Exhibit 2.02
Execution Copy
--------------
AGREEMENT AND PLAN OF MERGER
AMONG
AMERICAN INTERNATIONAL GROUP, INC.
WASHINGTON ACQUISITION CORPORATION
AND
AMERICAN GENERAL CORPORATION
DATED AS OF MAY 11, 2001
Table of Contents
PAGE
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INDEX OF DEFINED TERMS........................................................v
ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME.......................2
1.1 The Merger................................................2
1.2 Closing...................................................2
1.3 Effective Time............................................2
1.4 Change in Structure.......................................2
ARTICLE II ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION...............................................3
2.1 The Articles of Incorporation.............................3
2.2 The Bylaws................................................3
ARTICLE III OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION.......3
3.1 Directors.................................................3
3.2 Officers..................................................3
ARTICLE IV EFFECT OF THE MERGER ON STOCK; EXCHANGE OF CERTIFICATES...3
4.1 Effect on Stock...........................................3
(a) Merger Consideration.............................3
(b) Cancellation of Common Shares....................4
(c) Merger Sub.......................................4
4.2 Exchange of Certificates for Shares.......................4
(a) Exchange Agent and Procedures....................4
(b) Distributions with Respect to Unexchanged
Shares...........................................6
(c) Closing of Transfer Books........................6
(d) Fractional Shares................................6
(e) Termination of Entitlement.......................6
(f) Lost, Stolen or Destroyed Certificates...........7
(g) Withholding Taxes................................7
4.3 Adjustments to Prevent Dilution...........................7
ARTICLE V REPRESENTATIONS AND WARRANTIES............................8
5.1 Standard..................................................8
5.2 Representations and Warranties of the Company.............9
(a) Organization, Good Standing and Qualification....9
(b) Capital Structure...............................10
(c) Corporate Authority; Approval and Fairness......11
(d) Governmental Filings; No Violations.............12
(e) Company Reports; Financial Statements;
Undisclosed Liabilities; Statutory Statements...13
(f) Absence of Certain Changes......................14
(g) Litigation......................................15
(h) Employee Benefits; Labor........................15
(i) Compliance with Laws; Permits...................17
(j) Takeover Statutes...............................18
(k) Taxes...........................................18
(l) Intellectual Property...........................19
(m) Brokers and Finders.............................19
(n) Insurance Business..............................20
(o) Material Contracts..............................20
(p) Environmental Matters...........................21
(q) Risk Management; Derivatives....................22
(r) Pooling of Interests............................22
(s) Tax Status......................................22
(t) Company Broker/Dealers..........................23
(u) Investment Contracts, Funds and Clients.........23
5.3 Representations and Warranties of Parent.................24
(a) Organization, Good Standing and Qualification...24
(b) Capital Structure...............................25
(c) Corporate Authority; Approval and Fairness......26
(d) Governmental Filings; No Violations.............26
(e) Parent Reports; Financial Statements;
Undisclosed Liabilities.........................27
(f) Absence of Certain Changes......................28
(g) Litigation......................................28
(h) Compliance with Laws............................29
(i) Brokers and Finders.............................29
(j) Pooling of Interests............................29
(k) Tax Status......................................29
(l) Merger Sub's Operations.........................29
ARTICLE VI COVENANTS................................................29
6.1 Company Interim Operations...............................29
6.2 Parent Interim Operations................................34
6.3 Acquisition Proposals....................................35
6.4 Registration Statement; Information Supplied.............37
6.5 Shareholder Meeting......................................38
6.6 Filings; Other Actions; Notification.....................39
6.7 Pooling..................................................40
6.8 Access...................................................41
6.9 Affiliates...............................................41
6.10 Listing Application......................................42
6.11 Publicity................................................42
6.12 Expenses.................................................42
6.13 Indemnification; Directors' and Officers' Insurance......42
6.14 Takeover Statute.........................................44
6.15 Board of Directors of Parent.............................44
6.16 Accountants' Letters.....................................44
6.17 Integration Committee....................................45
6.18 Tax-Free Merger..........................................45
6.19 Employee Benefits........................................45
6.20 Section 16 Matters.......................................50
6.21 Advisory Clients.........................................50
6.22 Transfer Taxes...........................................50
6.23 Dividend Reinvestment Plan...............................50
ARTICLE VII CONDITIONS...............................................50
7.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................50
(a) Shareholder Approval............................50
(b) Exchange Listing................................51
(c) Regulatory Consents.............................51
(d) Governmental Orders or Proceedings..............51
(e) Form S-4........................................51
(f) Pooling Letters.................................52
7.2 Conditions to Obligations of Parent and Merger Sub.......52
(a) Representations and Warranties; Covenants.......52
(b) Consents........................................52
(c) Tax Opinion.....................................52
7.3 Conditions to Obligation of the Company..................52
(a) Representations and Warranties; Covenants.......52
(b) Tax Opinion.....................................53
ARTICLE VIII TERMINATION..............................................53
8.1 Termination by Mutual Consent............................53
8.2 Termination by Either Parent or the Company..............53
8.3 Termination by Company...................................54
8.4 Termination by Parent....................................54
8.5 Effect of Termination and Abandonment....................54
8.6 Company Termination Payment..............................55
8.7 Parent Termination Payment...............................57
8.8 Pre-Termination Acquisition Proposal Event...............59
ARTICLE IX MISCELLANEOUS AND GENERAL................................59
9.1 Survival.................................................59
9.2 Modification or Amendment................................59
9.3 Waiver...................................................59
9.4 Counterparts.............................................60
9.5 Governing Law and Venue; Waiver of Jury Trial............60
9.6 Notices..................................................61
9.7 Entire Agreement; No Other Representations...............61
9.8 No Third-Party Beneficiaries.............................62
9.9 Obligations of Parent and of the Company.................62
9.10 Severability.............................................62
9.11 Interpretation...........................................62
9.12 Assignment...............................................63
EXHIBITS
Exhibit A " Form of Company Affiliate Letter
Exhibit B " Form of Parent Affiliate Letter
INDEX OF DEFINED TERMS
1940 Act...........................................12
Acquisition Proposal...............................36
Actions............................................15
Adjusted Option....................................45
Advisers Act.......................................12
Advisor............................................32
Advisory Entity....................................23
Agreement...........................................1
Articles of Incorporation...........................3
Articles of Merger..................................2
Ascend..............................................1
Burdensome Condition...............................39
Business Day........................................2
Bylaws..............................................3
Certificate.........................................4
Change in Recommendation...........................39
Claim..............................................43
Client.............................................23
Closing.............................................2
Closing Date........................................2
Code................................................1
Common Shares.......................................2
Company.............................................1
Company Actuarial Analyses.........................20
Company Adverse Action.............................56
Company Broker/Dealers.............................23
Company Disclosure Letter...........................9
Company Form 10-K..................................13
Company Insurance Companies........................10
Company Options....................................45
Company Plan.......................................15
Company Proxy Statement............................37
Company Regulatory Reports.........................14
Company Reports....................................13
Company Requisite Vote.............................11
Company Restricted Shares..........................46
Company Shareholder Meeting........................38
Company Stock Plans................................45
Company Stock Purchase Plan........................50
Company Termination Amount.........................55
Company Voting Debt................................11
Confidentiality Agreement..........................61
Consultant.........................................32
Continuing Employees...............................47
Contract...........................................13
Contracts..........................................13
Costs..............................................43
Determination Date.................................57
Effective Date......................................2
Effective Time......................................2
Environmental Law..................................21
Equivalent Price...................................58
ERISA..............................................15
Exchange Act.......................................12
Exchange Agent......................................4
Exchange Ratio......................................4
Excluded Shares.....................................3
FDIC...............................................12
Form S-4...........................................37
Fund Client........................................23
Governmental Consents..............................51
Governmental Entity................................12
Hazardous Substance................................21
HDP.................................................1
HSR Act............................................12
Incentive Award Units..............................46
Indemnified Party..................................43
Index Group........................................57
Index Price........................................58
Insurance Amount...................................43
Intellectual Property..............................19
Investment Contract................................23
IRS................................................16
Job Security Plan..................................33
Laws...............................................17
Material Adverse Effect.............................8
Material Stock Price Decline.......................57
Material Contract..................................20
Merger..............................................1
Merger Consideration................................4
Merger Sub..........................................1
Merger Sub Common Stock.............................4
Xxxxxx Xxxxxxx.....................................12
NASD...............................................12
NYSE................................................4
Order..............................................51
OTS................................................12
Parent..............................................1
Parent Average Interim Price`......................57
Parent Average Price................................4
Parent Breach Exception............................57
Parent Common Stock.................................4
Parent Disclosure Letter...........................24
Parent Form 10-K...................................27
Parent Plan........................................25
Parent Preferred Stock.............................25
Parent Regulatory Reports..........................28
Parent Reports.....................................27
Parent Termination Amount..........................57
Partial Parent Termination Amount..................57
Performance Based Restricted Stock Award...........46
Person..............................................5
Plan...............................................15
Post-Termination Company Acquisition Proposal Event56
Preferred Shares...................................10
Pre-Termination Acquisition Proposal Event.........58
Prudential..........................................1
Representatives....................................36
Scheduled Subsidiaries..............................9
SEC................................................13
Securities Act.....................................12
Separate Account...................................20
Shareholder Approval/Reommendation Exception.......57
Significant Subsidiary.............................10
Starting Date......................................58
Subsidiary..........................................9
Superior Proposal..................................36
Surviving Corporation...............................2
Surviving Plans....................................49
Takeover Statute...................................18
Tax................................................19
Tax Return(s)......................................19
Taxes..............................................19
Taxing Authority...................................19
TBCA................................................1
Termination Date...................................53
Tri-Party Agreement.................................1
U.S. GAAP...........................................1
Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of May 11, 2001, among American General Corporation,
a Texas corporation (the "Company"), American International Group, Inc., a
Delaware corporation ("Parent"), and Washington Acquisition Corporation, a
Texas corporation and a direct wholly owned subsidiary of Parent ("Merger
Sub").
Recitals
WHEREAS, the Agreement and Plan of Merger, dated as of
March 11, 2001 (the "Prudential Agreement"), previously entered into by the
Company, 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"),
and Ascend Merger Corp., a Texas corporation and a wholly owned subsidiary
of HDP ("Ascend"), has been terminated pursuant to the terms thereof and
the terms of the Tri-Party Agreement, dated as of May 11, 2001 among the
Company, Parent, Prudential, HDP and Ascend (the "Tri-Party Agreement");
WHEREAS, the boards of directors of Parent, Merger Sub
and the Company have each determined that it is in furtherance of and
consistent with their respective long-term business strategies and is
advisable and in the best interests of their respective companies and
shareholders for Merger Sub to merge with and into the Company upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the boards
of directors of Parent, Merger Sub and the Company have each approved the
merger (the "Merger") of Merger Sub with and into the Company in accordance
with the applicable provisions of the Texas Business Corporation Act (the
"TBCA"), and upon the terms and subject to the conditions set forth herein;
WHEREAS, it is intended that, for United States federal
income tax purposes, the Merger shall qualify as a reorganization under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder (the "Code")
and that this Agreement be, and hereby is, adopted as a plan of
reorganization for purposes of Section 368 of the Code;
WHEREAS, Parent, Merger Sub and the Company intend that
the Merger be accounted for as a "pooling of interests" under United States
generally accepted accounting principles ("U.S. GAAP");
WHEREAS, as an inducement to the willingness of Parent
and Merger Sub to enter into this Agreement, Parent and the Company have
entered into employment agreements, each dated as of the date hereof and to
become effective as of the Effective Time, with Xxxxxx X. Xxxxxx, Xxxx X.
Xxxx and Xxxxxx X. Xxxxxx; and
WHEREAS, the Company, Parent and Merger Sub desire to
make certain representations, warranties, covenants and agreements in
connection with the Merger and the other transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises, and of
the representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time, Merger Sub
shall be merged with and into the Company, and the separate corporate
existence of Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation"), and the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. At the Effective Time, the effect
of the Merger shall be as provided in this Agreement, the Articles of
Merger and the applicable provisions of the TBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.2 Closing. The closing of the Merger (the "Closing")
shall take place (i) at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 9:00 a.m., New York City time, on
the fifth Business Day after all of the conditions set forth in Article VII
have been fulfilled or waived (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) in accordance with this Agreement or (ii) at
such other place and time and/or on such other date as the Company and
Parent may agree in writing (the "Closing Date"). For purposes of this
Agreement, "Business Day" shall mean any day other than a Saturday, Sunday
or one on which banks are authorized by law to close in New York, New York.
1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date (or such earlier time
as the parties hereto may mutually agree), the parties hereto shall file
articles of merger as contemplated by the TBCA (the "Articles of Merger"),
together with any required related certificates, with the Secretary of
State of the State of Texas, in such form as required by, and executed in
accordance with the relevant provisions of, the TBCA. The Merger shall
become effective upon the issuance of a certificate of merger by the
Secretary of State of the State of Texas in response to the filing of the
Articles of Merger or at such later date and time as may be set forth in
such Articles of Merger (such time, the "Effective Time" and the date on
which the Effective Time occurs, the "Effective Date").
1.4 Change in Structure. Parent may at any time prior to
the Effective Time change the structural method of effecting the
combination with the Company (including, without limitation, the provisions
of this Article I and of Article IV) if and to the extent Parent deems such
change to be desirable; provided, however, that no such change shall (i) be
effected without the consent of the Company, which consent shall not be
unreasonably withheld or delayed, (ii) alter or change in any way
(including as to the amount or kind) the consideration to be issued to
holders of common shares, par value $.50 per share, of the Company (the
"Common Shares"), or the holders of any Company Options or Company
Restricted Shares as provided for in this Agreement, (iii) adversely affect
the tax treatment of holders of Common Shares or the holders of any Company
Options or Company Restricted Shares as a result of the transactions
contemplated by this Agreement, or (iv) meaningfully impede or meaningfully
delay consummation of the transactions contemplated by this Agreement. In
addition, Parent and Merger Sub agree that if, as a result of any such
change in the structural method of effecting the combination with the
Company, any representation or warranty of the Company would become untrue
or incorrect, then such failures to be true or correct, to the extent
arising from such change in structure, shall not be taken into account in
determining whether the condition set forth in Section 7.2(a) shall have
been satisfied.
ARTICLE II
ARTICLES OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 The Articles of Incorporation. The articles of
incorporation of the Company as in effect immediately prior to the
Effective Time shall be the articles of incorporation of the Surviving
Corporation (the "Articles of Incorporation"), until thereafter duly
amended as provided therein or by applicable law.
2.2 The Bylaws. The bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation (the "Bylaws"), until thereafter amended as provided
therein or by applicable law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1 Directors. The directors of Merger Sub immediately
prior to the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Articles of Incorporation and
the Bylaws of the Surviving Corporation.
3.2 Officers. The officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, be
the officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Articles of Incorporation and
the Bylaws of the Surviving Corporation.
ARTICLE IV
EFFECT OF THE MERGER ON STOCK; EXCHANGE OF CERTIFICATES
4.1 Effect on Stock. At the Effective Time, as a result
of the Merger and without any action on the part of the holder of any stock
of the Company or Merger Sub:
(a) Merger Consideration. Subject to Section 4.2(d), each
Common Share issued and outstanding immediately prior to the Effective Time
(excluding any Common Shares ("Excluded Shares") held by the Company,
Parent, any wholly owned Subsidiary of Parent or by any wholly owned
Subsidiary of the Company, other than those Common Shares (i) held in trust
accounts, managed accounts and the like, or otherwise held in a fiduciary
or similar capacity, that are beneficially owned by third parties, (ii)
held in connection with any proprietary trading activities conducted by the
Company's broker-dealer subsidiaries in the ordinary course, consistent
with past practice, or (iii) described in Section 5.2(e)(ii) of the Company
Disclosure Letter) shall be converted into the right to receive in
accordance with this Article IV a number of shares (the "Merger
Consideration") of common stock, par value $2.50 per share, of Parent
("Parent Common Stock") equal to (a) if the Parent Average Price is $84.22
or greater, 0.5462; (b) if the Parent Average Price is less than $84.22 but
greater than $76.20, the quotient, rounded to the nearest ten-thousandth,
resulting from dividing (i) $46.00 by (ii) the Parent Average Price; or (c)
if the Parent Average Price is $76.20 or less, 0.6037 (such number pursuant
to (a), (b) or (c), as the case may be, subject to adjustment as provided
in Section 4.3, the "Exchange Ratio"). The "Parent Average Price" shall be
the average of the daily average of the per share high and low sales prices
of one share of Parent Common Stock as reported on The New York Stock
Exchange, Inc. (the "NYSE") composite transactions reporting system (as
reported in the New York City edition of The Wall Street Journal or, if not
reported thereby, another mutually acceptable authoritative source) for
each of the 10 trading days ending on the third trading day prior to the
Closing Date, rounded to the nearest ten-thousandth of a dollar.
(b) Cancellation of Common Shares.
(i) At the Effective Time, all Common Shares shall no
longer be outstanding and shall be cancelled and retired and shall
cease to exist, and each certificate (a "Certificate") formerly
representing any of such Common Shares (other than Excluded
Shares) shall thereafter represent only the right to receive the
Merger Consideration and the right, if any, to receive, pursuant
to Section 4.2(d), cash in lieu of a fractional share of Parent
Common Stock and any distribution or dividend pursuant to Section
4.2(b), in each case without interest.
(ii) Each Excluded Share issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be cancelled and retired without
payment of any consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of
common stock, par value $0.01 per share ("Merger Sub Common Stock"), of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall constitute one validly issued, fully paid and nonassessable Common
Share. Following the Effective Time, each certificate evidencing ownership
of shares of Merger Sub Common Stock shall evidence ownership of such
Common Shares.
4.2 Exchange of Certificates for Shares.
(a) Exchange Agent and Procedures.
(i) Prior to the Effective Time, Parent shall appoint
a bank, trust company or other agent reasonably acceptable to the
Company, as exchange agent (the "Exchange Agent") for the purpose
of acting solely as an agent in exchanging Certificates for shares
of Parent Common Stock in accordance with this Article IV;
notwithstanding anything to the contrary set forth herein, Parent
may cause its regular stock transfer agent to perform the
functions of the Exchange Agent hereunder at any time following
the six-month anniversary of the Closing Date, and the term
"Exchange Agent" shall include such stock transfer agent acting in
such capacity. Promptly after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to send to each holder
of record of Common Shares (other than Excluded Shares) as of the
Effective Time (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent, such letter of transmittal to be in such form
and to have such other provisions as the Company and Parent shall
reasonably specify, and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for (A) the Merger
Consideration and (B) if applicable, any cash in lieu of
fractional shares of Parent Common Stock in accordance with
Section 4.2(d) and unpaid dividends or other distributions in
accordance with Section 4.2(b). The Exchange Agent will act solely
for the benefit of holders of record of Common Shares (other than
Excluded Shares) as of the Effective Time in relation to the
actions required by the Exchange Agent under this Article IV.
(ii) Each holder of any Common Shares that have been
converted into a right to receive the Merger Consideration set
forth in Section 4.1(a) shall, upon surrender of a Certificate for
cancellation to the Exchange Agent together with a properly
completed letter of transmittal, duly executed, be entitled to
receive in exchange therefor (x) that whole number of shares of
Parent Common Stock that such holder is entitled to receive
pursuant to this Article IV and (y) a check in the amount (after
giving effect to any tax withholdings required by applicable Law)
of (A) any cash in lieu of a fractional share of Parent Common
Stock in accordance with Section 4.2(b), plus (B) if applicable,
any unpaid dividends or other distributions, that such holder has
the right to receive in accordance with Section 4.2(b), and the
Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any amount payable upon due
surrender of the Certificates.
(iii) In the event of the surrender of a Certificate
representing Common Shares which are not registered in the
transfer records of the Company under the name of the Person
surrendering such Certificate, the proper number of shares of
Parent Common Stock together with a check for any cash to be paid
upon due surrender of the Certificate and any other dividends or
distributions in respect thereof, shall be issued or otherwise
delivered and/or paid to such a transferee if the Certificate
formerly representing such Common Shares is presented to the
Exchange Agent, accompanied by all documents reasonably required
to evidence and effect such transfer and to evidence that any
applicable stock transfer Taxes have been paid. If any shares of
Parent Common Stock are to be delivered to a Person whose name is
other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such delivery
that the Person requesting such delivery shall pay any transfer or
other Taxes required to be paid by reason of such delivery to a
Person whose name is other than that of the registered holder of
the Certificate surrendered or shall establish to the reasonable
satisfaction of Parent that such Tax has been paid or is not
applicable. For the purposes of this Agreement, the term "Person"
shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, Governmental
Entity or other entity of any kind or nature.
(b) Distributions with Respect to Unexchanged Shares. All
shares of Parent Common Stock to be issued pursuant to the Merger shall be
deemed issued and outstanding as of the Effective Time and shall be
entitled to all dividends or other distributions declared by Parent in
respect of the Parent Common Stock, the record date for which is at or
after the Effective Time. No dividends or other distributions in respect of
the Parent Common Stock shall be paid to any holder of any unsurrendered
Certificate until such Certificate is surrendered for exchange in
accordance with this Article IV. Subject to the effect of escheat or
similar Laws, following surrender of any such Certificate, there shall be
issued and/or paid to the holder of the shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the dividends or other distributions with a record date at or
after the Effective Time theretofore payable with respect to such shares of
Parent Common Stock and not paid and/or (ii) at the appropriate payment
date, the dividends or other distributions payable with respect to such
shares of Parent Common Stock with a record date at or after the Effective
Time but with a payment date subsequent to surrender.
(c) Closing of Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of the Common Shares outstanding
immediately prior to the Effective Time thereafter on the records of the
Company.
(d) Fractional Shares. Notwithstanding any other
provision of this Agreement, no fraction of a share of Parent Common Stock
will be issued as Merger Consideration, and any holder of Common Shares
entitled to receive a fraction of a share of Parent Common Stock but for
this Section 4.2(d), shall be entitled to receive a cash payment in lieu
thereof, in an amount determined by multiplying (i) the average of the
closing sale prices of Parent Common Stock as reported on the NYSE
composite transactions reporting system (as reported in the New York City
edition of The Wall Street Journal or, if not reported thereby, another
mutually acceptable authoritative source) for each of the five trading days
immediately preceding the Closing Date by (ii) the fraction of a share
(rounded to the nearest thousandth when expressed in decimal form) of
Parent Common Stock that such holder would otherwise be entitled to receive
pursuant to Section 4.1(a).
(e) Termination of Entitlement. Upon demand by Parent,
any shares of Parent Common Stock and any amounts payable pursuant to
Section 4.2(d) that remain unclaimed by former shareholders of the Company
for one year after the Effective Time shall be paid or transferred to
Parent. Any holders of Common Shares who have not theretofore complied with
this Article IV shall thereafter look only to Parent for payment of the
Merger Consideration and any cash, dividends and other distributions in
respect thereof payable and/or issuable pursuant to Section 4.1, Section
4.2(b) and Section 4.2(d) upon due surrender of their Certificates, in each
case, without any interest thereon. Notwithstanding the foregoing, none of
Parent, Merger Sub, the Surviving Corporation, the Exchange Agent or any
other Person shall be liable to any former holder of Common Shares for any
amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar Laws. If any Certificates shall not
have been surrendered immediately prior to the date on which any payment
pursuant to this Article IV would otherwise escheat to or become property
of any Governmental Entity, the payment in respect of such Certificate
shall, to the extent permitted by applicable Law, become the property of
Parent, free and clear of all claims or interests of any Person previously
entitled thereto.
(f) Lost, Stolen or Destroyed Certificates. In the event
any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration and any cash payable in lieu of a fraction of a share
of Parent Common Stock and any unpaid dividends or other distributions in
respect thereof pursuant to Section 4.2(b) and Section 4.2(d) upon due
surrender of and deliverable in respect of the Common Shares represented by
such Certificate pursuant to this Agreement. Delivery of such affidavit and
the posting of such bond shall be deemed delivery of a Certificate with
respect to the relevant Common Shares for purposes of this Article IV.
(g) Withholding Taxes. Parent, the Surviving Corporation
or the Exchange Agent shall be entitled to deduct and withhold from the
Merger Consideration or other amounts otherwise payable pursuant to this
Agreement to any former holder of Common Shares such amounts as Parent, the
Surviving Corporation or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or non-U.S. tax Law. To the extent that amounts
are so withheld by Parent, the Surviving Corporation or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the former holder of the Common Shares in respect of
which such deduction and withholding was made by Parent, the Surviving
Corporation or the Exchange Agent.
4.3 Adjustments to Prevent Dilution. In the event Parent
changes (or establishes a record date for changing) the number of shares of
Parent Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction with respect to the
outstanding shares of Parent Common Stock or Parent pays (or establishes a
record date for paying) any special or extraordinary dividend or
distribution on shares of Parent Common Stock prior to the Effective Time,
then (a) if the record and payment or effective dates, as the case may be,
therefor shall be prior to the Effective Time, the Exchange Ratio, and the
formula by which it is calculated pursuant to Section 4.1(a), shall be
proportionately and appropriately adjusted to reflect such stock split,
stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares, special or extraordinary dividend or
distribution or similar transaction; and (b) if the record date therefor
shall be prior to the Effective Time but the payment or effective date, as
the case may be, therefor shall be subsequent to the Effective Time, Parent
shall take such action as shall be required so that on such payment or
effective date, as the case may be, any former holder of Common Shares who
shall have received or become entitled to receive Merger Consideration
pursuant to this Article IV shall be entitled to receive such additional
shares of Parent Common Stock or such special or extraordinary dividend or
distribution as such holder would have received as a result of such event
if the record date therefor had been immediately after the Effective Time.
In the event that the Company changes (or establishes a record date for
changing) the number of Common Shares issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares or similar transaction with respect to the outstanding Common
Shares, then the Exchange Ratio shall be appropriately adjusted, taking
into account the record and payment or effective dates, as the case may be,
for such transaction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Standard. No representation or warranty of the
Company contained in Section 5.2 (other than those contained in Section
5.2(b)(i) and Section 5.2(f)(i)(y)(i)) and no representation or warranty of
Parent contained in Section 5.3 (other than those contained in Section
5.3(b)(i) and Section 5.3(f)(ii)) shall be deemed untrue or incorrect, and
the Company or Parent, as the case may be, shall not be deemed to have
breached a representation or warranty as a consequence of the existence of
any fact, event or circumstance inconsistent with such representation or
warranty, unless such fact, event or circumstance, individually or taken
together with all other facts, events or circumstances inconsistent with
any representation or warranty contained in Section 5.2 or Section 5.3, as
applicable, has had or is reasonably likely to have a Material Adverse
Effect on such Person, in each case disregarding for these purposes (x) any
qualification or exception for, or reference to, materiality in any such
representation or warranty and (y) any use of the terms "material,"
"materially," "in all material respects" or similar terms or phrases in any
such representation or warranty. For purposes of this Agreement, "Material
Adverse Effect" means, with respect to a Person, a material adverse effect
on the properties, assets, liabilities, financial condition, business or
operating earnings of such Person and its Subsidiaries, taken as a whole,
or an effect which is reasonably likely to prevent or materially delay or
materially impair the ability of such Person to consummate the transactions
contemplated by this Agreement, except to the extent that such adverse
effect results from (i) general economic conditions or changes therein,
(ii) financial or securities market fluctuations or conditions, (iii)
changes in, or events or conditions affecting, the financial services
industry, insurance and insurance services industries, annuity industry,
consumer finance industry or asset management industry generally, (iv) the
imposition by any Governmental Entity of any condition or requirement in
connection with the transactions contemplated hereby (provided, that
nothing in this clause (iv) shall be deemed to modify or restrict the
rights of the parties under Section 6.6(a) or 7.1(c)), (v) Actions set
forth in Section 5.2(g) of the Company Disclosure Letter, or (vi) entering
into and announcing the Prudential Agreement, the Tri-Party Agreement or
this Agreement, undertaking the transactions contemplated by the Tri-Party
Agreement or this Agreement, undertaking the transactions contemplated by
the Prudential Agreement (excluding for this purpose any reference to
transactions contemplated by Sections 6.1 and 6.18 of the Prudential
Agreement or the disclosure letter relating to such sections) to the extent
undertaken prior to the date hereof, or any Actions relating to the
Prudential Agreement, the Tri-Party Agreement or this Agreement, and, in
the case of any of clauses (i), (ii) or (iii), not affecting such Person
and its Subsidiaries to a materially greater extent than it affects other
Persons in industries in which such Person competes. In determining whether
the outcome of any Action which has not become final and non-appealable has
had, or is reasonably likely to have, a Material Adverse Effect, the
likelihood that such outcome will be reversed or reduced on appeal or
reduced by settlement shall be taken into account. The representations and
warranties of the Company in Section 5.2(b)(i) and of Parent in Section
5.3(b)(i), respectively, shall be deemed to have been breached if they are
untrue or incorrect in any meaningful respect. The representations and
warranties of the Company and Parent in Section 5.2(f)(i)(y)(i) and Section
5.3(f)(ii), respectively, shall be deemed to have been breached if they are
not true and correct. It is understood that the mere inclusion of an item
in the Company Disclosure Letter or the Parent Disclosure Letter, as the
case may be, shall not be deemed an admission by the Company or Parent, as
applicable, that such item represents a material exception to any
representation, warranty or covenant or is for any purpose relating to this
Agreement a material fact, event or circumstance or that such item has had,
or is reasonably likely to have, a Material Adverse Effect with respect to
it. References herein to "material," "meaningful," "materially,"
"meaningfully," "in all material respects," "in any meaningful respect" or
similar terms or phrases in respect of any Person shall apply to such
Person and members of its consolidated group taken as a whole.
5.2 Representations and Warranties of the Company. Except
as set forth in a correspondingly numbered section of the disclosure letter
delivered to Parent by the Company prior to entering into this Agreement
(the "Company Disclosure Letter"), the Company hereby represents and
warrants to Parent (it being understood that (x) the words "to the
Knowledge of the Company" or "the Company's Knowledge" and any words of
similar import shall mean the actual knowledge of the Persons whose names
are set forth in Section 5.2(a)(i) of the Company Disclosure Letter and (y)
the listing or setting forth of an item in one section of the Company
Disclosure Letter shall be deemed to be a listing or setting forth in
another section or sections of the Company Disclosure Letter if and only to
the extent that such information is reasonably apparent to be so applicable
to such other section or sections) that:
(a) Organization, Good Standing and Qualification.
(i) Each of the Company and its Scheduled
Subsidiaries is a corporation or other entity duly organized, validly
existing and, if applicable, in good standing under the laws of its
respective jurisdiction of organization and has all requisite corporate or
similar power and authority to own, operate and lease its properties and
assets and to carry on its business as presently conducted and is duly
qualified to do business and is in good standing as a foreign corporation
or other entity in each jurisdiction where the ownership, operation or
leasing of its assets or properties or conduct of its business requires
such qualification. The Company has made available to Parent a complete and
correct copy of the Company's articles of incorporation and bylaws, each as
amended to date, which are in full force and effect.
As used in this Agreement, "Subsidiary" of the Company,
Parent, the Surviving Corporation of any other Person means any entity,
whether incorporated or unincorporated, in which the Company, Parent, the
Surviving Corporation or such other Person, as the case may be, owns,
directly or indirectly, at least a majority of the securities or ownership
interests having by their terms ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions. As
used in this Agreement, the "Scheduled Subsidiaries" of the Company shall
mean those corporations or other entities listed in Section 5.2(a)(ii) of
the Company Disclosure Letter. All of the outstanding shares of capital
stock or other equity interests of each of the Company's Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable and owned by
the Company or by a direct or indirect wholly owned Subsidiary of the
Company, free and clear of any material lien, pledge, security interest,
claim or other encumbrance.
(ii) Other than its Scheduled Subsidiaries, the
Company does not have any Subsidiaries which (a) individually constitute
or, if aggregated and treated as one Subsidiary, would constitute a
"Significant Subsidiary" within the meaning of Rule 1-02(w) of Regulation
S-X under the Exchange Act, (b) have unlimited liability share capital or
other equity or similar interests of unlimited liability, or (c) conduct
material insurance, fund management, broker-dealer, banking or consumer
finance operations. Section 5.2(a)(ii) of the Company Disclosure Letter (A)
lists the jurisdiction of organization of each of the Company's Scheduled
Subsidiaries, (B) lists each material Governmental Entity that exercises
primary supervisory jurisdiction over the Company and each of the Company's
Scheduled Subsidiaries with respect to market conduct (sales processes)
and/or capital adequacy/financial strength, (C) in the case of the
Company's Subsidiaries that conduct insurance operations (collectively, the
"Company Insurance Companies"), lists, as of December 31, 2000, the U.S.
jurisdictions where the Company Insurance Companies are domiciled or
"commercially domiciled" and licensed to do an insurance business for
insurance regulatory purposes, and (D) indicates which Subsidiaries in
which the Company's interest therein includes unlimited share capital or
other equity or similar interests of unlimited liability. Each of the
Company and each of its Subsidiaries holds all material licenses or
authorizations required or necessary to conduct its business as currently
conducted.
(iii) As of the date hereof, except as set forth in
Section 5.2(a)(iii) of the Company Disclosure Letter, the Company does not
own (other than (A) in a bona fide fiduciary capacity or in satisfaction of
a debt previously contracted, (B) in the ordinary course of its insurance,
annuity, asset management or investment business, (C) in customer accounts
held or maintained in the ordinary course, or (D) in any general account or
otherwise in the ordinary course to offset insurance liabilities)
beneficially, directly or indirectly, (x) any material equity securities or
similar material interests of any Person other than its Subsidiaries, or
(y) any interest in any general partnership, unlimited company or other
Person with share capital or other equity or similar interests of unlimited
liability, or any general partnership interest in a limited partnership.
(b) Capital Structure.
(i) The authorized stock of the Company consists of
800,000,000 Common Shares, of which 499,115,156 Common Shares (including
shares of restricted stock issued pursuant to Company Stock Plans) were
issued and outstanding (excluding treasury shares) as of the close of
business on April 30, 2001, and 60,000,000 shares of preferred stock, par
value $1.50 per share, of which no shares are issued or outstanding as of
the date hereof (the "Preferred Shares"). All of the issued and outstanding
Common Shares have been duly authorized and are validly issued, fully paid
and nonassessable. As of the Effective Time, there will be no Preferred
Shares outstanding. As of April 30, 2001, 39,481,830 Common Shares were
held in treasury by the Company (including 1,399,228 Common Shares held by
the Company's Subsidiary American General Life Insurance Company). As of
the date hereof, the Company has no commitments (including contingent or
conditional commitments) to issue or deliver Common Shares or Preferred
Shares except as described in the last sentence of this Section 5.2(b)(i)
and except that, as of April 30, 2001, there were outstanding options to
purchase 34,308,420 Common Shares granted pursuant to the Company Stock
Plans to such Persons, with such exercise prices as are set forth in a
schedule previously provided to Parent and outstanding Performance Based
Restricted Stock Awards containing Performance Awards with respect to
679,000 Common Shares and outstanding restricted share units with respect
to 774,781 Common Shares granted pursuant to Company Stock Plans, and
approximately 42,611,754 Common Shares were reserved for issuance pursuant
to the Company Stock Plans (including pursuant to such outstanding options
and other equity-based awards), but the Company is not, as of the date
hereof, obligated to issue such Common Shares reserved for issuance except
as set forth in this Section 5.2(b)(i) or the corresponding section of the
Company Disclosure Letter. In addition, as more fully described in Section
5.2(b) of the Company Disclosure Letter, as of April 30, 2001, there were
an estimated 1,042,043 phantom shares (adjusted for the March 1, 2001 stock
split) under Company deferred compensation plans which, if all such shares
vested, would be payable in Common Shares at the applicable distribution
dates.
(ii) Except as set forth above or in Section 5.2(b)
of the Company Disclosure Letter, and for changes since March 31, 2001
resulting from the exercise of stock options outstanding on such date, as
of the date hereof (i) there are no shares of capital stock or other voting
securities of the Company authorized, reserved, issued or outstanding, (ii)
neither the Company nor any of its Subsidiaries is party to any agreement
creating preemptive or other outstanding rights, subscriptions, options,
warrants, stock appreciation rights, redemption rights, repurchase rights,
convertible securities or other agreements, arrangements or commitments of
any character relating to, or the value of which is determined by reference
to, the issued or unissued share capital or other ownership interest of the
Company or any of its Scheduled Subsidiaries, and (iii) neither the Company
nor any of its Subsidiaries is party to any agreement creating any other
securities or obligations convertible or exchangeable into or exercisable
for, or giving any Person a right to subscribe for or acquire, any
securities of the Company or its Scheduled Subsidiaries, and no securities
or obligations evidencing such rights are authorized, issued or
outstanding. Neither the Company nor any of its Subsidiaries has
outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the shareholders of the Company
or any such Subsidiary on any matter ("Company Voting Debt").
(c) Corporate Authority; Approval and Fairness. The
Company has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the approval of
this Agreement by the holders of at least two-thirds of the outstanding
Common Shares entitled to vote in accordance with the TBCA and the
Company's articles of incorporation and bylaws (the "Company Requisite
Vote")). The board of directors of the Company has unanimously determined,
as of the date of this Agreement, that it is advisable and in the best
interest of the Company's shareholders for the Company to enter into this
Agreement and to consummate the Merger upon the terms and subject to the
conditions of this Agreement and, as of the date of this Agreement, has
recommended that this Agreement be approved by the shareholders of the
Company. This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, as applicable, constitutes a legal, valid and
binding obligation of the Company, except that enforcement hereof may be
subject to or limited by (i) bankruptcy, insolvency or other similar laws,
now or hereafter in effect, affecting creditors' rights generally, and (ii)
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). The
Company has received the opinion of its financial advisor, Xxxxxx Xxxxxxx &
Co. Incorporated ("Xxxxxx Xxxxxxx"), to the effect that as of the date
hereof, the Exchange Ratio is fair to holders of Common Shares from a
financial point of view, a true and correct copy of which will be furnished
to Parent.
(d) Governmental Filings; No Violations.
(i) Other than the reports, filings, registrations,
consents, approvals, permits, authorizations, applications, expiry of
waiting periods and/or notices (A) pursuant to Section 1.3 hereof, (B)
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (C) under any non-U.S. competition laws, (D) under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), (E) under the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder
(the "Securities Act"), (F) under the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder (the "1940
Act"), (G) under the Investment Advisers Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the "Advisers Act"), and with
applicable state regulatory authorities governing investment advisors, (H)
with or required by the NYSE and any other stock exchange on which the
Common Shares are listed, (I) with the National Association of Securities
Dealers, Inc. (the "NASD"), (J) required under applicable federal, state
and non-U.S. regulatory authorities governing insurance, (K) required by
federal, state and non-U.S. regulatory authorities governing financial
services, banking (including, but not limited to, the Federal Deposit
Insurance Corporation (the "FDIC") and the Office of Thrift Supervision
(the "OTS")), insurance premium finance, consumer finance, investment
services, commercial finance and mortgage lending or servicing, (L)
required by applicable federal and non-U.S. regulatory authorities
governing foreign investments, or (M) required under state securities or
"Blue Sky" laws, no material notices, reports or other filings are required
to be made by the Company or any of its Subsidiaries with, nor are any
material consents, registrations, approvals, permits applications, expiry
of waiting periods or authorizations required to be obtained by the Company
or any of its Subsidiaries from any U.S. or non-U.S. governmental or
regulatory authority, agency, commission, tribunal, body or other
governmental, quasi-governmental, regulatory or self-regulatory entity,
including, without limitation, any state insurance department or insurance
or consumer finance regulatory agency, in each case, of competent
jurisdiction (each a "Governmental Entity"), in connection with the
execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger and the other transactions
contemplated hereby, in each case, to the extent arising out of, or
relating to, the business or nature of the Company and its Subsidiaries.
(ii) Except as set forth in Section 5.2(d)(ii) of the
Company Disclosure Letter, the execution, delivery and performance of this
Agreement by the Company do not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default under, the articles
of incorporation or bylaws of the Company or the comparable governing
instruments of any of its (x) Scheduled Subsidiaries and (y) as of the
Closing, its other Subsidiaries, (B) a breach or violation of, or a default
under, or the creation or acceleration of any obligations or the creation
of a material lien, pledge, security interest or other encumbrance on the
assets of the Company or any of its Subsidiaries (with or without notice,
lapse of time or both) pursuant to, or the creation or acceleration of any
right of termination under, any material agreement, lease, contract,
license, note, mortgage, indenture, arrangement or other obligation,
whether written or oral ("Contracts" and individually, a "Contract"),
binding upon the Company or any of its Subsidiaries or any of their
respective assets (provided, as to consummation, that the filings, reports
and notices are made, and approvals are obtained, as referred to in Section
5.2(d)(i)) or any Law or material governmental or non-governmental permit,
registration, authorization or license to which the Company or any of its
Subsidiaries or their respective assets are subject, or (C) any material
and adverse change in the rights or obligations of the Company or any of
its Subsidiaries under any material Contract.
(e) Company Reports; Financial Statements; Undisclosed
Liabilities; Statutory Statements.
(i) Each registration statement, report, proxy
statement or information statement prepared by the Company or its
Subsidiaries since December 31, 1997, including the Company's Annual Report
on Form 10-K for the year ended December 31, 2000 (the "Company Form
10-K"), each in the form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such reports filed with the SEC subsequent to
the date hereof, the "Company Reports"), as of their respective dates, as
amended prior to the date hereof or as supplemented by Company Reports
filed prior to the date hereof, did not, and any Company Reports filed with
the SEC subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading;
provided, that the Company makes no representation or warranty with respect
to any information with respect to Parent provided to it by Parent for
inclusion in any Company Report filed after the date hereof. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly
presents, or will fairly present, in all material respects the consolidated
financial position of the Company and its Subsidiaries as of its date, and
each of the consolidated statements of income and of changes in
shareholders' equity and cash flows included in or incorporated by
reference into the Company Reports (including any related notes and
schedules) fairly presents, or will fairly present, in all material
respects the results of operations, retained earnings and changes in
financial position, as the case may be, of the Company and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that were not,
or are not reasonably expected to be, material in amount or effect), in
each case in accordance with U.S. GAAP (except in the case of unaudited
statements, as permitted by Form 10-Q) consistently applied during the
periods involved, except as may be noted therein or in the notes thereto.
(ii) Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of the
Company included in the Company Form 10-K or liabilities described in the
notes thereto (or liabilities for which neither accrual nor footnote
disclosure is required pursuant to U.S. GAAP), and except for liabilities
incurred in the ordinary course since December 31, 2000 and for liabilities
set forth in Section 5.2(e)(ii) of the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries has incurred any material liability
of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) (other than liabilities
incurred in connection with the negotiation, execution, delivery and
performance of this Agreement and the transactions contemplated hereby).
(iii) Except as set forth in Section 5.2(e)(iii) of
the Company Disclosure Letter, the Company and each of its Subsidiaries has
timely filed all material periodic statements, together with all exhibits,
interrogatories, notes, schedules and any actuarial opinions, affirmations
or certifications or other supporting documents in connection therewith,
required to be filed with or submitted to any Governmental Entity on forms
prescribed or permitted thereby (collectively, the "Company Regulatory
Reports"). Except as set forth in Section 5.2(e)(iii) of the Company
Disclosure Letter, the financial statements included in the Company
Regulatory Reports, including the notes thereto, were prepared in
conformity in all material respects with applicable statutory accounting
practices prescribed or permitted by the applicable Governmental Entity
consistently applied for the periods covered thereby and present fairly, in
all material respects, the statutory financial position of the Company or
such Subsidiary as at the respective dates thereof and the results of
operations thereof for the respective periods then ended. The Company
Regulatory Reports complied in all material respects with all applicable
Laws when filed, and no material deficiency has been asserted with respect
to any Company Regulatory Report by any Governmental Entity.
(iv) Except as disclosed in Section 5.2(e)(iv) of the
Company Disclosure Letter or set forth in the Company's proxy statement
with respect to the annual meeting of Company shareholders in 2001, neither
the Company nor any of its Subsidiaries is a party to any Contract with any
officer or director of the Company or any Person in which any such officer
or director holds 5% or more of equity interests which would be required to
be disclosed under Item 404 of Regulation S-K promulgated by the SEC.
(f) Absence of Certain Changes.
(i) Except as disclosed in the Company Reports filed
prior to the date hereof or set forth in Section 5.2(f)(i) of the Company
Disclosure Letter, and (other than in the case of clause (y)(i) below)
except for actions or inactions after the date hereof as expressly
contemplated by Section 6.1 below, since December 31, 2000 (x) the Company
and its Subsidiaries have conducted their respective businesses only in the
ordinary course, consistent with past practice, and (y) there has not been
(other than as a result of this Agreement or the Merger) (i) any Material
Adverse Effect with respect to the Company or any development or
combination of developments, that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect with respect
to the Company; (ii) any material change by the Company in accounting
principles, practices or methods other than as required by U.S. GAAP or
applicable Law or as disclosed in the Company Reports filed prior to the
date hereof; (iii) any declaration, setting aside or payment of any
dividend or other distribution in respect of the stock of the Company,
except for dividends or other distributions on its capital stock publicly
announced prior to the date hereof (including the dividend of one Common
Share for each Common Share outstanding on February 8, 2001 declared by the
Company's board of directors and payable on March 1, 2001); (iv) any split
in its capital stock, combination, recapitalization, redenomination of
share capital or other similar transaction or issuance or authorization of
any issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (v) other than in the
ordinary course, any material addition, or any development involving a
prospective material addition, to the Company's consolidated reserves for
future policy benefits or other policy claims and benefits; or (vi) any
material change in the accounting, actuarial, investment, reserving,
underwriting or claims administration policies, practices, procedures,
methods, assumptions or principles of the Company or any Subsidiary of the
Company not disclosed in the Company Reports filed prior to the date hereof
except as required by U.S. GAAP or applicable Law.
(ii) As of the date hereof, the Company has no
Knowledge that any material rating presently held by the Company or any of
its Scheduled Subsidiaries is likely to be modified, qualified, lowered or
placed under surveillance for a possible downgrade for any reason (other
than any such change resulting primarily from entering into and announcing
the Prudential Agreement, the Tri-Party Agreement or this Agreement,
undertaking the transactions contemplated by the Prudential Agreement, the
Tri-Party Agreement or this Agreement, or any Actions relating to the
Prudential Agreement, the Tri-Party Agreement or this Agreement).
(g) Litigation. Except as identified by name or as
summarized in reasonable detail in the Company Reports filed prior to the
date hereof or as set forth in Section 5.2(g) of the Company Disclosure
Letter, to the extent provided as of December 31, 2000 in appropriately
identified reserves or, to the extent commenced or threatened after the
date hereof, relating to this Agreement and the transactions contemplated
hereby, there are no material civil, criminal or administrative actions,
suits, claims, hearings, investigations, inquiries, arbitrations,
mediations or proceedings ("Actions") pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries before
any Governmental Entity.
(h) Employee Benefits; Labor.
(i) For purposes of this Agreement, the term (x)
"Plan" shall mean any "employee benefit plan," within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), whether or not subject to ERISA, and any employment,
consulting, termination, severance, retention, change-in-control, deferred
or incentive compensation, commission, stock option or other equity-based,
vacation or other fringe-benefit plan, program, policy, arrangement,
agreement or commitment, and (y) "Company Plan" shall mean each material
Plan which is sponsored or contributed to by the Company or any of its
Subsidiaries, to which the Company or any such Subsidiary has any
obligation to contribute, or with respect to which the Company or any such
Subsidiary is a party or otherwise has any material liability.
(ii) Section 5.2(h)(ii) of the Company Disclosure
Letter includes a complete list of all Company Plans (other than any
Company Plans that are adopted after the date hereof as permitted under
Section 6.1(d)). With respect to each Company Plan listed on the Company
Disclosure Letter, the Company has delivered or made available to Parent a
true, correct and complete copy of: (A) each Company Plan, and all benefit
schedules, employee communications, trust agreements, and insurance
contracts and other funding vehicles related thereto; (B) the most recent
Annual Report (Form 5500 Series) and accompanying schedule, if any; (C) the
current summary plan description and any material modifications thereto, if
any (in each case, whether or not required to be furnished under ERISA);
(D) the most recent annual financial report, if any; (E) the most recent
actuarial report, if any; and (F) the most recent determination letter from
the U.S. Internal Revenue Service (the "IRS"), if any. Except as
specifically provided in the foregoing documents delivered or made
available to Parent, as indicated in the Company Disclosure Letter or as
permitted under Section 6.1(d), there are no amendments to any Company Plan
that have been adopted or approved nor has the Company or any of its
Subsidiaries undertaken to make any such amendments or to adopt or approve
any new Company Plan.
(iii) Except as set forth in Section 5.2(h)(iii) of
the Company Disclosure Letter: (x) each Company Plan has been operated and
administered and is in compliance with its terms and all applicable Laws,
except for any failures to so operate, administer or comply that have not
and will not, individually or in the aggregate, resulted or result in any
material liability or obligation of the Company or any of its Subsidiaries,
and (y) there are no actions, suits, claims or governmental audits (other
than routine claims for benefits in the ordinary course) pending or, to the
Knowledge of the Company, threatened with respect to any Company Plan or
the assets thereof that, if adversely determined, would, individually or in
the aggregate, result in any material liability or obligation of the
Company or any of its Subsidiaries.
(iv) Except as set forth in Section 5.2(h)(iv) of the
Company Disclosure Letter, no Company Plan is (A) a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA, or (B) a multiple
employer plan within the meaning of Section 4063 or 4064 of ERISA. No
Company Plan has an "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived.
(v) Each Company Plan that is intended to qualify
under Section 401(a) and/or 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and, to the
Knowledge of the Company, nothing has occurred or been done or omitted to
be done since the date of such letter that has adversely affected or will
adversely affect such qualified status. The Company and its Subsidiaries
have timely paid all contributions, premiums and expenses payable to or in
respect of each Company Plan under the terms thereof and in accordance with
all applicable Laws, except where any failure to pay such amounts has not
and will not, individually or in the aggregate, resulted or result in any
material liability or obligation of the Company or its Subsidiaries.
(vi) Neither the Company nor any of its Subsidiaries
has incurred or will incur, either directly or indirectly (including as a
result of an indemnification obligation), any material liability under or
pursuant to any provision of Title I or IV of ERISA or the penalty, excise
tax or joint and several liability provisions of the Code relating to
Plans, and to the Knowledge of the Company, no event, transaction or
condition has occurred, exists or is expected to occur that would
reasonably be expected to result in any such liability to the Company or
any of its Subsidiaries or, after the Effective Time, to Parent, the
Surviving Corporation or any of their respective affiliates.
(vii) Except (x) as expressly provided under the
terms of an applicable Company Plan document previously provided to Parent
(or grant documents and notices to grantees the forms of which have been
previously provided to Parent), which Company Plan documents (but not the
grant documents and notices thereunder, the relevant terms of which relate
to clauses (A) through (E) of this Section 5.2(h)(vii) are described in
Section 5.2(h)(vii) of the Company Disclosure Letter) are listed in Section
5.2(h)(vii) of the Company Disclosure Letter, or (y) except as described in
Section 5.2(h)(vii) of the Company Disclosure Letter, with respect to such
Company Plan documents, grant documents and notices to grantees, neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, either alone or in combination with any
other event (whether contingent or otherwise) will (A) entitle any current
or former employee, consultant or director of the Company or any of its
Subsidiaries to any increased or modified benefit or payment; (B) increase
the amount of compensation or benefits due to any such employee, consultant
or director; (C) accelerate the vesting, payment or funding of any
compensation, stock-based, incentive or other benefit; (D) result in any
"parachute payment" under Section 280G of the Code (whether or not such
payment is considered to be reasonable compensation for services rendered);
(E) cause any compensation to fail to be deductible under Section 162(m) or
any other provision of the Code or any similar Law; (F) otherwise result in
any payment in the nature of severance or termination pay; or (G) limit or
prohibit (except to the extent required by applicable Law) the ability to
amend, merge, terminate or receive a reversion of assets from any Company
Plan or related trust.
(viii) The Company has provided Parent with a
complete and accurate schedule of the current base salary rate, as of the
date hereof, and of the annual bonuses paid in fiscal 2001 with respect to
fiscal 2000, and stock-based awards made in fiscal 2001, in each case, in
respect of each of the 41 employees of the Company and its Subsidiaries
listed in Section 5.2(h)(viii) of the Company Disclosure Letter, and
Section 6.1(d) of the Company Disclosure Letter provides accurate
information concerning the cash bonus program for fiscal 2001.
(ix) Except as set forth in Section 5.2(h)(ix) of the
Company Disclosure Letter, none of the Company or any of its Subsidiaries
is subject to regulation or treated under any Law as a U.S. federal
government contractor or subcontractor.
(i) Compliance with Laws; Permits.
(i) Except as set forth in the Company Reports filed
prior to the date hereof, each business of the Company and each of its
Subsidiaries has been, and is being, conducted in compliance in all
material respects with all applicable federal, state, local or non-U.S.
laws, statutes, ordinances, rules, regulations (including, without
limitation, the rules of any applicable self-regulatory organization
recognized by the SEC), rulings, written interpretations, judgments,
orders, injunctions, decrees, arbitration awards, agency requirements,
licenses or permits of any Governmental Entity of competent jurisdiction,
including all regulations regulating the business and products of insurance
and all applicable orders and directives of insurance regulatory
authorities (including federal authorities with respect to variable
insurance and annuity products) and orders resulting from market conduct
examinations of insurance regulatory authorities (including federal
authorities with respect to variable insurance and annuity products)
(collectively, "Laws"). Except as set forth in the Company Reports filed
prior to the date hereof and for regulatory examinations or reviews
conducted in the ordinary course and except as set forth in Section 5.2(i)
of the Company Disclosure Letter, no material investigation or review by
any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the Knowledge of the Company, threatened.
(ii) Except as set forth in Section 5.2(i) of the
Company Disclosure Letter, no material change is required in the Company's
or any of its Subsidiaries' processes, properties, practices or procedures
in connection with any such Laws, and the Company has not received any
written notice or communication of any material noncompliance with any such
Laws that has not been cured as of the date hereof. Notwithstanding the
generality of the foregoing, the Company and each of its Subsidiaries have
in place policies and procedures with respect to themselves and their
insurance agents, third-party administrators, brokers, broker/dealers,
distributors and agents intended to assure that their sales processes and
practices are consistent in all material respects with applicable Law
governing such practices and processes, and, except as disclosed in the
Company Reports filed prior to the date hereof, where there has been any
material deviation therefrom, such deviation has been cured, resolved or
settled through agreements with applicable Governmental Entities or are
barred by all applicable statutes of limitations or other equitable
principles. To the Knowledge of the Company, all employees of the Company
and its Subsidiaries with management responsibility with respect to any
business line, and all officers and directors thereof required to be
registered with or licensed under applicable Laws are so licensed and in
good standing with the applicable Governmental Entity.
(j) Takeover Statutes. Sections 13.01 through 13.08 of
the TBCA, and, to the Knowledge of the Company any restrictive provision of
any other applicable "fair price," "moratorium," "control share
acquisition," "interested shareholder" or other similar anti-takeover
statute or regulation (each a "Takeover Statute") and any restrictive
provision of any applicable anti-takeover provision in the Company's
articles of incorporation and bylaws are not, and at the Effective Time
will not be, applicable to this Agreement, or the transactions contemplated
by this Agreement.
(k) Taxes.
(i) Except as set forth in Section 5.2(k) of the
Company Disclosure Letter, the Company and each of its Subsidiaries (which,
for the purposes of this Section 5.2(k) shall include any predecessor of
any Subsidiary): (A) have filed all material Tax Returns required to be
filed by any of them and all such filed Tax Returns are complete and
correct in all material respects, or requests for extensions to file such
Tax Returns have been timely filed, granted and have not expired; (B) have
paid all Taxes shown as due on such Tax Returns; (C) are not parties to any
tax sharing agreement or arrangement other than with each other; (D) are
not "United States real property holding corporations" within the meaning
of Section 897(c)(2) of the Code; and (E) within the past five years, have
not been a "distributing corporation" or a "controlled corporation" in a
distribution intended to qualify under Section 355(a) of the Code. The most
recent financial statements filed with the SEC and publicly available prior
to the date of this Agreement reflect an adequate reserve for all Taxes
payable by the Company and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements. No
material deficiencies for any Taxes have been proposed, asserted or
assessed by any Taxing Authority against the Company or any of its
Subsidiaries that are not adequately reserved for in accordance with U.S.
GAAP. The Federal statute of limitation has expired with respect to the
consolidated United States Federal income Tax Return of the affiliated
group of which the Company is the parent for all taxable years ending prior
to 1993.
(ii) As used in this Agreement, (i) the term "Tax"
(including, with correlative meaning, the term "Taxes") shall mean, with
respect to any Person, (a) all taxes, domestic or non-U.S., including
without limitation any income (net, gross or other, including recapture of
any tax items such as investment tax credits), alternative or add-on
minimum tax, gross income, gross receipts, gains, sales, use, leasing,
lease, user, ad valorem, transfer, recording, franchise, profits, property
(real or personal, tangible or intangible), fuel, license, withholding on
amounts paid to or by such Person, payroll, employment, unemployment,
social security, excise, severance, stamp, occupation, premium,
environmental or windfall profit tax, custom, duty, value added or other
tax, or other like assessment or charge of any kind whatsoever, together
with any interest, levies, assessments, charges, penalties, additions to
tax or additional amounts imposed by any Taxing Authority, (b) any joint or
several liability of such Person with any other Person for the payment of
any amounts of the type described in clause (a) of this definition, and (c)
any liability of such Person for the payment of any amounts of the type
described in clause (a) as a result of any express or implied obligation to
indemnify any other Person; (ii) the term "Tax Return(s) " shall mean all
returns, consolidated or otherwise, report or statement (including without
limitation informational returns), required to be filed with any Taxing
Authority; and (iii) the term "Taxing Authority" shall mean any authority
of competent jurisdiction responsible for the imposition of any Tax.
(l) Intellectual Property.
(i) Each of the Company and its Subsidiaries owns, or
is licensed or otherwise possesses legally enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or
materials, including trade secrets (collectively, "Intellectual Property")
that are used in, and material to, the business of the Company and its
Subsidiaries as currently conducted, and any such patents, trademarks,
trade names, service marks and copyrights held by the Company and/or its
Subsidiaries are valid and subsisting.
(ii) Except as disclosed in Company Reports filed
prior to the date hereof or as set forth in Section 5.2(l) of the Company
Disclosure Letter, the Company does not have Knowledge of any bona fide
claims (A) to the effect that the sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the
Company or any of its Subsidiaries, infringes on any copyright, patent,
trademark, trade name, service xxxx or trade secret; (B) against the use by
the Company or any of its Subsidiaries of any Intellectual Property used
in, and material to, the business of the Company or any of its Subsidiaries
as currently conducted or as proposed to be conducted; (C) challenging the
ownership, validity or effectiveness of any of Intellectual Property owned
by, and material to, the Company or any of its Subsidiaries; or (D)
challenging the license or legally enforceable right to use any material
third-party Intellectual Property by the Company or any of its
Subsidiaries.
(m) Brokers and Finders. Except as set forth in Section
5.2(m) of the Company Disclosure Letter, neither the Company nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Merger or the other transactions contemplated in
this Agreement based upon arrangements made by or on behalf of the Company
or any of its Subsidiaries except that the Company has employed Xxxxxx
Xxxxxxx as its financial advisor pursuant to written agreements.
(n) Insurance Business.
(i) All actuarial reports with respect to the Company
or any Company Insurance Company relied upon by the Company or any Company
Insurance Company or Governmental Entity since December 31, 1998, and all
attachments, addenda, supplements and modifications thereto (the "Company
Actuarial Analyses"), including those provided to Parent, were based upon
an accurate inventory of policies in force for the Company and the Company
Insurance Companies, as the case may be, at the relevant time of
preparation, were prepared using appropriate modeling procedures accurately
applied, if relevant, and in conformity with generally accepted actuarial
standards consistently applied, and the projections contained therein were
properly prepared in accordance with the assumptions stated therein. The
information and data furnished by the Company or any Company Insurance
Company to its independent actuaries in connection with the preparation of
the Company Actuarial Analyses were accurate in all material respects.
(ii) The Company Insurance Companies are in
compliance in all material respects with the underwriting guidelines
applicable thereto.
(iii) Except as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Company, (x) each separate account maintained by a Company Insurance
Company (a "Separate Account") is duly and validly established and
maintained under the laws of its state of formation and is either exempt
from registration under the 1940 Act or is duly registered as an investment
company under the 1940 Act, and (y) each such Separate Account is operated
and all of its operations conducted, and each contract issued by a Company
Insurance Company under which Separate Account assets are held has been
duly and validly issued, offered and sold, in compliance with all
applicable Laws.
(o) Material Contracts.
(i) Other than contracts or amendments thereto that
have been disclosed in or have been filed as an Exhibit to a Company Report
filed prior to the date hereof, or as set forth in Section 5.2(o) or
Section 5.2(h)(ii) of the Company Disclosure Letter or contracts entered
into or amendments to contracts after the date hereof as expressly
permitted by Section 6.1 below, neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any Material Contract.
"Material Contract" means, with respect to any Person, any Contract that is
material to the business, financial position or results of operations of
such Person and its Subsidiaries, taken as a whole, including (i) any
employment, severance, termination, consulting or retirement contract
providing for aggregate payments to any individual in any calendar year in
excess of $500,000, and (ii) any Contract relating to the borrowing of
money or the guarantee of any such obligation (other than contracts
evidencing fully secured repurchase agreements, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course
of business), in each case in excess of $100,000,000.
(ii) All of the Company's Material Contracts are in
full force and effect. True and complete copies of all such Material
Contracts not filed as exhibits to the Company Reports prior to the date
hereof have been delivered or made available by the Company to Parent.
Neither the Company nor any of its Subsidiaries nor, to the Knowledge of
the Company, any other party is in breach of or in default under any such
Material Contract. Neither the Company nor any of its Subsidiaries is party
to any (x) Contract containing any provision or covenant limiting in any
material respect the ability of the Company or any of its Subsidiaries,
except as set forth in Section 5.2(o) of the Company Disclosure Letter, to
(A) sell any products or services to any other Person, (B) engage in any
line of business, or (C) compete with any Person, or (y) except for
employment agreements disclosed pursuant to another Section of this
Agreement or as provided in the articles of incorporation, bylaws or other
constituent documents of the Company or any of its Subsidiaries, any
Contract providing for indemnification of directors or executive officers
of the Company in their capacity as such.
(p) Environmental Matters.
(i) Except as set forth in Section 5.2(p) of the
Company Disclosure Letter, (i) the Company and its Subsidiaries have
complied in all material respects with all applicable Environmental Laws;
(ii) to the Knowledge of the Company, the properties currently owned or
operated by the Company and its Subsidiaries (including soils, groundwater,
surface water, buildings or other structures) are not contaminated with any
Hazardous Substance; (iii) to the Knowledge of the Company, neither the
Company nor any of its Subsidiaries is subject to material liability for
any Hazardous Substance disposal or contamination on any property owned or
operated or formerly owned or operated by the Company or any of its
Subsidiaries or on any third party property or as a result of any Hazardous
Substance having been transported from any of the properties owned or
operated or formerly owned and operated by the Company or any of its
Subsidiaries; (iv) to the Knowledge of the Company, neither the Company nor
any of its Subsidiaries has received any notice, demand, letter, claim or
request for information from a Governmental Entity indicating that the
Company or any of its Subsidiaries may be in violation of or subject to
liability under any Environmental Law; and (v) neither the Company nor any
of its Subsidiaries is subject to any material orders, decrees, injunctions
or other arrangements with any Governmental Entity or any material
indemnity or other agreement with any third party relating to any
Environmental Law or Hazardous Substances.
(ii) As used herein, the term "Environmental Law"
means any Law relating to: (A) the protection, investigation or restoration
of the environment, health and safety, or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance, or (C) noise, odor, wetlands, pollution or
contamination to persons or property.
(iii) As used herein, the term "Hazardous Substance"
means any substance that is: (A) listed, classified or regulated pursuant
to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which may be the subject of regulatory action by any Government
Authority pursuant to any Environmental Law.
(q) Risk Management; Derivatives.
(i) The Company and its Subsidiaries have in place
risk management policies and procedures sufficient in scope and operation
to protect against risks of the type and in amounts reasonably expected to
be incurred by Persons of similar size and in similar lines of business as
the Company and its Subsidiaries.
(ii) The adoption of Statement of Financial
Accounting Standards No. 133 will not have a material and adverse impact on
the Company's consolidated results of operations or financial position.
(iii) All material derivative instruments, including,
without limitation, swaps, caps, floors and option agreements, whether
entered into for the Company's own account, or for the account of one or
more of its Subsidiaries or their customers, were entered into (A) only for
purposes of mitigating identified risk or as a means of managing the
Company's long-term debt objectives, (B) in accordance with prudent
practices and in all material respects with all applicable laws, rules,
regulations and regulatory policies, and (C) with counterparties believed
by the Company to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of the Company or one
of its Subsidiaries, enforceable in accordance with its terms (except that
enforcement thereof may be subject to or limited by (i) bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity)), and are in full force and effect (except to the
extent disclosed pursuant to Section 5.2(d)(ii)). Neither the Company nor
its Subsidiaries, nor to the Company's Knowledge any other party thereto,
is in breach of any of its material obligations under any such agreement or
arrangement.
(r) Pooling of Interests. As of the date hereof, the
Company, based on the advice of its independent accountants, does not
believe that any conditions exist, other than any conditions relating to
Parent, that would preclude Parent from accounting for the Merger as a
pooling of interests under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations.
(s) Tax Status. Neither the Company nor any of its
Subsidiaries has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code. To the Knowledge of the Company after due investigation, there are no
facts or circumstances relating to the Company or any affiliate of the
Company, including any covenants or undertakings of the Company pursuant to
this Agreement, that would prevent Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois) from delivering the opinion referred to in Section 7.3(b) as of
the date hereof.
(t) Company Broker/Dealers.
(i) The only Company Subsidiaries conducting
broker/dealer operations are American General Distributors, Inc., American
General Financial Advisors, Inc., American General Funds Distributors, AGF
Investment Corp., American General Securities Incorporated, Franklin
Financial Services Corporation and The Variable Annuity Marketing Company
(collectively, the "Company Broker/Dealers"). Except as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on the Company, (A) each Company Broker/Dealer that is
required, in order to conduct its business as it is now conducted, to be
registered as a broker-dealer with any Governmental Entity or under
applicable Laws is so registered and is and has been since the latter of
their inception or January 1, 1998 in full compliance with all applicable
Laws, and (B) each Company Broker/Dealer is a member organization in good
standing of the NASD and such other organizations in which its membership
is required in order to conduct its business as now conducted.
(ii) Except as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on the
Company and except as set forth in Section 5.2(t)(ii) of the Company
Disclosure Letter, no Company Broker/Dealer or any "associated person" of
it is subject to a "statutory disqualification" (as such terms are defined
in the Exchange Act) or subject to a disqualification that would be a basis
for any limitations on the activities, functions or operations of, or
suspension or revocation of the registration of the Company as a
broker-dealer, municipal securities dealer, government securities broker or
government securities dealer under Sections 15, 15B or 15C of the Exchange
Act, and, to the knowledge of the Company, there are no proceedings or
investigations pending by any Governmental Entity that is reasonably likely
to result in any such limitations, suspension or revocation.
(iii) Except as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on the
Company, since its inception, each Company Broker/Dealer has had net
capital (as defined in Rule 15c3-1 under the Exchange Act) that satisfies
the minimum net capital requirements of the Exchange Act and the laws of
any jurisdiction in which such company conducts business.
(u) Investment Contracts, Funds and Clients.
(i) American General Investment Management, L.P. and
American General Asset Management Corp., American General Financial
Advisors, Inc., American General Securities Incorporated and The Variable
Annuity Life Insurance Company are the only Subsidiaries of the Company
providing investment management, investment advisory or sub-advisory
services (each Subsidiary of the Company providing such services, an
"Advisory Entity," each Contract for such services being referred to as an
"Investment Contract," each party thereto other than the applicable
Subsidiary of the Company being referred to as a "Client," and each Client
that is registered as an investment company under the 1940 Act being
referred to as a "Fund Client") to the Fund Clients or any other Person.
Each of the Fund Clients (or the trust of which it is a series) is duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. The Boards of Trustees or
Directors of the Fund Clients operate in all material respects in
conformity with the requirements and restrictions of Sections 9, 10 and 16
of the 1940 Act.
(ii) Each of the Fund Clients is in compliance in all
material respects with all applicable laws of the SEC, the NASD, the IRS
and any other governmental agency or self-regulatory body having
jurisdiction over such Fund Client, qualified or sold and with its
prospectus and statement of additional information. Each Fund Client has
elected to be treated as, and has qualified as, a "regulated investment
company" under subchapter M of Chapter 1 of Subtitle A of the Code. Each
Fund Client that is intended to be a tax-exempt municipal bond fund has
satisfied the requirements of Section 852(b)(5) of the Code and is
qualified to pay exempt interest dividends as defined therein.
(iii) Each of the Advisory Entities is duly
registered with the SEC as an investment adviser and is not subject to
state regulation as an investment advisor. The Company is not an Advisory
Entity. Except as set forth in Section 5.2(u)(iii) of the Company
Disclosure Letter, no Advisory Client is exempt from registration under the
1940 Act by virtue of Sections 3(c)(1), 3(c)(7) or (except Company Separate
Accounts) 3(c)(11).
(iv) Each Fund Client and Advisory Entity has
operated and is currently operating in compliance in all material respects
with all laws, rules, regulations and orders applicable to it or its
business. Each Advisory Entity has been and is in compliance in all
material respects with each Investment Contract to which it is a party.
(v) The accounts of each Fund Client subject to ERISA
have been managed by the applicable Company Subsidiary in compliance in all
material respects with the applicable requirements of ERISA.
5.3 Representations and Warranties of Parent. Except as
set forth in a correspondingly numbered section of the disclosure letter
delivered to the Company by Parent on or prior to entering into this
Agreement (the "Parent Disclosure Letter"), Parent hereby represents and
warrants to the Company (it being understood that (x) the words "to the
Knowledge of Parent" or "Parent's Knowledge" and any words of similar
import shall mean the actual knowledge of the Persons whose names are set
forth in Section 5.3(a)(i) of the Parent Disclosure Letter and (y) the
listing or setting forth of an item in one section of the Parent Disclosure
Letter shall be deemed to be a listing or setting forth in another section
or sections of the Parent Disclosure Letter if and only to the extent that
such information is reasonably apparent to be so applicable to such other
section or sections) that:
(a) Organization, Good Standing and Qualification.
(i) Each of Parent, Merger Sub and Parent's
Significant Subsidiaries is duly incorporated or organized, validly
existing and, if applicable, in good standing under the laws of its
respective jurisdiction of incorporation or organization and has all
requisite corporate, partnership or similar power and authority to own,
operate and lease its properties and assets and to carry on its business as
presently conducted and is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction
where the ownership or operation or leasing of its assets or properties or
conduct of its business requires such qualification. Parent has made
available to the Company a complete and correct copy of certificate or
articles of incorporation and bylaws of Parent and Merger Sub, as amended
to date, which are in full force and effect. All of the issued share
capital or other equity interests of each of Parent's Significant
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and owned by Parent or a direct or indirect wholly owned
Subsidiary of Parent free and clear of any material lien, pledge, security
interest, claim or other encumbrance
(ii) Except as would not reasonably be expected to
have a Material Adverse Effect with respect to Parent, each of Parent and
each of its Subsidiaries holds all material licenses or authorizations
required or necessary to conduct its business as currently conducted.
(b) Capital Structure.
(i) The authorized capital stock of Parent consists
of 5,000,000,000 shares of Parent Common Stock, of which
2,331,018,041 shares were outstanding as of the close of business
on March 31, 2001, and 6,000,000 shares of Serial Preferred Stock,
par value $5.00 per share (the "Parent Preferred Stock"), none of
which was outstanding as of the close of business on March 31,
2001. All of the outstanding shares of Parent Common Stock are
duly authorized, validly issued, fully paid and nonassessable. As
of March 31, 2001, 144,645,878 shares of Parent Common Stock were
held in treasury by Parent or Parent Subsidiaries. As of the date
hereof, Parent has no commitments (including contingent or
conditional commitments) to issue or deliver shares of Parent
Common Stock or Parent Preferred Stock except that, as of March
31, 2001, there were outstanding options or other rights to
purchase or receive up to 39,248,712 shares of Parent Common Stock
granted pursuant to compensation, incentive and benefit plans,
programs, agreements and arrangements ("Parent Plans"), and up to
approximately 52,813,243 shares of Parent Common Stock were
reserved for issuance or held for delivery pursuant to the Parent
Plans (including pursuant to such outstanding options).
(ii) Except as set forth above and for changes since
March 31, 2001 resulting from the exercise of stock options or
other rights outstanding on such date, as of the date hereof (i)
there are no shares of capital stock or other voting securities of
Parent authorized, reserved, issued or outstanding, (ii) neither
Parent nor any of its Subsidiaries is a party to any agreement
creating preemptive or other outstanding rights, subscriptions,
options, warrants, stock appreciation rights, redemption rights,
repurchase rights, convertible securities or other agreements,
arrangements or commitments of any character relating to, or the
value of which is determined by reference to, the issued or
unissued share capital or other ownership interest of Parent, and
(iii) neither Parent nor any of its Subsidiaries is a party to any
agreement creating any other securities or obligations convertible
or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any equity securities of
Parent, and no equity securities or obligations evidencing such
rights are authorized, issued or outstanding. Neither Parent nor
any of its Subsidiaries has any outstanding bonds, debentures,
notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the
right to vote) with the shareholders of Parent on any matter.
(c) Corporate Authority; Approval. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent
and Merger Sub of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
The Board of Directors of each of Parent and Merger Sub has determined, as
of the date of this Agreement, that, as applicable, it is advisable and in
the best interest of Parent's and Merger Sub's shareholders for Parent and
Merger Sub, as applicable, to enter into this Agreement and for Parent and
Merger Sub to consummate the Merger upon the terms and subject to the
conditions of this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company constitutes a legal,
valid and binding obligation of Parent and Merger Sub, except that
enforcement hereof may be subject to or limited by (i) bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity). Prior to the Effective Time, Parent will have taken
all necessary action to permit it to issue the number of shares of Parent
Common Stock required to be issued pursuant to Article IV. The shares of
Parent Common Stock to be issued pursuant to Article IV have been duly
authorized and, when issued, will be validly issued, fully paid and
nonassessable, and no shareholder of Parent will have any preemptive right
of subscription or purchase in respect thereof.
(d) Governmental Filings; No Violations.
(i) Other than the reports, filings, registrations,
consents, approvals, permits, authorizations, applications, expiry of
waiting periods and/or notices (A) pursuant to Section 1.3 hereof, (B)
under the HSR Act, (C) under any non-U.S. competition laws, (D) under the
Exchange Act, (E) under the Securities Act, (F) under the 1940 Act, (G)
under the Advisers Act, and with applicable state regulatory authorities
governing investment advisors, (H) with or required by the NYSE and any
other stock exchange on which the shares of Parent Common Stock are listed,
(I) with the NASD, (J) required under applicable federal, state and
non-U.S. regulatory authorities governing insurance, (K) required under
federal, state and non-U.S. regulatory authorities governing financial
services, banking (including, but not limited to, the FDIC and the OTS),
insurance premium finance, consumer finance, asset management, investment
services, commercial finance and mortgage lending or servicing, (L)
required under applicable non-U.S. and federal regulatory authorities
governing foreign investments or (M) required under state securities or
"Blue Sky" laws, no material notices, reports or other filings are required
to be made by Parent or any of its Subsidiaries with, nor are any material
consents, registrations, approvals, permits applications, expiry of waiting
periods or authorizations required to be obtained by Parent or any of its
Subsidiaries from any Governmental Entity in connection with the execution
and delivery of this Agreement by Parent, and Merger Sub and the
consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby, in each case, to the extent arising out
of, or relating to, the business or nature of Parent and its Subsidiaries.
(ii) The execution, delivery and performance of this
Agreement by Parent, and Merger Sub do not, and the consummation by Parent
and Merger Sub of the Merger and the other transactions contemplated hereby
will not, constitute or result in (A) a breach or violation of, or a
default under, the certificate of incorporation or bylaws of Parent or the
comparable governing instruments of any of its Significant Subsidiaries,
(B) a breach or violation of, or a default under, or the creation or
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of Parent or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to,
or the creation or acceleration of any right of termination under, any
Contract binding upon Parent or any of its Subsidiaries or any of their
respective assets (provided, as to consummation, that the filings, reports
and notices are made, and approvals are obtained, as referred to in Section
5.3(d)(i)) or any Law or material governmental or non-governmental permit,
registration, authorization or license to which Parent or any of its
Subsidiaries or any of their respective assets are subject, or (C) any
adverse change in the rights or obligations of Parent or any of its
Significant Subsidiaries under any Contract, except in the case of clauses
(B) or (C) as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on Parent.
(e) Parent Reports; Financial Statements; Undisclosed
Liabilities.
(i) Each registration statement, report, proxy
statement or information statement prepared by Parent since December 31,
1997 or by any Subsidiary of Parent since the latter of December 31, 1997
and the date upon which the relevant Subsidiary became a Subsidiary of
Parent, including Parent's Annual Report on Form 10-K for the year ended
December 31, 2000 (the "Parent Form 10-K"), each in the form (including
exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed with the SEC subsequent to
the date hereof, the "Parent Reports") as of their respective dates, as
amended prior to the date hereof or as supplemented by Parent Reports filed
prior to the date hereof, did not, and any Parent Reports filed with the
SEC subsequent to the date hereof will not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading; provided, that
Parent makes no representation or warranty with respect to any information
with respect to the Company provided to it by the Company for inclusion in
any Parent Report filed after the date hereof. Each of the consolidated
balance sheets included in or incorporated by reference into the Parent
Reports (including the related notes and schedules) fairly presents, or
will fairly present, in all material respects the consolidated financial
position of Parent and its Subsidiaries as of its date and each of the
consolidated statements of income and of changes in financial position
included in or incorporated by reference into the Parent Reports (including
any related notes and schedules) fairly presents, or will fairly present,
in all material respects the results of operations, retained earnings and
changes in financial position, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that
were not, or are not reasonably expected to be, material in amount or
effect), in each case in accordance with U.S. GAAP (except in the case of
unaudited statements, as permitted by Form 10-Q) consistently applied
during the periods involved, except as may be noted therein or in the notes
thereto.
(ii) Except for those liabilities that are fully
reflected or reserved against on a consolidated balance sheet of Parent
included in the Parent Form 10-K or liabilities described in the notes
thereto (or liabilities for which neither accrual nor footnote disclosure
is required pursuant to U.S. GAAP), and except for liabilities incurred in
the ordinary course since December 31, 2000, neither Parent nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become
due) (other than liabilities incurred in connection with the negotiation,
execution, delivery and performance of this Agreement and the transactions
contemplated hereby) that, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect on Parent.
(iii) Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on
Parent, (A) Parent and each of its Subsidiaries has timely filed all
periodic statements, together with all exhibits, interrogatories, notes,
schedules and any actuarial opinions, affirmations or certifications or
other supporting documents in connection therewith, required to be filed
with or submitted to any Governmental Entity on forms prescribed or
permitted thereby (collectively, the "Parent Regulatory Reports"); (B) the
financial statements included in the Parent Regulatory Reports, including
the notes thereto, were prepared in conformity in all respects with
applicable statutory accounting practices prescribed or permitted by the
applicable Governmental Entity consistently applied for the periods covered
thereby and present fairly, in all respects, the statutory financial
position of Parent or such Subsidiary as at the respective dates thereof
and the results of operations thereof for the respective periods then
ended; and (C) the Parent Regulatory Reports complied with all applicable
Laws when filed, and no deficiency has been asserted with respect to any
Parent Regulatory Report by any Governmental Entity.
(f) Absence of Certain Changes. Except as disclosed in
the Parent Reports filed prior to the date hereof and (other than in the
case of clause (ii) below) except for actions or inactions after the date
hereof as expressly contemplated by Section 6.2 below, since December 31,
2000 (i) Parent and its Subsidiaries, taken as a whole, have conducted
their respective businesses only in the ordinary course, consistent with
past practice, and (ii) there has not been (other than as a result of the
Merger or this Agreement) any Material Adverse Effect with respect to
Parent or any development or combination of developments, that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect with respect to Parent.
(g) Litigation. Except as described in the Parent Reports
filed prior to the date hereof, to the extent provided as of December 31,
2000 in appropriately identified reserves or, to the extent commenced or
threatened after the date hereof, relating to this Agreement and the
transactions contemplated hereby, there are no Actions pending or, to the
Knowledge of Parent, threatened against Parent or any of its Subsidiaries
before any Governmental Entity, other than Actions that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent.
(h) Compliance with Laws. Except as set forth in the
Parent Reports filed prior to the date hereof and except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent, each business of Parent and each of its
Subsidiaries has been, and is being, conducted in compliance with all
applicable Laws. Except as set forth in the Parent Reports filed prior to
the date hereof and for regulatory examinations or reviews conducted in the
ordinary course and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent, no
investigation or review by any Governmental Entity with respect to Parent
or any of its Subsidiaries is pending or, to the Knowledge of Parent,
threatened.
(i) Brokers and Finders. Neither Parent nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Merger or the other transactions contemplated in
this Agreement based upon arrangements made by or on behalf of Parent or
any of its Subsidiaries except that Parent has employed Xxxxxxx, Xxxxx &
Co. as its financial advisor pursuant to a written agreement.
(j) Pooling of Interests. As of the date hereof, Parent,
based on the advice of its independent accountants, does not believe any
conditions exist, other than any conditions relating to the Company, that
would preclude Parent from accounting for the Merger as a pooling of
interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations.
(k) Tax Status. Neither Parent nor any of its
Subsidiaries has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code. To the Knowledge of Parent after due investigation, there are no
facts or circumstances relating to Parent or any Parent Affiliate,
including any covenants or undertakings of Parent pursuant to this
Agreement, that would prevent Wachtell, Lipton, Xxxxx & Xxxx from
delivering the opinion referred to in Section 7.2(c) as of the date hereof.
(l) Merger Sub's Operations. Merger Sub is a direct
wholly owned subsidiary of Parent that was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not (i) engaged in
any business activities, (ii) conducted any operations other than in
connection with the transactions contemplated hereby, or (iii) incurred any
liabilities other than in connection with the transactions contemplated
hereby. Parent, as Merger Sub's sole stockholder, has approved Merger Sub's
execution of this Agreement.
ARTICLE VI
COVENANTS
6.1 Company Interim Operations. The Company covenants and
agrees as to itself and each of its Subsidiaries that, from and after the
date hereof and prior to the Effective Time (unless Parent shall otherwise
approve in writing and except as otherwise (i) expressly contemplated by
any other section of this Agreement, (ii) required by applicable Law (it
being understood that, insofar as less than 100% of the equity of a
Subsidiary of the Company is owned, directly or indirectly, by the Company,
nothing in this Section 6.1 shall be deemed to require any such Subsidiary
to take any action, or fail to take any action, which action or failure
would result in a violation of fiduciary duty under applicable Law) or
(iii) set forth in Section 6.1 of the Company Disclosure Letter):
(a) it and its Subsidiaries shall conduct their
businesses in the ordinary course, consistent with past practice,
and, to the extent consistent therewith, each of the Company and
its Subsidiaries shall use its respective commercially reasonable
best efforts to preserve its business organization intact and
maintain its existing relations and goodwill with material
customers, suppliers, reinsurers, distributors, agents,
regulators, creditors, rating agencies, lessors, employees and
business associates; provided, that the Company and its
Subsidiaries may take any action or omit to take any action, to
the fullest extent permitted by any proviso or exception contained
in this Section 6.1 (whether or not such action or omission would
be considered taken in the ordinary course, consistent with past
practice);
(b) neither it nor its Subsidiaries shall (i) amend its
articles of incorporation or bylaws or comparable governing
instruments; (ii) split, combine or reclassify its outstanding
shares; (iii) authorize, declare, set aside or pay any dividend
payable in cash, stock or property in respect of any capital stock
other than (A) dividends from its direct or indirect wholly owned
Subsidiaries; (B) dividends by a Subsidiary that is partially
owned by the Company or any of its Subsidiaries, in the ordinary
course, consistent with past practice; provided, that the Company
or any such Subsidiary receives or is to receive its proportionate
share thereof; and (C) regular quarterly cash dividends on Common
Shares in amounts to the extent disclosed in Section 6.1 of the
Company Disclosure Letter, and with record and payment dates
consistent with past practice; or (iv) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase
or otherwise acquire, any shares of its stock or any securities
convertible into or exchangeable or exercisable for any shares of
its stock;
(c) neither it nor its Subsidiaries shall (i) except for
issuances, sales or dispositions of capital stock of Subsidiaries
to the Company or a wholly owned Subsidiary of the Company, issue,
sell, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights or agreements of any kind
to acquire, or the value of which is determined in reference to,
any shares of its capital stock of any class or any Company Voting
Debt (other than (1) Common Shares issued pursuant to the existing
terms as of the date hereof of the Company deferred compensation
plans described in Section 5.2(b) of the Company Disclosure Letter
and the deferral elections thereunder as in effect as of the date
hereof or issued pursuant to Company Options or as results from
the vesting of Company Restricted Shares, in each case outstanding
on the date hereof and previously disclosed in writing to Parent,
(2) subject to prior consultation with Parent, issuances of
options to acquire Common Shares or grants of Company Restricted
Shares (other than Performance Based Restricted Stock Awards that
contain Performance Awards) pursuant to the terms of the Company
Stock Plans in the ordinary course, consistent with past practice,
to newly hired key employees in an amount not to exceed 50,000
Common Shares per person or 500,000 Common Shares in the aggregate
(provided, that options or Company Restricted Shares issued
pursuant to this clause (2) shall be pursuant to grants that are
fully consistent with treatment of the Merger as a pooling of
interests), and (3) the issuance of additional options to acquire
Common Shares pursuant to the "reload provisions" of those Company
Options outstanding as of the date hereof which contain such
provisions as of the date hereof, such issuances in all cases to
be in accordance with their present terms (provided, that options
issued pursuant to this clause (3) shall be pursuant to grants
that are fully consistent with treatment of the Merger as a
pooling of interests); (ii) transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of or encumber any other
properties or assets (including capital stock of any of its
Subsidiaries) that are, individually or in the aggregate, material
to the Company and its Subsidiaries taken as a whole; (iii) incur
any indebtedness in excess of $100,000,000 in the aggregate or
having a maturity of one year or greater from the date of issuance
except (A) for incurrences of short term indebtedness to refinance
outstanding indebtedness which outstanding indebtedness has a
maturity date within twelve months of such refinancing, (B) for
incurrences of corporate indebtedness in an amount not to exceed
$250,000,000 in the aggregate with maturities of up to five years
from the date of issuance (provided that, in consultation with
Parent, the Company will seek to issue such indebtedness with
maturities as short as is commercially reasonable under
then-current market conditions, but in any event in excess of one
year), (C) for issuances of commercial paper or bank indebtedness
with maturities of not more than one year from the date of
issuance to finance payments due to Prudential pursuant to the
Tri-Party Agreement (provided, that indebtedness with maturities
of not less than one year nor more than five years may be issued
in lieu of such commercial paper or bank indebtedness in an amount
not to exceed 50% of the payments to Prudential referred to in
this clause (C), provided, further, that, in consultation with
Parent, the Company will seek to issue the indebtedness referred
to in the first proviso to this clause (C) with maturities as
short as is commercially reasonable under then-current market
conditions, but in any event in excess of one year) and (D) for
incurrences of indebtedness in the ordinary course, consistent
with past practice, to support the Company's and its Subsidiaries'
consumer finance business (provided, that after giving effect to
any such incurrence, (x) the consumer finance division maintains a
debt to tangible net worth ratio of no greater than 7.5 to 1, and
(y) floating rate indebtedness represents no less than 35%, and no
more than 40%, of total indebtedness related to the consumer
finance division), provided, that no new issuance under clauses
(A) through (D) shall contain any covenant that would require the
Company or any Subsidiary to make periodic reports in addition to
those required under applicable Law; (iv) modify the terms of any
indebtedness in any respect that would impose additional material
obligations or costs on the Company or any of its Subsidiaries;
(v) other than as permitted by Section 6.1(c)(vi), make or
authorize or commit for any capital expenditures other than in
amounts less than $100,000,000 in the aggregate or, by any means,
make any acquisition of, or investment in, assets or stock of any
other Person (other than investments (q) in the ordinary course of
its insurance, annuity, asset management or investment businesses
consistent with past practice, (r) in customer accounts held in
the ordinary course consistent with past practice, or (s) in any
general account or otherwise in the ordinary course consistent
with past practice to offset insurance liabilities) in excess of
$50,000,000 in the aggregate; provided, however, that no such
acquisition or investment shall (x) meaningfully and adversely
impair its ability to consummate, or meaningfully delay the
consummation of, the transactions contemplated by this Agreement,
or (y) be reasonably likely to cause a material rating held by the
Company to be modified, qualified, lowered or placed under
surveillance for a possible downgrade; or (vi) make or authorize
or commit for the acquisition of receivables with an aggregate
purchase price in excess of $1,200,000,000 since January 1, 2001
(provided, that (A) any such acquisition with a purchase price in
excess of $100,000,000 shall be subject to prior consultation with
Parent, and (B) all such acquisitions shall be made consistent
with the consumer finance risk management policies and strategic
plan of the Company and be in the ordinary course of business
consistent with past practice);
(d) except to the extent required to maintain compliance
with applicable Law, or as required by a collective bargaining
agreement, neither it nor any of its Subsidiaries shall (i)
terminate, establish, implement, adopt, amend, enter into, make
any new, or accelerate the vesting or payment of any existing
grants or awards under, amend or otherwise modify any Company
Plans (including the funding arrangements in respect thereof) or
contractual obligations in effect as of the date of this Agreement
or as contemplated by this Agreement, (ii) except as described in
Section 6.1(d) of the Company Disclosure Letter, increase the
commissions, compensation or benefits payable or accrued or that
could become payable by the Company or any of its Subsidiaries or
accrue to or in respect of any employee, director or consultant
who is an individual (a "Consultant" (except a consultant who is
not a former employee and is an outside legal or other
professional advisor (an "Advisor")), other than increases in
commissions, base salary or wages granted to Advisors or employees
(other than the 41 employees listed in Section 5.2(h)(viii) of the
Company Disclosure Letter) in the ordinary course, consistent with
past practice, (iii) waive any debts due to the Company from any
officer or director of the Company, (iv) otherwise take any action
that would reasonably be expected to materially increase any
funding liability with respect to any Company Plan, or (v) take,
or permit to be taken, any action described on Section 6.1(d)(v)
of the Company Disclosure Letter or exercise any discretion or
authority under the terms of any Company Plan or contractual
obligation in any manner that would result in an acceleration,
increase or modification of the rights of or payments or benefits
to any employee, director or Consultant; notwithstanding the
foregoing provisions of this Section 6.1(d), the Company shall be
permitted but only to the extent consistent with accounting for
the Merger as a pooling of interests, to (1) after prior
consultation with Parent, make amendments to the Company Plans
that will not result in a material increase in the aggregate
annual costs to the Company and/or any Subsidiary in respect of
such Company Plans, (2) grant options or Company Restricted Shares
to any current directors, officers or employees to the extent
permitted by clauses (c)(i)(2) and (c)(i)(3) above, (3) accelerate
the vesting and payment of the Company Stock Options and the
Company Restricted Shares outstanding on the date hereof and
previously disclosed in writing to Parent to the extent required
under their terms in effect as of the date hereof, including the
vesting and payment in Common Shares of Performance Awards
contained in Performance Based Restricted Stock Awards at the
maximum performance level to the extent so required, the vesting
and payment in Common Shares of the restricted share units and the
conversion of each such Common Share into the Merger Consideration
pursuant to Section 6.19 hereof, and any vesting and payment in
Common Shares which is incident to a termination of employment
prior to the Effective Time, (4) amend the Benefit Trust Agreement
made as of February 8, 2001 between the Company and The Chase
Manhattan Bank and any other necessary amendments in accordance
with Section 6.19(l) hereof, (5) make payments of cash and other
benefits (other than equity-based benefits) incident to
terminations of employment in the ordinary course, consistent with
past practice, prior to the Effective Time (other than to any of
the 41 employees listed in Section 5.2(h)(viii) of the Company
Disclosure Letter) in such amounts as the Company shall deem
necessary or appropriate (so long as the cost of the benefits
payable do not exceed the costs of the benefits that would be
payable to the employee in question under the terms of the 2001
American General Corporation Job Security Plan, effective April
12, 2001 (the "Job Security Plan") were it applicable to such
termination), or, in the ordinary course, consistent with past
practice, enter into appropriate agreements with terminating
employees (other than any employees or former employees provided
severance or termination payments as permitted under the preceding
portion of this clause (5)) to provide for continued services (at
a rate of compensation not in excess of that currently payable to
such employee) as a consultant, and (6) terminate the Company
Employee Stock Purchase Plan in accordance with Section 6.19(m)
hereof;
(e) neither it nor any of its Subsidiaries shall (i)
except to the extent provided in appropriately identified reserves
set forth in Company Reports filed prior to the date hereof,
settle or compromise any claims or litigation in a manner material
to the Company and its Subsidiaries taken as a whole; or (ii) pay,
discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), which, in the case of clause (ii) would,
individually or in the aggregate, be material to the Company and
its Subsidiaries taken as a whole, other than the payment,
discharge or satisfaction of claims, liabilities or obligations in
the ordinary course, as required by contract or applicable Law, or
to the extent provided for in appropriately identified reserves
set forth in Company Reports filed prior to the date hereof;
(f) neither it nor any of its Subsidiaries shall (i)
modify in any material respect, amend in any material respect or
terminate any of its Material Contracts or (ii) waive, release or
assign any rights or claims, other than (in the case of both
clauses (i) and (ii)) such modifications, amendments,
terminations, waivers, releases or assignments as are in the
ordinary course, consistent with past practice and which,
individually or in the aggregate, are not material to the Company
and its Subsidiaries taken as a whole;
(g) neither it nor any of its Subsidiaries shall make any
material Tax election (other than in the ordinary course,
consistent with past practice, or unless required by applicable
Law), enter into any settlement or compromise of any Tax liability
which, individually or in the aggregate, is material to the
Company and its Subsidiaries taken as a whole, or permit any
insurance or reinsurance policy naming it as a beneficiary or
loss-payable payee, which, individually or in the aggregate, is
material to the Company and its Subsidiaries, taken as a whole, to
be canceled or terminated except in the ordinary course,
consistent with past practice, except to the extent provided for
in reserves;
(h) neither it nor any of its Subsidiaries shall file any
amended Tax Returns if the result of such amendment would increase
the Company's Tax liability in a manner material to the Company
and its Subsidiaries taken as a whole, except to the extent
provided for in reserves or otherwise required by applicable Law;
(i) except as required by applicable Law, neither it nor
any of its Subsidiaries shall enter into any agreement containing
any provision or covenant limiting in any respect the ability of
the Company or any Subsidiary or affiliate (or, giving effect to
the Merger, Parent or any Subsidiary or affiliate) to (i) sell any
products or services to any other Person, (ii) engage in any line
of business, or (iii) compete with any Person (other than, in the
case of clauses (i), (ii) and (iii), any such provisions entered
into by the Company or any Subsidiary of the Company in the
ordinary course, consistent with past practice, that are not
material and adverse to the Company and its Subsidiaries, taken as
a whole, and that expressly provide that such provisions will not
apply to Parent or any Subsidiary of Parent as a result of the
completion of the Merger (other than the Company and the
applicable Subsidiary or Subsidiaries of the Company that become
Subsidiaries of Parent as a result of the completion of the
Merger);
(j) except as required by applicable Law, neither it nor
any of its Subsidiaries shall in any material respect change or
fail to comply with investment, risk management, consumer credit
and other policies of the Company as in effect as of the date
hereof;
(k) neither it nor any of its Subsidiaries shall
implement or adopt any change in its accounting principles other
than as may be required by U.S. GAAP or regulatory guidelines;
(l) neither it nor any of its Subsidiaries shall, with
the prior approval or Knowledge of any of the individuals listed
in Section 5.2(a)(i) of the Company Disclosure Letter take, or
fail to take, any action that would cause any representation or
warranty of the Company herein to become untrue;
(m) neither it nor any of its Subsidiaries shall take any
corporate action for its winding up, dissolution or reorganization
or for the appointment of a receiver, administrator or
administrative receiver, trustee or similar officer of all or any
of its assets or revenues which are material to the Company and
its Subsidiaries, taken as a whole; and
(n) neither it nor any of its Subsidiaries shall
authorize, announce an intention to implement, or enter into an
agreement to do any of the foregoing.
6.2 Parent Interim Operations. Parent covenants and
agrees as to itself and each of its Subsidiaries that, from and after the
date hereof and prior to the Effective Time (unless the Company shall
otherwise approve in writing and except as otherwise (i) expressly
contemplated by any other section of this Agreement, (ii) required by
applicable Law (it being understood that, insofar as less than 100% of the
equity of a Subsidiary of Parent is owned, directly or indirectly, by
Parent, nothing in this Section 6.2 shall be deemed to require any such
Subsidiary to take any action, or fail to take any action, which action or
failure would result in a violation of fiduciary duty under applicable
Law), or (iii) set forth in Section 6.2 of the Parent Disclosure Letter):
(a) except as would not reasonably be expected to delay
or impede the consummation of the Merger in any meaningful
respect, it and its Subsidiaries, taken as a whole, shall conduct
their businesses in the ordinary course and, to the extent
consistent therewith, each of Parent and its Subsidiaries shall
use its respective commercially reasonable best efforts to
preserve its business organization intact and maintain its
existing relations and goodwill with material customers,
suppliers, reinsurers, distributors, agents, regulators,
creditors, rating agencies, lessors, employees and business
associates; provided, that Parent and its Subsidiaries may take
any action, or omit to take any action, to the fullest extent
permitted by any proviso or exception contained in this Section
6.2 (whether or not such action or omission would be considered
taken in the ordinary course, consistent with past practice);
provided further that, subject to Section 6.7, Parent may
coordinate the record and payment date of any regular quarterly
dividend so that holders of Common Shares do not receive dividends
on both Common Shares and Parent Common Stock received in the
Merger in respect of any calendar quarter, provided that any such
coordination does not result in the holders of Common Shares
receiving a dividend on neither the Common Shares nor the Parent
Common Stock received in the Merger in respect of any calendar
quarter;
(b) it and its Subsidiaries shall not (i) amend its
certificate of incorporation in a manner that would adversely
affect the economic benefits of the Merger to the Company's
shareholders or (ii) split, combine or reclassify its issued or
authorized share capital unless appropriate adjustment is made to
the Exchange Ratio;
(c) neither it nor any of its Subsidiaries shall enter
into any agreement or otherwise commence or publicly announce any
transaction to sell, transfer, dispose of or acquire any assets,
capital stock or business of another Person or business unless
such transaction would not reasonably be expected to delay or
impede the consummation of the Merger in any meaningful respect;
(d) neither it nor any of its Subsidiaries shall, with
the prior approval or Knowledge of any of the individuals listed
in Section 5.3(a)(i) of the Parent Disclosure Letter take, or fail
to take, any action that would cause any representation or
warranty of Parent herein to become untrue;
(e) neither it nor any of its Subsidiaries shall take any
corporate action for its winding up, dissolution or reorganization
or for the appointment of a receiver, administrator or
administrative receiver, trustee or similar officer of all or any
of its assets or revenues which are material to Parent and its
Subsidiaries, taken as a whole; and
(f) neither it nor any of its Subsidiaries shall
authorize, announce an intention to implement, or enter into an
agreement to do any of the foregoing.
6.3 Acquisition Proposals.
(a) The Company agrees that, except as expressly
contemplated by this Agreement, it and each of its Subsidiaries will not,
and it shall direct and use its commercially reasonable best efforts to
cause its and its Subsidiaries' officers, directors, employees, investment
bankers, attorneys, accountants, financial advisors, agents or other
representatives (collectively, "Representatives") not to, directly or
indirectly, initiate, solicit, knowingly encourage or otherwise knowingly
facilitate any inquiries or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving the Company, or any purchase (pursuant to a
new issuance, tender offer, takeover bid or otherwise) of, or offer to
purchase, 20% or more of the voting securities of the Company, or any
business that constitutes 20% or more of the Company's consolidated net
revenues, net income or shareholders' equity (as reflected on the financial
statements included in the Company Form 10-K) (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal"). The Company
further agrees that neither it nor any of its Subsidiaries shall, and that
it shall direct and use its commercially reasonable best efforts to cause
its and its Subsidiaries Representatives not to, directly or indirectly,
have any discussions with or provide any confidential information or data
to any Person relating to an Acquisition Proposal, engage in any
negotiations concerning an Acquisition Proposal, otherwise knowingly
facilitate any effort or attempt to make or implement an Acquisition
Proposal or enter into any agreement with respect to any Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent the Company or its board of directors from (i) making any
disclosure to its shareholders if, in the good faith judgment of its board
of directors, failure so to disclose would be inconsistent with its
obligations under applicable Law or the listing rules of the NYSE;
provided, however, that it shall use commercially reasonable best efforts
to notify Parent of such obligation and the substance of the planned
disclosure as promptly as practicable (and in any event prior to making any
such disclosure); (ii) prior to the Company Shareholder Meeting discussing
or negotiating with or furnishing information to any Person who has made a
bona fide unsolicited written Acquisition Proposal which did not, directly
or indirectly, result from or follow a breach by the Company of this
Section 6.3(a); provided, that no information shall be furnished to any
Person unless such Person shall have entered into a confidentiality
agreement with the Company, containing terms and conditions of
substantially the same effect as those of the Confidentiality Agreement; or
(iii) recommending (but only at a time that is after the fifth Business Day
following Parent's receipt of written notice advising Parent that the
Company's board of directors is prepared to recommend a Superior Proposal)
such an Acquisition Proposal to its shareholders, if and only to the extent
that, in the case of actions referred to in clause (ii) or clause (iii),
such Acquisition Proposal is or, in the case of clause (ii) would
reasonably be expected to result in, a Superior Proposal and the board of
directors of the Company determines in good faith, after consultation with
outside legal counsel, that failure to do so (and, in the case of clause
(ii), failure to continue to do so) would be inconsistent with their
fiduciary duties under applicable Law. For purposes of this Agreement, a
"Superior Proposal" means any Acquisition Proposal by a third party (x)
that would, if consummated, be more favorable than the Merger to the
Company's shareholders, in the good faith judgment the Company's board of
directors, after consultation with its financial advisors, and (y) which
the board of directors of the Company determines in its good faith judgment
to constitute a transaction that is reasonably capable of being consummated
on the terms set forth, taking into account all legal, financial,
regulatory and other aspects of such proposal. The Company agrees that it
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations by it or its Representatives with any Person
other than Parent conducted heretofore with respect to any Acquisition
Proposal. The Company also agrees that it will (q) if it has not already
done so, promptly request each Person, if any, that has heretofore executed
a confidentiality agreement within the 12 months prior to the date hereof
in connection with its consideration of any potential Acquisition Proposal
to return or destroy all confidential information heretofore furnished to
such Person by or on behalf of it or any of its Subsidiaries; (r) promptly
notify all Persons with whom it has a continuing standstill or similar
agreement pursuant to which any third party is authorized to make any
Acquisition Proposal that it is withdrawing any such authorization; and (s)
take all commercially reasonable actions necessary to enforce the
provisions of any such continuing confidentiality, standstill or similar
agreement.
(b) The Company agrees that it will take the necessary
steps promptly to inform its Subsidiaries and its Subsidiaries'
Representatives of the obligations undertaken in this Section 6.3. The
Company agrees that it will notify Parent promptly (and in any event within
24 hours) if any inquiries, proposals or offers relating to or constituting
an Acquisition Proposal are received by, any information is requested from,
or any discussions or negotiations are sought to be initiated or continued
with, it or any of its or its Subsidiaries' Representatives indicating, in
connection with such notice, the name of such Person and the material terms
and conditions of any proposals or offers, and thereafter shall keep Parent
fully informed, on a prompt basis (and in any event within one Business
Day), of the status and material terms of any such inquiries, proposals or
offers. All information provided to Parent under this Section 6.3(b) shall
be kept confidential by the receiving party in accordance with the terms of
the Confidentiality Agreement.
(c) Nothing contained in this Section 6.3 shall prohibit
the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making disclosure of the fact that an Acquisition Proposal has been made,
the identity of the party making such proposal or the material terms of
such proposal in the Form S-4 or the Company Proxy Statement, to the extent
disclosure of such facts, identity or terms is advisable under applicable
Law (and the disclosure of such facts, by itself, shall not be deemed a
withdrawal or adverse modification of its approval or recommendation to
shareholders of the Merger).
6.4 Registration Statement; Information Supplied.
(a) Each of Parent and the Company shall cooperate and
reasonably promptly prepare and Parent shall file with the SEC as soon as
practicable after the date hereof a Registration Statement on Form S-4 (the
"Form S-4") under the Securities Act, with respect to the issuance of the
shares of Parent Common Stock in the Merger a portion of which Form S-4
shall also serve as the proxy statement of the Company (the "Company Proxy
Statement"). The parties will cause the Form S-4 to comply as to form in
all material respects with the applicable provisions of the Securities Act
and the Exchange Act. Each of Parent and the Company shall use its
respective commercially reasonable best efforts to have the Form S-4
declared effective by the SEC as promptly as reasonably practicable after
such filing. Parent shall use its commercially reasonable best efforts to
obtain, prior to the effective date of the Form S-4, all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement. No filing of, or amendment or
supplement to, the Form S-4 or the Company Proxy Statement will be made by
Parent or the Company without providing the other with a reasonable
opportunity to review and comment thereon. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the Form S-4
has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the
shares of Parent Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Company Proxy Statement or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional
information.
(b) Each of the Company and Parent agrees, as to itself
and its Subsidiaries, that none of the information to be supplied by it or
its Subsidiaries for inclusion or incorporation by reference in the Form
S-4, including, without limitation the Company Proxy Statement, or any
amendment or supplement thereto will at the time the Form S-4 becomes
effective under the Securities Act, at the date of mailing of the Company
Proxy Statement to shareholders and at the time of the Company Shareholder
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. If at any time prior to the
Effective Time any information relating to the Company or Parent should be
discovered by the Company or Parent which should be set forth in an
amendment to the Form S-4 or a supplement to the Company Proxy Statement,
so that such document would not include any misstatement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other and, to the extent required by
Law, an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and, to the extent required by Law,
disseminated to the Company's shareholders.
(c) The Company will use commercially reasonable best
efforts to cause the Company Proxy Statement to be mailed to its
shareholders as promptly as reasonably practicable after the date hereof.
6.5 Shareholder Meeting.
(a) The Company will take all action reasonably necessary
to convene a meeting of the Company's shareholders to consider and vote
upon the approval of this Agreement (the "Company Shareholder Meeting") as
promptly as reasonably practicable (subject to applicable Law and to
Section 6.5(b)) after the Form S-4 has been declared effective by the SEC.
(b) Subject to the requirements of applicable Law and the
terms of this Agreement (including the next sentence and the provisions of
Section 6.3), the board of directors of the Company shall recommend to its
shareholders the approval of this Agreement and shall use commercially
reasonable best efforts to solicit such approval. The board of directors of
the Company shall be permitted to (i) not recommend to its shareholders
that they approve this Agreement or (ii) withdraw or modify in a manner
adverse to Parent its recommendation to its shareholders that they approve
this Agreement and, in either such event, not solicit votes in favor of
such approval, if the Company's board of directors determines in good
faith, after consultation with outside counsel, that to do otherwise would
be inconsistent with their fiduciary duties under applicable Law (a "Change
in Recommendation"). Notwithstanding any such Change in Recommendation,
Parent shall have the option, exercisable within six Business Days of
notice of such Change in Recommendation, to cause the board of directors of
the Company to adopt a resolution directing that this Agreement be
submitted without recommendation to the shareholders of the Company at the
shareholder meeting for the purpose of approving this Agreement and, in
connection with such submission, communicate the basis for its
determination that this Agreement be submitted to its shareholders. If
Parent exercises its option under the preceding sentence to have this
Agreement submitted to the shareholders of the Company, Parent shall no
longer be entitled to terminate this Agreement under Section 8.4(i) below.
If Parent fails to exercise its option to require the Company to take the
actions specified in the second preceding sentence, the Company may
terminate this Agreement at any time after the expiration of the relevant
six Business Day period.
6.6 Filings; Other Actions; Notification.
(a) The Company and Parent shall cooperate with each
other and use (and shall cause their respective Subsidiaries to use)
commercially reasonable best efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or
advisable on its part under this Agreement and applicable Laws to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as reasonably practicable, including
preparing and filing as promptly as reasonably practicable all
documentation to effect all necessary notices, reports, applications and
other filings and to obtain as promptly as reasonably practicable all
consents, registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental
Entity in order to consummate the Merger or any of the other transactions
contemplated by this Agreement; provided, however, that nothing in this
Section 6.6 shall require, or be construed to require, Parent or the
Company, in connection with the receipt of any regulatory approval, to
proffer to, or agree to (i) sell or hold separate and agree to sell,
divest, discontinue or limit, before or after the Effective Time, any
assets, businesses, or interest in any assets or businesses of Parent, the
Company or any of their respective affiliates (or to consent to any sale,
or agreement to sell, or discontinuance or limitation by Parent or the
Company, as the case may be, of any of its assets or businesses) or (ii)
agree to any conditions relating to, or changes or restrictions in, the
operations of any such assets or businesses which, in the case of either
clause (i) or (ii), is reasonably likely, individually or in the aggregate,
to materially and adversely impact the aggregate economic or business
benefits, taken as a whole, to Parent or the Company, as applicable, of the
transactions contemplated by this Agreement (any such requirement specified
in clause (i) or (ii), a "Burdensome Condition"). Subject to applicable
Laws relating to the exchange of information, Parent and the Company shall
have the right to review in advance, and to the extent practicable each
will consult the other with respect to all the information relating to
Parent or the Company, as the case may be, and any of their respective
Subsidiaries, that appear in any material filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and
Parent shall act reasonably and as promptly as reasonably practicable.
(b) The Company and Parent each shall, upon reasonable
request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in connection
with the Company Proxy Statement, the Form S-4 or any other statement,
filing, notice or application made by or on behalf of Parent, the Company
or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement.
(c) The Company and Parent each shall keep the other
apprised of the status of matters relating to completion of the Merger and
the other transactions contemplated hereby, including promptly furnishing
the other with copies of material notices or other communications received
by Parent or the Company, as the case may be, or any of its Subsidiaries,
from any third party and/or any Governmental Entity with respect to the
Merger and the other transactions contemplated by this Agreement. The
Company and Parent each shall give prompt notice to the other of any change
that, individually or in the aggregate, is reasonably likely to result in a
Material Adverse Effect with respect to it or to cause the non-satisfaction
of any condition to the Merger.
(d) Prior to making any material filing, notice,
petition, statement, registration, submission of information or application
to or with any third party and/or Governmental Entity (including any U.S.
or non-U.S. securities exchange) in connection with the consummation of the
Merger and the other transactions contemplated by this Agreement and except
as may be required by Law or by obligations pursuant to any listing
agreement with or rules of any U.S. or non-U.S. national securities
exchange, each party shall use commercially reasonable best efforts to
consult with the other party with respect to (and, to the extent reasonably
practicable, give the other party an opportunity to comment on) the content
of such material filing, notice, petition, statement, registration,
submission of information or application and to provide the other party
with copies of the proposed filing, notice, petition, statement,
registration, submission of information or application.
(e) In the event any claim, action, suit, investigation
or other proceeding by any Governmental Entity or other Person or other
legal or administrative proceeding is commenced that questions the validity
or legality of this Agreement, or the Merger or the other transactions
contemplated by this Agreement or claims damages in connection therewith,
the Company and Parent each agree to cooperate and use their commercially
reasonable best efforts, subject to the limitations set forth in Section
6.6(a), to defend against and respond thereto.
(f) Nothing set forth in this Section 6.6 shall be deemed
to limit or affect the right of any party to take any action expressly
permitted pursuant to Sections 6.1, 6.2, 6.3 or 6.5(b) hereof.
6.7 Pooling. From and after the date hereof and until the
Effective Time, and notwithstanding anything to the contrary in this
Article VI, except as and to the extent required by applicable Law, none of
Parent, Merger Sub, the Company or any of their respective Subsidiaries or
other affiliates over which they exercise control shall knowingly take any
action, or knowingly fail to take any action, that would reasonably be
expected to jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes. Each party hereto shall use commercially
reasonable best efforts and shall cooperate to cause the transactions
contemplated by this Agreement, including the Merger, to be accounted for
as a pooling-of-interests under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by the SEC.
6.8 Access. Upon reasonable notice, and except as may
otherwise be required by applicable Law, the Company agrees that it shall
(and shall, only to the extent appropriate in the case of Subsidiaries that
are not wholly owned, cause its Subsidiaries to) afford Parent's officers,
directors or Representatives reasonable access, during normal business
hours throughout the period prior to the Effective Time, to its and its
Subsidiaries' properties, books, contracts and records and, during such
period, shall (and shall, only to the extent appropriate in the case of
Subsidiaries that are not wholly owned, cause its Subsidiaries to) furnish
reasonably promptly to the Parent all information concerning its and its
Subsidiaries' business, properties and personnel as may reasonably be
requested; provided, that no investigation pursuant to this Section 6.8
shall affect or be deemed to modify any representation or warranty made by
the Company hereunder; and provided, further, that the foregoing shall not
require the Company to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company would result in
the disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Company shall have used
commercially reasonable best efforts to obtain the consent of such third
party to such inspection or disclosure. All requests for information made
pursuant to this Section 6.8 shall be directed to a senior executive
officer of the Company or such Person as may be designated by such
officers. All such information shall be governed by the terms of the
Confidentiality Agreement, including all such information disclosed in the
Company Disclosure Letter.
6.9 Affiliates. Not later than the fifteenth day prior to
the mailing of the Company Proxy Statement, (i) the Company shall deliver
to Parent a list of names and addresses of those Persons who are or are
expected to be, to the Knowledge of the Company, as of the time of the
Company Shareholder Meeting, "affiliates" of the Company within the meaning
of Rule 145 under the Securities Act and for the purposes of applicable
interpretations regarding the pooling-of-interests method of accounting,
and (ii) Parent shall deliver to the Company a list of names and addresses
of those Persons who are or are expected to be, to the Knowledge of Parent,
as of the time of the Company Shareholder Meeting, "affiliates" of Parent
for the purposes of applicable interpretations regarding the
pooling-of-interests method of accounting. There shall be added to such
respective lists the names and addresses of any other Person subsequently
identified by the Company or Parent as a Person who may be deemed to be
such an affiliate; provided, however, that no such Person identified by the
Company or Parent shall remain on such list of affiliates if Parent shall
receive from the Company, or the Company shall receive from Parent, as the
case may be, on or before the date of the Company Shareholder Meeting an
opinion of counsel reasonably satisfactory to Parent or the Company, as the
case may be, to the effect that such Person is not such an affiliate. Each
of the Company and Parent shall exercise its commercially reasonable best
efforts to deliver or cause to be delivered to Parent or the Company, as
the case may be, prior to the date of the Company Shareholder Meeting from
each such affiliate identified in the list delivered pursuant to the first
sentence of this Section 6.9 (as the same may be supplemented as aforesaid)
a letter dated as of the Company Shareholder Meeting substantially in the
form attached as Exhibit A with respect to affiliates of the Company and
substantially in the form of Exhibit B with respect to affiliates of
Parent. Parent shall not be required to maintain the effectiveness of the
Form S-4 or any other registration statement under the Securities Act for
the purposes of resale of Parent Common Stock received in the Merger by
such affiliates of the Company and shares of Parent Common Stock received
by such affiliates shall bear a customary legend regarding applicable
Securities Act restrictions and the provisions of this Section 6.9. Parent
shall use commercially reasonable best efforts to have combined sales and
net income figures covering at least 30 days of post-Merger combined
operations as contemplated by, and in accordance with, the terms of SEC
Accounting Series Release 135, included in its first public earnings
release relating to the first fiscal quarter or fiscal year end, as the
case may be, following the Effective Time in which there are at least 30
days of post-Merger combined operations.
6.10 Listing Application. Parent shall promptly prepare
and submit to the NYSE a listing application in respect of the shares of
Parent Common Stock issuable in the Merger or, as necessary, upon exercise
of Adjusted Options, and shall use its commercially reasonable best efforts
to obtain, prior to the Effective Time, approval for the listing of such
Parent Common Stock from the NYSE, subject to official notice of issuance.
The Surviving Corporation shall use its commercially reasonable best
efforts to cause the Common Shares to be de-listed from the NYSE, and any
other stock exchange on which such shares are listed immediately prior to
the Effective Time and de-registered under the Exchange Act as soon as
practicable following the Effective Time.
6.11 Publicity. The initial press release concerning the
Merger shall be a joint press release and thereafter the Company and Parent
each shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Merger and the
other transactions contemplated by this Agreement and shall provide each
other the opportunity to review, comment upon and concur with, and use
commercially reasonable best efforts to agree upon, and shall not issue,
any such press release or make any such public announcement prior to such
consultation, except as either party may determine is required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any securities exchange.
6.12 Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Exchange Agent, in connection
with the transactions contemplated in Article IV out of assets held by the
Company prior to the Merger. Parent and its affiliates (other than the
Company and its Subsidiaries) will not provide, directly or indirectly, any
funding for the payment of such amounts. Except as otherwise provided in
Section 6.22, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the Merger and the
other transactions contemplated by this Agreement shall be paid by the
party incurring such expense, except that filing fees and other expenses
incurred in connection with filing, printing, mailing and distributing the
Form S-4, the Company Proxy Statement and related documents shall be shared
equally by Parent and the Company.
6.13 Indemnification; Directors' and Officers' Insurance.
(a) Parent, the Surviving Corporation and the
Subsidiaries of the Surviving Corporation, jointly and severally, shall
indemnify, defend and hold harmless (and Parent shall take no action to
prevent the Surviving Corporation and its Subsidiaries from so
indemnifying, defending and holding harmless) the present and former
directors and officers of the Company and its Subsidiaries (each, and each
of the parties entitled to indemnity pursuant to the next sentence, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative ("Claim"), arising out of actions or omissions by them in
their capacities as employees, agents, officers or directors of the Company
or one of its Subsidiaries, or taken by them at the request of the Company
or one of its Subsidiaries, occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement) to the fullest extent that Parent, the Company or the relevant
Subsidiary is permitted to indemnify any of such Persons under the Laws of
its jurisdiction of incorporation, and its articles of incorporation and
bylaws (or comparable organizational documents) as in effect on the date
hereof (and Parent, the Surviving Corporation or the relevant Subsidiary
shall also advance expenses as incurred to the fullest extent permitted
under applicable Law). In addition, Parent, the Surviving Corporation and
the Subsidiaries of the Surviving Corporation, jointly and severally, shall
indemnify, defend and hold harmless the members of the Selected Committee
(as defined in Section 6.1(d) of the Company Disclosure Letter) listed on
Section 6.13 of the Company Disclosure Letter with respect to all Costs
incurred by any of them in connection with any Claims arising out of
actions or omissions by the members of such committee in their capacities
as members thereof occurring after the Effective Time, to the fullest
extent permitted under applicable Law (and Parent, the Surviving
Corporation or the relevant Subsidiary shall also advance expenses as
incurred in connection with such Claims to the fullest extent permitted
under applicable Law). Without limiting the foregoing, Parent and the
Surviving Corporation shall honor all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to
the Effective Time now existing in favor of current or former employees,
agents, directors or officers of the Company and its Subsidiaries as
provided in their respective organizational documents and indemnification
agreements or arrangements heretofore entered into by the Company or any of
its Subsidiaries in accordance with their terms. From and after the
Effective Time, Parent shall cause employees, agents, directors or officers
of the Company or its Subsidiaries who become employees, agents, directors
or officers of Parent or its Subsidiaries to be entitled to the same
indemnity and exculpation rights and protections as are afforded to
similarly situated employees, agents, directors and officers of Parent or
its Subsidiaries, it being understood that executive officers and directors
of the Company shall be deemed similarly situated to executive officers and
directors of Parent.
(b) For a period of six years from the Effective Time,
Parent shall cause the Surviving Corporation to provide that portion of
directors' and officers' liability insurance with a reputable unaffiliated
third-party insurer with respect to claims against such Indemnified Parties
arising from facts, events, acts or omissions that occurred at or prior to
the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by the Company and its
Subsidiaries; provided, however, that in no event shall the Surviving
Corporation be required to expend more than two hundred percent (200%) of
the amount expended by the Company and its Subsidiaries (the "Insurance
Amount") to maintain or procure such directors' and officers' liability
insurance coverage immediately prior to the Effective Time (provided, that,
except as set forth in Section 6.1 of the Company Disclosure Letter, such
coverage immediately prior to the Effective Time shall be for the same
coverage and amounts as in effect on the date of this Agreement); provided,
further, that if the Surviving Corporation is unable to maintain or obtain
the insurance called for by this Section 6.13(b), the Surviving Corporation
shall obtain as much comparable insurance as is available for the Insurance
Amount; provided, further, that officers and directors of the Company or
any Subsidiary may be required to make application and provide reasonable
and customary representations and warranties to the relevant insurance
carriers for the purpose of obtaining such insurance; provided, further,
that any substitution or replacement of existing policies shall not result
in any gaps or lapses in coverage with respect to facts, events, acts or
omissions occurring at or prior to the Effective Time.
(c) Any Indemnified Party wishing to claim
indemnification under Section 6.13(a), upon learning of any claim, action,
suit, proceeding or investigation described above, shall promptly notify
the Surviving Corporation thereof; provided that the failure so to notify
shall not affect the obligations of Parent, the Surviving Corporation and
the Subsidiaries of the Surviving Corporation under Section 6.13(a) unless
and to the extent such failure materially increases their liability under
such subsection.
(d) It is expressly agreed that the Indemnified Parties
to whom this Section 6.13 applies shall be third-party beneficiaries of
this Section 6.13. The provisions of this Section 6.13 (i) are intended to
be for the benefit of, and will be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives and (ii) are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such Indemnified Party may have by contract or
otherwise.
(e) In the event that either of the Surviving Corporation
or Parent or any of their respective successors or assigns (i) consolidates
with or merges into any other Person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any Person
(whether by sale, merger, operation of law or otherwise), then, and in each
such case, proper provision will be made so that the successors and assigns
of the Surviving Corporation or Parent, as applicable, will assume the
obligations thereof set forth in this Section 6.13.
(f) Parent shall cause the Surviving Corporation and its
Subsidiaries or any successor or assign thereto to comply with their
respective obligations under this Section 6.13.
6.14 Takeover Statute. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated by
this Agreement, each of Parent and the Company and its board of directors
shall, to the fullest extent consistent with its fiduciary obligations
under applicable Law, grant such approvals and take such actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement, and otherwise act
to eliminate or minimize the effects of such statute or regulation on such
transactions.
6.15 Board of Directors of Parent. As promptly as
practicable following the Effective Time, Xxxxxx X. Xxxxxx shall be elected
as a director and Vice Chairman of Parent.
6.16 Accountants' Letters. Each of the Company and Parent
shall use commercially reasonable best efforts to cause to be delivered to
the other party, a letter from their respective independent auditors, dated
(i) the date on which the Form S-4 shall become effective and (ii) a date
shortly prior to the Effective Date, and addressed to such other party, in
form and substance customary for "comfort" letters delivered by independent
accountants in accordance with Statement of Accounting Standards No. 72.
6.17 Integration Committee. Parent recognizes that the
Company has a talented group of officers and employees that will be
important to the future growth of the combined companies. In recognition of
the foregoing, promptly after the date hereof, the parties will establish
an integration committee composed of senior executive officers of both
Parent and the Company, as mutually selected by Parent's and the Company's
Chief Executive Officers, which will have direct access to Parent's Chief
Executive Officer or his designee or designees principally responsible for
integration matters relating to the Merger and will be responsible for
proposing alternatives and recommendations regarding the matters and issues
arising in connection with the integration of the two companies and their
respective businesses, assets and organizations.
6.18 Tax-Free Merger. Each of Parent and the Company will
use its commercially reasonable best efforts, and each agrees to cooperate
with the other and provide the other with such documentation, information
and materials as may be reasonably necessary, proper or advisable to cause
the Merger to qualify as a reorganization within the meaning of Section
368(a) of the Code and to obtain the opinions of counsel referred to in
Sections 7.2(c) and 7.3(b). Neither Parent nor the Company will take or
fail to take (and, following the Merger, Parent will cause the Surviving
Corporation to not take or fail to take) any action which action (or
failure to act) would reasonably be expected to cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the
Code.
6.19 Employee Benefits.
(a) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, each option to
purchase Common Shares granted to employees or directors of the Company or
any of its Subsidiaries under the Company's 1999 Stock and Incentive Plan,
the Company's 1997 Stock and Incentive Plan, the Company's 1984 Stock and
Incentive Plan as restated February 8, 1994, the Western National
Corporation 1993 Stock and Incentive Plan, the US LIFE Corporation 1981
Stock Option Plan, the US LIFE Corporation 1991 Stock Option Plan or the US
LIFE Corporation Non-Employee Directors' Stock Option Plan (collectively,
the "Company Stock Plans") that is outstanding immediately prior to the
Effective Time (collectively, the "Company Options") shall be converted
into an option (an "Adjusted Option") to purchase the greatest number of
whole shares of Parent Common Stock that is equal to the number of Common
Shares subject to such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, at an exercise price per share of
Parent Common Stock (rounded to the nearest whole xxxxx) equal to the
exercise price for each such Common Share subject to such Company Option
immediately prior to the Effective Time divided by the Exchange Ratio, and
all references in each such Company Option to the Company (other than any
references relating to a "change in control" of the Company) shall be
deemed to refer to Parent, where appropriate; provided, however, that (x)
the adjustments provided herein with respect to any Company Options which
qualify as "incentive stock options" (as defined in Section 422 of the
Code) or which are described in Section 423 of the Code, shall be effected
in a manner consistent with the requirements of Section 424(a) of the Code
and (y) the exercise price per share of Parent Common Stock covered by an
Adjusted Option shall not be less than the par value of such share. Except
with respect to options granted after the date hereof, which shall not
become exercisable as of the Effective Time, Parent and the Company
acknowledge that each Company Option shall be fully vested and exercisable
immediately prior to the Effective Time, in each case in accordance with
its terms in effect as of the date hereof (except that, in the case of each
Company Option which is granted in accordance with the terms in effect as
of the date hereof of a "reload" feature of a Company Option outstanding as
of the date hereof, such vesting and exercisability shall be in accordance
with the terms on the date of grant of such "reload" Company Option).
(b) As of the Effective Time, each restricted Common
Share, restricted share unit and Common Share that is represented by the
Performance Award portion of a "Performance Based Restricted Stock Award"
granted to any employee or director of the Company or any of its
Subsidiaries under a Company Stock Plan that is outstanding immediately
prior to the Effective Time (collectively, the "Company Restricted Shares")
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be cancelled and converted into the right to receive the
Merger Consideration in accordance with Section 4.1 of this Agreement;
provided, however, that, prior to such conversion and subject to any
necessary consents from the holders of Company Restricted Shares upon the
lapsing of restrictions with respect to the Company Restricted Shares, the
Company shall be entitled to deduct and withhold from the Company
Restricted Shares such amounts as it is required to deduct and withhold
with respect to the lapsing of such restrictions under the Code, or any
applicable provision of state, local or non-U.S. Tax Law. As of the
Effective Time, each incentive award granted to a non-employee director of
the Company under a Company Stock Plan that is outstanding immediately
prior to the Effective Time (collectively, the "Incentive Award Units")
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be deemed to be invested in the Merger Consideration in
accordance with Section 4.1 above until the termination of such director's
service on the board of directors of the Company and, thereafter, shall be
deemed to be invested or distributed to such director in accordance with
the terms of the applicable Company Stock Plan, any payment election duly
made by such director and any related grant document issued in connection
with such Incentive Award Units that has been previously provided to
Parent.
(c) (i) As of the Effective Time, Parent shall assume the
obligations of the Company under the Company Stock Plans, and (ii) from and
after the Effective Time, the terms of each Company Option, Incentive Award
Unit and the Company Stock Plan under which such Company Option or
Incentive Award Unit, as the case may be, was initially granted, in each
case, as in effect immediately prior to the Effective Time, shall continue
to apply to the corresponding Adjusted Option or Incentive Award Unit,
subject to the alterations described herein and except as specifically
provided otherwise in this Section 6.19.
(d) The Company and Parent agree that each of the Company
Stock Plans shall be amended, (i) if and to the extent necessary and
practicable, to reflect the transactions contemplated by this Agreement,
including, but not limited to, the conversion of Company Options and
Incentive Award Units pursuant to paragraphs (a) and (b) above and the
substitution of Parent for the Company thereunder to the extent applicable
to effectuate the assumption of such plans by Parent, in particular so that
Parent, from and after the Effective Time, shall have all authority and
control over the Company Stock Plans, subject to Section 6.19(d) of the
Company Disclosure Letter, (ii) to preclude any automatic grants of awards
thereunder on or after the date hereof, other than grants of "reload
options" solely in accordance with the terms of the Company Options as in
effect on the date hereof, and (iii) to preclude the grant of any options
(including "reload options") or other awards thereunder on or after the
date hereof that provide for or permit the grant of "reload options."
(e) Parent shall (i) take all action necessary or
appropriate to have available for issuance or transfer a sufficient number
of shares of Parent Common Stock for delivery upon exercise of all Adjusted
Options and (ii) issue or cause to be issued or transfer or cause to be
transferred the appropriate number of shares of Parent Common Stock upon
the exercise or maturation of rights existing under the Adjusted Options.
No later than the Effective Time, Parent shall prepare and file with the
SEC a registration statement on Form S-8 (or other appropriate form)
registering a number of shares of Parent Common Stock necessary to fulfill
Parent's obligations under this Section 6.19. Parent shall use commercially
reasonable best efforts to cause such registration statement to remain
effective (and to maintain the current status of the prospectus required
thereby) for at least as long as Adjusted Options are outstanding.
(f) As soon as practicable after the Effective Time,
Parent shall deliver to the holders of Adjusted Options appropriate notices
setting forth (i) the number of shares of Parent Common Stock subject to
the Adjusted Options held by such holder, (ii) the exercise price per share
of Parent Common Stock subject to the Adjusted Options, and (iii) an
acknowledgement that all such Adjusted Options and all Incentive Award
Units will continue to be governed by the terms and conditions governing
the corresponding Company Option or Incentive Award Unit as in effect
immediately prior to the Effective Time, except as provided in this Section
6.19.
(g) Except as set forth in Section 6.19(g) of the Company
Disclosure Letter, from and after the Effective Time, Parent shall cause
the Surviving Corporation and its Subsidiaries to honor, in accordance with
the terms thereof in effect as of the date hereof or as amended after the
date hereof with the prior written consent of Parent, each employment
agreement, change in control severance agreement, split-dollar agreement
and supplemental executive retirement agreement (including any amendments
thereto listed or described in Section 6.19(g) of the Company Disclosure
Letter) between the Company or any of its Subsidiaries and any present or
former officer, director or employee of the Company or any of its
Subsidiaries that is listed or described in Section 6.19(g) of the Company
Disclosure Letter. Parent and the Company acknowledge that the consummation
of the Merger shall constitute a "change in control" for all purposes of
the Company Plans.
(h) Except as otherwise expressly provided in this
Section 6.19(h), during the period commencing at the Effective Time and
ending on December 31, 2002, Parent shall (or shall cause the Surviving
Corporation and its Subsidiaries to) (1) continue in effect the Company
Plans that are qualified retirement plans under Section 401(a) of the Code
as in effect on the date hereof for the benefit of employees (other than
any employees to whom a collective bargaining agreement applies) of the
Company and its Subsidiaries at the Effective Time (such non-union
employees being hereinafter called the "Continuing Employees"), during the
period of their respective employment with the Surviving Corporation or its
Subsidiaries or Parent or its Subsidiaries, subject only to such
amendments, if any, that may be required to be adopted to continue any such
Company Plan in compliance with applicable Law; (2) provide welfare
benefits (other than medical, dental and hospital benefits which are
addressed in clause (3) below) to the Continuing Employees at the same
economic levels and on terms and conditions that are not materially
different from the terms and conditions on which such benefits are provided
to such employees generally under the Company Plans immediately prior to
the Effective Time; and (3) provide medical, dental and hospital benefits
and other benefits (except as otherwise provided in clauses (1) and (2)
hereof or elsewhere in this Agreement) to the Continuing Employees that are
substantially comparable in the aggregate to those provided to such
employees generally under the Company Plans immediately prior to the
Effective Time. Except as otherwise provided in this Section 6.19, the
immediately preceding sentence shall not require the Parent, the Surviving
Corporation or any of their Subsidiaries to continue in effect any of the
Company Stock Plans or the Company Stock Purchase Plan. In no event shall
the percentage of the cost of the medical benefits made available to
Continuing Employees during 2001 or 2002 that any such Continuing Employee
must pay for such coverage be greater than the percentage currently in
effect. With respect to each of the Company's qualified and nonqualified
defined contribution plans and each deferred compensation plan that permits
Common Shares as a deemed investment option, Parent shall (or shall cause
the Surviving Corporation to) substitute Parent Common Stock for the Common
Shares as an investment option under each such Company Plan, in each case
on the same terms and conditions as applied to the Common Shares under the
respective Company Plans, except where changes are required to reflect the
change in investment or deemed investment to the Parent Common Stock.
Notwithstanding the foregoing, Parent shall only be required to continue
any stock premium or discount under any deferred compensation plan in
effect with respect to compensation payable in respect of services rendered
or to be rendered in 2001 with respect to which the participating employees
have already made their elections to defer. Regardless of whether, or the
extent to which, the Surviving Corporation and its Subsidiaries continue in
effect any Company Plan after the Effective Date, Parent shall cause the
Surviving Corporation or its Subsidiaries, as applicable, to honor any and
all obligations in respect of accrued and vested benefits under each such
Company Plan, as determined in accordance with the terms of such Company
Plan (including as such Company Plan may be amended in accordance with its
terms and the provisions of this Agreement). Following the Effective Time,
at the same time that Parent makes available to employees of Parent or its
Subsidiaries generally the right to purchase shares of Parent's Common
Stock under any employee stock purchase plan intended to qualify under
Section 423 of the Code, Parent shall cause similar rights to be granted to
Continuing Employees on the same terms and conditions as such awards are
made available to employees of Parent. Without limiting the generality of
the foregoing, Parent shall cause the Surviving Corporation and its
Subsidiaries to maintain and honor, in accordance with the terms thereof in
effect as of the date hereof or as amended by the Company after the date
hereof with the prior written consent of Parent (as applied only to
Continuing Employees), the Company's (i) Supplemental Executive Retirement
Plan until the third anniversary of the Effective Time, (ii) Job Security
Plan until the second anniversary of the Effective Time and (iii)
Restoration Income Plan and the Supplemental Thrift Plan until the first
anniversary of the Effective Time. Notwithstanding the foregoing, the
Continuing Employees who are covered under a collective bargaining
agreement shall be provided the benefits that are required by such
collective bargaining agreement from time to time.
(i) Except as set forth in Section 6.19(i) of the Company
Disclosure Letter, for purposes of any Parent Plan or Plan maintained by
the Surviving Corporation (collectively, the "Surviving Plans"), Parent and
the Surviving Corporation shall, and Parent shall cause its Subsidiaries
to, recognize (or cause to be recognized) the service of a Continuing
Employee with the Company and its Subsidiaries and any predecessor entities
completed prior to the Effective Time (and any other service credited by
the Company under corresponding Company Plans previously provided to Parent
and as described in Section 5.2(h)(vii) of the Company Disclosure Letter
and additional service which, as set forth in Section 6.19(i) of the
Company Disclosure Letter, the Company is obligated to credit with respect
to actual service rendered after the Effective Date) for purposes of
vesting, eligibility to participate in and calculation of any benefit under
those Surviving Plans in which such Continuing Employee becomes a
participant after the Effective Time to the extent that such service was
recognized by the Company and its Subsidiaries under the corresponding
Company Plan in which such Continuing Employee was a participant
immediately prior to the Effective Time; provided, however, that such
service shall not be credited to the extent that it would result in a
duplication of benefits with respect to the same periods of service.
(j) From and after the Effective Time, if any Continuing
Employee becomes a participant in a Plan of Parent that is a medical,
dental or other health plan, Parent and the Surviving Corporation shall,
and Parent shall cause its Subsidiaries to, waive any pre-existing
condition limitations applicable to the Continuing Employee that were
covered under the Company Plan in which the Continuing Employee was a
participant immediately prior to his commencement of participation in such
Plan of Parent and credit any deductibles and out-of-pocket expenses that
are applicable to the Continuing Employee and are incurred by the
Continuing Employee and his or her beneficiaries during the portion of the
calendar year prior to his or her commencement of participation in such
Plan of Parent.
(k) The provisions of this Section 6.19 shall not create
in any employee or former employee of the Company or any of its
Subsidiaries any rights to employment or continued employment with Parent,
the Surviving Corporation or the Company or any of their respective
Subsidiaries.
(l) Prior to or within fourteen business days following
execution of this Agreement, the Company shall amend the Benefit Trust
Agreement made as of February 8, 2001 between the Company and The Chase
Manhattan Bank and take all other actions necessary or appropriate to
eliminate any requirement thereunder that any funds, assets or other
property be deposited in or otherwise transferred to the trust under such
Benefit Trust Agreement to fund any obligations of the Company or its
Subsidiaries or for any other purpose. Following the execution of this
Agreement and prior to the Effective Date, the Company shall use its
reasonable best efforts to obtain a waiver of, or otherwise eliminate any
requirement that it may have under, any provision of any individual
agreement to fund the Benefit Trust Agreement (or any other similar grantor
trust).
(m) The Company shall take such action as is necessary to
cause a new "date of exercise," within the meaning of the Company's 1998
Employee Stock Purchase Plan, as amended and restated effective as of
November 2, 2000 (the "Company Stock Purchase Plan"), to be established
that will cause the option period under such Company Stock Purchase Plan in
effect immediately prior to the Effective Date to terminate as of a date
that is no later than one payroll period prior to the Effective Date;
provided, that such change in the option period shall be conditioned upon
the consummation of the Merger. On such new date of exercise in accordance
with exercise made by the participant, the Company shall apply the funds
credited as of such date under the Company Stock Purchase Plan within each
participant's payroll deductions account to the purchase of whole Common
Shares in accordance with the terms of the Company Stock Purchase Plan. Any
amount remaining in each participant's payroll deductions account shall be
refunded to the participant. Immediately prior to and effective as of the
Effective Time and subject to the consummation of the Merger, the Company
shall terminate the Company Stock Purchase Plan.
6.20 Section 16 Matters. Prior to the Effective Time,
Parent and the Company shall take all such steps as may be required to
cause any dispositions of Common Shares or acquisitions of Parent Common
Stock (including derivative securities with respect to Common Shares or
Parent Common Stock) resulting from the transactions contemplated by
Article I, Article IV or Section 6.19 of this Agreement by each individual
who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company or will be, immediately following
the Effective Time, with respect to Parent, to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance
with the No-Action Letter dated January 12, 1999, issued by the SEC to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
6.21 Fund Clients. Subject to applicable fiduciary duties
to the Fund Clients, the Company will use commercially reasonable best
efforts to cause the Fund Clients not to take action (i) that would prevent
any Fund Client from qualifying as a "regulated investment company," within
the meaning of Section 851 of the Code, or (ii) that would be inconsistent
with any Fund Client's prospectus and other offering, advertising and
marketing materials.
6.22 Transfer Taxes. All stamp, transfer, or documentary
taxes or other Taxes payable by the Surviving Corporation under this
Agreement in connection with the Merger or the issuance of the Merger
Consideration shall be paid by the Surviving Corporation exclusively out of
assets held by the Company prior to the Merger. Parent and its affiliates
will not provide, directly or indirectly, any funding for the payment of
any such amounts.
6.23 Dividend Reinvestment Plan. The Company shall take
all actions necessary to terminate the Company's Dividend Reinvestment and
Stock Purchase Plan as promptly as practicable following the payment by the
Company of its last regular quarterly cash dividend paid prior to the
Closing Date. From and after the date hereof, the Company will satisfy any
of its obligations under the Company's Dividend Reinvestment and Stock
Purchase Plan only with Common Shares acquired in open market purchases and
not with Common Shares held in treasury.
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver at or prior to the Closing of each of
the following conditions:
(a) Shareholder Approval. The Company Requisite Vote
shall have been obtained.
(b) Exchange Listing. The shares of Parent Common Stock
issuable to holders of Common Shares (including Company Restricted
Shares) and Adjusted Options pursuant to this Agreement shall have
been approved for listing on the NYSE, subject to official notice
of issuance.
(c) Regulatory Consents. (i) The waiting periods
applicable to the consummation of the Merger under (A) the HSR Act
and (B) applicable insurance Laws shall have expired or been
terminated, (ii) the transactions contemplated hereby shall have
been approved by the OTS or the parties shall have mutually
determined that no such approval is required, and (iii) other than
the filing provided for in Section 1.3, all notices, reports and
other filings required to be made prior to the Effective Time by
the Company or Parent or any of their respective Subsidiaries or
affiliates, and all consents, registrations, approvals, permits
and authorizations required to be obtained prior to the Effective
Time by the Company or Parent or any of their respective
Subsidiaries or affiliates from, any Governmental Entity ((i)
through (iii) collectively, "Governmental Consents"), in
connection with the execution and delivery of this Agreement and
the consummation of the Merger and the other transactions
contemplated hereby (other than Governmental Consents the failure
of which to expire, to terminate or to be obtained or made is not
reasonably likely to result, individually or in the aggregate, in
the imposition on Parent, the Company, the Surviving Corporation
or any of their respective Subsidiaries or affiliates of a
criminal penalty or material civil penalties) shall have been made
or obtained (as the case may be), and any related waiting period
shall have expired or been terminated, and no such Governmental
Consent shall impose a Burdensome Condition; provided, however,
that no party that has previously agreed to accept a particular
Burdensome Condition in respect of a Governmental Consent shall be
permitted to assert the existence of such Burdensome Condition as
a reason for the failure of the condition set forth in this
Section 7.1(c) to be satisfied.
(d) Governmental Orders or Proceedings. No court or
Governmental Entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, statute,
ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits consummation
of the Merger (collectively, an "Order"), and there shall not be
any pending proceeding by any Governmental Entity seeking to
impose criminal penalties or material civil penalties in
connection therewith; provided, however, that, subject to Section
6.6(a), no party which has not used its commercially reasonable
best efforts to (i) prevent the entry of any such Order or (ii)
defend against and reasonably promptly appeal any such Orders or
penalties that may be entered shall be entitled to terminate this
Agreement by reason of the non-satisfaction of this Section
7.1(d).
(e) Form S-4. The Form S-4 shall have become effective
under the Securities Act. No stop order suspending the
effectiveness of the Form S-4 shall have been issued, and no
proceeding for that purpose shall have been initiated or been
threatened, by the SEC.
(f) Pooling Letter. Parent shall have received a letter
from its independent auditors addressed to Parent, dated as of the
Closing Date, to the effect that the Merger will qualify as a
pooling of interests under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations.
7.2 Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also
subject to the satisfaction or waiver by Parent at or prior to the Closing
of the following conditions:
(a) Representations and Warranties; Covenants. (i) Each
of the representations and warranties contained herein of the
Company shall be true and correct as of the date of this Agreement
and at the Closing with the same effect as though all such
representations and warranties had been made at the Closing,
except for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date,
in each case subject to the standard set forth in Section 5.1,
(ii) the agreements and covenants of the Company to be performed
and complied with pursuant to this Agreement at or prior to the
Effective Time shall, taken as a whole, have been duly performed
and complied with in all material respects (disregarding for these
purposes references to materiality in specific agreements and
covenants); provided, that the covenants and agreements contained
in Sections 6.1(b)(ii), 6.1(b)(iii), 6.1(b)(iv), and 6.1(c)(i)
shall, each taken individually, have been complied with in all
meaningful respects, and (iii) Parent shall have received a
certificate signed by the Chief Financial Officer of the Company,
dated the Closing Date, to the effect set forth in clauses (i) and
(ii) of this Section 7.2(a).
(b) Consents. The Company shall have obtained the consent
or approval of each Person whose consent or approval shall be
required under those Contracts specified in Section 7.2(b) of the
Company Disclosure Letter and no such consent shall impose any
Burdensome Condition.
(c) Tax Opinion. Parent shall have received the opinion
of Wachtell, Lipton, Xxxxx & Xxxx, counsel to Parent, dated the
Closing Date, substantially to the effect that the Merger will be
treated for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
In rendering such opinion, Wachtell, Lipton, Xxxxx & Xxxx may rely
upon and require such certificates of the Company and Parent as
are customary for such opinions.
7.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company at or prior to the Closing of the
following conditions:
(a) Representations and Warranties; Covenants. (i) Each
of the representations and warranties contained herein of Parent
shall be true and correct as of the date of this Agreement and at
the Closing with the same effect as though all such
representations and warranties had been made at the Closing,
except for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date,
in each case subject to the standard set forth in Section 5.1,
(ii) the agreements and covenants of Parent to be performed and
complied with pursuant to this Agreement at or prior to the
Closing shall, taken as a whole, have been duly performed and
complied with in all material respects (disregarding for these
purposes references to materiality in specific agreements and
covenants); provided, that the covenants and agreements contained
in Sections 6.2(b)(ii), 6.15 and 6.19, -------- each taken
individually, shall have been complied with in all meaningful
respects, and (iii) the Company shall have received a certificate
signed by the Chief Financial Officer of Parent, dated the Closing
Date, to the effect set forth in clauses (i) and (ii) of this
Section 7.3(a).
(b) Tax Opinion. The Company shall have received the
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), counsel to the
Company, dated the Closing Date, substantially to the effect that the
Merger will be treated for United States Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) may
rely upon and require such certificates of the Company and Parent as are
customary for such opinions.
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval by shareholders of the
Company referred to in Section 7.1(a), by mutual written consent of the
Company and Parent by action of their respective boards of directors.
8.2 Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by action of the board of directors of either
Parent or the Company if (i) the Merger shall not have been consummated by
February 28, 2002, whether such date is before or after the date of
approval by the shareholders of the Company (the "Termination Date");
provided, however, that the right to terminate this Agreement pursuant to
this Section 8.2(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement primarily contributes
to the failure of the Merger to be consummated by such time; provided,
further, that the Termination Date may be extended not more than sixty (60)
days by either party by written notice to the other party if the Merger
shall not have been consummated as a direct result of the condition set
forth in Section 7.1(c) failing to have been satisfied and the extending
party reasonably believes that the relevant approvals will be obtained
during such extension period; (ii) any order of any Governmental Entity
permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger shall have become final and non-appealable,
whether before or after the approval by the shareholders of the Company;
provided, that, the party seeking to terminate this Agreement pursuant to
this Section 8.2(ii) shall have used commercially reasonable best efforts
to prevent the entry of and to remove such order; or (iii) the Company
Requisite Vote shall not have been obtained at a meeting duly convened
therefor, including any adjournments or postponements thereof; provided,
that, the right to terminate this Agreement pursuant to Section 8.2(iii)
shall not be available to the Company or Parent if it has breached in any
material respect its obligations under this Agreement in any manner that
shall have materially contributed to the failure of the Merger to be
consummated or of any condition thereof not to be satisfied; provided,
further, that any termination by the Company pursuant to Section 8.2(iii)
shall be subject to payment to Parent of the Company Termination Amount
pursuant to Section 8.6(c), if applicable.
8.3 Termination by Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval by shareholders of the
Company referred to in Section 7.1(a), by action of the board of directors
of the Company:
(i) if there shall be a breach by Parent of any
representation or warranty, or any other covenant or agreement
contained in this Agreement which would result in a failure of a
condition set forth in Section 7.3(a) and which breach cannot be
cured or has not been cured by the earlier of (x) 20 Business Days
after the giving of written notice to Parent of such breach and
(y) the Termination Date; or
(ii) pursuant to the last sentence of Section 6.5(b).
8.4 Termination by Parent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval by the shareholders of
the Company referred to in Section 7.1(a), by action of the board of
directors of Parent, if:
(i) there shall have been a Change in Recommendation
(subject to the penultimate sentence of Section 6.5(b));
(ii) the Company or its board of directors (A) shall
breach its obligations under Section 6.3 or (B) shall recommend an
Acquisition Proposal to its shareholders as described in clause
(iii) of the proviso to Section 6.3(a); or
(iii) there shall be a breach by the Company of any
representation or warranty, or any other covenant or agreement
contained in this Agreement which would result in a failure of a
condition set forth in Section 7.2(a) and which breach cannot be
cured or has not been cured by the earlier of (x) 20 Business Days
after the giving of written notice to the Company of such breach
and (y) the Termination Date.
8.5 Effect of Termination and Abandonment.
(a) The party desiring to terminate this Agreement
pursuant to Sections 8.2, 8.3 or 8.4 shall give written notice of such
termination to the other party in accordance with Section 9.6, specifying
the provision pursuant to which such termination is effected.
(b) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement
(other than as set forth in Section 9.1) shall become void and of no effect
with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors or
other representatives); provided, however, that, no such termination shall
relieve any party hereto of any liability for damages resulting from any
intentional and material breach of this Agreement or from any obligation to
pay, if applicable, the amounts payable pursuant to Section 8.6 or Section
8.7.
8.6 Company Termination Payment.
(a) In the event that a Pre-Termination Acquisition
Proposal Event with respect to the Company shall have occurred and this
Agreement is terminated by Parent pursuant to Section 8.4(iii) as a result
of an intentional breach by the Company of any representation, warranty,
covenant or agreement, then the Company shall pay to Parent a termination
payment equal to $250,000,000 (the "Company Termination Amount"), by wire
transfer of immediately available funds. Such Company Termination Amount
shall be paid promptly and, in any event, within two Business Days after
the date of such termination.
(b) In the event that:
(i) a Pre-Termination Acquisition Proposal Event with
respect to the Company shall have occurred and this Agreement is
terminated by Parent pursuant to Section 8.4(i) (which clause
relates to a Change in Recommendation);
(ii) this Agreement is terminated by Parent pursuant
to Section 8.4(ii)(A) (which clause relates to a breach under the
"no solicitation" or related obligations under Section 6.3);
(iii) this Agreement is terminated by Parent pursuant
to Section 8.4(ii)(B) by reason of the Company or the board of
directors of the Company recommending an Acquisition Proposal to
its shareholders pursuant to clause (iii) of the proviso to
Section 6.3(a); or
(iv) a Pre-Termination Acquisition Proposal Event
with respect to the Company shall have occurred and this Agreement
is terminated by the Company pursuant to Section 8.3(ii);
then, in any such event, (A) the Company shall promptly (and in any event
within two Business Days) following such termination, pay Parent, by wire
transfer of immediately available funds, an initial termination payment
equal to three-fifths (3/5) of the Company Termination Amount, and (B) if,
prior to or within nine (9) months following any such termination, (x) the
Company executes and delivers an agreement with respect to an Acquisition
Proposal, or (y) the board of directors of the Company recommends a
third-party tender offer or exchange offer for the Common Shares, or (z) an
Acquisition Proposal with respect to the Company is consummated, then, upon
the occurrence of the first such event described in clause (x), (y) or (z)
(a "Post-Termination Company Acquisition Proposal Event"), the Company
shall also promptly (and in any event within two Business Days after such
event) pay Parent, by wire transfer of immediately available funds, an
additional amount equal to two-fifths (2/5) of the Company Termination
Amount.
(c) In the event that a Pre-Termination Acquisition
Proposal Event with respect to the Company shall have occurred and this
Agreement is terminated by either the Company or Parent pursuant to Section
8.2(iii) (which clause relates to failure to obtain the Company Requisite
Vote), then:
(A) the Company shall promptly (and in any event within
two Business Days) following such termination, pay Parent, by wire
transfer of immediately available funds, an initial termination
payment equal to
(x) if at the time of, or at any time within 10
Business Days prior to, the Company Shareholder Meeting, there
shall have been a Change in Recommendation or the board of
directors of the Company shall have recommended an Acquisition
Proposal to its shareholders pursuant to clause (iii) of the
proviso to Section 6.3(a) (either of such actions, a "Company
Adverse Action"), three-fifths (3/5) of the Company
Termination Amount, or
(y) if such a Company Adverse Action shall not have
occurred, one-third (1/3) of the Company Termination Amount,
and
(B) if, prior to or within nine (9) months following any
such termination a Post-Termination Company Acquisition Proposal
Event shall have occurred, the Company shall also promptly (and in
any event within two Business Days after such event) pay Parent,
by wire transfer of immediately available funds, an additional
amount equal to the applicable remaining balance of the Company
Termination Amount.
(d) In addition to the other payments provided for in
this Section 8.6, the Company also agrees upon and following any
termination of this Agreement to promptly reimburse Parent for any portion
of the Payment (as defined in the Tri-Party Agreement) or any other Losses
(as defined in the Tri-Party Agreement), in each case, to the extent repaid
to the Company by Prudential, whether such repayment is made prior to or
following said termination (provided, that the amount of such reimbursement
by the Company shall not in any case exceed the amount that Parent has
actually paid to the Prudential Indemnified Parties (as defined in the
Tri-Party Agreement) pursuant to the terms of Section 6 of the Tri-Party
Agreement); provided, in the event this Agreement is terminated under
circumstances in which Parent is obligated to pay to the Company the Parent
Termination Amount or Partial Parent Termination Amount, then any such
reimbursement obligation arising with respect to any amounts repaid by
Prudential on or prior to such termination may be treated by Parent as an
offset against any such payment obligation by Parent (provided that any
such offset amounts shall be treated as constituting part of the Parent
Termination Amount or Partial Parent Termination Amount for purposes of
Section 8.7(c)).
(e) The Company acknowledges that the agreements
contained in this Section 8.6 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay any amount due pursuant to this Section 8.6 and, in order
to obtain any such payment, Parent commences a suit which results in a
judgment against the Company for the payment set forth in this Section 8.6,
the Company shall pay to Parent its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on
the Company Termination Amount from each date for payment until the date of
such payment at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made plus one (1) percent per annum. For the
avoidance of doubt, approval by the shareholders of the Company shall not
be a condition to the payment of any amount specified in this Section 8.6.
8.7 Parent Termination Payment.
(a) Parent shall pay to the Company a termination payment
equal to $600,000,000 (the "Parent Termination Amount") in the event that
this Agreement is terminated pursuant to this Article VIII, unless the
Agreement is terminated (i) in circumstances where the Company is obligated
to pay all or a portion of the Company Termination Amount pursuant to
Section 8.6, (ii) following an intentional breach by the Company of its
covenants or agreements that would result in a failure of the condition set
forth in Section 7.2(a)(ii) (without giving effect to any notice or cure
period, and assuming for these purposes that the date of termination is the
Closing Date) and that has not been cured prior to the date of termination
of this Agreement, (iii) following a breach as of the date of this
Agreement by the Company of any representation or warranty contained in
this Agreement that would result in a failure of the condition set forth in
Section 7.2(a)(i) (without giving effect to any notice or cure period, and
assuming for these purposes that the date of termination is the Closing
Date) and that has not been cured prior to the date of termination of this
Agreement or (iv) pursuant to Section 8.2(iii) following a Change in
Recommendation or pursuant to Section 8.4(i) (the "Shareholder
Approval/Recommendation Exception"), unless, in each of clauses (ii), (iii)
or (iv), Parent has breached any of its representations, warranties,
covenants or agreements that would result in a failure of the conditions
set forth in Section 7.3(a) (without giving effect to any notice or cure
period, and assuming for these purposes that the date of termination is the
Closing Date) and which breach has not been cured prior to the termination
of this Agreement (the "Parent Breach Exception"); provided, however, that
in the event that the sole reason that Parent is not obligated to pay to
the Company the Parent Termination Amount is as a result of the Shareholder
Approval/Recommendation Exception set forth in clause (iv) above, then
Parent shall be obligated to pay $350,000,000 (the "Partial Parent
Termination Amount") to the Company in the event the Agreement is
terminated pursuant to Section 8.4(i) or pursuant to Section 8.2(iii)
following a Change in Recommendation, under circumstances in which the
Company is not obligated to pay all or a portion of the Company Termination
Amount pursuant to Section 8.6 and where there exists a Material Parent
Stock Price Decline as of the initial date of the Change in Recommendation.
"Material Parent Stock Price Decline" shall occur if and
only if both (i) the Parent Average Interim Price is less than $64.76 and
(ii) the number obtained by dividing the Parent Average Interim Price by
$76.19 shall be less than the number obtained by dividing the Index Price
on the Determination Date by the Index Price on the Starting Date and
subtracting 0.15 from such quotient. "Determination Date" shall mean the
date of the Change in Recommendation. "Parent Average Interim Price" shall
mean the average of the daily average of the per share high and low sales
prices of one share of Parent Common Stock as reported on the NYSE
composite transactions reporting system (as reported in the New York City
edition of The Wall Street Journal or, if not reported thereby, another
mutually acceptable authoritative source) for each of the ten trading days
ending on the trading day prior to the Determination Date, rounded to the
nearest hundredth of a dollar. "Index Group" means the group of ten
companies listed in Section 8.7(a) of the Parent Disclosure Letter, the
common stock of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination
Date, an announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization as of the
Starting Date. In the event that the common stock of any such company
within the Index Group ceases to be publicly traded or any such
announcement is made with respect to any such transaction, such company
shall be eliminated from the Index Group, and the Index Price shall be
calculated as if such company was not in the Index Group for all relevant
periods. "Index Price" on a given date means the sum of the Equivalent
Price for each of the companies in the Index Group. "Equivalent Price"
means the product of (A) the average of the daily average of the per share
high and low sales prices of one share of common stock of the applicable
company as reported on the principal exchange or quotation system on which
such member is listed or quoted (as reported in the New York City edition
of The Wall Street Journal or, if not reported thereby, another mutually
acceptable authoritative source) for each of the ten trading days ending on
the trading day prior to the Starting Date or the Determination Date, as
applicable, rounded to the nearest hundredth of a dollar, and (B) the
Shares Purchased Factor set forth in Section 8.7(a) of the Parent
Disclosure Letter for the applicable member of the Index Group. "Starting
Date" means May 11, 2001. All share price information set forth in this
paragraph shall be appropriately adjusted for any stock split, stock
dividend, recapitalization, subdivision, reclassification, combination,
exchange of shares or similar transaction.
(b) The Parent Termination Amount or Partial Parent
Termination Amount shall be paid, by wire transfer of immediately available
funds, promptly and, in any event, within two Business Days after the date
of such termination.
(c) If the Company receives the Parent Termination Amount
or Partial Parent Termination Amount pursuant to Section 8.7(a) and within
12 months following termination of this Agreement a Post-Termination
Company Acquisition Proposal Event occurs, then the Company shall repay to
Parent, without any interest thereon, not later than two Business Days
after the date of the first consummation of any Post-Termination Company
Acquisition Proposal Event occurring during such 12-month period, the
Parent Termination Amount or the Partial Parent Termination Amount, as the
case may be; provided that the Company shall not be obligated to make such
repayment if the termination of this Agreement occurred (x) pursuant to
Section 8.3(i) or (y) pursuant to Sections 8.2(i), 8.2(ii), 8.2(iii),
8.3(ii), 8.4(i) or 8.4(iii) if, and only if, in each case referred to in
this clause (y), a Parent Breach Exception had occurred (and had been
asserted by the Company) as of the date of termination.
(d) Parent acknowledges that the agreements contained in
this Section 8.7 are an integral part of the transactions contemplated by
this Agreement and that, without these agreements, the Company would not
enter into this Agreement; accordingly, if Parent fails promptly to pay any
amount due pursuant to this Section 8.7 and, in order to obtain any such
payment, the Company commences a suit which results in a judgment against
the Company for the payment set forth in this Section 8.7, Parent shall pay
to the Company its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the Parent Termination
Amount or the Partial Parent Termination Amount from the date for payment
until the date of such payment at the prime rate of Citibank N.A. in effect
on the date such payment was required to be made plus one (1) percent per
annum. For the avoidance of doubt, it is acknowledged that approval by the
stockholders of Parent shall not be a condition to the payment of any
amount specified in this Section 8.7.
8.8 Pre-Termination Acquisition Proposal Event. For
purposes of Section 8.6, a "Pre-Termination Acquisition Proposal Event"
shall be deemed to occur with respect to the Company if, at any time prior
to the event giving rise to the relevant right to terminate this Agreement,
(i) a bona fide Acquisition Proposal shall have been made known to the
Company or any of its Subsidiaries or made directly to its shareholders
generally or (ii) any Person shall have publicly announced a bona fide
intention (whether or not conditional) to make an Acquisition Proposal and,
in the case of clause (i) or (ii), such Acquisition Proposal or
announcement of intention shall not have been irrevocably withdrawn.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Survival. Article IV, this Article IX and the
agreements of the Company and Parent contained in Sections 6.9, 6.10, 6.12,
6.13, 6.15, 6.18, 6.19 and 6.23 shall survive the consummation of the
Merger. This Article IX, the agreements of the Company and Parent contained
in the last sentence of Section 6.8, Section 6.12, Section 8.5, Section
8.6, Section 8.7 and the Confidentiality Agreement shall survive the
termination of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall not survive the consummation of the Merger
or the termination of this Agreement. If the Effective Time occurs, this
Section 9.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time.
9.2 Modification or Amendment. Subject to the provisions
of the applicable Law, at any time prior to the Effective Time, the parties
hereto may modify or amend this Agreement, by written agreement executed
and delivered by duly authorized officers of the respective parties;
provided, however, that after the approval of this Agreement, there shall
not be made any amendment (including, without limitation, pursuant to
Section 1.4 or Section 9.12) that by Law requires further approval by the
shareholders of the Company without the further approval of such
shareholders.
9.3 Waiver. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party
and may be waived prior to the Effective Time by such party in whole or in
part to the extent permitted by applicable Law. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of any
of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.2, waive compliance by
the other party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
9.4 Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts shall together constitute
the same agreement.
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE, EXCEPT THAT THE PROVISIONS
OF THE TBCA APPLICABLE TO THE MERGER AND THIS AGREEMENT SHALL GOVERN THE
MERGER AND ARTICLES I THROUGH IV AND SECTIONS 6.3, 6.5, 9.2 AND 9.3 OF THIS
AGREEMENT TO THE EXTENT MANDATORILY REQUIRED THEREBY. 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 9.6 or in such other
manner as may be permitted by law shall be valid and sufficient service
thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY 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 9.5.
9.6 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in
writing and delivered personally or sent by registered or certified mail,
postage prepaid, or by facsimile:
if to Parent:
American International Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
if to the Company:
American General Corporation
0000 Xxxxx Xxxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by
the party to receive such notice as provided above.
9.7 Entire Agreement; No Other Representations. This
Agreement (including any exhibits hereto), the Company Disclosure Letter,
the Parent Disclosure Letter and the Confidentiality Agreement, dated April
10, 2001, between Parent and the Company (the "Confidentiality Agreement")
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among
the parties, with respect to the subject matter hereof. EACH PARTY HERETO
AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
THIS AGREEMENT, NEITHER PARENT NOR THE COMPANY MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY
DOCUMENT OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
9.8 No Third-Party Beneficiaries. Except for the
provisions of Section 6.13, this Agreement is not intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder.
9.9 Obligations of Parent and of the Company. Whenever
this Agreement requires a Subsidiary of Parent (including Merger Sub) to
take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to cause such Subsidiary to take such action.
Whenever this Agreement requires a Subsidiary of the Company to take any
action, such requirement shall be deemed to include an undertaking on the
part of the Company to cause such Subsidiary to take such action and, after
the Effective Time, on the part of Parent and the Surviving Corporation to
cause such Subsidiary to take such action.
9.10 Severability. 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.
9.11 Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof. Where a reference in this Agreement is made to a
Section or Exhibit, such reference shall be to a Section of or Exhibit to
this Agreement unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Unless otherwise
stated, any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns; provided, that no representation made
with respect to any Company Report or Parent Report filed prior to the date
hereof shall be deemed modified by the filing of any amendment thereto
after the date hereof by operation of this sentence.
9.12 Assignment. This Agreement shall not be assignable
by operation of law or otherwise; provided, however, that, subject to
Section 6.18, Parent may designate, by written notice to the Company,
another wholly owned direct Subsidiary of Parent to effect the Merger in
lieu of Merger Sub, in which event all references herein to Merger Sub
shall be deemed references to such other Subsidiary, except that all
representations and warranties made herein with respect to Merger Sub as of
the date of this Agreement shall be deemed representations and warranties
made with respect to such other Subsidiary as of the date of such
designation.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officers of the parties hereto as of
the date first written above.
AMERICAN GENERAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
WASHINGTON ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and Chief
Executive Officer
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President and
General Counsel
