EXHIBIT 2.1
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AGREEMENT AND PLAN OF DISTRIBUTION
BETWEEN
PROVIDIAN CORPORATION
AND
PROVIDIAN BANCORP, INC.
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December 28, 1996
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TABLE OF CONTENTS
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Article/Section Page
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ARTICLE I
DEFINITIONS
1.01. Definitions......................................................... 1
ARTICLE II
RECAPITALIZATION OF SPINCO;
MECHANICS AND TIMING OF THE DISTRIBUTION
2.01. Recapitalization of Spinco.......................................... 5
2.02. Timing of the Distribution.......................................... 5
2.03. Mechanics of the Distribution....................................... 5
2.04. Changes; Amendments to Various Agreements........................... 5
ARTICLE III
CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION
3.01. Certificate of Incorporation; By-laws; Rights Plan.................. 5
3.02. Other Agreements.................................................... 5
3.03. Registration and Listing............................................ 6
3.04. Spinco Board........................................................ 6
3.05. Intercompany Accounts............................................... 6
3.06. Certain Transactions................................................ 7
3.07. External Financing of Spinco........................................ 7
3.08. Certain Company Agreements.......................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPINCO
4.01. Spinco Representations.............................................. 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.01. Company Representations............................................. 9
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
6.01. Survival of Agreements and Representations and Warranties........... 10
TABLE OF CONTENTS
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Article/Section Page
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6.02. Indemnification..................................................... 10
6.03. Procedure for Indemnification for Third Party Claims................ 12
6.04. Remedies Cumulative................................................. 13
ARTICLE VII
CERTAIN ADDITIONAL COVENANTS
7.01. Notices to Third Parties............................................ 14
7.02. Intercompany Agreements............................................. 14
7.03. Further Assurances.................................................. 14
7.04. Mutual Release, Etc................................................. 14
ARTICLE VIII
ACCESS TO INFORMATION
8.01. Provision of Corporate Records...................................... 15
8.02. Access to Information............................................... 15
8.03. Retention of Records................................................ 15
8.04. Reimbursement; Other Matters........................................ 16
8.05. Production of Witnesses............................................. 16
8.06. Confidentiality..................................................... 16
8.07. Ownership of Information............................................ 17
8.08. Non-Competition..................................................... 17
ARTICLE IX
INSURANCE
9.01. Policies and Rights Included Within Transferred Assets.............. 18
9.02. Post-Distribution Date Claims....................................... 18
9.03. Administration; Other Matters....................................... 18
9.04. Agreement for Waiver of Conflict and Shared Defense................. 20
9.05. Cooperation......................................................... 20
ARTICLE X
MISCELLANEOUS
10.01. Conditions to Obligations........................................... 20
10.02. Complete Agreement.................................................. 21
10.03. Expenses............................................................ 21
10.04. Governing Law....................................................... 21
10.05. Notices............................................................. 21
TABLE OF CONTENTS
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Article/Section Page
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10.06. Specific Performance............................................... 23
10.07. Amendment and Modification......................................... 23
10.08. Successors and Assigns; Third-Party Beneficiaries.................. 23
10.09. Counterparts....................................................... 24
10.10. Interpretation..................................................... 24
10.11. Severability....................................................... 24
10.12. References; Construction........................................... 24
10.13. Termination........................................................ 24
SCHEDULES
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Schedule 1.01 - List of Spinco Subsidiaries
Schedule 3.05 - Intercompany Payments
Schedule 3.06(a) - Transferred Assets
Schedule 3.07 - External Financing Agreements
Schedule 3.08 - Certain Company Agreements
Schedule 4.01(c) - Spinco Conflicts
Schedule 4.01(d) - Required Approvals for Spinco
Schedule 4.01(e) - Spinco Insurance Policies
Schedule 5.01(c) - Company Conflicts
Schedule 5.01(d) - Required Approvals for the Company
Schedule 7.02 - Surviving Intercompany Agreements
Schedule 8.03(d) - Policies-Deductibles
EXHIBITS
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Exhibit A - Tax Disaffiliation Agreement
Exhibit B - Employee Benefits Agreement
Exhibit C - Transition Services Agreement
Exhibit D - Trademark License Agreement
Exhibit E - General Intellectual Property Assignment and Renunciation Agreement
Exhibit F - Short-Form Assignment Agreement
Exhibit G - Form of SEC No-Action Letter
AGREEMENT AND PLAN OF DISTRIBUTION, dated as of December 28, 1996 (this
"Agreement"), by and between Providian Corporation, a Delaware corporation (the
"Company"), and Providian Bancorp, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company ("Spinco").
RECITALS
A. The Merger Transaction. The Company, AEGON N.V., a company organized
under the laws of The Netherlands ("Merger Partner"), and LT Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Merger Partner ("Sub"),
have entered into a Plan and Agreement of Merger and Reorganization, dated as of
December 28, 1996 (the "Merger Agreement"), providing for the Merger (as defined
in the Merger Agreement) of Sub with and into the Company, with the Company as
the surviving corporation.
B. The Distribution. Immediately prior to the Effective Time (as defined
in the Merger Agreement), the Company intends to distribute (the "Distribution")
as a dividend to the holders of the Company's common stock, par value $1.00 per
share ("Company Common Stock"), on a pro rata basis, all of the then outstanding
shares of common stock, par value $1.00 per share ("Spinco Common Stock"), of
Spinco.
C. Purpose. The purpose of the Distribution is to facilitate the
reorganization of the Company, wherein the stockholders of the Company will
continue to own and operate Spinco, and to make possible the Merger by divesting
the Company of the businesses and operations conducted by Spinco in a tax-free
distribution to the Company's stockholders. This Agreement sets forth or
provides for certain agreements between the Company and Spinco in consideration
of the separation of their ownership.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings (capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Merger
Agreement):
"Claims Administration" shall mean the processing of claims made under
the Shared Policies, including the reporting of claims to the insurance
carriers, management and defense of claims and providing for appropriate
releases upon settlement of claims.
"Company" shall have the meaning specified in the preamble to this
Agreement and shall mean any successors by way of merger or otherwise.
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"Company Business" shall have the meaning specified in Section 6.02.
"Company Common Stock" shall have the meaning specified in the recitals to
this Agreement.
"Company Group" shall mean the Company and all of the Company Subsidiaries
(which shall not include Spinco and the members of the Spinco Group).
"Distribution" shall have the meaning specified in the recitals to this
Agreement.
"Distribution Date" shall mean the date as of which the Distribution is
effective.
"Employee Benefits Agreement" shall have the meaning specified in Section
3.02.
"Form F-4" shall mean the Registration Statement on Form F-4 filed by
Merger Partner pursuant to the Merger Agreement.
"Group" shall mean either the Spinco Group or the Company Group, as the
case may be.
"Indemnified Party" shall have the meaning specified in Section 6.03.
"Indemnifying Party" shall have the meaning specified in Section 6.03.
"Information" shall have the meaning specified in Section 8.02.
"Information Statement" shall mean the information statement included in
the Registration Statement and sent to the holders of shares of Company Common
Stock in connection with the Distribution, including any amendment or supplement
thereto.
"Insurance Administration" shall mean, with respect to each Shared Policy,
the accounting for (i) premiums, (ii) defense costs, (iii) indemnity payments,
(iv) deductibles and (v) retentions, as appropriate, under the terms and
conditions of each of the Shared Policies; and the reporting to excess insurance
carriers of any losses or claims which may cause the per-occurrence, per claim
or aggregate limits of any Shared Policy to be exceeded, and the distribution of
Insurance Proceeds as contemplated by this Agreement.
"Insurance Proceeds" shall mean those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of an
insured, in either case net of any applicable premium adjustment, deductible,
retention, or cost of reserve paid or held by or for the benefit of such
insured.
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"Insured Claims" shall mean those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Shared
Policies, whether or not subject to deductibles, co-insurance, uncollectibility
or retrospectively-rated premium adjustments.
"Liabilities" shall mean all debts, liabilities and obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, and whether or not the
same would properly be reflected on a balance sheet.
"Losses" shall have the meaning specified in Section 6.02.
"Merger Partner" shall have the meaning specified in the recitals to this
Agreement.
"Other Agreements" shall have the meaning specified in Section 3.02.
"person" shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Policies" shall mean insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts), including primary,
excess and umbrella policies, comprehensive commercial general liability
policies, director and officer liability, fiduciary liability, automobile,
aircraft, property and casualty, workers' compensation and employee dishonesty
insurance policies, bonds and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
"Proxy Statement" shall mean the proxy statement of the Company provided
for in the Merger Agreement.
"Record Date" shall have the meaning specified in Section 2.03.
"Registration Statement" shall have the meaning specified in Section 3.03.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall have the meaning specified in Section 6.02.
"Shared Policies" shall mean all Policies, current, past or future to the
extent such Policies are entered into between the date hereof and the
Distribution Date, that are owned or maintained by or on behalf of the Company
or any member of the Company Group that relate, whether in whole or in part, to
the Spinco Business.
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"Spinco" shall have the meaning specified in the preamble to this Agreement
and shall mean any successors by merger or otherwise.
"Spinco Business" shall have the meaning specified in Section 6.02.
"Spinco Common Stock" shall have the meaning specified in the recitals to
this Agreement.
"Spinco Group" shall mean Spinco and those subsidiaries listed on Schedule
1.01, including any subsidiaries transferred to Spinco pursuant to Section 3.06.
"Spinco Policies" shall mean all Policies, current or past, which are owned
or maintained by or on behalf of any member of the Company Group, which relate
to the Spinco Business but do not relate to the Company Business.
"Spinco Preferred Stock" shall have the meaning specified in Section 2.01.
"Tax Disaffiliation Agreement" shall have the meaning specified in Section
3.02.
"Third Party Claim" shall have the meaning specified in Section 6.03.
"Trademark License Agreement" shall have the meaning specified in Section
3.02.
"Transfer Agent" shall mean First Chicago Trust Company of New York, the
transfer agent for the Company Common Stock.
"Transferred Assets" shall have the meaning specified in Section 3.06(a).
"Transition Services Agreement" shall have the meaning specified in Section
3.02.
ARTICLE II
RECAPITALIZATION OF SPINCO;
MECHANICS AND TIMING OF THE DISTRIBUTION
2.01. Recapitalization of Spinco. The authorized capital stock of
Spinco currently consists of 5,000 shares of Spinco Common Stock, all of which
are issued and outstanding and owned beneficially and of record by the Company,
and sixty-three thousand two hundred sixty-nine (63,269) shares of preferred
stock (the "Spinco Preferred Stock"), all of which shares are issued and
outstanding and owned beneficially and of record by the Company. Prior to the
Distribution Date, the parties hereto shall take all steps necessary so that,
prior to the Distribution, the number of shares of Spinco Common Stock
outstanding and held by the Company shall equal the number of shares of
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Company Common Stock outstanding on the Record Date and all shares of Spinco
Preferred Stock shall have been redeemed by Spinco in accordance with the terms
of the Spinco Preferred Stock.
2.02. Timing of the Distribution. Subject to the terms and conditions
hereof, the Board of Directors of the Company shall formally declare the
Distribution and, immediately prior to the Effective Time, pay it by delivery of
certificates for Spinco Common Stock to the Transfer Agent for delivery to the
holders entitled thereto. The Distribution shall be deemed to be effective upon
notification by the Company to the Transfer Agent that the Distribution has been
declared and that the Transfer Agent is authorized to proceed with the
distribution of the certificates representing shares of Spinco Common Stock.
2.03. Mechanics of the Distribution. The Distribution shall be effected by
the distribution to each holder of record of the Company Common Stock, as of the
close of the stock transfer books on the record date designated by, or pursuant
to the authorization of, the Board of Directors of the Company (the "Record
Date"), of certificates representing the number of shares of Spinco Common Stock
equal to the number of shares of Company Common Stock held by such holder. All
shares of Spinco Common Stock delivered in the Distribution shall be duly
authorized, validly issued, fully paid, non-assessable and free of preemptive
rights.
2.04. Changes; Amendments to Various Agreements. The parties hereto agree
that without the written consent of Merger Partner, which written consent shall
not be unreasonably withheld, no changes, amendments, modifications, waivers or
supplements may be made by either party hereto to this Agreement or any of the
Other Agreements. In addition, each of the Company and Spinco agrees to furnish
to Merger Party copies of drafts of the Registration Statement and all
supplements and amendments thereto and all other SEC Documents, and such other
documents contemplated in Section 3.03(d) hereunder, prior to the filing of the
Registration Statement, such supplements or amendments, or such other documents,
with the SEC in connection with the transactions contemplated hereunder.
ARTICLE III
CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION
3.01. Certificate of Incorporation; By-laws; Rights Plan. Prior to the
Distribution Date, the parties hereto shall take all action necessary so that
(i) the Certificate of Incorporation and By-laws of Spinco shall be amended as
specified by Spinco prior to the Distribution Date, and (ii) Spinco shall adopt
a rights plan in the form as specified by Spinco prior to the Distribution Date.
3.02. Other Agreements. On or prior to the Distribution Date, the Company
and Spinco shall enter into the Tax Disaffiliation Agreement, substantially in
the form attached hereto as Exhibit A (the "Tax Disaffiliation Agreement"), the
Employee Benefits Agreement, substantially in the form attached hereto as
Exhibit B (the "Employee Benefits Agreement"), the Transition Services
Agreement, substantially in the form attached hereto as Exhibit C (the
"Transition Services
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Agreement"), the Trademark License Agreement, substantially in the form attached
hereto as Exhibit D (the "Trademark License Agreement"), and such other
agreements as may be advisable in connection with the Distribution, including
agreements with respect to restructuring, transfer of assets and assumption of
liabilities and other matters, all such other agreements to be on terms
reasonably acceptable to the Company, Spinco and Merger Partner (the Tax
Disaffiliation Agreement, the Employee Benefits Agreement, the Transition
Services Agreement, the Trademark License Agreement and such other agreements
being collectively referred to herein as the "Other Agreements").
3.03. Registration and Listing. On or prior to the Distribution Date:
(a) The Company and Spinco shall prepare and file with the SEC a
Registration Statement on Form 10, or such other form as Spinco may deem
appropriate, with respect to the Spinco Common Stock (the "Registration
Statement"), and each of them shall use reasonable efforts to have the
Registration Statement declared effective such that the Distribution can
occur upon the satisfaction of the other conditions to the Merger
Agreement.
(b) The parties hereto shall use reasonable efforts to take all such
action as may be necessary or appropriate under state securities and blue
sky laws in connection with the transactions contemplated by this
Agreement.
(c) Spinco shall prepare, and Spinco shall file and seek to make
effective, an application for the listing of the Spinco Common Stock on the
New York Stock Exchange, or such other exchange or quotations system as
Spinco may determine in its discretion, subject to official notice of
issuance.
(d) The parties hereto shall cooperate in preparing, filing with the
SEC and causing to become effective any other registration statements or
amendments thereto that are necessary or appropriate in order to effect the
transactions contemplated hereby or to reflect the establishment of, or
amendments to, any employee benefit plans contemplated by the Employee
Benefits Agreement requiring registration under the Securities Act.
3.04. Spinco Board. Prior to the Distribution Date, the parties
hereto shall use reasonable efforts to take all steps necessary so that,
effective immediately after the Distribution, the Board of Directors of Spinco
shall be comprised of those individuals so named in the Information Statement.
3.05. Intercompany Accounts. On or before the Distribution Date, the
parties shall pay, or otherwise settle, intercompany loans, payables,
receivables and accounts between the Company Group, on the one hand, and the
Spinco Group on the other, all as more specifically provided for on Schedule
3.05. From the date hereof through the Distribution Date, any increases in such
accounts, loans, payables and receivables shall only be made in the ordinary
course of business consistent with past practice. Notwithstanding the
foregoing, any amounts required to be paid after the date hereof pursuant to the
agreements set forth on Schedule 7.02 (except for the accumulated amounts with
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respect to such agreements that are set forth on Schedule 3.05) shall be paid in
accordance with the terms of such agreements.
3.06. Certain Transactions. (a) On or prior to the Distribution Date, or as
soon as reasonably practicable thereafter, the Company shall:
(i) assign, transfer and convey, or cause to be assigned, transferred
or conveyed, to Spinco, or the appropriate member of the Spinco Group
designated by Spinco, all of the Company's or such member of the Company
Group's respective right, title and interest to the assets, contracts,
permits, licenses, authorizations and agreements listed or described on
Schedule 3.06(a);
(ii) assign, transfer and convey to Spinco all of the Company's right,
title and interest in and to the "Providian" name and logo and related
tradenames and marks pursuant to the Assignment Agreements attached hereto
as Exhibits E and F; and
(iii) assign, transfer and convey to Spinco, any and all other assets,
properties, claims and rights, whether real or personal, tangible or
intangible, primarily relating to the Spinco Business and not required by
the Company for the conduct of, and in the ordinary course of, the Company
Business, to the extent such assets, properties, claims or rights are not
owned by a member of the Spinco Group as of the Distribution Date (all of
items in (i) -(iii) being referred to herein as the "Transferred Assets").
(b) From and after the Distribution Date, Spinco shall assume, pay, perform
and discharge all Liabilities arising from or with respect to the Transferred
Assets, except for any Liabilities with respect to the Transferred Assets
arising out of or relating to the Company Business, whether or not such
Liabilities were incurred before or after the Distribution Date.
(c) To the extent that any transfers contemplated by this Section 3.06
shall not have been consummated on or prior to the Distribution Date, the
parties shall cooperate to effect such transfers as promptly following the
Distribution Date as shall be practicable. In the event that any such transfer
of Transferred Assets, including the assumption of all Liabilities arising from
or with respect to such Transferred Assets to the extent provided for in Section
3.06(b), has not been consummated, from and after the Distribution Date the
Company shall hold such Transferred Asset in trust for the use and benefit of
Spinco (at Spinco's expense) upon receipt of an undertaking from Spinco to
assume the Liabilities relating to such transfer, and take such other actions as
may be reasonably requested in order to place Spinco, insofar as is reasonably
possible, in the same position as would have existed had such Transferred Assets
been transferred and such Liabilities assumed as contemplated hereby.
3.07. External Financing of Spinco. The Company agrees to use its
reasonable efforts to assist Spinco in obtaining waivers or other necessary
modifications to the external financing agreements to which Spinco or any member
of the Spinco Group is a party and which are listed on Schedule 3.07 in order to
effect the Distribution.
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3.08. Certain Company Agreements. The Company and Spinco shall cooperate
and use their reasonable efforts to negotiate separate agreements with the third
parties listed on Schedule 3.08 in order to permit the Company Group and the
Spinco Group to each have the benefits of such agreements after the
Distribution; provided that with respect to any agreements that cannot be
separated, such agreements will remain with the Company and will be terminated
as to Spinco as of the Distribution Date or as soon as practicable thereafter.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPINCO
4.01. Spinco Representations. Spinco represents and warrants to the
Company as follows:
(a) Organization. Spinco is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as now being conducted.
(b) Authority. Spinco has the corporate power and authority to execute
this Agreement and the Other Agreements, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Other Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Spinco. This Agreement has been, and the Other Agreements, when
executed and delivered by Spinco will be, duly executed and delivered by Spinco
and constitute legal, valid and binding obligations of Spinco enforceable
against it in accordance with their terms, (i) except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally, and (ii) subject to general
principles of equity.
(c) No Conflict. Except as set forth on Schedule 4.01(c), the execution,
delivery and performance by Spinco of this Agreement and the Other Agreements
will not contravene, violate, result in a breach or constitute a default under
(i) any provision of the certificate of incorporation or by-laws of Spinco, (ii)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Spinco or any of its properties or assets, or (iii) any material
contract or agreement to which Spinco is a party or by which any of its
properties or assets is bound, except where such contravention, violation,
breach or default would not have a material adverse effect on (i) the financial
condition, business or results of operations of Spinco or (ii) the ability of
Spinco to consummate the transactions contemplated by this Agreement and the
Other Agreements (a "Material Adverse Effect on Spinco").
(d) Approvals. Except as set forth on Schedule 4.01(d) and other than
consents, approvals, orders, authorizations, registrations, declarations or
filings, the failure of which to give or obtain would not individually or in the
aggregate have a Material Adverse Effect on Spinco, no
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consent, approval, order, authorization of, or registration, declaration or
filing with, any governmental authority is required in connection with the
making or performance by Spinco of this Agreement or the Other Agreements,
subject to compliance with applicable securities or banking laws.
(e) Spinco Insurance Policies. Except as set forth on Schedule 4.01(e),
there are no Policies directly owned or maintained by or on behalf of Spinco or
the Spinco Business.
(f) Claims, Etc. Except for this Agreement, the Other Agreements, the
agreements listed on Schedules 3.05 and 7.02 and the transactions contemplated
hereby and thereby, Spinco has no debts, demands, actions, causes of action,
suits, accounts, covenants, contracts, agreements, damages, claims or other
liabilities, either in law or equity as against any of the Company or its
officers, directors, agents, affiliates, record or beneficial securityholders,
advisors or representatives that arise out of or relate to events, circumstances
or actions taken by the Company prior to the Distribution Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.01. Company Representations. The Company represents and warrants to
Spinco as follows:
(a) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and operate its properties
and to carry on its business as now being conducted.
(b) Authority. The Company has the corporate power and authority to
execute this Agreement and the Other Agreements, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Other Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been, and the
Other Agreements, when executed and delivered by the Company will be, duly
executed and delivered by the Company and constitute legal, valid and binding
obligations of the Company enforceable against it in accordance with their
terms, (i) except as may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to the enforcement of creditors' rights
generally, and (ii) subject to general principles of equity.
(c) No Conflict. Except as set forth on Schedule 5.01(c), the execution,
delivery and performance by the Company of this Agreement and the Other
Agreements will not contravene, violate, result in a breach or constitute a
default under (i) any provision of or the certificate of incorporation or by-
laws of the Company, (ii) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its properties or assets,
or (iii) any material
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contract or agreement to which the Company is a party or by which any of its
properties or assets is bound, except where such contravention, violation,
breach or default would not have a Material Adverse Effect on Company.
(d) Approvals. Except as set forth on Schedule 5.01(d) and other than
consents, approvals, orders, authorizations, registrations, declarations or
filings, the failure of which to give or obtain would not, individually or in
the aggregate, have a Material Adverse Effect on Company, no consent, approval,
order, authorization of, or registration, declaration or filing with, any
governmental authority is required in connection with the making or performance
by the Company of this Agreement or the Other Agreements, subject to compliance
with applicable securities or insurance laws.
(e) Claims, Etc. Except for this Agreement, the Other Agreements, the
agreements listed on Schedules 3.05 and 7.02 and the transactions contemplated
hereby and thereby, the Company has no debts, demands, actions, causes of
action, suits, accounts, covenants, contracts, agreements, damages, claims or
other liabilities, either in law or equity as against any of Spinco or its
officers, directors, agents, affiliates, record or beneficial securityholders,
advisors or representatives that arise out of or relate to events, circumstances
or actions taken by Spinco prior to the Distribution Date.
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
6.01. Survival of Agreements and Representations and Warranties. All
covenants, agreements, representations and warranties of each of the Company and
Spinco contained in this Agreement shall survive the Distribution Date for the
duration of any applicable statute of limitations with respect thereto.
6.02. Indemnification. (a) Spinco agrees to indemnify and hold harmless
the Company, and its affiliates, successors and assigns and the officers,
directors, partners, employees, agents and representatives of any of them, from
and against any and all losses, damages, claims or Liabilities, including
reasonable attorneys' fees and disbursements (collectively "Losses"), arising
out of, based upon, or resulting from (i) the operation of the businesses of, or
relating to, Spinco or any other member of the Spinco Group (the "Spinco
Business") (including those Losses arising due to the failure of Spinco or any
other member of the Spinco Group to pay, perform or otherwise discharge its
obligations under this Agreement or arising out of or connected with the Spinco
Business), (ii) any breach of or inaccuracy in any representation or warranty of
Spinco contained in Sections 4.01(a) - (d) of this Agreement, or any material
breach of or material inaccuracy in any representation or warranty of Spinco
contained in Sections 4.01(e) and (f) of this Agreement and (iii) subject to
Section 6.02(c), any material breach of any covenant contained in this Agreement
or the Other Agreements.
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Without limiting the generality of the foregoing, Spinco agrees to
indemnify and hold harmless the Company, its officers, directors, partners,
employees, agents and representatives of any of them, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, and each of the heirs, executors, successors
and assigns of any of the foregoing, from and against any and all Losses arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the Information
Statement), the Form F-4, the Proxy Statement or any other document filed with
the SEC in connection with the transactions contemplated hereby or any
preliminary or final form thereof or any amendment or supplement thereto
(collectively, the "SEC Documents") or any omission or alleged omission to state
in any SEC Document a material fact required to be stated therein or necessary
to make the statements made therein not misleading, but in each case only to the
extent such untrue statement or omission or alleged untrue statement or omission
relates to any member of the Spinco Group or the Spinco Business.
(b) The Company agrees to indemnify and hold harmless Spinco, its
affiliates, successors and assigns and the officers, directors, partners,
employees, agents and representatives of any of them from and against any and
all Losses arising out of, based upon, or resulting from (i) the operation of
the businesses of, or relating to, the Company or any other member of the
Company Group (the "Company Business") (including those Losses arising due to
the failure of the Company or any other member of the Company Group to pay,
perform or otherwise discharge its obligations under this Agreement or arising
out of or connected with the Company Business), (ii) any breach of or inaccuracy
in any representation or warranty of the Company contained in Sections 5.01(a)-
(d) of this Agreement or any material breach or material inaccuracy in the
representation and warranty contained in Section 5.01(e), or (iii) subject to
Section 6.02(c), any material breach of any covenant contained in this Agreement
or the Other Agreements.
Without limiting the generality of the foregoing, the Company agrees to
indemnify and hold harmless Spinco, its officers, directors, partners,
employees, agents and representatives of any of them, each person, if any, who
controls Spinco within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, and each of the heirs, executors, successors
and assigns of any of the foregoing, from and against any and all Losses arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any SEC Document or any omission or alleged omission
to state in any SEC Document a material fact required to be stated therein or
necessary to make the statements made therein not misleading, but in each case
only to the extent such untrue statement or omission or alleged untrue statement
or omission does not relate to any member of the Spinco Group or the Spinco
Business.
(c) The indemnification provided by this Section 6.02 shall not include any
Losses (i) relating to any Tax (as defined in the Tax Disaffiliation Agreement),
which shall be covered exclusively by the Tax Disaffiliation Agreement, (ii)
relating to matters for which indemnification is provided in any of the Other
Agreements or (iii) relating to matters governed by any of the agreements listed
on Schedule 7.02, which, in each case, shall be covered exclusively by the
applicable provisions of such agreements.
12
(d) If any indemnification provided in paragraph (a) or (b) of this
Section 6.02 is unavailable for any reason, the parties shall contribute in
respect of the applicable Losses on an equitable basis.
(e) Any indemnification or contribution pursuant to this Section 6.02
shall be paid net of the amount of any insurance (other than any insurance paid
for by the applicable indemnitee) or other amounts that would be payable by any
third party to the indemnified party in the absence of this Agreement. The
parties hereto expressly agree that no insurer or other third party shall be (i)
entitled to any benefit if such entity would not be entitled to receive such
benefit in the absence of the foregoing indemnification and contribution
provisions, (ii) relieved of the responsibility to pay any claims for which it
is under an obligation to pay or (iii) entitled to any subrogation rights with
respect to any obligation hereunder.
(f) Notwithstanding any other provision hereof to the contrary, this
Section 6.02 shall not be deemed to create any obligation, or expand the scope
of any existing obligation on the part of any party to this Agreement to
indemnify or hold harmless such party's own officers, directors, partners,
employee, agents or representatives.
(g) (i) The amount of any indemnifiable Loss shall be (x) increased to
take into account any net Tax cost actually incurred by the Indemnified Party
arising from any payments received from the Indemnifying Party (grossed up for
such increase) and (y) reduced to take account of any net Tax benefit actually
realized by the Indemnified Party arising from the incurrence or payment of any
such indemnifiable Loss. In computing the amount of such Tax cost or Tax
benefit, the Indemnified Party shall be deemed to have recognized all other
items of income, gain, loss, deduction or credit before recognizing any item
arising from the receipt of any payment with respect to an indemnifiable Loss or
the incurrence or payment of any indemnifiable Loss.
6.03. Procedure for Indemnification for Third Party Claims. (a) Any
person seeking any indemnification provided for under this Agreement (the
"Indemnified Party") in respect of, arising out of or involving a claim made by
any person against the Indemnified Party (a "Third-Party Claim"), shall notify
in writing (and to the extent received, deliver copies of all related notices
and documents, including court papers), to the party from whom indemnification
is sought (the "Indemnifying Party") of the Third-Party Claim within 15 days
after receipt by such Indemnified Party of written notice of the Third-Party
Claim; provided, however, that failure to give such notification (or make such
delivery) shall not affect the indemnification provided hereunder except to the
extent that the Indemnifying Party shall have been actually prejudiced as a
result of such failure.
(b) If a Third-Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses (except as provided below), to assume the defense thereof with
counsel selected by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party. Should the Indemnifying Party so elect to assume the defense
of a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses (except as provided below) subsequently
incurred by the Indemnified Party in
13
connection with the defense thereof. Notwithstanding the Indemnifying Party's
election to assume the defense of such Third Party Claim, the Indemnified Party
shall have the right to employ separate counsel and to participate in the
defense of such action at its own expense; provided, however, that the
Indemnifying Party shall bear the reasonable fees, costs, and expenses of such
separate counsel if (i) the use of counsel chosen by the Indemnifying Party to
represent the Indemnified Party would present such counsel with a conflict of
interest that would preclude such counsel from representing the Indemnified
Party pursuant to legal canons of ethics or other applicable law; (ii) the
Indemnifying Party shall not have employed counsel reasonably satisfactory to
the Indemnified Party to represent it within 30 days after notice to the
Indemnifying Party of the institution of such Third Party Claim or (iii) the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the Indemnifying Party's expense. If the Indemnifying Party chooses
to defend a Third Party Claim, each party hereto shall cooperate in the defense
thereof. Such cooperation shall include the retention and (upon the Indemnifying
Party's request) the provision to the Indemnifying Party of records and
information which are reasonably relevant to such Third Party Claim, and making
employees available (subject to reimbursement by the Indemnifying Party of
actual expenses incurred therewith) on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. If
the Indemnifying Party chooses to defend any Third Party Claim, the Indemnifying
Party shall have the right to agree to a settlement, compromise or discharge of
such Third Party Claim which by its terms obligates the Indemnifying Party to
pay the full amount of the liability in connection with such Third Party Claim
and releases the Indemnified Party completely in connection with such Third
Party Claim; provided that such settlement, compromise or discharge shall be
subject to the prior written consent of the Indemnified Party, which consent may
not be unreasonably withheld, unless, (A) there is no finding or admission of
any violation of law or any violation of the rights of any person and no effect
on any other claims that may be made against the Indemnified Party, and (B) the
sole relief provided is monetary damages that are paid in full by the
Indemnifying Party. Whether or not the Indemnifying Party shall have assumed the
defense of a Third Party Claim, so long as the Indemnifying Party acknowledges
in writing its obligation to indemnify the Indemnified Party with respect to the
applicable claims, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent, which consent may not be
withheld unless, in the Indemnifying Party's good-faith judgment, such
settlement, compromise or discharge is unreasonable in light of such Third Party
Claim against, and defenses available to, the Indemnified Party.
(c) In no event shall an Indemnifying Party be liable for the fees and
expenses of more than one counsel for all Indemnified Parties in connection with
any one action, or separate but similar or related actions, in the same
jurisdiction arising out of the same general allegations or circumstances.
6.04. Remedies Cumulative. The remedies provided in this Article VI shall
be cumulative and shall not preclude assertion by any Indemnified Party of any
other rights or the seeking of any other remedies against any Indemnifying
Party; provided, however, that the procedures set forth in Section 6.03 shall be
the exclusive procedures governing any indemnity action brought under this
14
Agreement or otherwise and relating to a Third-Party Claim, except as otherwise
specifically provided in any of the Other Agreements.
ARTICLE VII
CERTAIN ADDITIONAL COVENANTS
7.01. Notices to Third Parties. The members of the Company Group and the
Spinco Group shall cooperate to make all filings and give notice to and use
their reasonable efforts to obtain consents from all third parties that may
reasonably be required to consummate the transactions contemplated by this
Agreement and the Other Agreements.
7.02. Intercompany Agreements. All contracts, licenses, agreements,
commitments, joint marketing test programs and other arrangements, formal or
informal, between any member of the Spinco Group, on the one hand, and any
member of the Company Group, on the other, in existence as of the Distribution
Date, pursuant to which any member of either Group provides to any member of the
other Group services (including management, administrative, legal, financial,
accounting, data processing, insurance or technical support), or the use of any
assets of any member of the other Group, or the secondment of any employee, or
pursuant to which any rights, privileges or benefits are afforded to members of
either Group as an affiliate of the other Group, shall terminate as of the close
of business on the day prior to the Distribution Date, except as specifically
provided herein or on Schedule 7.02 hereto or in the Other Agreements. From and
after the Distribution Date, no member of either Group shall have any rights
under any such contract, license, agreement, commitment or arrangement with any
member of the other Group, except as specifically provided herein or on Schedule
7.02 hereto or in the Other Agreements.
7.03. Further Assurances. In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto shall use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement and the Other Agreements. Without
limiting the foregoing, each party hereto shall cooperate with the other party,
and execute and deliver, or use reasonable efforts to cause to be executed and
delivered, all instruments, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any governmental or regulatory
authority or any other person under any permit, license, agreement, indenture or
other instrument, and take all such other actions as such party may reasonably
be requested to take by any other party hereto from time to time, including
cooperating in identifying and establishing other mutually satisfactory interim
arrangements between the parties, consistent with the terms of this Agreement
and the Other Agreements, in order to effectuate the provisions and purposes of
this Agreement.
7.04. Mutual Release, Etc. Effective upon the Distribution and except as
otherwise specifically set forth in this Agreement, each of the Company and
Spinco releases and forever
15
discharges the other, and its affiliates, successors and assigns and the
officers, directors, employees, partners, agents and representatives of any of
them, of and from all debts, demands, actions, causes of action, suits,
accounts, covenants, contracts, agreements, damages, and any and all claims,
demands and liabilities whatsoever of every name and nature, both in law and in
equity, against such other party or any of its successors or assigns, that the
releasing party has or ever had, that arise out of or relate to events,
circumstances or actions taken by such other party prior to the Distribution
Date; provided, however, that the foregoing general release shall not apply to
this Agreement, the Other Agreements or any of the agreements listed on Schedule
7.02 or the transactions contemplated hereby or thereby and shall not affect
either party's right to enforce this Agreement, any of the Other Agreements or
any of the agreements listed on Schedule 7.02, in each case in accordance with
its terms. Each party understands and agrees that, except as otherwise
specifically provided herein, neither the other party nor any of its affiliates,
successors and assigns or the officers, directors, employees, partners, agents
and representatives of any of them, in this Agreement or any of the Other
Agreements, is representing or warranting to such party in any way as to the
assets, business or liabilities transferred, assumed or licensed as contemplated
hereby or thereby, it being agreed and understood that each party shall take or
keep all of its assets "as is" and that it shall bear the economic and legal
risk that conveyance or licensing of such assets shall prove to be insufficient
or that the title to any assets conveyed or licensed shall be other than good
and marketable and free from encumbrances.
ARTICLE VIII
ACCESS TO INFORMATION
8.01. Provision of Corporate Records. Prior to or as promptly as
practicable after the Distribution Date, the Company shall deliver to Spinco all
corporate books and records of the Spinco Group and the Spinco Business in its
possession, including all active agreements, planning and product approval
documents, active litigation files and government filings. From and after the
Distribution Date, all such books, records and copies shall be the property of
Spinco.
8.02. Access to Information. From and after the Distribution Date,
each of the Company and Spinco shall afford to the other and to the other's
authorized representatives reasonable access and duplicating rights during
normal business hours to all records, books, contracts, instruments, computer
database, magnetic or optical media and any form of recorded, computer generated
or stored information and other data and information ("Information") within the
possession or control of such party's Group relating to the other party's
Group's pre-Distribution business or liabilities or relating to or arising in
connection with the relationship between the Groups on or prior to the
Distribution Date, insofar as such access is reasonably required by such other
party for a reasonable purpose, including, without limitation, audit,
accounting, tax and litigation purposes.
8.03. Retention of Records. Except as otherwise agreed in writing or
as otherwise provided in the Other Agreements, each of the Company and Spinco
shall retain all Information in such party's
16
possession or under its control relating directly and primarily to the pre-
Distribution business of the other party that is less than seven years old until
such Information is at least seven years old except that if, prior to the
expiration of such period, either party wishes to destroy or dispose of any such
Information, prior to destroying or disposing of any of such Information, (a)
the party who is proposing to dispose of or destroy any such Information shall
provide no less than 30 days' prior written notice to the other party,
specifying the Information proposed to be destroyed or disposed of, and (b) if,
prior to the scheduled date for such destruction or disposal, the other party
requests in writing that any of the Information proposed to be destroyed or
disposed of be delivered to such other party, the party who is proposing to
dispose of or destroy such Information promptly shall arrange for the delivery
of the requested Information to a location specified by, and at the expense of,
the requesting party.
8.04. Reimbursement; Other Matters. Except to the extent otherwise
contemplated by any Other Agreement, a party providing records or access to
information to the other party under this Article VIII shall be entitled to
receive from the recipient, upon the presentation of invoices therefor, payments
for such amounts, relating to supplies, disbursements and other out-of-pocket
expenses (which shall be deemed to exclude costs of salaries and benefits of
employees who provide such services), as may be reasonably incurred in providing
such records or access to information.
8.05. Production of Witnesses. From and after the Distribution Date
each party hereto shall, and shall cause the members of the Group of which it is
a member to, use reasonable efforts to make available to the other party or any
member of the other party's Group, upon written request, its officers,
directors, employees and agents as witnesses to the extent that any such person
may reasonably be required in connection with any legal, administrative or other
proceedings in which the requesting party may from time to time be involved. A
party providing witness services to the other party under this Section shall be
entitled to receive from the recipient of such services, upon the presentation
of invoices therefor, payments for such amounts, relating to disbursements and
other out-of-pocket expenses (which shall be deemed to exclude costs of salaries
and benefits of employees who are witnesses), as may be reasonably incurred in
providing such witness services.
8.06. Confidentiality. From and after the Distribution Date, the
Company and Spinco shall hold, and cause their respective affiliates, directors,
officers, employees, agents, consultants, advisors (including the members of the
Group of which it is a member), and representatives to hold, in strict
confidence, and shall not make use of, divulge or otherwise disclose any
Information concerning the other party's Business obtained by it prior to the
Distribution Date, including any trade secret or other similar proprietary data,
or furnished to it by such other party pursuant to this Agreement or the Other
Agreements and shall not release or disclose such Information to any other
person, except its directors, officers, employees, agents, consultants,
advisors, affiliates and representatives, who (in the case of agents,
consultants, advisors and representatives) shall execute an agreement agreeing
to be bound by the provisions of this Section 8.06, and each party shall be
responsible for a breach by any of such persons or representatives; provided,
however, that the Company or Spinco, or any of their respective affiliates, may
disclose such Information to the extent that (a) disclosure is compelled by an
order of a court of competent jurisdiction or is required by law to be disclosed
to a
17
governmental authority, (b) such party can show that such Information was (i)
available to such person on a nonconfidential basis (other than from the other
party or its affiliates or representatives) prior to its disclosure by the other
party, (ii) in the public domain through no fault of such person or (iii)
lawfully acquired by such person from another source after the time that it was
furnished to such person by the other party, and not acquired from such source
subject to any confidentiality obligation on the part of such source, or on the
part of the acquiror and (c) the applicable party uses reasonable efforts to
notify the other party prior to (and, to the extent practicable, at least 10
days prior to) any disclosure of Information pursuant to the foregoing clause
(a), except to the extent that the giving of such notice would be unlawful or
violate any order, ruling or directive of any governmental authority.
8.07. Ownership of Information. Any Information owned by one party or
any of its subsidiaries that is provided to a requesting party pursuant to this
Article VIII shall be deemed to remain the property of the providing party;
provided, however, that the Company and Spinco shall each be entitled to the
unrestricted use of any and all corporate-wide administration policies and
procedures in use at the Company prior to the Distribution Date, including
corporate-wide policies, training materials, preventive law procedures and
corporate-wide planning methodologies. Unless specifically set forth herein,
nothing contained in this Agreement shall be construed as granting or conferring
rights of license or otherwise in any such Information.
8.08. Non-Competition. Spinco agrees that, for a period of two years
after the date hereof, neither it nor any of its affiliates shall, anywhere in
the United States of America, directly or indirectly, (a) sell or offer life
insurance and related products through the home service channel, (b) offer, sell
or otherwise provide to the non-individual market (i) guaranteed investment
contracts or (ii) other funding agreements directly competitive with products
offered as of the date hereof by Providian Capital Management, (c) sell or offer
life insurance products directly competitive with products offered as of the
date hereof by Providian Direct Insurance except, in the case of this clause
(c), for offers or sales of accidental death and dismemberment insurance and
offers or sales to current or future Spinco customers of life insurance products
that are incremental to a product that is currently being offered by Spinco.
Spinco further agrees that, for a period of eighteen months after the date
hereof, neither it nor any of its affiliates shall, anywhere in the United
States of America, directly or indirectly, use, with respect to any life
insurance product or the offer or sale of any such product, the name Providian,
or any derivative thereof, in conjunction with the term "insurance", "assurance"
or any similar insurance related term, as the name of an entity, joint venture
or similar marketing arrangement.
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ARTICLE IX
INSURANCE
9.01. Policies and Rights Included Within Transferred Assets. The
Transferred Assets shall include (i) any and all rights of an insured party
under each of the Shared Policies, subject to the terms of such Shared Policies
and any limitations or obligations of Spinco contemplated by this Article IX,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer, with respect to all claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses incurred or
claimed to have been incurred prior to the Distribution Date by any party in or
in connection with the conduct of the Spinco Business or, to the extent any
claim is made against Spinco or any member of the Spinco Group, the conduct of
the Company Business, and which claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses may arise out of an insured or
insurable occurrence under one or more of such Shared Policies; provided,
however, that nothing in this clause shall be deemed to constitute an assignment
of such Shared Policies, or any of them, to Spinco, and (ii) the Spinco
Policies.
9.02. Post-Distribution Date Claims. If, subsequent to the
Distribution Date, any person shall assert a claim against Spinco or any member
of the Spinco Group (including where Spinco or any member of the Spinco Group is
a joint defendant with any person other than a member of the Company Group) with
respect to any claim, suit, action, proceeding, injury, loss, liability, damage
or expense incurred or claimed to have been incurred prior to the Distribution
Date in, or in connection with, the conduct of the Spinco Business or, to the
extent any claim is made against Spinco or any member of the Spinco Group
(including where any member of the Spinco Group is a joint defendant with any
person other than a member of the Company Group), in, or in connection with, the
conduct of the Company Business, and which claim, suit, action, proceeding,
injury, loss, liability, damage or expense may arise out of an insured or
insurable occurrence under one or more of the Shared Policies, the Company
shall, at the time such claim is asserted, to the extent any such Policy may
require that Insurance Proceeds thereunder be collected directly by the named
insured be deemed to designate, without need of further documentation, Spinco as
the agent and attorney-in-fact to assert and to collect any related Insurance
Proceeds under such Shared Policy, and shall further be deemed to assign,
without need of further documentation, to Spinco any and all rights of an
insured party under such Shared Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer and the right to any applicable Insurance Proceeds
thereunder; provided, however, that nothing in this Section 9.02 shall be deemed
to constitute an assignment of the Shared Policies, or any of them, to Spinco.
9.03. Administration; Other Matters. (a) Except as otherwise provided
in Section 9.02 hereof, from and after the Distribution Date, the Company shall
be responsible for Insurance Administration of, and Claims Administration under,
the Shared Policies; provided that the retention of such responsibilities by the
Company is in no way intended to limit, inhibit or preclude any right to
insurance coverage for any Insured Claim of a named insured under such Policies
as contemplated by the terms of this Agreement; and provided further that the
Company's retention of the
19
administrative responsibilities for the Shared Policies shall not relieve
Spinco, when submitting any Insured Claim, of its responsibility for reporting
such Insured Claim accurately, completely and in a timely manner or of Spinco's
authority to settle any such Insured Claim within any period permitted or
required by the relevant Policy. The Company may discharge its administrative
responsibilities under this Section 9.03 by contracting for the provision of
services by independent parties. Each of the parties hereto shall administer and
pay any costs relating to defending its respective Insured Claims under Shared
Policies to the extent such defense costs are not covered under such Policies
and shall be responsible for obtaining or reviewing the appropriateness of
releases upon settlement of its respective Insured Claims under Shared Policies.
Spinco shall reimburse the Company for its reasonable out-of-pocket expenses and
direct and indirect costs of employees or agents of the Company relating to
Claims Administration and Insurance Administration contemplated by this Section
9.03(a).
(b) Except for Losses that are subject to the indemnification provisions of
Section 6.02, the Company and Spinco shall not be liable to one another for
claims not reimbursed by insurers for any reason not within the control of the
Company or Spinco, as the case may be, including coinsurance provisions,
deductibles, quota share deductibles, self-insured retentions, bankruptcy or
insolvency of an insurance carrier, Shared Policy limitations or restrictions,
any coverage disputes, any failure to timely claim by the Company or Spinco or
any defect in such claim or its processing.
(c) In the event that the aggregate limits on any Shared Policies are
exceeded by the aggregate of outstanding Insured Claims filed by the parties
hereto with respect to the period of coverage under such Shared Policy, the
parties agree to allocate the Insurance Proceeds received thereunder based upon
their respective percentage of the total of their bona fide claims that were
covered under such Shared Policy with respect to such coverage period (the
"allocable portion of insurance proceeds"), and any party who has received
Insurance Proceeds in excess of such party's allocable portion of such Insurance
Proceeds shall pay to the other party the appropriate amount so that each party
will have received its allocable portion of such Insurance Proceeds pursuant
hereto. Each of the parties agrees to use reasonable efforts to maximize
available coverage under the Shared Policies, and to take all reasonable steps
to recover from all other responsible parties in respect of an Insured Claim to
the extent coverage limits under a Shared Policy have been exceeded or would be
exceeded as a result of such Insured Claim.
(d) In the event that each party has bona fide claims under any Shared
Policy for which a deductible is payable with respect to the period of coverage
under such Shared Policy, the parties agree that the aggregate amount of the
deductible paid shall be borne by the parties in the same proportion that the
Insurance Proceeds received by each such party with respect to such coverage
period bears to the total Insurance Proceeds received under the applicable
Shared Policy (the "allocable share of the deductible"), and any party that has
paid more than such share of the deductible shall be entitled to receive from
the other party an appropriate amount such that each party has borne its
allocable share of the deductible pursuant hereto. For purposes of this
paragraph 9.03(d), the amount of the relevant deductible under any Shared Policy
shall be that set forth in Schedule 9.03(d) hereto.
20
9.04. Agreement for Waiver of Conflict and Shared Defense. In the event
that Insured Claims of both parties hereto exist relating to the same
occurrence, the parties shall jointly defend and waive any conflict of interest
necessary to the conduct of the joint defense. Nothing in this Article IX shall
be construed to limit or otherwise alter in any way the obligations of the
parties to this Agreement, including those created by this Agreement or the
Other Agreements, by operation of law or otherwise.
9.05. Cooperation. The parties agree to use their reasonable efforts to
cooperate with respect to the various insurance matters contemplated by this
Agreement.
ARTICLE X
MISCELLANEOUS
10.01. Conditions to Obligations. (a) The obligations of the parties
hereto to consummate the Distribution are subject to the satisfaction or waiver
of each of the following conditions:
(i) The Other Agreements shall have been executed and delivered by
each of the Company and Spinco;
(ii) The Company shall have received a favorable no-action letter with
respect to those issues on which the Company proposes to ask the SEC to
rule in a letter to the SEC, substantially in the form of the letter
attached hereto as Exhibit G;
(iii) The representations and warranties of each of the Company and
of Spinco set forth in this Agreement shall be true and correct in all
material respects as of the date hereof and as of the Distribution Date;
(iv) Spinco shall have obtained the approval of the Board of Governors
of the Federal Reserve System to, or shall have received a no-action letter
to the effect that it may, continue to operate as a grandfathered
institution under the Competitive Equality Banking Act of 1987 or Spinco
shall have been registered as a bank holding company;
(v) The Registration Statement shall have become effective under the
Exchange Act;
(vi) The Spinco Common Stock shall have been approved for listing on
the New York Stock Exchange, or such other exchange or quotations system as
Spinco may determine in its discretion, subject to official notice of
issuance;
(vii) No governmental authority or regulatory body (including any
court of competent jurisdiction) shall have enacted, issued, promulgated,
enforced or entered any law, rule,
21
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) to prevent or prohibit the
Distribution;
(viii) All conditions to the Merger set forth in the Merger Agreement
shall have been satisfied or waived prior to or contemporaneously with the
Effective Time; and
(ix) All other agreements or conditions set forth and described in
Article III shall have been satisfied or waived.
(b) Any determination made by the Board of Directors of the Company on
behalf of either party hereto prior to the Distribution Date concerning the
satisfaction or waiver of any or all of the conditions set forth in this Section
shall be conclusive.
10.02. Complete Agreement. This Agreement, the Exhibits and Schedules
hereto and the agreements and other documents referred to herein, including the
Other Agreements, shall constitute the entire agreement between the parties
hereto with respect to the subject matter hereof (other than the Merger
Agreement and the Schedules and Exhibits thereto) and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.
10.03. Expenses. Spinco shall bear all fees and expenses of outside
counsel to Spinco in connection with the preparation, review and filing of the
Registration Statement and Information Statement, all filing fees, printing and
mailing expenses in connection with the Registration Statement and Information
Statement, all exchange listing fees with respect to Spinco Common Stock, and
any fees of transfer agents and registrars in connection with the Distribution.
The Company shall bear all other costs and expenses with respect to the
transactions contemplated hereby, by the Merger Agreement and the Other
Agreements, including, without limitation, all fees and disbursements of
Xxxxxxx, Xxxxx & Co. relating to the transactions contemplated hereby, by the
Merger Agreement and the Other Agreements.
10.04. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (other than the laws
regarding choice of laws and conflicts of laws that would apply the substantive
laws of any other jurisdiction) as to all matters, including matters of
validity, construction, effect, performance and remedies.
10.05. Notices. All notices, requests, claims, demands and other
communications that are required or permitted hereunder shall be in writing and
shall be sufficient if delivered in person, by overnight courier, by hand
delivery, telecopied with confirmation of receipt, or sent by registered or
certified mail, postage prepaid, return receipt requested, to the addresses set
forth below, or to such other addresses of which either party shall notify the
other party in accordance with this Section 10.05, and shall be deemed given as
of the time of such delivery.
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If to the Company prior to the Distribution Date:
Providian Center
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx XX
Telecopy No.: 000-000-0000
with a copy to:
King & Spalding
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. E. Xxxxxxx Xxxxx, II
Telecopy No.: (000) 000-0000
and
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
If to the Company after the Distribution Date:
(VIA MAIL)
AEGON N.V.
X.X. Xxx 000
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Attention: Xx. Xxxx J. Storm
Telecopy No.: (00-00) 000-0000
(VIA HAND DELIVERY)
AEGON N.V.
Mariahoeveplein 50
2591 TV The Hague
The Netherlands
Attention: Xx. Xxxx J. Storm
Telecopy No.: (00-00) 000-0000
and
00
XxXxxxx, Xxxx, Xxxxxx & MacCrae, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxxx, Xx.
Telecopy No.: (000) 000-0000
If to Spinco:
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: 000-000-0000
with a copy to:
Providian Bancorp, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopy No.: 000-000-0000
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section.
10.06. Specific Performance. Each party hereto acknowledges that there is
no adequate remedy at law for failure by such party to comply with the
provisions of this Agreement and that such failure would cause immediate harm
that would not be adequately compensable in damages, and therefore each party
agrees that its agreements contained herein may be specifically enforced without
the requirement of posting a bond or other security, in addition to all other
remedies available to the parties hereto under this Agreement.
10.07. Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a written agreement signed by the parties
hereto.
10.08. Successors and Assigns; Third-Party Beneficiaries. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their successors and permitted assigns, but neither
this Agreement nor any of the rights, interests and obligations hereunder shall
be assigned by any party hereto without the prior written consent of the other
party. Except for the provisions of Sections 6.02 and 6.03 relating to
indemnities, which are also for the benefit of the applicable Indemnified Party,
this Agreement is solely for the benefit of the parties hereto, and is not
intended to confer upon any other persons any rights or remedies hereunder,
except that, prior to the Distribution Date, Merger Partner shall be a third
party beneficiary of and shall be entitled to enforce the rights of the Company
hereunder.
24
10.09. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10.10. Interpretation. (a) The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) The parties hereto intend that the Distribution shall be a distribution
pursuant to the provisions of Section 355 of the Code, so that no gain or loss
shall be recognized for federal income tax purposes as a result of such
transaction, and all provisions of this Agreement shall be so interpreted.
10.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.
10.12. References; Construction. References to any "Article", "Exhibit",
"Schedule" or "Section", without more, are to Articles, Exhibits, Schedules and
Sections to or of this Agreement. Unless otherwise expressly stated, clauses
beginning with the term "including" set forth examples only and in no way limit
the generality of the matters thus exemplified.
10.13. Termination. Notwithstanding any provision hereof, following
termination of the Merger Agreement, this Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in the
sole discretion of the Board of Directors of the Company without the approval of
any other party hereto or of the Company's shareholders. In the event of such
termination, no party hereto or to any Other Agreement shall have any liability
to any person by reason of this Agreement or any Other Agreement.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PROVIDIAN CORPORATION
By: /s/ Xxxxxx X. Xxxxxx XX
-------------------------------------------
Name: Xxxxxx X. Xxxxxx XX
Title: Chairman of the Board and
Chief Executive Officer
PROVIDIAN BANCORP, INC.
By : /s/ Xxxxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
