 5
Section 1.12 Further Assurances 5
Section 1.13 Closing 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 5
Section 2.1 Organization, Standing and Power 5
Section 2.2 Authority 6
Section 2.3 Consents and Approvals; No Violation 6
Section 2.4 Proxy Statement 7
Section 2.5 Actions and Proceedings 8
Section 2.6 Operations of Sub 8
Section 2.7 Brokers 8
Section 2.8 Financing 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
Section 3.1 Organization, Standing and Power 8
Section 3.2 Capital Structure 9
Section 3.3 Authority 10
Section 3.4 Consents and Approvals; No Violation 10
Section 3.5 SEC Documents and Other Reports 11
Section 3.6 Proxy Statement 12
Section 3.7 Absence of Certain Changes or Events 12
Section 3.8 Permits and Compliance 13
Section 3.9 Tax Matters 14
Section 3.10 Actions and Proceedings 14
Section 3.11 Certain Agreements 15
Section 3.12 ERISA 15
Section 3.13 Compliance with Worker Safety and Environmental Laws 16
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Section 3.14 Labor Matters. 17
Section 3.15 Intellectual Property 17
Section 3.16 State Takeover Statutes; Certain Charter Provisions 17
Section 3.17 Required Vote of Company Stockholders 18
Section 3.18 Year 2000 Compliance 18
Section 3.19 Brokers 18
Section 3.20 Insurance Coverage 18
Section 3.21 Conflicts of Interest 18
ARTICLE IV COVENANTS 19
Section 4.1 Conduct of Business Pending the Merger 19
Section 4.2 No Solicitation 21
Section 4.3 Third Party Standstill Agreements 22
ARTICLE V ADDITIONAL AGREEMENTS 23
Section 5.1 Stockholder Meeting. 23
Section 5.2 Preparation of the Proxy Statement. 23
Section 5.3 Access to Information 23
Section 5.4 Fees and Expenses 23
Section 5.5 Company Stock Options 25
Section 5.6 Best Efforts 25
Section 5.7 Public Announcements 26
Section 5.8 Real Estate Transfer and Gains Tax 26
Section 5.9 Indemnification; Directors and Officers Insurance 26
Section 5.10 Notification of Certain Matters 27
Section 5.11 Employee Benefit Plans and Agreements 27
Section 5.12 Stock Purchase Agreement 28
Section 5.13 Dissenting Shares 28
Section 5.14 Chief Executive Officer 28
Section 5.15 Change of Control 29
Section 5.16 Convertible Debentures 29
Section 5.17 Advance of Funds 29
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER 29
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger 29
Section 6.2 Conditions to Obligation of the Company to Effect the Merger 30
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger 30
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 31
Section 7.1 Termination 31
Section 7.2 Effect of Termination 33
Section 7.3 Amendment 33
Section 7.4 Waiver 33
ARTICLE VIII GENERAL PROVISIONS 34
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Section 8.1 Non-Survival of Representations and Warranties. 34
Section 8.2 Notices. 34
Section 8.3 Interpretation 35
Section 8.4 Counterparts 35
Section 8.5 Entire Agreement; No Third-Party Beneficiaries 35
Section 8.6 Governing Law 35
Section 8.7 Assignment 35
Section 8.8 Severability 35
Section 8.9 Enforcement of this Agreement 36
Signatures 37
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 17, 1999
(the "Agreement"), is executed by and among ALLIANZ LIFE INSURANCE COMPANY OF
NORTH AMERICA, a Minnesota corporation ("Parent"), NOVA NEW CO., a Minnesota
corporation and a wholly owned subsidiary of Parent ("Sub"), and LIFE USA
HOLDING, INC., a Minnesota corporation (the "Company") (Sub and the Company
being hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub with and into
the Company (the "Merger"), upon the terms and subject to the conditions set
forth herein, whereby each issued and outstanding share of common stock, par
value $.01 per share, of the Company ("Company Common Stock") not owned directly
or indirectly by Parent or the Company other than Dissenting Shares (as
hereinafter defined) will be converted into a right to receive $20.75 per share;
and
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is in the best interest of
their respective stockholders.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the Minnesota Business Corporation Act
(the "MBCA"), Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the MBCA. Notwithstanding
anything to the contrary herein, at the election of Parent, any direct wholly
owned Subsidiary (as hereinafter defined) of Parent may be substituted for Sub
as a constituent corporation in the Merger; provided that such substituted
corporation is a Minnesota corporation which is formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has engaged in
no other business activities. In such event, the parties agree to execute an
appropriate
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amendment to this Agreement, in form and substance reasonably satisfactory to
Parent and the Company, in order to reflect such substitution.
Section 1.2 Effective Time. The Merger shall become effective
when Articles of Merger (the "Articles of Merger"), executed in accordance with
the relevant provisions of the MBCA, are filed with the Secretary of State of
the State of Minnesota; provided, however, that, upon the mutual consent of the
Constituent Corporations, the Articles of Merger may provide for a later date or
time of effectiveness of the Merger. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Articles of Merger
are accepted for record or such later date or time established by the Articles
of Merger. The filing of the Articles of Merger shall be made on the date of the
Closing (as hereinafter defined).
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in Section 302A.641 subd. 2 of the MBCA.
Section 1.4 Charter and By-Laws; Directors and Officers
(a) Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be amended so that (i) Article III of such Articles of
Incorporation reads in its entirety as follows: "The aggregate number of shares
of common stock which this corporation shall have authority to issue is One
Hundred (100) shares, par value $.01 per share." and (ii) Article IV of such
Articles of Incorporation is deleted in its entirety. As so amended, such
Articles of Incorporation of the Company shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law. At the Effective Time, the By-Laws of the Company,
as in effect immediately prior to the Effective Time, shall be amended and
restated to read as did the By-Laws of Sub immediately prior to the Effective
Time, except that the name of the Surviving Corporation shall remain unchanged.
As so amended and restated, such By-Laws of the Company shall be the By-Laws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) Directors. The directors of Sub at the Effective Time of
the Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be. The officers of the Company at
the Effective Time of the Merger shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
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(b) All shares of Company Common Stock that are held in the
treasury of the Company or by any wholly owned Subsidiary of the Company and any
shares of Company Common Stock owned by Parent shall be canceled and no cash or
other consideration shall be delivered in exchange therefor.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 1.5(b) and Dissenting Shares) shall be converted into
the right to receive, upon surrender of the certificate (the "Certificate")
formerly representing such share of Company Common Stock, an amount of cash
equal to $20.75 (the "Per Share Amount"). All such shares of Company Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be canceled and retired and each holder of a Certificate or Certificates
formerly representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the cash to be paid to such holder
pursuant to Article I hereof (the "Merger Consideration") upon the surrender of
a Certificate or Certificates in accordance with Section 1.6 hereof.
(d) Each Convertible Debenture (as hereinafter defined) shall
cease to be convertible into shares of Company Common Stock and instead shall
only be convertible into a right to receive from Parent an amount of cash equal
to the Merger Consideration the holder of such Convertible Debenture would have
received pursuant to Article I hereof had such Convertible Debenture been
converted into Company Common Stock immediately prior to the Effective Time.
(e) The Dissenting Shares shall be handled in accordance with
Section 5.13 hereof.
Section 1.6 Payment Agent
(a) Exchange of Certificates. Parent shall authorize a
commercial bank (or such other person or persons as shall be reasonably
acceptable to Parent and the Company) to act as Payment Agent hereunder (the
"Payment Agent"). As soon as practicable after the Effective Time, Parent shall
deposit with the Payment Agent, in trust for the holders of shares of Company
Common Stock converted in the Merger and holders of Company Stock Options (as
hereinafter defined), an amount of cash equal to or exceeding the aggregate
Merger Consideration to be paid to holders of Company Common Stock pursuant to
Article I hereof and any Option Consideration (as hereinafter defined) to be
paid to holders of Company Stock Options pursuant to the terms of Section 5.5
(such amount hereinafter the "Payment Fund").
(b) Exchange Procedures. Parent shall instruct the Payment
Agent, as soon as practicable after the Effective Time, to mail to each record
holder of a Certificate or Certificates a letter of transmittal, which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Payment Agent, and shall contain instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon surrender for
cancellation to the Payment Agent of all Certificates held by any record holder
of a Certificate, together with such letter of transmittal,
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duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a check representing the Merger Consideration, and any
Certificate so surrendered shall forthwith be canceled. Holders of Company Stock
Options shall receive payment, if any, for such Company Stock Options pursuant
to the procedures set forth in Section 5.5.
Section 1.7 Transfer Taxes; Withholding. If any Merger
Consideration is to be paid to any person other than to the person named in the
Certificate surrendered in exchange therefor, it shall be a condition of such
exchange that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Payment Agent any transfer or other taxes required by
reason of the payment of the Merger Consideration to a person other than to the
person named in the Certificate surrendered, or shall establish to the
satisfaction of the Payment Agent that such tax has been paid or is not
applicable. Parent or the Payment Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock or holder of a Company Stock Option
such amounts as Parent or the Payment Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code") or under any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent or the Payment
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock or the
holder of a Company Stock Option in respect of which such deduction and
withholding was made by Parent or the Payment Agent.
Section 1.8 Return of Payment Fund. Any portion of the Payment
Fund which remains undistributed for six months after the Effective Time shall
be delivered to Parent, upon demand of Parent, and any such former stockholders
who have not theretofore complied with this Article I and holders of Company
Stock Options who have not theretofore complied with Section 5.5 hereof shall
thereafter look only to Parent for payment of their claim for any Merger
Consideration or Option Consideration, as the case may be. Neither Parent nor
the Surviving Corporation shall be liable to any former holder of Company Common
Stock or holder of a Company Stock Option for any cash held in the Payment Fund
which is delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 1.9 No Further Ownership Rights in Company Common
Stock. The payment of the Merger Consideration upon surrender of any Certificate
shall be deemed to constitute full satisfaction of all rights pertaining to the
shares of Company Common Stock represented by such Certificate.
Section 1.10 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Payment Agent or the Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
Section 1.11 Lost Certificates. If 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
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be lost, stolen or destroyed and, if required by Parent or the Payment Agent,
the posting by such person of a bond, in such reasonable amount as Parent or the
Payment Agent may direct as indemnity against any claim that may be made against
them with respect to such Certificate, the Payment Agent will pay the Merger
Consideration in exchange for such lost, stolen or destroyed Certificate.
Section 1.12 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.13 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions specified in this
Agreement to occur at the Closing shall take place at the offices of Xxxxxx &
Xxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, at 10:00 a.m.,
local time, no later than the second business day following the day on which the
last of the conditions set forth in Article VI shall have been fulfilled or
waived (if permissible) or at such other time and place as Parent and the
Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of its place of incorporation and has the requisite corporate
power and authority to carry on its business as now being conducted. Parent is
duly qualified to do business, and is in good standing in each jurisdiction
where the character of the properties owned or held under lease by it 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 (as hereinafter defined) on Parent. For purposes of this
Agreement (a) "Material Adverse Change" or "Material Adverse Effect" means, when
used with respect to Parent or the Company, as the case may be, any change or
effect that is or could reasonably be expected (as far as can be foreseen at the
time) to be materially adverse to the business, assets, liabilities, financial
condition or results of operations of Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries,
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taken as a whole, as the case may be; provided, however, that in determining
whether a Material Adverse Change or Material Adverse Effect has occurred with
respect to either referenced party, any change or effect, to the extent it is
attributable to changes in prevailing interest rates or to any change in general
economic conditions affecting companies in industries similar to the industries
in which the Company and its Subsidiaries or Parent and its Subsidiaries, as the
case may be, operate, shall not be considered when determining if a Material
Adverse Change or Material Adverse Effect has occurred; and (b) "Subsidiary"
means any corporation, partnership, limited liability company, joint venture or
other legal entity of which Parent or the Company, as the case may be (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, limited liability
company, joint venture or other legal entity.
Section 2.2 Authority. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Sub have each declared the
merger advisable and fair to and in the best interest of Parent and Sub, and the
Board of Directors of Sub has recommended the adoption of this Agreement by
Parent as sole stockholder of Sub and Parent has approved this Agreement as sole
stockholder of Sub. Each of Parent and Sub has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Parent or Sub, as the case may be, subject to the filing of the
Articles of Merger with the Secretary of State of the State of Minnesota. This
Agreement has been duly executed and delivered by Parent and Sub and (assuming
the valid authorization, execution and delivery of this Agreement by the Company
and the validity and binding effect of the Agreement on the Company) constitutes
the valid and binding obligations of each of Parent or Sub, as the case may be,
enforceable against them in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of specific performance and other
equitable remedies.
Section 2.3 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 2.3 have been obtained and all filings and obligations described in this
Section 2.3 have been made, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Subsidiaries under, any provision of (i) the Articles of
Incorporation or the By-Laws of Parent or the Articles of Incorporation or
By-Laws of Sub, (ii) any provision of the comparable charter or organization
documents of any of Parent's Subsidiaries, (iii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its Subsidiaries
or (iv) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, other
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than, in the case of clauses (ii), (iii) or (iv), any such violations, defaults,
rights, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a Material Adverse Effect on Parent, materially
impair the ability of Parent or Sub to perform their respective obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any domestic (federal and state), foreign or supranational court,
commission, governmental body, regulatory agency, authority or tribunal (a
"Governmental Entity") is required by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
Parent or Sub or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and the Securities Exchange Act of 1934,
as amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act"), (ii) the filing of the Articles of Merger with the Secretary of
State of the State of Minnesota and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (iii) such filings, authorizations, orders, notices
and approvals as may be required by state takeover laws (the "State Takeover
Approvals") and state insurance laws (the "State Insurance Approvals"), and (iv)
such consents, orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair the
ability of Parent or Sub to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
Section 2.4 Proxy Statement. None of the information to be
supplied by Parent or Sub for inclusion or incorporation by reference in the
Schedule 13e-3 (as hereinafter defined) or the proxy statement relating to the
Stockholder Meeting (as hereinafter defined) (together with any amendments or
supplements thereto, the "Proxy Statement") will, (i) in the case of the
Schedule 13e-3, at the time of its filing, 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 not misleading or (ii) in
the case of the Proxy Statement, at the time of the mailing of the Proxy
Statement, at the time of the Stockholder Meeting and at the Effective Time,
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. If at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its Subsidiaries shall occur, which
is required to be described in the Schedule 13e-3 or the Proxy Statement, such
event shall be so described, and, in the case of the Schedule 13e-3, an
appropriate amendment or supplement shall be promptly filed with the SEC and, in
the case of the Proxy Statement, Parent will promptly give notice of such event
to the Company.
Section 2.5 Actions and Proceedings. There are no outstanding
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving Parent or any of its Subsidiaries, or against or involving
any of the present or former directors, officers, employees, consultants, agents
or stockholders of Parent or any of its Subsidiaries, as such, or any of its or
their properties, assets or business that, individually or in the aggregate,
would materially impair the ability of Parent to perform its obligations
hereunder. As of the
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date of this Agreement, there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to the
Knowledge of Parent, threatened against or involving Parent or any of its
Subsidiaries or any of its or their present or former directors, officers,
employees, consultants, agents or stockholders, as such, or any of its or their
properties, assets or business that, individually or in the aggregate, would
materially impair the ability of Parent to perform its obligations hereunder. As
of the date hereof, there are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or governmental investigations
pending or, to the Knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries or any of its or their present or former officers,
directors, employees, consultants, agents or stockholders, as such, or any of
its or their properties, assets or business relating to the transactions
contemplated by this Agreement. For purposes of this Agreement, "Knowledge of
Parent" means the actual knowledge of the executive officers of Parent.
Section 2.6 Operations of Sub. Sub is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
Section 2.7 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transaction contemplated by this Agreement based upon the
arrangements made by or on behalf of Parent or Sub.
Section 2.8 Financing. Parent has sufficient capital resources
necessary to perform its obligations under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their 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 Company.
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Section 3.2 Capital Structure. As of the date hereof, the
authorized capital stock of the Company consists of 60,000,000 shares of Company
Common Stock and 15,000,000 shares of undesignated preferred stock, par value
$.01 per share ("Company Preferred Stock"). At the close of business on March
31, 1999, (i) 23,920,839 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Company Common Stock were held in
the treasury of the Company or by Subsidiaries of the Company and (iii)
5,695,790 shares of Company Common Stock were reserved for issuance pursuant to
outstanding options under the Company's stock plans described under Section 3.2
of the letter dated the date hereof and delivered on the date hereof by the
Company to Parent, which letter relates to this Agreement and is designated
therein as the Company Letter (the "Company Letter") (collectively, the "Company
Stock Plans"). Except as set forth in Section 3.2 of the Company Letter, no
options have been granted since March 31, 1999. At the close of business on
March 31, 1999, the Company's outstanding 8% convertible subordinated debentures
(the "Convertible Debentures") were convertible into approximately 231,373
shares of Company Common Stock. Except as set forth in Section 3.2 of the
Company Letter, the Company Stock Plans are the only benefit plans of the
Company or its Subsidiaries under which any securities of the Company or any of
its Subsidiaries are issuable. No shares of Company Preferred Stock are
outstanding. As of the date of this Agreement, except (i) as set forth above or
(ii) as set forth in Section 3.2 of the Company Letter, no shares of capital
stock or other voting securities of the Company or any Subsidiary were issued,
reserved for issuance or outstanding. As of the date of this Agreement, except
as set forth in Section 3.2 of the Company Letter, there are no options,
warrants, calls, rights or agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or agreement. Each
outstanding share of capital stock of each Subsidiary of the Company that is a
corporation is duly authorized, validly issued, fully paid and nonassessable
and, except as set forth in Section 3.2 of the Company Letter, each such share
is owned by the Company or another Subsidiary of the Company, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. Other than the Convertible Debentures,
the Company does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter. Exhibit 21 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998, as filed with the SEC (the "Company
Annual Report"), is a true, accurate and correct statement in all material
respects of all of the information as of December 31, 1998 required to be set
forth therein by the regulations of the SEC.
Section 3.3 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company has declared the Merger
advisable and fair to and in the best interest of the Company and its
stockholders, approved this Agreement in accordance with the MBCA, resolved to
recommend the adoption of this Agreement by the Company's stockholders and
directed that this Agreement be submitted to the Company's stockholders for
adoption. The
9
Company has all requisite corporate power and authority to enter into this
Agreement and, subject to approval by the stockholders of the Company of this
Agreement, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to (x) approval of this
Agreement by the stockholders of the Company and (y) the filing of the Articles
of Merger with the Secretary of State of the State of Minnesota. This Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the validity and binding effect of the Agreement on Parent and Sub) constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as the enforceability hereof may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and to judicial limitations on the
enforcement of specific performance and other equitable remedies. The filing of
the Proxy Statement with the SEC has been duly authorized by the Company's Board
of Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 3.4 have been obtained and all filings and obligations described in this
Section 3.4 have been made, except as set forth in Section 3.4 of the Company
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the Articles of
Incorporation or By-Laws of the Company, (ii) any provision of the comparable
charter or organization documents of any of the Company's Subsidiaries, (iii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby or
thereby. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the Company or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or is necessary for the consummation of the Merger and
the other transactions contemplated by this Agreement, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, the Securities
Act and the Exchange Act, (ii) the filing of the Articles of Merger with the
Secretary of State of the State of Minnesota and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings, authorizations,
notices, orders and approvals as may be required to obtain the State Takeover
Approvals and State Insurance Approvals, (iv) applicable requirements, if any,
of Blue Sky Laws and the Nasdaq National
10
Market or as may be required pursuant to the laws, rules and regulations of
states and state commissions regulating the business of securities
broker-dealers, and (v) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company has
filed all required documents with the SEC since January 1, 1996 (the "Company
SEC Documents"). Except as set forth in Section 3.5 of the Company Letter, as of
their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and, at the respective times they were filed, none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in Section 3.5 of the Company Letter, the
consolidated financial statements (including, in each case, any notes thereto)
of the Company included in the Company SEC Documents (the "Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto), are in accordance
with the books and records of the Company and fairly presented in all material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents or as required by generally accepted accounting
principles, the Company has not, since December 31, 1998, made any change in the
accounting practices or policies applied in the preparation of financial
statements. Except as and to the extent set forth in Section 3.5 of the Company
Letter or in the Company Annual Report, neither the Company nor any of its
Subsidiaries had as of December 31, 1998 any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on the consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto)
included in the Financial Statements that are not so reflected. The Company has
delivered to Parent the following statutory financial statements of Life USA
Insurance Company (the "Insurance Subsidiary") which have been filed with
insurance regulators (the "Statutory Statements"): (a) the Statutory Quarterly
Statement for the quarter ended March 31, 1999 for the Insurance Subsidiary as
filed with state insurance regulatory authorities, and (b) the Annual Statutory
Statements for the years ended December 31, 1998, 1997, 1996, 1995 and 1994 as
filed with state insurance regulatory authorities. The Statutory Statements (i)
fairly present the financial position of the Insurance Subsidiary and the
results of its operations as of the dates thereof and periods then ended, (ii)
were prepared in accordance with statutory accounting principles prescribed or
permitted at the date of such financial statements by the insurance regulatory
authority of its state of domicile, and (iii) all investments in stocks and
bonds shown thereon were carried at values determined in
11
accordance with the National Association of Insurance Commissioners' guidelines.
Section 3.6 Proxy Statement. The Proxy Statement will comply
in all material respects with the provisions of the Exchange Act. Neither the
Proxy Statement (other than with respect to information contained in the Proxy
Statement that is provided to the Company by Parent for inclusion in the Proxy
Statement) nor any of the information supplied by the Company for inclusion or
incorporation by reference in the Schedule 13e-3, together with any amendments
or supplements thereto, will (i) in the case of the Proxy Statement, at the time
of the mailing of the Proxy Statement, at the time of the Stockholder Meeting
and at the Effective Time, 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, and (ii) in the case of information supplied by
the Company for inclusion or incorporation by reference in the Schedule 13e-3,
at the time its filing, 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 not misleading. If at any time prior to the
Effective Time any event with respect to the Company, its officers and directors
or any of its Subsidiaries shall occur which is required at that time to be
described in the Proxy Statement or the Schedule 13e-3, such event shall be so
described, and, in the case of the Proxy Statement, an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company, and, in the case of the
Schedule 13e-3, the Company shall promptly notify Parent of such event.
Section 3.7 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date of
this Agreement or as disclosed in Section 3.7 of the Company Letter, since
December 31, 1998, (A) the Company and its Subsidiaries have not incurred any
material liability or obligation (indirect, direct or contingent), or entered
into any material oral or written agreement or other transaction, that is not in
the ordinary course of business or that would result in a Material Adverse
Effect on the Company, (B) there has been no change in the capital stock of the
Company except for the issuance of shares of the Company Common Stock pursuant
to the Company Stock Plans or the conversion of the Convertible Debentures and
no dividend or distribution of any kind declared, paid or made by the Company on
any class of its stock, except for the regular quarterly dividend of not more
than $.025 per share of Company Common Stock, (C) there has not been (x) any
granting by the Company or any of its Subsidiaries to any executive officer of
the Company or any of its Subsidiaries of any increase in compensation, except
in the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Company SEC Documents, (y) any
granting by the Company or any of its Subsidiaries to any such executive officer
of any increase in severance or termination agreements in effect as of the date
of the most recent audited financial statements included in the Company SEC
Documents or (z) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination agreement with any such executive officer
and (D) there has been no event causing a Material Adverse Effect on the
Company, nor any development that would, individually or in the aggregate,
result in a Material Adverse Effect on the Company.
Section 3.8 Permits and Compliance. Each of the Company and
its
12
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and, as of the date of
this Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the Company
Permits would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries is in
violation of (A) its Articles of Incorporation, by-laws or other organizational
documents, (B) any applicable law, ordinance, administrative or governmental
rule or regulation or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over the Company or any of its Subsidiaries, except,
in the case of clauses (B) and (C), for any violations that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. Except
as disclosed in the Company SEC Documents filed prior to the date of this
Agreement or as disclosed in Section 3.8 of the Company Letter, as of the date
hereof there is no contract or agreement that is material to the business,
properties, assets, liabilities, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries, taken as a whole.
Except as set forth in the Company SEC Documents filed prior to the date of this
Agreement or as disclosed in Section 3.8 of the Company Letter, no event of
default or event that, but for the giving of notice or the lapse of time or
both, would constitute an event of default exists or, upon the consummation by
the Company of the transactions contemplated by this Agreement, will exist under
any indenture, mortgage, loan agreement, note or other agreement or instrument
for borrowed money, any guarantee of any agreement or instrument for borrowed
money or any lease, contractual license or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any such Subsidiary is bound or to which any of the properties, assets or
operations of the Company or any such Subsidiary is subject, other than any
defaults that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. As of the date of this Agreement, set forth in
Section 3.8 of the Company Letter is a description of any material changes to
the amount and terms of the indebtedness of the Company and its Subsidiaries as
described in the Company Annual Report. For purposes of this Agreement,
"Knowledge of the Company" means the actual knowledge of the executive officers
of the Company.
Section 3.9 Tax Matters. Except as otherwise set forth in
Section 3.9 of the Company Letter, (i) the Company and each of its Subsidiaries
have filed all federal, and all material state, local, foreign and provincial,
Tax Returns required to have been filed or appropriate extensions therefor have
been properly obtained, and such Tax Returns are correct and complete, except to
the extent that any failure to so file or any failure to be correct and complete
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; (ii) all Taxes shown to be due on such Tax Returns have been timely
paid or extensions for payment have been properly obtained, or such Taxes are
being timely and properly contested; (iii) the Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations would not, individually or in
the aggregate,
13
have a Material Adverse Effect on the Company; (iv) neither the Company nor any
of its Subsidiaries has waived any statute of limitations in respect of its
Taxes; (v) any Tax Returns referred to in clause (i) relating to federal and
state income Taxes have been examined by the IRS or the appropriate state taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (vi) no material issues that have
been raised in writing by the relevant taxing authority in connection with the
examination of the Tax Returns referred to in clause (i) are currently pending;
(vii) all deficiencies asserted or assessments made as a result of any
examination of such Tax Returns by any taxing authority have been paid in full
or are being timely and properly contested; and (viii) no withholding is
required under Section 1445 of the Code in connection with the Merger. For
purposes of this Agreement: (i) "Taxes" means any federal, state, local, foreign
or provincial income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or added minimum, ad
valorem, value-added, transfer or excise tax, or other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty imposed by any Governmental Entity, and
(ii) "Tax Return" means any return, report or similar statement (including the
attached schedules) required to be filed with respect to any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 3.10 Actions and Proceedings. Except as set forth in
the Company SEC Documents filed prior to the date of this Agreement or in
Section 3.10 of the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving
(i) the Company or any of its Subsidiaries, (ii) to the Knowledge of the
Company, any of the present or former directors, officers, employees,
consultants, agents or stockholders of the Company or any of its Subsidiaries,
as such, (iii) any of the properties, assets or businesses of the Company or any
of its Subsidiaries or (iv) any Company Plan (as hereinafter defined) that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company or materially impair the ability of the Company to perform its
obligations hereunder. As of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of the Company, threatened against
or involving (i) the Company or any of its Subsidiaries, (ii) to the Knowledge
of the Company, any of its or their present or former directors, officers,
employees, consultants, agents or stockholders, as such, (iii) any of the
properties, assets or businesses of the Company or any of its subsidiaries or
(iv) any Company Plan (as hereinafter defined) that, individually or in the
aggregate, would have a Material Adverse Effect on the Company or materially
impair the ability of the Company to perform its obligations hereunder. As of
the date hereof, there are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or governmental investigations
pending or, to the Knowledge of the Company, threatened against or affecting (i)
the Company or any of its Subsidiaries, (ii) to the Knowledge of the Company,
any of its or their present or former officers, directors, employees,
consultants, agents or stockholders, as such, (iii) any of the properties,
assets or businesses of the Company or any of its Subsidiaries or (iv) any
Company Plan, in each case relating to the transactions contemplated by this
Agreement. The Company is not in default with respect to any material final
judgment, order or decree of any court or any governmental agency or
instrumentality.
Section 3.11 Certain Agreements. Except as set forth in
Section 3.11 of the
14
Company Letter or as provided pursuant to Section 5.5 hereof, neither the
Company nor any of its Subsidiaries is a party to any oral or written agreement
or plan, including any employment agreement, severance agreement, stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement (collectively, "Transaction Agreements"). No holder of any
option to purchase shares of Company Common Stock, or shares of Company Common
Stock granted in connection with the performance of services for the Company or
its Subsidiaries, is or will be entitled to receive cash from the Company or any
Subsidiary in lieu of or in exchange for such option or shares as a result of
the transactions contemplated by this Agreement, other than the Stock Option
Consideration to be paid to holders of Company Stock Options pursuant to Section
5.5. Section 3.11 of the Company Letter sets forth (i) for each officer,
director or employee who is a party to, or will receive benefits under, any
Transaction Agreement, the total amount that each such person may receive, or is
eligible to receive, if this Agreement were to be consummated on the date hereof
and whether such amount (or portion thereof) constitutes or will constitute a
"parachute payment" to a "disqualified individual" as those terms are defined in
section 280G of the Code, and (ii) the total amount of indebtedness owed to the
Company or its Subsidiaries as of April 30, 1999 from each officer or director
of the Company and its Subsidiaries.
Section 3.12 ERISA
(a) Company Plans. Each Company Plan (as hereinafter defined)
is listed in Section 3.12(a) of the Company Letter. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code and all other applicable statutes and governmental rules and
regulations, and (i) no "reportable event" (within the meaning of Section 4043
of ERISA) has occurred with respect to any Company Plan that is likely to have
individually or in the aggregate, a Material Adverse Effect on the Company, and
(ii) no action has been taken, or is currently being considered, to terminate
any Company Plan subject to Title IV of ERISA. No Company Plan, nor any trust
created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived.
(b) Plan Liabilities. Except as listed in Section 3.12(b) of
the Company Letter, with respect to the Company Plans, no event has occurred
and, to the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company or any ERISA Affiliate or
Company Plan fiduciary could be subject to any liability under the terms of such
Company Plans, ERISA, the Code or any other applicable law, other than
liabilities for benefits payable in the normal course, which would have a
Material Adverse Effect on the Company. All Company Plans that are intended to
be qualified under Section 401(a) of the Code have been determined by the IRS to
be so qualified, or a timely application for such determination is now pending
or a request for such a determination filed within the remedial amendment period
of Section 401(b) of the Code is pending, and the Company is not aware of any
reason why any such Company Plan is not so qualified in operation. Neither the
Company nor any entity which is treated as a single employer along with the
Company under
15
Section 414(b), (c), (m) or (o) of the Code maintains or contributes to, or has
ever maintained or contributed to, or been required to contribute to a
"multiemployer plan" within the meaning of Section 3(37) of ERISA or any plan
subject to Title IV of ERISA. Except as disclosed in Section 3.12(b) of the
Company Letter, neither the Company nor any of its ERISA Affiliates has any
liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required by
Section 4980B of the Code.
(c) Definitions. As used herein, (i) "Company Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA), a "welfare plan" (as
defined in Section 3(1) of ERISA), or any bonus, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, holiday pay, vacation, severance, death benefit, sick
leave, fringe benefit, personnel policy, insurance or other plan, arrangement or
understanding, in each case established or maintained by the Company or any of
its ERISA Affiliates or as to which the Company or any of its ERISA Affiliates
has contributed or otherwise may have any liability.
(d) Employment Agreements. Section 3.12(d) of the Company
Letter contains a list of all (i) severance and employment agreements with
employees of the Company and each ERISA Affiliate, (ii) severance programs and
policies of the Company and each ERISA Affiliate with or relating to its
employees and (iii) plans, programs, agreements and other arrangements of the
Company and each ERISA Affiliate with or relating to its employees containing
change of control or similar provisions.
Section 3.13 Compliance with Worker Safety and Environmental
Laws. The properties, assets and operations of the Company and its Subsidiaries
are in compliance with all applicable federal, state, local and foreign laws,
rules and regulations, orders, decrees, judgments, permits and licenses relating
to public and worker health and safety (collectively, "Worker Safety Laws") and
the protection and clean-up of the environment and activities or conditions
related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. With respect to such properties, assets and operations, including
any previously owned, leased or operated properties, assets or operations, there
are no events, conditions, circumstances, activities, practices, incidents,
actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance with applicable Worker Safety
Laws and Environmental Laws, other than any such interference or prevention as
would not, individually or in the aggregate with any such other interference or
prevention, have a Material Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries (the
"Company Business Personnel"), and there is no unfair labor practice complaint
or grievance against the Company or any of its Subsidiaries by the National
Labor Relations Board or any comparable state agency pending or threatened in
writing with respect to the Company Business
16
Personnel, except where such unfair labor practice, complaint or grievance would
not have a Material Adverse Effect on the Company. There is no labor strike,
dispute, slowdown or stoppage pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries which may
interfere with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage would not have
a Material Adverse Effect on the Company.
Section 3.15 Intellectual Property. To the Knowledge of the
Company, the Company (a) owns or has the exclusive right in the life insurance
and annuity industry to use the "LifeUSA" trademark without infringing upon or
otherwise acting adversely to the right or claimed right of any person under or
with respect to any of the foregoing, (b) owns or has the right in the ordinary
course of its business to use all patents, trademarks, trade names, service
marks, copyrights, trade secrets (including without limitation know-how,
show-how, customer lists, inventions, designs, processes, computer programs and
technical data), and all other intellectual property rights (collectively,
"Proprietary Rights") necessary to its operations and the sale of all products
and services sold or proposed to be sold by it, free and clear of any rights,
liens, or claims of others, except for customary restrictions or provisions
under any agreement pursuant to which any of the foregoing is licensed from a
third party, which restrictions and provisions do not significantly interfere
with the conduct of the Company's business in the ordinary course, and (c) to
the Knowledge of the Company and except as set forth in Section 3.15 of the
Company Letter, is not using any Proprietary Rights of any third party which
violates the rights of such third party.
Section 3.16 State Takeover Statutes; Certain Charter
Provisions. Minnesota Statutes Section 302A.671 is not applicable to the
Company, and no charter or by-law takeover provision nor, to the Knowledge of
the Company, any state takeover statute is applicable to the Merger or the
Agreement and the transactions contemplated hereby.
Section 3.17 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to adopt this Agreement. No other vote of the
security holders of the Company is required by law, the Articles of
Incorporation or By-laws of the Company or otherwise in order for the Company to
consummate the Merger and the transactions contemplated hereby.
Section 3.18 Year 2000 Compliance. The Company and its
Subsidiaries have established, and are adhering to, a written year 2000
compliance plan to facilitate the continued, effective operation of the
Company's business before and after January 1, 2000. Such plan includes, without
limitation, (a) adequate procedures for verification that all material software,
hardware, systems and equipment (collectively "Technology") purchased, leased,
licensed or otherwise used by the Company or any of its Subsidiaries is capable
of accurately processing date/time data within, from, into and between the
twentieth and twenty-first centuries, including leap year calculations and the
processing of four-digit date data ("Year 2000 Compliant"), (b) verification of
adequate year 2000 planning by all providers of products and services to the
Companies, and (c) adequate contingency plans in the event of a failure of
mission-critical systems or products, or interruption in the provision of
mission-critical services utilized by the Company. The material Technology of
the Company and its Subsidiaries is Year 2000
17
Compliant, and the Company and its Subsidiaries (i) have obtained confirmation
from their respective providers of material products and services that such
products and services are Year 2000 Compliant in all material respects or (ii)
the Company has alternative providers of such products or services such that, to
the Knowledge of the Company, any interruption or failure of such third party
products or services would not have a Material Adverse Effect on the Company.
Section 3.19 Brokers. No broker, investment banker or other
person, other than a nationally recognized investment bank, reasonably
acceptable to Parent and the fees and expenses of which will be paid by the
Company, that may be retained by the Company to opine as to the "fairness" of
the transaction contemplated hereunder, is entitled to any broker's, finder's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company.
Section 3.20 Insurance Coverage. There are in full force and
effect policies of insurance issued by insurers of recognized responsibility
insuring the Company and its properties and business against such losses and
risks, and in such amounts, as in the Company's reasonable judgment, are
acceptable for the nature and extent of such business and its resources. A
summary of the insurance policies carried by the Company as of the date hereof
has been furnished previously to Parent.
Section 3.21 Conflicts of Interest. As of the date hereof, no
officer or director of the Company or any "Affiliate" (as such term is defined
in Rule 405 under the Securities Act) of any such person has any direct or
indirect interest (a) in any entity which does business with the Company, (b) in
any property, asset or right which is used by the Company in the conduct of its
business, or (c) in any contractual relationship with the Company other than as
an employee, except as disclosed in the Company's proxy statement for its 1999
annual shareholders meeting or except as with Parent or any of Parent's
Affiliates.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.1 Conduct of Business Pending the Merger. Except as
expressly permitted by clauses (i) through (xvi) of this Section 4.1, during the
period from the date of this Agreement through the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, in all material respects
carry on its business in the ordinary course of its business as currently
conducted and, to the extent consistent therewith, use best efforts to preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement or as set forth in the Company Letter (with
specific reference to the applicable subsection below), the Company shall not,
and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent (which consent shall not be unreasonably withheld or delayed):
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(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its stockholders in their capacity as
such (other than (1) regular quarterly dividends of not more than $.025 per
share of Company Common Stock declared and paid on dates consistent with past
practice and (2) dividends and other distributions by wholly owned Subsidiaries
or LifeSales, LLC), (B) other than in the case of any Subsidiary, split, combine
or reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (C) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity equivalent or
any securities convertible into, or any rights, warrants or options to acquire
any such shares, voting securities, equity equivalent or convertible securities,
other than (A) the issuance of shares of Company Common Stock (x) upon the
exercise of Company Stock Options outstanding on the date of this Agreement in
accordance with their current terms, (y) to the 401k plan of the Company
pursuant to its current terms and in accordance with past practices, (z) upon
the conversion of Convertible Debentures outstanding on the date of this
Agreement in accordance with their current terms or (B) the issuance by LTC
America, Inc. of securities and rights pursuant to the programs described in
Section 4.1 of the Company Letter.
(iii) amend its Articles of Incorporation or charter or By-Laws;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, other than transactions that
are in the ordinary course of business consistent with past practice and not
material to the Company and its Subsidiaries taken as a whole;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than transactions that are in the
ordinary course of business consistent with past practice;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or other
investments in, any other person, other than (A) in the ordinary course of
business consistent with past practices, provided, that the Company may not,
without the written consent of Parent, incur any indebtedness for borrowed
money, other than borrowings under credit facilities existing on the date hereof
and (B) indebtedness, loans, advances, capital contributions and investments
between the Company and any of its wholly owned Subsidiaries or between any of
such wholly owned Subsidiaries;
(vii) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the Company or
of any of its Subsidiaries;
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(viii) enter into or adopt any, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Company Plan or employment
or consulting agreement, except as required by applicable law;
(ix) increase the compensation payable or to become payable to its
directors, officers or employees (except for increases in the ordinary course of
business consistent with past practice in salaries or wages of employees of the
Company or any of its Subsidiaries who are not officers of the Company or any of
its Subsidiaries) or grant any severance or termination pay to, or enter into or
amend any employment or severance agreement with, any director or officer of the
Company or any of its Subsidiaries, or establish, adopt, enter into, or, except
as may be required to comply with applicable law, amend in any material respect
or take action to enhance in any material respect or accelerate any rights or
benefits under, any labor, collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee;
(x) knowingly violate or knowingly fail to perform any obligation or
duty imposed upon it or any of its Subsidiaries by any applicable material
federal, state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods;
(xiii) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(xiv) enter into or amend any agreement or contract material to the
Company and its Subsidiaries, taken as a whole, except in the ordinary course of
business consistent with past practices; or make or agree to make any new
capital expenditure or expenditures which in the aggregate together with all
capital expenditures made by the Company or any of its Subsidiaries since
December 31, 1998 are in excess of $4,000,000;
(xv) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
(a) the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent financial
statements (or the notes thereto) of the Company included in the Company SEC
Documents or incurred in the ordinary course of business consistent with past
practice or (b) the payment, discharge or satisfaction of any indebtedness owed
by the Company or any of its Subsidiaries under any existing credit facility; or
20
(xvi) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 No Solicitation
(a) Takeover Proposals. The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to any Takeover Proposal or
(iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal; provided, however,
that prior to the Stockholder Meeting (as hereinafter defined), if the Board of
Directors of the Company reasonably determines the Takeover Proposal constitutes
a Superior Proposal (as defined below), then, to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as determined in
good faith by a majority of the disinterested members thereof after receiving
the advice of independent counsel, the Company may, in response to an
unsolicited request therefor, furnish information with respect to the Company
to, and enter into discussions with, any person pursuant to a customary
confidentiality agreement. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence by any
executive officer of the Company or any of its Subsidiaries or any financial
advisor, attorney or other advisor or representative of the Company or any of
its Subsidiaries, whether or not such person is purporting to act on behalf of
the Company or any of its Subsidiaries or otherwise, shall be deemed to be a
breach of this Section 4.2(a) by the Company. For purposes of this Agreement,
"Takeover Proposal" means any proposal for a merger or other business
combination involving the Company or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, a substantial equity
interest in, a substantial portion of the voting securities of, or a substantial
portion of the assets of the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement, and "Superior Proposal" means a
bona fide Takeover Proposal made by a third party which a majority of the
disinterested members of the Board of Directors of the Company determines in its
reasonable good faith judgment to be more favorable to the Company's
stockholders than the Merger (after receiving the written opinion, with only
customary qualifications, of the Company's independent financial advisor that
the value of the consideration provided for in such proposal exceeds the value
of the consideration provided for in the Merger) and for which financing, to the
extent required, is then committed or which, in the reasonable good faith
judgment of a majority of such disinterested members (after receiving the
written advice of the Company's independent financial advisor), is highly likely
to be financed by such third party.
(b) Recommendation of the Board of Directors. Neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Sub, the approval or recommendation by such Board of Directors or any such
committee of this Agreement or the Merger or (ii) approve
21
or recommend, or propose to approve or recommend, any Takeover Proposal.
(c) Notice of Takeover Proposal. The Company shall advise
Parent orally (within one business day) and in writing (as promptly as
practicable) of (i) any Takeover Proposal or any inquiry with respect to or
which could lead to any Takeover Proposal, (ii) the material terms of such
Takeover Proposal and (iii) the identity of the person making any such Takeover
Proposal or inquiry. The Company will keep Parent fully informed of the status
and details of any such Takeover Proposal or inquiry.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
agreement relating to a Takeover Proposal or standstill agreement to which the
Company or any of its Subsidiaries is a party (other than any involving Parent).
During such period, the Company agrees to enforce, to the fullest extent
permitted under applicable law, the provisions of any such agreements,
including, but not limited to, obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
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ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meeting. The Company will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of stockholders (the "Stockholder Meeting") for the
purpose of considering the approval of this Agreement and the transactions
contemplated hereby. The Company will, through its Board of Directors, recommend
to its stockholders the adoption or approval of the Agreement, shall use all
reasonable efforts to solicit such approvals by its stockholders and shall not
withdraw such recommendation. Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
Section 5.1 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of a Takeover Proposal.
Section 5.2 Preparation of the Proxy Statement. The Company
and Parent shall promptly prepare and file with the SEC the Proxy Statement and
Parent shall prepare and file, with the reasonable cooperation and assistance of
the Company, a Schedule 13e-3 with the SEC (the "Schedule 13e-3"). The Company
shall mail the Proxy Statement to its stockholders at the earliest practical
date.
Section 5.3 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to the Company or any of
its Subsidiaries, the Company shall, and shall cause each of its Subsidiaries
to, afford to the accountants, counsel, financial advisors and other
representatives of Parent hereto reasonable access to, and permit them to make
such inspections as they may reasonably require of, during normal business hours
during the period from the date of this Agreement through the Effective Time,
all their respective properties, books, contracts, commitments and records
(including, without limitation, the work papers of independent accountants, if
available and subject to the consent of such independent accountants) and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request. No investigation pursuant to this Section 5.3 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained by
Parent pursuant to this Section 5.3 shall be kept confidential in accordance
with Section 7.2 of the Stock Purchase Agreement, dated January 13, 1998 between
Parent and the Company (the "Stock Purchase Agreement").
Section 5.4 Fees and Expenses
(a) Expenses. Except as provided in this Section 5.4 and
Section 5.7, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby including, without limitation, the fees and disbursements of counsel,
financial advisors and accountants, shall be paid by the party incurring
23
such costs and expenses, provided that all printing expenses and all filing fees
(including, without limitation, filing fees under the Exchange Act and the HSR
Act) shall be divided equally between Parent and the Company.
(b) Expenses Upon Termination. Notwithstanding any provision
in this Agreement to the contrary, if this Agreement is terminated (A) by the
Company or Parent pursuant to Section 7.1(f), (B) by Parent pursuant to Section
7.1(g) or (C) by the Company or Parent at a time when Parent is entitled to
terminate this Agreement pursuant to Section 7.1(f) or 7.1(g), then, in each
case, the Company shall (without prejudice to any other rights Parent may have
against the Company for breach of this Agreement) reimburse Parent upon demand
for all out-of-pocket fees and expenses incurred or paid by or on behalf of
Parent or any Affiliate of Parent in connection with this Agreement and the
transactions contemplated herein, including all fees and expenses of counsel,
investment banking firms, accountants and consultants.
(c) Termination Fee. Notwithstanding any provision in this
Agreement to the contrary, if (i) this Agreement is terminated by the Company or
Parent at a time when Parent is entitled to terminate this Agreement pursuant to
Section 7.1(b), (c), (e) or (i), and, concurrently with or within eighteen
months after such a termination a Third Party Acquisition Event (as defined
below) occurs, or (ii) this Agreement is terminated pursuant to Section 7.1(f)
or 7.1(g) or by the Company or Parent at a time when Parent is entitled to
terminate this Agreement pursuant to Section 7.1(f) or 7.1(g), then, in each
case, the Company shall (in addition to any obligation under this Section 5.4(b)
and without prejudice to any other rights that Parent may have against the
Company for a breach of this Agreement) pay to Parent a termination fee of
$20,000,000 in cash (the "Termination Fee"), such payment to be made promptly,
but in no event later than the second business day following, in the case of
clause (i), the later to occur of such termination and such Third Party
Acquisition Event or, in the case of clause (ii), such termination; provided,
however, that in the case of clause (i) but only with respect to a termination
of this Agreement by the Company or Parent pursuant to Section 7.1(c) (in the
circumstance where the representations and warranties of the Company are true
and correct in all material respects as of the date hereof), (e) or (i) where
the applicable Third Party Acquisition Event constitutes an event described
under clause (D) of the definition of such term, the Company shall only be
required to pay the Termination Fee to Parent if the Takeover Proposal relating
or giving rise to such Third Party Acquisition Event constitutes a Superior
Proposal.
A "Third Party Acquisition Event" means any of the following
events: (A) any person (other than Parent or its Affiliates) acquires or becomes
the beneficial owner of 20% or more of the outstanding shares of Company Common
Stock; (B) any group (other than a group which includes or may reasonably be
deemed to include Parent or any of its Affiliates) is formed which, at the time
of formation, beneficially owns 20% or more of the outstanding shares of Company
Common Stock; (C) any person (other than Parent or its Affiliates) shall have
commenced a tender or exchange offer for 20% or more of the then outstanding
shares of Company Common Stock or publicly proposed any bonafide merger,
consolidation or acquisition of all or substantially all the assets of the
Company, or other similar business combination involving the Company; (D) the
Company enters into, or announces that it proposes to enter into, an agreement,
including, without limitation, an agreement in principle, providing for a merger
or other business combination involving the Company or a "significant
subsidiary"
24
(as defined in Rule 1.02(v) of Regulation S-X as promulgated by the SEC) of the
Company or the acquisition of a substantial interest in, or a substantial
portion of the assets, business or operations of, the Company or a significant
subsidiary (other than the transactions contemplated by this Agreement); (E) any
person (other than Parent or its Affiliates) is granted any option or right,
conditional or otherwise, to acquire or otherwise become the beneficial owner of
shares of Company Common Stock which, together with all shares of Company Common
Stock beneficially owned by such person, results or would result in such person
being the beneficial owner of 20% or more of the outstanding shares of Company
Common Stock; or (F) there is a public announcement with respect to a plan or
intention by the Company or any person, other than Parent and its Affiliates, to
effect any of the foregoing transactions. For purposes of this Section 5.4(c),
the terms "group," "beneficial owner" and "person" shall be defined by reference
to Section 13(d) of the Exchange Act.
Section 5.5 Company Stock Options. Immediately prior to the
Effective Time, each Company Stock Option which is outstanding immediately prior
to the Effective Time shall become exercisable in full (to the extent not
previously exercised), and shall be canceled and the holder thereof shall have
the right to receive upon execution and delivery to the Payment Agent of an
option termination agreement, in form and substance reasonably acceptable to
Parent (which agreement shall be mailed by the Payment Agent to holders of
Company Stock Options promptly following the Effective Time), an amount of cash
equal to the result of (x) the Merger Consideration such holder would have
received pursuant to Article I hereof had such Company Stock Option been
exercised immediately prior to the Effective Time less (y) the exercise price of
such Company Stock Option (such amount hereinafter the "Option Consideration").
The payment of the Option Consideration, net of any withholding or other
applicable taxes, upon delivery to the Payment Agent of an option termination
agreement shall be deemed to constitute full satisfaction of all rights
pertaining to such Company Stock Option.
Section 5.6 Best Efforts
(a) Consummation of the Merger. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including, but not limited to: (i) the obtaining
of all necessary actions or non-actions, waivers, consents and approvals from
all Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity (including those in
connection with the HSR Act, State Takeover Approvals and State Insurance
Approvals), (ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement and
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, (iv) the taking of all reasonable
actions to minimize the effects of any State Takeover Approval or State
Insurance Approval on the transactions contemplated hereby, and (v)
25
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement. No party to this Agreement
shall consent to any voluntary delay of the consummation of the Merger at the
behest of any Governmental Entity without the consent of the other parties to
this Agreement, which consent shall not be unreasonably withheld.
(b) Representations and Warranties. Each party shall not take
any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Divestiture. Notwithstanding anything to the contrary
contained in this Agreement, in connection with any filing or submission
required or action to be taken by either Parent or the Company to effect the
Merger and to consummate the other transactions contemplated hereby, the Company
shall not, without Parent's prior written consent, commit to any divestiture
transaction, and neither Parent nor any of its Affiliates shall be required to
divest or hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to retain, the
Company or any of the material businesses, product lines or assets of Parent or
any of its Subsidiaries or that otherwise would have a Material Adverse Effect
on Parent.
Section 5.7 Public Announcements. Parent and the Company will
not issue any press release with respect to the transactions contemplated by
this Agreement or otherwise issue any written public statements with respect to
such transactions without prior consultation with the other party, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or the Nasdaq National Market.
Section 5.8 Real Estate Transfer and Gains Tax. Parent and the
Company agree that either the Company or the Surviving Corporation will pay any
state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.9 Indemnification; Directors and Officers Insurance.
For six years from and after the Effective Time, Parent agrees to cause the
Surviving Corporation to, and shall guarantee the obligation of the Surviving
Corporation to, indemnify and hold harmless all past and present officers and
directors of the Company and of its Subsidiaries to the same extent such persons
are indemnified as of the date of this Agreement by the Company pursuant to the
Company's Articles of Incorporation, By-Laws or agreements in existence on the
date hereof for acts or omissions occurring at or prior to the Effective Time.
Parent shall provide, or shall cause
26
the Surviving Corporation to provide, for an aggregate period of not less than
six years from the Effective Time, the Company's current directors and officers
an insurance and indemnification policy that provides coverage for events
occurring prior to the Effective Time (the "D&O Insurance") that is
substantially similar (with respect to limits and deductibles) to the Company's
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the Surviving
Corporation shall not be required to pay premiums aggregating more than
$1,750,000 for D&O Insurance for the six year period commencing on the Effective
Time.
Section 5.10 Notification of Certain Matters. Parent shall use
its best efforts to give prompt notice to the Company, and the Company shall use
its best efforts to give prompt notice to Parent, of: (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which it is
aware and which would be reasonably likely to cause (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect or (y) any covenant, condition or agreement contained in this Agreement
not to be complied with or satisfied in all material respects, (ii) any failure
of Parent or the Company, as the case may be, to comply in a timely manner with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder or (iii) any change or event which would be reasonably likely to
have a Material Adverse Effect on the Company; provided, however, that the
delivery of any notice pursuant to this Section 5.10 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.11 Employee Benefit Plans and Agreements
(a) Company Plans. Except as set forth in Section 5.11(b),
Parent agrees that it will cause the Surviving Corporation from and after the
Effective Time to honor all Company Plans (other than the Company Stock Plans)
and all employment agreements entered into by the Company prior to the date
hereof; provided, however, that nothing in this Agreement shall be interpreted
as limiting the power of Parent or the Surviving Corporation to amend or
terminate any Company Plan or any other individual employee benefit plan,
program, agreement or policy or as requiring Parent or the Surviving Corporation
to offer to continue (other than as required by its terms) any written
employment contract.
(b) 401(k) Plan. Effective as of the Closing Date, the 401(k)
plan of the Company shall be amended to terminate and discontinue the stock
participation feature in Company Common Stock of such plan.
(c) Credit for Prior Service. In the event that Parent shall
merge any Company Plan with any benefit plan of Parent, pre-Closing service with
the Company or any of its Subsidiaries will be counted for purposes of employee
eligibility, seniority and vesting under such benefit plan, and any pre-existing
condition shall be waived.
Section 5.12 Stock Purchase Agreement. The Company and Parent
agree that, notwithstanding the provisions of Section 11.2(b) of the Stock
Purchase Agreement, from the date hereof until the earlier to occur of (i) the
Effective Time or (ii) termination of this Agreement, Parent and any Restricted
Holder (as defined in the Stock Purchase Agreement) may
27
vote any shares of Common Stock held by Parent or such Restricted Holder in any
and all matters presented to the stockholders of the Company, may solicit
proxies and may attempt to influence the vote of other stockholders of the
Company as Parent, or such Restricted Holder, as applicable, deems appropriate.
None of the execution or performance of this Agreement, the execution or
performance of agreements between Parent and certain officers and directors of
the Company concerning the voting of shares of Common Stock held by such
officers and directors or the consummation of the transactions contemplated
herein by the Company or its Subsidiaries or by Parent or Sub shall constitute a
breach or other default under the terms of the Stock Purchase Agreement by
Company and its Subsidiaries or by Parent and Sub, as the case may be.
Section 5.13 Dissenting Shares.
(a) Dissenters' Rights. Notwithstanding any provisions of this
Agreement to the contrary, any shares of Company Common Stock held by a holder
who has exercised such holder's dissenters' rights in accordance with the MBCA
and who, as of the Effective Time, has not effectively withdrawn or lost such
dissenters' rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive the Merger Consideration, but the holder of the
Dissenting Shares shall only be entitled to such rights as are granted by the
MBCA.
(b) Withdrawal of Dissenters' Rights. Notwithstanding the
provisions of subsection (a) above, if any holder of shares of Company Common
Stock who demands dissenters' rights with respect to such shares shall
effectively withdraw or lose (through the failure to perfect or otherwise) such
holder's dissenters' rights under the MBCA, then, as of the Effective Time or
the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive the Merger Consideration
upon surrender of the applicable Certificate(s) as provided herein.
(c) Demand for Payment. The Company shall give Parent (i)
prompt written notice of any written demands for payment with respect to any
shares of Company Common Stock pursuant to dissenters' rights, and any
withdrawals of such demands or losses of such rights, and any other instruments
served pursuant to the MBCA, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for dissenters' rights. The
Company shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to demands for dissenters' rights or offer to
settle or settle any such demands.
Section 5.14 Chief Executive Officer. As promptly as
practicable following the Effective Time, Xxxxxx X. XxxXxxxxx shall be appointed
and elected by the Board of Directors of Parent as (i) the Chief Executive
Officer of Parent and (ii) a member of the Board of Directors of Parent and the
Company.
Section 5.15 Change of Control. Following the date hereof, the
Company shall use its best efforts to amend the terms of any employment
agreement and shall take all such action as may be otherwise necessary so that
neither the execution or performance of this Agreement nor the consummation of
the transactions contemplated hereunder shall trigger the acceleration of any
benefit with respect to, or require any severance or other payment to be paid
28
to, any employee of the Company or any of its Subsidiaries upon the termination
of employment of such employee.
Section 5.16 Convertible Debentures. The Company shall redeem
all Convertible Debentures in accordance with their terms as a result of
consummation of the Merger.
Section 5.17 Advance of Funds. Immediately prior to the
Effective Time, Parent shall advance, or shall cause to be advanced, to the
Company funds necessary to pay, discharge and satisfy any indebtedness for
borrowed money under any existing credit facility and to redeem and retire the
Convertible Debentures to the extent such repayment or redemption is required to
be made at or prior to the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 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 fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been duly
approved by the requisite vote of stockholders of the Company in accordance with
applicable law and the Articles of Incorporation and By-laws of the Company.
(b) HSR and Other Approvals. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting periods
imposed by, any Governmental Entity, which the failure to obtain, make or occur
would have the effect of making the Merger or any of the transactions
contemplated hereby illegal or would have, individually or in the aggregate, a
Material Adverse Effect on Parent (assuming the Merger had taken place), shall
have been obtained, shall have been made or shall have occurred.
(c) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger or any of the transactions contemplated hereby
illegal.
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
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(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all material respects
each of its agreements contained in this Agreement required to be performed on
or prior to the Effective Time, each of the representations and warranties of
Parent and Sub contained in this Agreement that is qualified by materiality
shall be true and correct on and as of the Effective Time as if made on and as
of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct as of such certain
date) and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects on and as of the Effective
Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and the Company shall
have received certificates signed on behalf of each of Parent and Sub by its
Chief Executive Officer and its Chief Financial Officer to such effect.
(b) Certain Consents. In obtaining any approval or consent
required to consummate any of the transactions contemplated herein, no
Governmental Entity shall have imposed or shall have sought to impose any
condition, penalty or requirement which, in the reasonable opinion of the
Company, individually or in the aggregate, would have a Material Adverse Effect
on Parent (assuming the consummation of the Merger).
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material respects each of
its agreements contained in this Agreement required to be performed on or prior
to the Effective Time, each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Consents. (i) The Company shall have obtained the consent
or approval (or, with respect to any agreement concerning indebtedness for
borrowed money owed by the Company or any of its Subsidiaries to any reinsurer
of the Company or any of its Subsidiaries, paid such indebtedness in full) (and
shall have provided Parent with evidence, reasonably satisfactory to Parent, of
such consent, approval or payment) of each person or Governmental Entity whose
consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease or
30
other agreement or instrument of the Company or any Subsidiary or any law, rule
or regulation applicable to the Company or any of its Subsidiaries, except as to
which the failure to obtain such consents and approvals would not, in the
reasonable opinion of Parent, individually or in the aggregate, have a Material
Adverse Effect on the Company or Parent or upon the consummation of the
transactions contemplated in this Agreement.
(ii) In obtaining any approval or consent required to
consummate any of the transactions contemplated herein, no Governmental Entity
shall have imposed or shall have sought to impose any condition, penalty or
requirement which, in the reasonable opinion of Parent, individually or in
aggregate would have a Material Adverse Effect on the Company or Parent.
(c) Litigation. There shall not be instituted or pending any
suit, action or proceeding before any Governmental Entity as a result of this
Agreement or any of the transactions contemplated herein or therein which would
have a Material Adverse Effect on the Company or Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any approval of
the matters presented in connection with the Merger by the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) except for a breach by the Company of Section 5.1, by
either Parent or the Company if the other party shall have failed to comply in
any material respect with any of its covenants or agreements contained in this
Agreement required to be complied with prior to the date of such termination,
which failure to comply has not been cured within thirty business days following
receipt by such other party of written notice from the non-breaching party of
such failure to comply;
(c) by either Parent or the Company if there has been (i) a
breach by the other party (in the case of Parent, including any material breach
by Sub) of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or warranty not
true and correct in all material respects or (ii) a breach by the other party
(in the case of Parent, including any material breach by Sub) of any
representation or warranty that is qualified as to materiality, in each case
which breach has not been cured within thirty business days following receipt by
the breaching party from the non-breaching party of written notice of the
breach;
(d) by Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on December 31, 1999; provided,
however, that the right to
31
terminate this Agreement pursuant to this Section 7.1(d)(i) shall not be
available to any party whose failure to fulfill any of its obligations contained
in this Agreement has been the cause of, or resulted in, the failure of the
Merger to have occurred on or prior to the aforesaid date; or (ii) any court or
other Governmental Entity having jurisdiction over a party hereto shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and nonappealable;
(e) by Parent or the Company if the stockholders of the
Company do not approve this Agreement at the Stockholder Meeting or at any
adjournment or postponement thereof;
(f) by Parent or the Company if the Company enters into a
merger, acquisition or other agreement (including an agreement in principle) to
effect a Superior Proposal or the Board of Directors of the Company resolves to
do so; provided, however, that the Company may not terminate this Agreement
pursuant to this Section 7.1(f) unless (i) the Company has delivered to Parent a
written notice of the Company's intent to enter into such an agreement to effect
the Superior Proposal, (ii) five business days have elapsed following delivery
to Parent of such written notice by the Company and (iii) during such five
business day period the Company has fully cooperated with Parent, including,
without limitation, informing Parent of the terms and conditions of the Takeover
Proposal and the identity of the person making the Takeover Proposal, with the
intent of enabling Parent to agree to a modification of the terms and conditions
of this Agreement so that the transactions contemplated hereby may be effected;
provided, further, that the Company may not terminate this Agreement pursuant to
this Section 7.1(f) unless at the end of such five business day period the Board
of Directors of the Company continues reasonably to believe that the Takeover
Proposal constitutes a Superior Proposal and prior to such termination the
Company pays to Parent the amounts specified under Sections 5.4(a), (b) and (c);
(g) by Parent if (i) the Board of Directors of the Company, in
breach of Section 5.1, shall not have recommended, or shall have resolved not to
recommend, or shall have qualified, modified or withdrawn its recommendation of
the Merger or declaration that the Merger is advisable and fair to and in the
best interest of the Company and its stockholders, or shall have resolved to do
so, (ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company any Takeover Proposal or shall have resolved to do
so or (iii) a third party tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of the Company is commenced, and the Board
of Directors of the Company fails to recommend against acceptance of such tender
offer or exchange offer by its stockholders (including by taking no position
with respect to the acceptance of such tender offer or exchange offer by its
stockholders);
(h) by Parent on or prior to June 1, 1999, if this Agreement
and the consummation of the transactions contemplated hereunder shall not have
been duly approved by the Board of Management of Allianz Aktiengesellschaft, the
indirect parent company of Parent.
(i) by either Parent or the Company prior to June 8, 1998, if
the Company
32
shall have received (A) the written opinion of a nationally recognized
investment bank reasonably acceptable to Parent (the "Opinion Provider") that,
as of the date of the Agreement, the Per Share Amount is unfair to the Company's
stockholders from a financial point of view, a copy of which opinion and other
materials presented to the Company's Board of Directors shall be delivered to
Parent, or (B) a written statement from Opinion Provider that it is not able to
render an opinion that as of the date of the Agreement the Per Share Amount is
fair to the Company's stockholders from a financial point of view, a copy of
which statement and any other materials presented to the Company's Board of
Directors shall be delivered to Parent.
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Sub or their respective officers
or directors (except for the last sentence of Section 5.3 and the entirety of
Section 5.4, which shall survive the termination); provided, however, that
nothing contained in this Section 7.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Parent and the Company, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. 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.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the Effective Time.
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Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or when sent
via facsimile (with a confirmatory copy sent by overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to
Allianz Life Insurance Company of North America
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx,
Senior Vice President and Chief Financial
Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Whitney LLP
Pillsbury Center South
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to
Life USA Holding, Inc.
000 Xxxxxxxxxxx Xxxxxxxx Xxxxx
000 Xxxxx Xxxxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. XxxXxxxxx
Chairman and CEO
Facsimile No.: (000) 000-0000
34
with a copy to:
Xxxxxx, Xxxxxxxx and Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, except and as provided in the last sentence of Section 5.3,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. Except as provided pursuant to Section 5.9 and 5.11, this
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Minnesota,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 8.7 Assignment. Subject to Section 1.1, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
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Section 8.9 Enforcement of this Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific wording or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity.
36
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and Chief
Financial Officer
NOVA NEW CO.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
LIFE USA HOLDING, INC.
By: /s/ Xxxxxx X. XxxXxxxxx
---------------------------------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Chairman and Chief Executive Officer
37
