Exhibit 2.01
Execution Copy
TRI-PARTY AGREEMENT
TRI-PARTY AGREEMENT (this "Agreement") dated May 11, 2001
among PRUDENTIAL PLC, a public limited company incorporated in England and
Wales ("Prudential"), HOLBORN DELAWARE PARTNERSHIP, a Delaware general
partnership and a wholly-owned indirect subsidiary of Prudential ("HDP"),
ASCEND MERGER CORP., a Texas corporation and a wholly-owned subsidiary of
HDP ("Merger Sub" and, together with Prudential and HDP, the "Prudential
Parties"), AMERICAN GENERAL CORPORATION, a Texas corporation ("AGC"), and
AMERICAN INTERNATIONAL GROUP, INC., a Delaware corporation ("AIG").
WHEREAS, Prudential, HDP, Merger Sub and AGC entered into
an Agreement and Plan of Merger dated as of March 11, 2001 (the "Merger
Agreement") providing, upon the terms and subject to the conditions
contained in the Merger Agreement, for Merger Sub to be merged with and
into AGC (the "Merger");
WHEREAS, the Prudential Parties and AGC have agreed to
terminate the Merger Agreement (wherein Prudential had agreed to issue a
fixed number of its shares in exchange for AGC shares) pursuant to the
terms and subject to the conditions hereof;
WHEREAS, AGC and AIG intend, simultaneously with the
termination of the Merger Agreement, to execute an Agreement and Plan of
Merger of even date herewith, a copy of which is attached hereto (the "AIG
Merger Agreement"), providing, upon the terms and conditions thereof, for a
merger of a direct wholly owned subsidiary of AIG with and into AGC (the
"AIG Merger");
WHEREAS, pursuant to Section 6.5(b) of the Merger
Agreement, the board of directors of AGC has withdrawn its recommendation
to its shareholders that they approve the Merger Agreement;
WHEREAS, AGC is paying to the Prudential Parties a
termination fee of US$600 million and reimbursing certain Prudential
expenses substantially concurrently with the execution of this Agreement in
full and final satisfaction of any and all obligations owed to the
Prudential Parties under the Merger Agreement;
WHEREAS, the Prudential Parties and AIG agree to the
dismissal with prejudice of all pending litigation between the Prudential
Parties and AIG and the parties hereto agree to enter into mutual releases
of any and all claims arising under or relating to the Merger Agreement and
the proposed AIG Merger; and
WHEREAS, the Prudential Parties, AIG and AGC believe that
it is in their respective best interests and in the best interests of their
respective stockholders that the uncertainty with respect to the Merger and
the proposed AIG Merger be resolved as promptly as practicable.
NOW THEREFORE, in consideration of the foregoing and the
mutual agreements herein set forth, the parties do hereby agree as follows:
1. PAYMENT BY AGC TO PRUDENTIAL. (a) Provided that
Prudential has complied with its obligations pursuant to Section 5(a)(i)
hereof, AGC irrevocably and unconditionally agrees to pay to Prudential (i)
substantially concurrently with the execution of this Agreement, by wire
transfer in immediately available funds, US$602,762,495.50 (the "Payment,"
of which US$600,000,000 is being paid pursuant to Section 8.6 of the Merger
Agreement and US$2,762,495.50 is being paid pursuant to Section 6.11 of the
Merger Agreement), and (ii) on demand, all amounts due under Section 6.11
of the Merger Agreement (other than with respect to the filing fees with
respect to the Form F-4 and expenses related to such filing fees), all such
amounts being without deduction or withholding but inclusive of U.K. taxes,
if any, howsoever arising, and to be paid into a bank account specified in
writing by Prudential as set forth in the instructions provided
concurrently herewith.
(b) The payments pursuant to Section 1(a) of this
Agreement shall be in full and final satisfaction of AGC's obligations
under Article VIII and Section 6.11 of the Merger Agreement and, to the
extent provided in the Releases (as hereinafter defined), in full and final
satisfaction of any claims that any Prudential Party may have against AGC
and any other releasee for any alleged breach of the Merger Agreement and
any claims that any Prudential Party may have against AIG or any other
releasee for any actions it has or they have taken, or any omissions, or
otherwise, relating to the Merger Agreement and the proposed AIG Merger.
2. TERMINATION OF MERGER AGREEMENT. AGC and each of the
Prudential Parties agree that the Merger Agreement is hereby terminated
effective as of the date hereof by Prudential in accordance with Section
1(a) hereof and Section 8.4(i) thereof, and, accordingly, subject to
Section 1(a)(ii) above and the second sentence of Section 4(a) below, the
Merger Agreement shall have no further force or effect from and after such
time.
3. RELEASE; WITHDRAWAL OF LITIGATION. Each of Prudential,
HDP, Merger Sub, AGC and AIG agrees to, and shall, execute releases
immediately upon execution of this Agreement, in the form attached hereto
as Exhibits A, B, C and D, as applicable (collectively the "Releases").
Each party hereto shall take all steps necessary promptly to withdraw or
otherwise finally terminate with prejudice, without costs imposed on any
other party, all litigation initiated by such party and to which the
Releases relate, including without limitation filing a stipulation and
order substantially in the form attached hereto as Exhibit E dismissing the
litigation entitled Prudential P.L.C.; Holborn Delaware Partnership; Ascend
Merger Corporation v. American International Group, Inc., now pending in
the United States District Court for the Southern District of Texas, Civil
Action No. H01-1273. Each of the Prudential Parties further agrees that it
shall (i) promptly following the execution of this Agreement (A) withdraw
all applications and/or notices filed with any federal, state or non-U.S.
Governmental Entity (as defined in the Merger Agreement) in connection with
the Merger and (B) withdraw or amend to be inapplicable to any merger
between Prudential and AGC or any acquisition by Prudential of AGC its
Registration Statement on Form F-4 (File No. 333-57586) filed on March 26,
2001 with the Securities and Exchange Commission, and any related
prospectuses or other filings under the Securities Act of 1933, as amended,
and any similar filings under the laws of jurisdictions other than the
U.S., and (ii) for so long as the AIG Merger Agreement remains in effect in
accordance with its terms and has not been terminated pursuant to the terms
thereof, not, and use its reasonable best efforts to cause its
representatives not to, take any action that would reasonably be expected
to prevent or materially interfere with or delay the transactions
contemplated by the AIG Merger Agreement or solicit or support any such
actions by any other persons. Each of the parties hereto hereby represents
and warrants that it has not, and agrees that it will not, assign, convey
or otherwise transfer any claim, demand or cause of action or any part
thereof relating to any matters covered by the releases referred to herein.
Nothing in this Agreement or the Releases shall be deemed a release or
discharge of any claim to enforce this Agreement.
4. EFFECT OF TERMINATION; CONFIDENTIALITY. (a)
Prudential, HDP, Merger Sub and AGC agree that, notwithstanding any
provision of the Merger Agreement that may be to the contrary and subject
to the immediately following sentence with respect to liability arising out
of occurrences following the date hereof, none of Prudential, HDP, Merger
Sub and AGC shall have any liabilities to any other party for any breach or
alleged breach of the Merger Agreement, including, without limitation, any
willful or intentional breach thereof. Notwithstanding anything in the
Merger Agreement to the contrary, only the agreements of AGC and the
Prudential Parties contained in the last sentence of Section 6.7 and in
Section 6.11 of the Merger Agreement and the Confidentiality Agreement (as
defined in the Merger Agreement) shall survive the termination of the
Merger Agreement; provided, however, that notwithstanding anything to the
contrary in the Confidentiality Agreement, the parties agree that
Prudential and its subsidiaries may solicit for employment and/or hire any
person who, at the time of such solicitation or hiring, has received a
notice that his or her employment will be terminated by AGC or any of its
subsidiaries or affiliates.
(b) Each of AGC and Prudential shall, as promptly as
practicable after the execution of this Agreement, return to the other
party or destroy all Evaluation Material (as such term is defined in the
Confidentiality Agreement with respect to such party) in accordance with
the terms of the Confidentiality Agreement.
(c) Nothing in this Agreement shall constitute or be
deemed to constitute an admission of fault, wrongdoing or liability on the
part of any party hereto, each of the parties acknowledging, without
conceding any infirmity in its claims or defenses, that it is entering into
this Agreement solely in order to avoid the further expense and
inconvenience of litigation. This Agreement (and all drafts hereof) are for
settlement purposes and will not be used by the parties in any litigation,
other than litigation arising out of this Agreement.
5. TAX MATTERS. (a) Representations.
(i) Prudential shall deliver to AGC a properly completed
and executed United States Internal Revenue Service Form W-8 BEN (a "Form
W-8"), certifying that Prudential is a U.K. resident that is entitled to
the benefits of the United Kingdom-U.S. Income Tax Treaty, and Prudential
represents to AGC that such Form W-8 will be true, correct and complete in
all respects. Section 5(b) provides the sole remedy for a breach by
Prudential of the representation in this Section 5(a)(i).
(ii) AGC represents to Prudential that AGC has no reason
to believe that it cannot rely on the Form W-8 to be delivered by
Prudential pursuant to Section 5(a)(i) hereof and, as a result, AGC
believes that it has no obligation to withhold United States Federal income
tax from the Payment. In the event of a breach of the representation in
this Section 5(a)(ii), Prudential will have no obligation under Section
5(b).
(b) Reimbursement.
(i) Subject to the provisions of this Section 5,
Prudential hereby agrees to reimburse and indemnify AGC (which
reimbursement and indemnity shall be on a net after-tax basis to AGC) with
respect to any amounts paid or incurred by AGC with respect to any United
States withholding taxes (including any interest or penalties and costs and
expenses (including reasonable attorney fees with respect thereto)) with
respect to the payment by AGC to Prudential described in Section 1(a) of
this Agreement ("Possible Tax").
(ii) If AGC is notified, in writing, as part of an audit
or other administrative proceeding related to taxes (a "Contest"), that the
applicable taxing authority is asserting a claim for Possible Tax, then (i)
AGC shall promptly notify Prudential of such claim, (ii) AGC shall, subject
to Section 5(c) below, permit Prudential, at Prudential's own cost and
expense, to control that portion of the Contest related to Possible Tax,
including the execution of any powers-of-attorney or similar documents
necessary for Prudential to control such portion of the Contest; provided
that in executing such powers-of- attorney or similar documents, AGC and
Prudential agree that such powers shall be limited to such portion of the
Contest, and (iii) AGC shall not settle or otherwise compromise such
portion of the Contest related to Possible Tax without the prior written
consent of Prudential, which consent shall not be withheld or delayed
unless Prudential receives an opinion from nationally recognized counsel
that it is more likely than not that a court would determine that AGC would
prevail with respect to the portion of the Contest related to Possible Tax.
Further, without the prior written consent of Prudential, which consent
shall not be unreasonably withheld or delayed, AGC shall not take any
position on any tax return or similar filing that Possible Tax may be due
and owing, unless such position is required by Law (as defined in the
Merger Agreement) pursuant to a final determination.
(iii) Upon acknowledgment in writing by Prudential (i)
that it intends to assume responsibility for defense of a Contest related
to Possible Taxes, and (ii) that it intends to reimburse AGC pursuant to
this Agreement, Prudential will thereafter be entitled to appoint at its
own cost lead defense counsel (reasonably acceptable to AGC) with respect
to such claim and AGC will thereafter be responsible for all costs and
expenses of its own counsel.
6. INDEMNIFICATION. AIG hereby agrees to indemnify and
hold harmless the Prudential Parties and their respective officers,
directors, employees, agents and advisors, and their respective successors
(the "Prudential Indemnified Parties") against any and all liabilities,
judgments, settlements, costs and reasonable expenses, including reasonable
legal fees (collectively, "Losses") incurred by any Prudential Indemnified
Party and arising out of or in connection with any claims (including, but
not limited to, claims that have been or could have been asserted in
actions pending prior to the date hereof) by or on behalf of any AGC
securityholders (or by any such securityholders on behalf or purportedly on
behalf of AGC) arising out of or in connection with the Merger Agreement,
this Agreement or the transactions contemplated thereby and hereby
(including, without limitation, any claims directly or indirectly
challenging the validity or enforceability of the amounts payable pursuant
to Section 1 hereof or Section 6.11 and 8.6 of the Merger Agreement or
seeking to modify, reduce, recoup, recover or otherwise deprive Prudential
of the benefit thereof) ("AGC Claims"), but, to the extent such Losses
arise out of acts or omissions of any Prudential Indemnified Parties, only
to the extent that such acts or omissions shall have been taken prior to
the date hereof or are contemplated by this Agreement. In connection with
defending any such AGC Claims, the Prudential Parties shall be entitled to
retain counsel to represent them (with reasonable fees and expenses of such
counsel to be paid by AIG as above provided), provided that, except to the
extent that in the reasonable judgment of counsel for the Prudential
Indemnified Parties such action would result in a waiver of any applicable
privilege, AIG shall be entitled to direct the control of the defense of
such AGC Claims in consultation with counsel to the applicable Prudential
Indemnified Party, and the Prudential Indemnified Parties and their counsel
shall consult and cooperate with AIG and its counsel in connection with the
defense of such AGC Claims, including with respect to strategic decisions;
provided that if counsel to Prudential reasonably determines with respect
to any strategic decision that such decision would reasonably be expected
to have adverse collateral consequences to Prudential, AIG shall not take
such action without the consent of Prudential, which shall not be
unreasonably withheld. The Prudential Indemnified Parties further agree
that they will not settle any AGC Claims without the prior written consent
of AIG, which consent will not be unreasonably withheld, and no Prudential
Indemnified Party shall be entitled to any amounts hereunder with respect
to any AGC Claim that is settled without such consent. Unless the
settlement of an AGC Claim is for monetary damages only and includes an
unconditional release of the Prudential Parties, AIG agrees that it will
not settle such AGC Claim without the prior written consent of Prudential,
which consent will not be unreasonably withheld. AIG also agrees to
indemnify the Prudential Parties against legal fees and expenses incurred
in enforcing this Agreement (including this sentence).
7. [Intentionally Omitted.]
8. PRESS RELEASE. Each of the parties hereto has
furnished to the other a form of press release that it intends to issue
shortly after execution of this Agreement.
9. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.
10. VALIDITY; DUE AUTHORIZATION. Each party hereto
represents and warrants to the others that it is duly authorized to execute
and deliver this Agreement and the relevant Release or Releases, that no
further corporate or partnership authorizations (including any shareholder
or partner approvals) are required for such party's execution, delivery and
performance of this Agreement and the relevant Release or Releases, and
that this Agreement and such Release or Releases is a valid and binding
obligation of such party.
11. SPECIFIC PERFORMANCE. The parties hereto acknowledge
that damages would be an inadequate remedy for any breach of the provisions
of this Agreement and agree that the obligations of the parties hereunder
shall be specifically enforceable and no party shall take any action to
impede the others from seeking to enforce such rights of specific
performance.
12. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be effective upon receipt, shall be in
writing and shall be delivered in person, by cable, telegram or telex, or
by facsimile transmission as follows: (i) if to AIG, addressed to American
International Group, Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attn:
General Counsel) with a copy to Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attn: Xxxxxx X. Xxxxxxx, Esq.), and
(ii) if to the Prudential Parties or AGC, to the addresses specified in
Section 9.6 of the Merger Agreement, or (iii) or to such other address as
any party may have furnished to the others in writing in accordance
herewith.
13. GOVERNING LAW AND VENUE. THIS AGREEMENT SHALL BE
DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED
AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
The parties hereby irrevocably submit to the jurisdiction of the courts of
the State of New York and the Federal courts of the United States of
America located in the State of New York solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such a New York State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 12 or in such other manner as
may be permitted by law shall be valid and sufficient service thereof.
14. ENTIRE AGREEMENT; ADVICE OF INDEPENDENT COUNSEL. This
Agreement, together with the Merger Agreement to the extent not expressly
superseded hereby (as specified in Section 4 of this Agreement), contains
the entire agreement between each of the parties hereto or among them with
respect to the matters settled and released herein and supersedes any and
all prior or contemporaneous representations, understandings and agreements
between any of the parties hereto or among them with respect to the matters
settled and released herein. Each party hereto acknowledges and agrees that
it has received the advice of independent counsel before entering into this
Agreement, and that it is not relying on any other party concerning this
Agreement or any aspect of the transaction contemplated herein.
15. COSTS AND ATTORNEYS' FEES. Except as expressly
contemplated by Section 1(a) of this Agreement, each party shall bear its
own costs and attorneys' fees incurred in connection with the action
described in Section 3 of this Agreement and the negotiation and execution
of this Agreement.
16. FURTHER EFFORTS. The parties to this Agreement shall
each use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable law or otherwise to consummate and
make effective the transactions contemplated by this Agreement (which for
purposes of this section shall be deemed not to include the AIG Merger
Agreement or the transactions contemplated thereby) and to effectively
carry out or better evidence or perfect the full intent and meaning of this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
18. EFFECT OF HEADINGS. The section headings herein are
for convenience only and shall not affect the construction hereof.
19. NO ADMISSION. The provisions of this Agreement shall
not be deemed a presumption, concession or admission by any party of any
breach of duty, liability, default or wrongdoing whatsoever, including
without limitation as to any facts or claims alleged or asserted in the
litigation entitled Prudential P.L.C.; Holborn Delaware Partnership; Ascend
Merger Corporation v. American International Group, Inc, or in any other
actions or proceedings involving any of the parties hereto.
20. SEVERABILITY. Assuming the receipt by Prudential of
the Payment, the provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability or the other provisions hereof. If any provision
of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as
may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not
be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other jurisdiction.
21. ASSIGNMENT. The benefits and obligations of this
Agreement shall inure to and be binding on the parties and their respective
successors and assigns.
22. AMENDMENT; WAIVER. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be
effective unless in writing and signed by the parties hereto affected
thereby, in the case of an amendment, or by the party which is the
beneficiary of any such provision, in the case of a waiver or a consent to
departure therefrom.
IN WITNESS WHEREOF, this Agreement has been duly executed
by the parties hereto all as of the day and year first above written.
PRUDENTIAL PLC
By: /s/ Xxxxx Xxxxxxx
___________________________________
Name: Xxxxx Xxxxxxx
Title: Secretary
HOLBORN DELAWARE PARTNERSHIP
By: /s/ Xxxxx Xxxxxxx
___________________________________
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
ASCEND MERGER CORP.
By: /s/ Xxxxx Xxxxx
___________________________________
Name: Xxxxx Xxxxx
Title: Authorized Signatory
AMERICAN GENERAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
___________________________________
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
___________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President and
General Counsel
