SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 13, 1997
AMERUS LIFE HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
IOWA 0-21459 42-1459712
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
418 SIXTH AVENUE, DES MOINES, IOWA 50309-2407
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (515) 280-1331
Not Applicable.
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
ACQUISITION OF AMERUS LIFE HOLDINGS, INC.
On September 19, 1997, AmerUs Life Holdings, Inc.
("Registrant"), a wholly owned subsidiary of the
Registrant and AmVestors Financial Corporation
("AmVestors") entered into an Agreement and Plan of
Merger dated as of September 19, 1997 and as amended and
restated as of October 8, 1997 ("AmVestors Merger
Agreement"), providing for a merger ("AmVestors Merger")
pursuant to which, and subject to the terms thereof,
AmVestors would become a wholly owned subsidiary of the
Registrant. As of the effective time of the AmVestors
Merger, each outstanding share of common stock of
AmVestors, no par value ("AmVestors Common Stock"), other
than shares held in the treasury of AmVestors and shares
owned by the Registrant or any of its subsidiaries, shall
be converted into the right to receive (x) if the Average
Registrant Share Price (as defined below) is greater than
or equal to $27.00 but less than or equal to $29.75, the
number of shares of Series A common stock, no par value,
of the Registrant ("Registrant Common Stock") determined
by dividing $20.00 by the Average Registrant Share Price;
(y) if the Average Registrant Share Price is less than
$27.00, 0.7407 shares of Registrant Common Stock (subject
to the termination rights described below), and (z) if
the Average Registrant Share Price is greater than
$29.75, 0.6724 shares of Registrant Common Stock (as
applicable, the "AmVestors Merger Consideration"). The
"Average Registrant Share Price" is the average of the
last reported sales price per share of Registrant Common
Stock quoted by The Nasdaq National Market for the twenty
consecutive trading days ending on the tenth trading day
prior to the date the AmVestors Merger is consummated.
If the Average Registrant Share Price falls below $27.00,
the AmVestors Merger Consideration would be worth less
than $20.00 per share and AmVestors has the right to
terminate the AmVestors Merger Agreement unless the
Registrant agrees to provide additional Registrant Common
Stock valued at $20.00 per share of AmVestors Common
Stock. If the Average Registrant Share Price rises above
$29.75, the AmVestors Merger Consideration would be worth
more than $20.00 per share. The AmVestors Merger is
intended to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended.
AmVestors' principal subsidiaries are American
Investors Life Insurance Company ("American") and Florida
Benefit Group, Inc. ("FBL"). Consummation of the
AmVestors Merger is subject to satisfaction or waiver by
the parties of certain closing conditions, including the
receipt of regulatory approvals, approvals by the
stockholders of the Registrant and AmVestors and other
customary closing conditions.
The foregoing description of the AmVestors Merger
Agreement does not purport to be complete and is
qualified in its entirety by reference to the AmVestors
Merger Agreement, a copy of which is attached hereto as
Exhibit 2.1 and is hereby incorporated by reference in
its entirety.
ACQUISITION OF DELTA LIFE CORPORATION
On August 13, 1997 the Registrant, a wholly owned
subsidiary ("Sub") of the Registrant, and Delta Life
Corporation ("Delta") entered into an Agreement and Plan
of Merger (the "Delta Merger Agreement") dated as of
August 13, 1997, and as amended on September 5, 1997,
pursuant to which all of the outstanding capital stock of
Delta would be acquired for $162.9 million in cash. Under
the Delta Merger Agreement, Sub would merge with and into
Delta, and Delta would be the surviving corporation and
become a wholly owned subsidiary of the Registrant's
wholly owned subsidiary, AmerUs Life Insurance Company,
or of AmerUs. The principal asset of Delta is its
wholly-owned subsidiary, Delta Life and Annuity Company
("Delta Life"), a Tennessee domiciled life insurance
company formed in 1955. As of June 30, 1997, Delta had
approximately 52,000 annuity contracts outstanding, had
assets of $2.0 billion, had total stockholders' equity of
$107.4 million, and had reserves of approximately $1.8
billion. Delta Life specializes in the sale of individual
single and flexible premium deferred annuities, primarily
in the southeastern, western, southwestern and midwestern
regions of the United States. Such sales are made
primarily through a network of over 3,400 independent
agents. Approximately 55% of Delta Life's 1996 direct
collected premiums were derived from retirement-oriented
tax-qualified annuities. Delta Life is licensed in the
District of Columbia and in all states except New York.
Consummation of the Delta Merger is subject to
satisfaction or waiver by the parties of certain closing
conditions, including the receipt of regulatory
approvals, approvals by the stockholders of the
Registrant and Delta and other customary closing
conditions. It is anticipated that the Delta Merger will
close in the fourth quarter of this year.
The foregoing description of the Delta Merger
Agreement does not purport to be complete and is
qualified in its entirety by reference to the Delta
Merger Agreement, a copy of which is attached hereto as
Exhibit 2.2 and is hereby incorporated by reference in
its entirety.
ITEM 7: FINANCIAL STATEMENT, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
- 2.1 Agreement and Plan of Merger, dated as of
September 19, 1997 and as amended and restated as of
October 8, 1997, among AmerUs Life Holdings, Inc., a
wholly owned subsidiary of AmerUs Life Holdings, Inc.and
AmVestors Financial Corporation
2.2 Agreement and Plan of Merger, dated as of
August 13, 1997 and as amended as of September 5, 1997,
among AmerUs Life Holdings, Inc., a wholly owned
subsidiary of AmerUs Life Holdings, Inc. and Delta Life
Corporation
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMERUS LIFE HOLDINGS, INC.
By: /s/ Roger K. Brooks
------------------------------
Name: Roger K. Brooks
Title: Chairman, President and
Chief Executive Officer
Date: October 8, 1997
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of September
19, 1997 and as amended and restated as of October
8, 1997, among AmerUs Life Holdings, Inc., a wholly
owned subsidiary of AmerUs Life Holdings, Inc. and
AmVestors Financial Corporation
2.2 Agreement and Plan of Merger, dated as of August 13,
1997 and as amended as of September 5, 1997, among
AmerUs Life Holdings, Inc., a wholly owned
subsidiary of AmerUs Life Holdings, Inc. and Delta
Life Corporation
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is
dated as of September 19, 1997 and amended and restated as of
October 8, 1997, and is by and among AmVestors Financial
Corporation, a Kansas corporation (the "Company"), AmerUs Life
Holdings, Inc., an Iowa corporation ("Parent"), and AFC Corp.,
a Kansas corporation and a subsidiary of Parent ("Sub"). A
Glossary of Terms is attached as Annex A and incorporated herein
by reference.
RECITALS
WHEREAS, the respective Boards of Directors of Parent,
Sub and the Company have approved the merger of Sub into the
Company, upon the terms and subject to the conditions set forth
in this Agreement, whereby each issued and outstanding share of
common stock, no par value, of the Company (the "Company Common
Stock"), not owned directly or indirectly by Parent or held in
treasury by the Company, will be converted into the right to
receive the Merger Consideration (as defined below), on the terms
set forth herein;
WHEREAS, Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is
intended that the Merger of the Company and Sub shall qualify as
a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement shall be, and is hereby, adopted as a plan of
reorganization for the purposes of Section 368 of the Code.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties and covenants set
forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger.
(a) Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.01(b)),
Sub shall be merged with and into the Company (the "Merger") in
accordance with the Kansas Statutes Annotated ("KSA"), Chapter 17
(the "KGCC"), whereupon the separate existence of the Sub shall
cease, and the Company shall be the surviving corporation (the
"Surviving Corporation").
(b) The consummation of the Merger (the "Closing")
shall take place (i) at the offices of Bryan Cave LLP, One
Metropolitan Square, 211 North Broadway, Suite 3600, St. Louis,
Missouri, at 10:00 A.M., on such date (the "Closing Date") which
is three business days after the date on which the last of the
conditions set forth in Article 8 hereof shall have been
satisfied or waived in accordance with this Agreement, or (ii)
such other place, time and date as the parties hereto shall
agree. Prior to the Closing, Sub and the Company shall execute
and deliver to the Secretary of State of the State of Kansas (the
"Kansas Secretary of State") a Certificate of Merger in proper
form for filing under the KGCC on the day of the Closing, and the
Merger shall become effective upon the filing of the Certificate
of Merger with the Kansas Secretary of State or at such later
time as may be specified in the Certificate of Merger, such time
being herein called the "Effective Time".
(c) The Merger shall have the effects set forth in the
KGCC. Without limiting the generality of the foregoing, at the
Effective Time (i) the Surviving Corporation shall possess all
assets and property of every description, and every interest
therein, wherever located, and the rights, privileges,
immunities, power, franchises, and authority, of a public as well
as of a private nature, of each of the Company and the Sub and
all obligations belonging to or due each of them shall be vested
in the Surviving Corporation without further act or deed; (ii)
title to any real estate or any interest therein vested in either
of the Company or the Sub shall not revert or in any way be
impaired by reason of the Merger; (iii) all rights of creditors
and all liens on any property of the Company and the Sub shall be
preserved unimpaired; and (iv) the Surviving Corporation shall be
liable for all the obligations of the Company and the Sub, and
any claim existing, or action or proceeding pending, by or
against either of them, may be prosecuted to judgment with the
right of appeal, as if the Merger had not taken place.
SECTION 1.02 Stock Options.
(a) As soon as practicable following the date of this
Agreement, but in any event not less than fifteen trading days
prior to the Closing, the Board of Directors of the Company (or,
if appropriate, any committee administering the Company's 1989
Non-Qualified Stock Option Plan (the "NQSO Plan") or 1996
Incentive Stock Option Plan (the "ISO Plan," and together with
the NQSO Plan, the "Company Option Plans") shall adopt such
resolutions or take such other actions as may be required to
adjust the terms of all outstanding Company Options (as defined
in Section 3.03) issued pursuant to the Company Option Plans and
related agreements, to provide that at the Effective Time, each
Company Option outstanding (whether or not vested and
exercisable) immediately prior to the Effective Time shall at the
Effective Time cease to represent a right to acquire shares of
Company Common Stock and shall be converted automatically into an
option (a "Continuing Option") to acquire Parent Common Stock in
an amount and at an exercise price determined as provided in the
immediately following sentence (and on substantially the same
terms and conditions as were applicable under such Company Option
Plan and the agreements evidencing grants thereunder), subject to
Section 1.02(b). At the Effective Time, if the holder of a
Company Option which is then outstanding and unexercised has not
timely elected (with respect to Company Options granted under the
NQSO Plan) or has not timely requested (with respect to Company
Options granted under the ISO Plan; or if so requested, if such
request has been denied by the Company) to receive cash for such
Company Option as described in subsection (b) of this Section
1.02, then such Company Option shall, in accordance with the
provisions of the NQSO Plan or the ISO Plan, whichever is
applicable, become a Continuing Option to acquire (x) the number
of shares of Parent Common Stock equal to the product of (i) the
number of shares of Company Common Stock subject to such Company
Option immediately prior to the Effective Time multiplied by (ii)
the Merger Consideration (a partial share shall be rounded down
to the next lower whole share), with (y) an exercise price equal
to the quotient of (i) the original exercise price per share (the
"Original Exercise Price") of Company Common Stock subject to
such Company Option in effect immediately prior to the Effective
Time divided by (ii) the Merger Consideration and rounding the
exercise price thus determined to the nearest whole cent (a half
cent shall be rounded to the next higher whole cent). In the
case of Company Options intended to be incentive stock options
(as defined in Section 422 of the Code), the exercise price,
number of shares of Parent Common Stock subject to such
Continuing Option and terms and conditions or exercise of such
Continuing Option shall be determined in order to comply with the
requirements of Section 424(a) of the Code.
(b) As soon as practicable following the date of this
Agreement, but in any event not less than fifteen trading days
prior to the Closing, the Company shall deliver to the holders of
Company Options (whether or not vested and exercisable) a Cash
Option Notice Form (as defined below) offering to (i) holders of
Company Options issued pursuant to the NQSO Plan the right to
elect, and (ii) holders of Company Options issued pursuant to the
ISO Plan the right to request, to receive in consideration for
the cancellation of all (but not less than all) of such holder's
Company Options, an amount in cash equal to the product of (x)
the excess of (i) the Option Cash Price (as defined below), over
(ii) the Original Exercise Price of such Company Option,
multiplied by (y) the number of shares subject to such Company
Option. The Option Cash Price is the product of (A) the last
reported sales price per share of Parent Common Stock as quoted
by Nasdaq (as defined below) on the Closing Date multiplied by
(B) the Merger Consideration. Alternatively, with the consent of
Parent prior to the Closing, holders of Company Options may
request to receive in consideration for the cancellation of such
holder's Company Options, a number of shares of Parent Common
Stock (rounded down to the nearest whole share) equal to the
amount of cash which otherwise would be payable upon termination
of such Company Options pursuant to the first sentence of this
Section 1.02(b), divided by the last sales price of Parent Common
Stock as reported on Nasdaq as of the Effective Time.
(c) As soon as practicable after the Effective Time,
Parent shall deliver to the holders of Continuing Options
appropriate notices setting forth such holders' rights pursuant
to the respective Company Option Plans.
(d) To make the election for cash consideration
described in Section 1.02(b) above, any eligible Company Option
holder must deposit with the Exchange Agent at least ten trading
days prior to the Closing a properly completed notice ("Cash
Option Notice Form"), in form and substance reasonably
satisfactory to Parent (including an appropriate release), and
the Option Agreements (as defined below) relating to any such
Company Options for which such election is made. Such election
shall be irrevocable unless the Agreement is terminated before
the Effective Time. Following the Effective Time, the Company
shall deliver to each such holder the cash amount so elected,
calculated in accordance with Section 1.02(b) above. No interest
shall be paid on such amount. If this Agreement is terminated
before the Effective Time, the Option Agreement(s) shall be
returned to each such holder.
SECTION 1.03 Stock Appreciation Rights. Following the
Effective Time, the holders of outstanding Company SARs (as
defined in Section 3.03(e) hereof), shall be entitled to receive
in consideration for the cancellation of such Company SAR an
amount in cash equal to the product of (x) the excess of (i) the
Option Cash Price over (ii) the strike price of such Company SAR,
multiplied by (y) the number of shares of Company Common Stock
referenced by the Company SARs; provided, that Parent shall have
received from each such holder a written acknowledgement that
such payment is in full satisfaction of the Company's and
Parent's obligations in respect of the Company SARs.
SECTION 1.04 Articles of Incorporation and By-laws.
(a) 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 until
thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of Sub as in effect immediately prior
to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law.
SECTION 1.05 Directors. The individuals who are the
directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation until thereafter they
cease to be directors in accordance with the KGCC and the
Articles of Incorporation and By-laws of the Surviving
Corporation.
SECTION 1.06 Officers. The individuals who are the
officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until
thereafter they cease to be officers in accordance with the KGCC
and the Articles of Incorporation and By-laws of the Surviving
Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.01 Capital Stock of Sub. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock or
any shares of capital stock of Sub, each share of common stock,
without par value, of Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become
one fully paid and nonassessable share of common stock, without
par value, of the Surviving Corporation.
SECTION 2.02 Cancellation of Treasury Stock and Parent
Owned Stock. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub, each
share of Company Common Stock issued and held immediately prior
to the Effective Time in the Company's treasury and each share of
Company Common Stock that is owned by Parent, Sub or any other
subsidiary of Parent shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered
in exchange therefor. At the Effective Time, shares of Company
Common Stock held by subsidiaries of the Company shall be
converted into the right to receive the Merger Consideration in
accordance with Section 2.03.
SECTION 2.03 Conversion of Company Common Stock.
(a) As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub,
except as otherwise provided in this Section 2.03 and subject to
Section 2.04(f), each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.02) shall be
converted into the right to receive (x) if the Average Parent
Share Price (as defined below) is greater than or equal to $27.00
but less than or equal to $29.75, the number of shares of Parent
Common Stock (as defined in Section 4.10 hereof) determined by
dividing $20.00 by the Average Parent Share Price and rounding
the result to the nearest one ten-thousandth of a share; (y) if
the Average Parent Share Price is less than $27.00, 0.7407 shares
of Parent Common Stock (subject to the next succeeding
paragraph); and (z) if the Average Parent Share Price is greater
than $29.75, 0.6724 shares of Parent Common Stock (as applicable,
the "Merger Consideration"); provided, however, that, in any
event, if between the date of this Agreement and the Effective
Time the outstanding shares of Parent Common Stock shall have
been changed into a different number of shares or a different
class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration shall be
correspondingly adjusted to the extent appropriate to reflect
such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. The
"Average Parent Share Price" means the average of the last
reported sales prices per share of Parent Common Stock as quoted
by The Nasdaq National Market ("Nasdaq") for the 20 consecutive
trading days ending on the trading day (the "Price Measuring
Date") which is ten trading days prior to the Closing Date.
(b) In the event that the Average Parent Share Price
on the Price Measuring Date is less than $27.00, the Company
shall have the option to deliver a written notice to Parent on
the trading day following the Price Measuring Date providing for
the termination of this Agreement pursuant to this Section
2.03(b) and Article IX, subject to the next sentence (the
"Termination Notice"). If the Company properly delivers a
Termination Notice, this Agreement shall terminate in accordance
with Article IX hereof at the close of business on the fifth
trading day following the Price Measuring Date unless prior to
such time Parent shall have delivered to the Company a written
notice whereby the Parent agrees to adjust the consideration into
which each share of Company Common Stock from the Merger
Consideration as determined above to the number of shares of
Parent Common Stock (the "Adjusted Merger Consideration")
determined by dividing $20.00 by the Average Parent Share Price
as of the Price Measuring Date and rounding the result to the
nearest one ten-thousandth of a share.
(c) As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
SECTION 2.04 Exchange of Certificates.
(a) Exchange Agent. From and after the Effective
Time, (i) Parent shall make available to a bank or trust company
designated by Parent and reasonably satisfactory to the Company
(the "Exchange Agent"), for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with this
Article II through the Exchange Agent, (i) certificates
evidencing such number of shares of Parent Common Stock issuable
to holders of Company Common Stock in the Merger pursuant to
Section 2.03 and (ii) upon request of the Exchange Agent cash in
the amount required to be exchanged for shares of Company Common
Stock in the Merger pursuant to Section 2.04(f) (such
certificates for shares of Parent Common Stock, together with any
dividends or distributions with respect thereto and cash, being
hereinafter referred to as the "Exchange Fund"). The Exchange
Agent shall, pursuant to irrevocable instructions, deliver the
Parent Common Stock contemplated to be issued pursuant to Section
2.03 out of the Exchange Fund. Except as contemplated by Section
2.04(f) hereof, the Exchange Fund shall not be used for any other
purpose. The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall
be paid to Parent.
(b) Exchange Procedures. As promptly as practicable
after the Effective Time, Parent shall cause the Exchange Agent
to mail to each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (the "Certificates") (i) a letter
of transmittal (which shall be in customary form and shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Parent Common
Stock.
(c) Exchange of Certificates. Upon surrender to the
Exchange Agent of a Certificate for cancellation, together with
such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor (i) a Certificate representing that
number of whole shares of Parent Common Stock, if any, which such
holder has the right to receive pursuant to this Article II and
(ii) a check in the amount equal to the cash, if any, which such
holder has the right to receive pursuant to the provisions of
this Article II (including any cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.04(f) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.04(d)), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the
transfer records of the Company, the applicable Merger
Consideration, cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section
2.04(f) and any dividends or other distributions to which such
holder is entitled pursuant to Section 2.04(d) may be issued to a
transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.04,
each Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender
the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, cash in lieu
of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.04(f) and any dividends
or other distributions to which such holder is entitled pursuant
to Section 2.04(d).
(d) Distributions with Respect to Unexchanged Shares
of Parent Common Stock. No dividends or other distributions
declared or made after the Effective Time with respect to Parent
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of any fractional shares shall be paid to
any such holder pursuant to Section 2.04(f), until the holder of
such Certificate shall surrender such Certificate. Subject to
the effect of escheat, tax or other applicable laws, following
surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest,
(i) promptly, the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.04(f) and the amount of dividends
or other distributions with a record date after the Effective
Time and theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record
date after the Effective Time but prior to surrender and a
payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(e) No Further Rights in Company Common Stock. All
shares of Parent Common Stock issued or cash paid upon conversion
of the shares of Company Common Stock in accordance with the
terms hereof (including any cash paid pursuant to Section 2.04(d)
or (f)) shall be deemed to have been issued in full satisfaction
of all rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any other rights of a shareholder of Parent. Each
holder of a fractional share interest shall be paid an amount in
cash equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into
account all fractional share interests then held by such holder)
would otherwise be entitled by (ii) the product of the (x) Merger
Consideration or (y) Adjusted Merger Consideration, as
appropriate, and the Average Parent Share Price. As promptly as
practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional share interests, the
Exchange Agent shall so notify Parent, and Parent shall deposit
such amount with the Exchange Agent and shall cause the Exchange
Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Sections
2.04(b), (c) and (d).
(g) Termination of Exchange Fund. Any portion of the
Exchange Fund (including any shares of Parent Common Stock) which
remains undistributed to the holders of Company Common Stock for
one year after the Effective Time shall be delivered to Parent,
upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article II shall thereafter look
only to Parent for the applicable Merger Consideration, any cash
in lieu of fractional shares of Parent Common Stock to which they
are entitled pursuant to Section 2.04(f) and any dividends or
other distributions with respect to the Parent Common Stock to
which they are entitled pursuant to Section 2.04(d). Any portion
of the Exchange Fund remaining unclaimed by holders of shares of
Company Common Stock as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become
property of any government entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear
of any claims or interest of any person previously entitled
thereto.
(h) No Liability. None of the Exchange Agent, Parent
nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any such shares of Parent
Common Stock (or dividends or distributions with respect
thereto), or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are
so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as
the case may be.
(j) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, 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
applicable Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.04(f) and any dividends or other
distributions to which the holders thereof are entitled pursuant
to this Agreement.
(k) Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving
Corporation its right, title and interest in, to or under any of
the rights, properties or assets of either the Sub or the Company
acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers of the Surviving
Corporation shall be authorized to execute and deliver, in the
name and on behalf of each of the Sub and the Company or
otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in such names and on such behalves
or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
SECTION 2.05 Stock 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 shares of
Company Common Stock thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates
representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock,
except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent
or Parent for any reason shall be converted into shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant
to Section 2.04(f) and any dividends or other distributions to
which the holders thereof are entitled pursuant to
Section 2.04(d).
SECTION 2.06 Registered Stock. The shares of Parent
Common Stock receivable as Merger Consideration and upon exercise
of the Continuing Options and in exchange for Company Warrants,
shall be registered pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended (the
"Securities Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, as
of the date hereof and as of the Closing Date:
SECTION 3.01 Organization, Standing and Corporate
Power. Each Acquired Company (as defined below) is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has the
requisite power and authority to carry on its business as now
being conducted. "Acquired Companies" shall mean the Company,
American Investors Life Insurance Company ( American ) and
Financial Benefit Life Insurance Company ( FBL ) (together,
American and FBL are referred to herein as the "Company Insurance
Subsidiaries") and any other direct or indirect subsidiary of the
Company. Each Acquired Company is duly qualified to do business
and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties
makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified (individually
or in the aggregate) would not reasonably be expected to have a
Material Adverse Effect on the Company. The Company has made
available to Parent complete and correct copies of its Articles
of Incorporation and By-laws and, to the extent requested by
Parent, the certificates of incorporation and by-laws or
comparable organization documents of the Acquired Companies, in
each case as amended to the date of this Agreement. No Acquired
Company is in violation of any provision of its Articles of
Incorporation or By-laws, except to the extent that such
violations would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
SECTION 3.02 Acquired Companies.
(a) Section 3.02 of the disclosure schedule delivered
on or prior to the date hereof to Parent by the Company (the
"Company Disclosure Schedule") lists each Acquired Company and
the ownership or interest therein of the Company. All the
outstanding shares of capital stock of each Acquired Company have
been validly issued and are fully paid and nonassessable and are
owned by the Company or by another subsidiary of the Company,
free and clear of all Liens. Except for (i) the capital stock of
the Acquired Companies, (ii) the ownership interests set forth in
Section 3.02 of the Company Disclosure Schedule and
(iii) investments made by the Acquired Companies in the ordinary
course of business, the Acquired Companies do not own, directly
or indirectly, any capital stock or other ownership interest in
any Person, with a fair market value as of the date of this
Agreement greater than $500,000.
(b) Except for the subsidiaries disclosed in Section
3.02 of the Company Disclosure Schedule, each Acquired Company
has no subsidiaries and does not control (whether directly or
indirectly, whether through the ownership of securities or by
Contract or proxy or otherwise, and whether alone or in
combination with others) any corporation, partnership, business
organization, or other similar Person. For purposes of this
Section, control" shall mean the right to elect a majority of
the Board of Directors or other governing body of any such entity
or Person or otherwise manage, direct or govern the business
operations of such entity or Person.
SECTION 3.03 Capital Structure.
(a) The authorized capital stock of the Company
consists of 25,000,000 shares of Company Common Stock and
2,000,000 shares of preferred stock, $1.00 par value per share
("Company Preferred Stock"). As of September 18, 1997, there
were outstanding 13,249,119 shares of Company Common Stock, no
shares of Company Preferred Stock, Company Options to purchase
1,859,884 shares of Company Common Stock, Company Warrants to
purchase 896,747 shares of Company Common Stock, Company
Convertible Debentures convertible into 3,795,620 shares of
Company Common Stock and Company SARs relating to 820,500 shares
of Company Common Stock.
(b) All of the outstanding options to acquire shares
of the Company's Common Stock (collectively, "Company Options")
were issued pursuant to either the NQSO Plan or the ISO Plan.
The number of shares covered by and the exercise prices of the
Company Options as of September 18, 1997 are set forth in the
Section 3.03 of the Company Disclosure Schedule. The Company has
made available to Parent true and complete copies of all
agreements (the "Option Agreements") entered into by the Company
under the Company Option Plans.
(c) All outstanding warrants to acquire shares of
Company Common Stock (the "Company Warrants") consist of (i)
warrants for 716,361 shares of Company Common Stock issued in
connection with the acquisition of Financial Benefit Group, Inc.
( FBG ) ("Acquisition Warrants"), (ii) warrants for 10,384 shares
of Company Common Stock assumed by the Company from FBG in
connection with the acquisition of FBG ("FBG Warrants"), and
(iii) warrants for 170,002 shares of Company Common Stock issued
in connection with previous financing by the Company ("Bank
Warrants"). The Company Warrants and the exercise prices
therefor, as of September 18, 1997 are set forth in Section 3.03
of the Company Disclosure Schedule.
(d) All of the Company's outstanding convertible debt
securities are the Company's 3% Convertible Debentures Due 2003
("Company Convertible Debentures") issued pursuant to the
Indenture (the "Indenture") dated July 12, 1996, between the
Company and Boatmen's Trust Company, as trustee. The outstanding
principal amount of the Company Convertible Debentures and the
conversion price thereof, as of September 18, 1997 are set forth
in Section 3.03 of the Company Disclosure Schedule.
(e) All of the outstanding stock appreciation rights
with respect to the Company Common Stock (the "Company SARs")
were issued pursuant to resolutions of the Board of Directors on
March 27, 1997. The number of shares covered by and the weighted
average strike price of the Company SARs as of September 18, 1997
are set forth in Section 3.03 of the Company Disclosure Schedule.
(f) All outstanding shares of capital stock of the
Acquired Companies have been duly authorized and validly issued
and are fully paid and nonassessable and all outstanding shares
of capital stock of the Company are free of preemptive rights.
Except as set forth in this Section 3.03, and as of the date
hereof, there are outstanding (i) no other shares of capital
stock or other voting securities of the Company, (ii) no
securities of the Acquired Companies convertible into or
exchangeable for shares of capital stock or voting securities of
the Acquired Companies, and (iii) no other options, warrants,
calls, rights, commitments, agreements, arrangements or
undertakings of any kind to acquire from the Acquired Companies,
and no obligation of the Acquired Companies to issue, any capital
stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the
Acquired Companies. All shares of Company Capital Stock that are
subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.03 of the
Company Disclosure Schedule, as of the date of this Agreement,
there are not any outstanding contractual obligations of any
Acquired Company to repurchase, redeem or otherwise acquire any
shares of capital stock, or to make any investment in excess of
$500,000 (in the form of a loan, capital contribution or
otherwise) in, any Acquired Company or any other person
(excluding non-equity investments made in the ordinary course).
SECTION 3.04 Authority. The Company has all requisite
corporate power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated by
this Agreement, subject to the conditions set forth in this
Agreement. The Board of Directors of the Company has unanimously
approved this Agreement and the transactions contemplated hereby
and has resolved to recommend to the stockholders of the Company
that they approve this Agreement and the transactions
contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the
Company, subject to Company Stockholder Approval. This Agreement
has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by each of Parent
and Sub, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except to the extent that (a) enforcement may be limited
by or subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar Laws now or hereafter in effect relating
to or limiting creditors rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the
discretion of the court or other similar Person before which any
proceeding therefor may be brought.
SECTION 3.05 No Conflicts or Violations. Except as
disclosed in Section 3.05 of the Company Disclosure Schedule, the
execution and delivery of this Agreement by Company does not, and
the performance by Company of its obligations under this
Agreement will not:
(a) violate any term or provision of any applicable
Law or any writ, judgment, decree, injunction, or similar order
applicable to any Acquired Company and Known to the Company;
(b) conflict with or result in a violation or breach
of the provisions of the articles of incorporation or by-laws of
any Acquired Company;
(c) cause any Permits (as defined below) of the
Company to lapse or become invalid or subject to any material
limitations after the Closing as a result of the Merger;
(d) result in the creation or imposition of any Lien
upon any Acquired Company or any of their respective Assets and
Properties;
(e) conflict with or result in a violation or breach
of, or constitute (with or without notice or lapse of time or
both) a default under, or give to any Person any right of
termination, cancellation, acceleration, or modification in or
with respect to, any Contract to which any Acquired Company is a
party or by which any of their respective Assets or Properties
may be bound; or
(f) require any Acquired Company to obtain any
consent, approval, or action of, or make any filing with or give
any notice to, any Person (including pursuant to any Laws);
except (i) as contemplated or disclosed in Sections 3.04, 3.05
and 3.06 hereof or the sections of the Company Disclosure
Schedule relating thereto, and (ii) those violations, conflicts,
Liens, breaches, defaults and rights which do not individually or
in the aggregate with any other such matters, have, or would
reasonably be expected to have, a Material Adverse Effect on the
Company.
SECTION 3.06 No Consents. No consent, approval,
order or authorization of, or registration, declaration or filing
with, any United States Federal, state or local government or any
court, administrative agency or commission or other governmental
authority or agency, domestic or foreign, including Canada and
its provinces (a "Governmental Entity"), is required by or with
respect to any Acquired Company in connection with the execution,
delivery and performance of this Agreement by the Company under
any Laws or the consummation by the Company of the transactions
contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company and Parent
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (ii) the filing with the Securities
and Exchange Commission (the "SEC") of (A) a proxy statement
relating to the meetings of the Company's stockholders and, if
required, the Parent's stockholders to be held in connection with
the Merger and the transactions contemplated by this Agreement
(as amended or supplemented from time to time, the "Proxy
Statement"), (B) the Form S-4 (hereinafter defined), and (C) such
reports under Section 12 or 13(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated
by this Agreement, (iii) such filings with the New York Stock
Exchange, Inc. ( NYSE ) as may be required in connection with
this Agreement and the transactions contemplated by this
Agreement, (iv) the filing of the Certificate of Merger with the
Kansas Secretary of State and appropriate documents with the
relevant authorities of other states in which Acquired Companies
are qualified to do business, (v) such as may be required by any
applicable state securities or "blue sky" laws, (vi) such
filings, consents or approvals with or from the Kansas, Michigan,
Connecticut and Florida Insurance Commissions and such other
state insurance commissions and similar agencies as may be
required in connection with this Agreement and the transactions
contemplated hereby, (vii) those that may be required solely by
reason of Parent's or Sub's (as opposed to any other third
party's) participation in the Merger and the other transactions
contemplated by this Agreement and (viii) such other consents,
approvals, orders, authorizations, registrations, declarations
and filings, (x) as may be required under the laws of any foreign
country in which any Acquired Company conducts any business or
owns any property or assets, (y) as are set forth in Section 3.06
of the Company Disclosure Schedule or (z) that, if not obtained
or made, would not, individually or in the aggregate, have, or
would reasonably be expected to have, a Material Adverse Effect
on the Company.
SECTION 3.07 Books and Records. The corporate minute
books of each Acquired Company are complete and accurate in all
material respects and have been made available to the Parent.
SECTION 3.08 Financial Statements and Filings.
(a) The Company has made available to Parent true and
complete copies of the following financial statements (the
"Company Financial Statements"):
(i) audited (A) annual GAAP Statements for the
Company and (B) Annual Statements for the Company Insurance
Subsidiaries, for each of the years ended December 31, 1994,
1995, and 1996, including all the notes thereto; and
(ii) unaudited (A) quarterly GAAP Statements for
the Company and (B) Quarterly Statements for the Company
Insurance Subsidiaries, for each of the first three quarters
of each of 1995 and 1996, and the first two quarters of
1997, including all the notes thereto.
(b) Each such Company Financial Statement (and the
notes thereto), and each GAAP Statement and Quarterly Statement
made available by the Company pursuant to Section 5.04, including
without limitation each balance sheet and each of the statements
of operations, capital and surplus account, and cash flow
contained therein was prepared in accordance with SAP ("SAP
Statements") or GAAP ("GAAP Statements"), respectively, except as
may be otherwise indicated in notes filed as a part thereof, as
the case may be, presents fairly in all material respects, the
financial condition and results of operations and cash flows of
the Company and its consolidated subsidiaries or the Company
Insurance Subsidiaries, as the case may be, as of the respective
dates thereof or for the respective periods presented therein,
subject, in the case of quarterly statements, to normal year end
adjustments. Each SAP Statement was timely filed and complied in
all material respects with all applicable Laws when filed with
the applicable insurance regulatory authority, and any
deficiencies known to the Company with respect to any such SAP
Statement have been cured or corrected to the satisfaction of
such insurance regulatory authority.
(c) Except as indicated on Section 3.08 of the Company
Disclosure Schedule, the Company has not received written notice
from the Kansas Commissioner of Insurance ("KCI") or the Florida
Commissioner of Insurance ("FCI") asserting any deficiency with
respect to such SAP Statements.
(d) Since December 31, 1996, the Company Insurance
Subsidiaries have filed all reports and other filings, together
with any amendments required to be made with respect thereto,
that it has been required to file with state insurance regulatory
authorities (the "Company Insurance Subsidiaries Filings"), and
all of the Company Insurance Subsidiaries Filings prior to the
date hereof complied, and all such filings made hereafter prior
to the Effective Time will comply, in all material respects with
applicable insurance laws, rules and regulations, and, except as
disclosed in Section 3.08 of the Company Disclosure Schedule,
there are no material open or unresolved issues which were raised
by any insurance or securities regulatory authority and brought
to the attention of the Company by such regulatory authority with
respect to any of such filings.
(e) The Company has no reason to believe that any
material amount recoverable pursuant to any material reinsurance,
coinsurance, excess insurance, ceding of insurance, assumption of
insurance or indemnification with respect to insurance or similar
material arrangements applicable to the Company Insurance
Subsidiaries or their properties or assets (collectively,
"Reinsurance Agreements") is not fully collectible in due course.
The Company Insurance Subsidiaries are entitled to take full
credit in their SAP Statements pursuant to applicable insurance
laws, rules and regulations for such reinsurance, coinsurance or
excess insurance ceded pursuant to any such Reinsurance
Agreement. Section 3.08 of the Company Disclosure Schedule sets
forth all reinsurance contracts or arrangements entered into by
the Company or any of the Company Insurance Subsidiaries in which
the Company or such subsidiary has ceded risk to any person.
SECTION 3.09 Reserves.
(a) All reserves and other liabilities with respect to
insurance and annuities and for claims and benefits incurred but
not reported ( Reserve Liabilities ) as established or reflected
in the SAP Statements of the Company Insurance Subsidiaries were
determined in accordance with generally accepted actuarial
standards consistently applied, are fairly stated in accordance
with sound actuarial principles, are based on actuarial
assumptions that are in accordance with those called for by the
provisions of the related insurance and annuity Contracts and in
the related reinsurance, coinsurance and other similar Contracts
of the Company Insurance Subsidiaries, and meet in all material
respects the requirements of the insurance Laws of its state of
domicile. Adequate provision for all such Reserve Liabilities
have been made (under generally accepted actuarial principles
consistently applied) to cover the total amount of all reasonably
anticipated matured and unmatured benefits, dividends, claims and
other liabilities of the Company Insurance Subsidiaries under all
insurance and annuity Contracts under which the Company Insurance
Subsidiaries have any liability (including without limitation any
liability arising under or as a result of any reinsurance,
coinsurance or other similar Contract) on the respective dates of
such SAP Statement based on then current information regarding
interest earnings, mortality and morbidity experience,
persistency and expenses. The Company Insurance Subsidiaries own
assets that qualify as legal reserve assets under applicable
insurance Laws in an amount at least equal to all such Reserve
Liabilities; and
(b) Adequate provision has been made for all estimated
losses, settlements, costs and expenses from pending suits,
actions and proceedings included in the December 31, 1996 Annual
Statement and the latest Quarterly Statements, and the reserves
and accrued Liabilities relating thereto were determined in
accordance with SAP and Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards
Board.
SECTION 3.10 Absence of Changes. Except (i) as set
forth in Section 3.10 of the Company Disclosure Schedule, or
(ii) as disclosed in the Company SEC Documents (hereinafter
defined) filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents"), from December 31,
1996 to the date of this Agreement (or such other date or period
as may be specifically referred to below), the Company has
conducted its business only in the ordinary course and there has
not been, occurred, or arisen:
(a) any change in, or any event (including without
limitation any damage, destruction, or loss whether or not
covered by insurance), condition, or state of facts of any
character that individually or in the aggregate has or would
reasonably be expected to have a Material Adverse Effect on the
Company;
(b) any declaration, setting aside, or payment of any
dividend or other distribution in respect of the capital stock of
any Acquired Company or any direct or indirect redemption,
purchase or other acquisition by any Acquired Company of any such
stock or of any interest in or right to acquire any such stock;
(c) any employment, deferred compensation, or other
salary, wage or compensation Contract entered into between any
Acquired Company and any Company Employee, except for normal and
customary Contracts with agents and consultants and Employees who
would earn total annual compensation (other than from Company
Options and Company SARs included in Section 3.03) of less than
$50,000 in the ordinary course of business and consistent with
past practice; or, since June 30, 1997 any increase in the
salary, wages, or other compensation of any kind, whether current
or deferred, of any Company Employee, other than routine
increases that were made in the ordinary course of business and
consistent with past practice and that did not result in an
increase of more than 10% of the respective salary, wages or
compensation of any such Person, except for increases which
relate to increases in production by agents consistent with the
terms of their existing Contracts; or any creation of any Plan
(as defined in Section 3.14) or any contribution to (other than a
contribution made in the ordinary course of business and
consistent with past practice) or amendment or modification of
any Plan; or any election by or on behalf of any Acquired Company
made pursuant to the provisions of any Plan to accelerate any
payments, obligations or vesting schedules under any Plans;
(d) any payment, discharge, or satisfaction by an
Acquired Company of any Lien or Liability other than Liens or
Liabilities that (i) were paid, discharged, or satisfied in the
ordinary course of business and consistent with past practice, or
(ii) were paid, discharged, or satisfied as required under this
Agreement;
(e) except for value received in the ordinary course
of business and consistent with past practice, any cancellation
of any Liability owed to any Acquired Company by any other
Person;
(f) any amendment, termination, waiver, disposal or
lapse of, or other failure to preserve, or regulatory agreement
with respect to any Permit of any Acquired Company the result of
which individually or in the aggregate has or would reasonably be
expected to have a Material Adverse Effect on the Company;
(g) any agreement for the sale, merger or transfer of
any Acquired Company or substantially all of the assets or
business thereof (except for this Agreement and documents
relating thereto);
(h) any damage, destruction, loss (whether or not
covered by insurance) affecting any of the Assets or Properties
of any Acquired Company which damage, destruction, or loss
individually or in the aggregate exceeds $1 million; or
(i) any issuance, sale or disposition by any Acquired
Company of any debenture, note, stock or other security issued by
such Acquired Company (except pursuant to the Company Option
Plans), or any modification or amendment of any right of the
holder of any outstanding debenture, note, stock or other
security issued by such Acquired Company (except pursuant to
Section 1.02);
(j) any Liability involving the borrowing of money by
any Acquired Company, except in the ordinary course of business
and consistent with past practice;
(k) any termination, amendment or entering into by any
Company Insurance Subsidiary as ceding or assuming insurer of any
reinsurance, coinsurance or other similar Contract or any trust
agreement or security agreement related thereto;
(l) any material restriction or limitation in any
Permit of any Acquired Company, including any Company Insurance
Subsidiary; or
(m) any Contract to take any of the actions described
in this Section 3.10 other than actions expressly permitted under
this Section 3.10.
SECTION 3.11 Taxes. Except as disclosed in Section
3.11 of the Company Disclosure Schedule (with paragraph
references corresponding to those set forth below):
(a) All Tax Returns required to be filed with respect
to each Acquired Company or the affiliated, combined or unitary
group of which any such company is or was a member have been duly
and timely filed and all such Tax Returns are true, correct and
complete in all material respects. Each Acquired Company (i) has
duly and timely paid all Taxes that are shown as due on such Tax
Returns, or claimed or asserted by any taxing authority to be
due, from such company for the periods covered by such Tax
Returns (unless such Taxes are being contested in good faith and
adequate reserves therefor have been established in the Acquired
Companies books and records) and have made all required estimated
payments of Taxes sufficient to avoid any penalties for
underpayment, or (ii) has duly provided for all such Taxes in the
applicable financial statements, and in the SAP and GAAP
Statements, in the case of Company Insurance Subsidiaries. There
are no filed Liens with respect to Taxes (except for Liens on
Taxes not yet due and owing) upon any of the Assets and
Properties of any Acquired Company.
(b) With respect to any period or portion thereof
through the Closing for which Tax Returns have not yet been
filed, or for which Taxes are not yet due or owing, each Acquired
Company has established due and sufficient reserves for the
payment of such Taxes in accordance with SAP and GAAP in the case
of Company Insurance Subsidiaries or otherwise in accordance with
GAAP, and such current reserves through the Closing are duly and
fully provided for in all material respects in the SAP and GAAP
Statements of such company for the period then ended.
(c) Section 3.11(c) of the Company Disclosure Schedule
discloses all years for which (i) United States federal income
Tax Returns of each Acquired Company and of each affiliated group
(within the meaning of the Code) of which any Acquired Company is
or has been a member which have been audited or examined by the
IRS, or the statute of limitations has expired; and (ii) state,
local and foreign income Tax Returns of each Acquired Company and
of each affiliated or consolidated group of which they are or
have been members which have been audited or examined by the
appropriate state, local or foreign authority, or all statutes of
limitation for the applicable state, local and foreign taxable
periods has expired. All material deficiencies that have been
asserted, proposed or assessed as a result of the above
referenced examinations specified in the first two sentences of
this Section 3.11(c) have been paid in full or finally settled or
adequately reserved against to the extent there is a reasonable
possibility that the position of any of the taxing authorities
specified in the first two sentences of this Section 3.11(c) will
be sustained, and to the Knowledge of Company, no issue has been
raised by any taxing authority in any such examination which, by
application of the same or similar principles, reasonably could
be expected to result in a material proposed deficiency for any
other period not so examined, except to the extent adequate
reserves have been established in the Acquired Companies books
and records. To the Knowledge of Company, no state of facts
exists or has existed that would constitute grounds for the
assessment of any material Tax liability with respect to any
Acquired Company for the periods that have not been audited by
the taxing authorities specified in the first two sentences of
this Section 3.11(c). There are no outstanding agreements,
waivers or arrangements extending the statutory period of
limitation applicable to any Tax Return or claim for, or the
period for the collection or assessment of, Taxes due from any
Acquired Company for any taxable period. The Company has
previously delivered or made available to the Parent copies,
which are true, correct and complete in all material respects, of
each of (i) the most recent audit reports relating to the United
States federal, state, local and foreign income taxes due from
each Acquired Company and (ii) the United States federal, state,
local and foreign income Tax Returns, for each of the last three
taxable years, filed by each Acquired Company, and the Company
has made available to Parent for inspection copies, which are
true, correct and complete in all material respects, of such Tax
Returns, (insofar as such Tax Returns relate to any Acquired
Company) filed by any affiliated or consolidated group of which
any Acquired Company was then a member.
(d) No audit or other proceeding by any U.S. or
foreign court, governmental or regulatory authority has been
asserted or is pending with respect to any Taxes due from any
Acquired Company or any Tax Return filed or required to be filed
by or relating to any Acquired Company. No material assessment,
deficiency or adjustment of Tax has been asserted or, based on
existing facts and circumstances, is threatened against any
Acquired Company or any Assets and Properties of any Acquired
Company.
(e) No election under any of Section 108, 168, 338,
441, 472, 1017, 1033 or 4977 of the Code (or any predecessor
provisions) has been made or filed by or with respect to any
Acquired Company or any of their Assets and Properties. No
consent to the application of Section 341(f)(2) of the Code (or
any predecessor provision) has been made or filed by or with
respect to any Acquired Company or any of their Assets and
Properties. None of the Assets and Properties of any Acquired
Company is an asset or property that the Parent or any of its
Affiliates is or will be required to treat as being (i) owned by
any other Person pursuant to the provisions of Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect
immediately before the enactment of the Tax Reform Act of 1986 or
(ii) tax-exempt use property within the meaning of Section
168(h)(1) of the Code. No election has been made under Section
815(d)(1) of the Internal Revenue Code of 1954, as amended and in
effect immediately before the enactment of the Deficit Reduction
Act of 1984. No closing agreement pursuant to Section 7121 of
the Code (or any predecessor provision) or any similar provision
of any state, local or foreign Law has been entered into by or
with respect to any Acquired Company or any of their Assets and
Properties.
(f) No Acquired Company has agreed to or is required
to make any material adjustment pursuant to Section 481(a) or
807(f)(1) of the Code (or any predecessor provision) by reason of
any change in any accounting method or change in basis for
determining the reserves of such company or otherwise, and no
Acquired Company has any application pending with any taxing
authority requesting permission for any changes in any accounting
method or in the basis for determining reserves of any of them.
Except as may apply to the industry generally, the IRS has not
proposed any such adjustment or change in accounting method or in
the basis of determining reserves of any of them.
(g) No Acquired Company has been or is in material
violation (or with notice or lapse of time or both, would be in
violation) of any applicable Law relating to the payment or
withholding of Taxes (including, without limitation, withholding
of Taxes pursuant to Sections 1441 and 1442 of the Code or
similar provisions under any foreign laws). Each Acquired
Company has duly and timely withheld in all material respects
from employee salaries, wages and other compensation and paid
over to the appropriate taxing authorities all amounts required
to be so withheld and paid over for all periods under all
applicable Laws.
(h) Except as disclosed in Section 3.11(h) of the
Company Disclosure Schedule, no Acquired Company is a party to,
is bound by, or has any obligation under, any tax allocation
agreement, tax sharing agreement, or tax indemnification
agreement.
(i) No Acquired Company has made any direct, indirect
or deemed distributions that have been or to the Knowledge of
Company, could be taxed under Section 815 of the Code.
(j) For any open tax years, all ceding commission
expenses paid or accrued by Company Insurance Subsidiaries in
connection with any reinsurance arrangement or Contract or
transaction have been capitalized and amortized over the life or
lives of such reinsurance arrangement or Contract in accordance
with the decision of the United States Supreme Court in Colonial
American Life Insurance Company v. Commissioner of Internal
Revenue, 109 S.Ct. 240 (1989) or, in the case of any such expense
incurred on or after September 30, 1990, in accordance with
Sections 848 and 197 of the Code.
(k) No material Liabilities have been proposed in
connection with any audit or other proceeding by any U.S. or
foreign court, governmental or regulatory authority, or similar
person with respect to any Taxes due from any Acquired Company or
Tax Return filed by or relating to any Acquired Company, other
than those that are disclosed in Section 3.11(k) of the Company
Disclosure Schedule which are being contested in good faith and
adequate reserves therefor have been established in the Acquired
Companies books and records.
(l) Each reserve item with respect to each Acquired
Company set forth in its respective 1996 Federal income tax
return was determined in all material respects in accordance with
Section 807 of the Code or other applicable Code Sections, and
has been consistently applied with respect to the filing of the
Federal income tax returns for all years through December 31,
1995 for which the statute of limitations has not expired, and
will be consistently applied for any Tax Return filed on or prior
to the Closing Date.
(m) As of December 31, 1996, no Acquired Company had
and during the period from December 31, 1996 through the Closing
Date will have, any Tax Liability in respect of Taxes to any
stockholder of the Company or any of such stockholder's
Affiliates that resulted or will result from a transaction with
an Affiliate prior to the Closing Date that would require payment
after December 31, 1996.
(n) The Company Insurance Subsidiaries satisfy the
definition of life insurance company under Section 816 of the
Code.
(o) All material elections with respect to Federal
income Taxes affecting the Acquired Companies are set forth in
Section 3.11(o) of the Company Disclosure Schedule.
(p) Except as set forth in Section 3.11(p) of the
Company Disclosure Schedule, there is no valid power of attorney
given by or binding upon any of the Acquired Companies with
respect to Taxes for any period for which the statute of
limitations (including any waivers or extensions) has not yet
expired.
(q) There are no intercompany transactions within the
meaning of Treasury Regulations section 1.1502-13 for which gain
has been deferred, and there are no excess loss accounts as
described in Treasury Regulations section 1.1502-19 that exist
with respect to any of the Acquired Companies.
(r) None of the Acquired Companies is a party to or
otherwise subject to any arrangement entered into in anticipation
of the Closing and not required by this Agreement, (i) having the
effect of or giving rise to the recognition of a deduction or
loss before the Closing Date, and a corresponding recognition of
taxable income or gain after the Closing Date, or (ii) that would
reasonably be expected to have the effect of or give rise to the
recognition of taxable income or gain by any Acquired Company
after the Closing Date without the receipt of or entitlement to a
corresponding amount of cash.
(s) Section 3.11(s) of the Company Disclosure Schedule
sets forth the amount of any existing policyholders surplus
account and shareholders surplus account with respect to the
Acquired Companies within the meaning of Section 815 of the Code.
(t) Except for federal income Tax Returns, the
Acquired Companies do not file or join in filing any
consolidated, unitary, combined or similar Tax Returns with any
corporation.
(u) None of the Acquired Companies has requested any
extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
(v) The Company has filed, as a common parent
corporation of an "affiliate group" (within the meaning of
Section 1504(a) of the Code) a consolidated return for federal
income tax purposes on behalf of itself and each other Acquired
Company which is an "includible corporation" (within the meaning
of Section 1504(b) of the Code). The Company and each of the
Acquired Companies have not been members of any other affiliated
group of corporations within the meaning of Section 1504 of the
Code.
(w) The Company is not and has not been a United
States real property holding company (as defined in Section
897(c)(2) of the Code) during the applicable period specified in
Section 897(c)(1)(ii) of the Code.
(x) All transactions which could give rise to a
substantial understatement of federal income tax (within the
meaning of Section 6662(d) of the Code) were adequately disclosed
(or, with respect to Tax Returns filed before the Closing will be
adequately disclosed) on the Tax Returns required in accordance
with Section 6662(d)(2)(B) of the Code.
SECTION 3.12 Litigation. Except as disclosed in the
Company's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1996 (the "Company 10-K") or in Section 3.12 of the
Company Disclosure Schedule:
(a) There are no actions, suits, investigations or
pending, or, to the Knowledge of Company, threatened, against any
Acquired Company or its Assets and Properties, at law or in
equity, in, before, or by any Person that individually or in the
aggregate have or would reasonably be expected to have a Material
Adverse Effect on the Company; and no event, fact or circumstance
has arisen or occurred (other than claims for benefits under
insurance policies and annuities in force) Known to the Company
that would likely result in the commencement of any action, suit,
proceeding or investigation, against any Acquired Company or any
of its Assets and Properties, at law or in equity, in, before, or
by any Person that individually involves a claim or claims for
any injunction or similar relief or for damages exceeding
$250,000 or an unspecified amount of damages, or that
individually or in the aggregate have or would reasonably be
expected to have a Material Adverse Effect on such Acquired
Company.
(b) There are no writs, judgments, decrees or similar
orders of any Governmental Entity with competent jurisdiction
outstanding against any Acquired Company that individually exceed
$100,000 or that individually or in the aggregate have or would
reasonably be expected to have a Material Adverse Effect on the
Company.
(c) There is no suit, action or proceeding before any
Governmental Entity with competent jurisdiction pending, or, to
the Knowledge of the Company, threatened, against any Acquired
Company that expressly seeks to prevent or delay in any material
respect the consummation of the Merger or the transactions
contemplated by this Agreement.
SECTION 3.13 Compliance with Laws; Regulatory Filings.
(a) To the Knowledge of the Company, the business of
the Acquired Companies is being conducted in compliance in all
material respects with all applicable Laws, including, without
limitation, all insurance laws, ordinances, rules, regulations,
decrees and orders of any Governmental Entity, and all material
notices, reports, documents and other information required to be
filed thereunder within the last three years were properly filed
in all material respects and were in compliance in all material
respects with such laws.
(b) Each Acquired Company has all material permits and
insurance and other licenses, franchises, approvals,
authorizations, exemptions, classifications, certificates,
registrations, and similar documents (each of which, a "Permit")
in each jurisdiction (as listed in Section 3.13(b) of the Company
Disclosure Schedule) in which the Acquired Companies require
Permits by virtue of the business conducted or the properties
owned is required and which are necessary to conduct of its
business as it is currently conducted. The business of the
Acquired Companies has been and is being conducted in compliance,
in all material respects, with all such Permits. To the
Knowledge of the Company, all such Permits are in full force and
effect, and there is no proceeding or investigation pending or
threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation,
modification, suspension or restriction of any such Permit. No
Acquired Company is operating under any formal or informal
agreement or understanding with the regulatory authority of any
state which restricts its authority to do business or requires
any Acquired Company to take, or refrain from taking, any action
otherwise permitted by law. No Acquired Company is a
"commercially domiciled insurer" for purposes of Section 1215.13
of the California Insurance Code.
(c) The Acquired Companies have made available for
inspection by Parent complete copies of all material
registrations, filings and submissions made since January 1, 1995
by the Acquired Companies with any Governmental Entity and any
material reports of examinations issued since January 1, 1995 by
any such Governmental Entity that relate to the Acquired
Companies. To the Knowledge of the Company, the Acquired
Companies have filed all reports, statements, documents,
registrations, filings or submissions required to be filed by any
of them with any Governmental Entity, except where the failure to
file, in the aggregate, would not have a Material Adverse Effect
on the Company; and, to the Knowledge of the Company, all such
reports, statements, documents, registrations, filings or
submissions were in all material respects true, complete and
accurate when filed.
(d) To the knowledge of the Company, all outstanding
insurance and annuity Contracts issued, reinsured or underwritten
by the Company Insurance Subsidiaries are, to the extent required
under applicable Laws in all material respects, on forms approved
by the insurance regulatory authority of the jurisdiction where
issued or have been filed with and not objected to by such
authority within the period provided for objection, and have been
filed or registered as required with all other applicable
governmental authorities.
(e) Neither the Company nor the Company Insurance
Subsidiaries has received any information which would reasonably
cause it to believe that the financial condition of any other
party to any material reinsurance, coinsurance, or other similar
Contracts with the Company is so impaired as to result in a
default thereunder.
(f) Except as set forth on Section 3.13 of the
Company Disclosure Schedule, no Real Estate has been used for the
storage, treatment, generation, transportation, manufacture,
processing, handling, production, distribution, deposit, burial,
use, or disposal of any Hazardous Substance except in compliance
with Environmental Laws, no Acquired Company has any material
liability arising out of or resulting from a Release of any
Hazardous Substance on or from any Real Estate and each Acquired
Company has complied in all material respects with all applicable
Environmental Laws relating to Real Estate and the business,
activities and processing respectively conducted thereon.
(g) (i) Section 3.13(g) of the Company Disclosure
Schedule contains a true and complete list of (A) each master or
prototype (as well as any individually designed) pension, profit
sharing, defined benefit, Code Section 401(k), and other
retirement or employee benefit plan or Contract (including, but
not limited to, simplified employee pension plans, Code Section
403(a), (b) and (c) annuities, Keogh plans, and individual
retirement accounts and annuities) offered or sold by any
Acquired Company to, or maintained or sponsored for the benefit
of any employees of, any other Person, and (B) each determination
letter relating to the creation or amendment of any such plan or
Contract. Each such plan or Contract in all material respects
conforms with, and has been offered, sold, maintained and
sponsored in accordance with, all applicable Laws. No Acquired
Company is a fiduciary with respect to any plan or Contract
referenced in this Section 3.13.
(ii) No Acquired Company provides administrative
or other contractual services for any plan or Contract
referenced in Section 3.13(g)(i), including, but not limited
to, any third party administrative services for any Plan or
Parent Plan (as defined in Section 3.14) which is an
"employee welfare benefit plan" within the meaning of
Section 3(1) of ERISA.
(iii) To the extent that any Acquired Company
maintains any collective or commingled funds or accounts
which restrict the Persons who may invest therein to tax-
exempt entities or qualified plans, each such fund or
account (of which a true and complete list and description
is disclosed in Section 3.13 of the Company Disclosure
Schedule) has been established, maintained and operated in
accordance with all applicable Laws in all material
respects, has maintained its tax-exempt status and has no
non-qualified plans or trusts or other taxable entities
investing within it.
(iv) In addition to the representations and
warranties contained in this Section 3.13 hereof, there are
no claims pending, or (to the Knowledge of the Company)
threatened against any Acquired Company or any of their
respective Assets or Properties, under any fiduciary
liability insurance policy issued by or to any of them that
individually or in the aggregate has or would reasonably be
expected to have a Material Adverse Effect on any Acquired
Company.
(h) No insurance contracts or insurance policies
(including without limitation annuity contracts, variable annuity
contracts, and modified guaranteed contracts) issued by the
Company Insurance Subsidiaries fail to comply with the applicable
provisions of Sections 72, 817, 817A, 7702 and 7702A of the Code.
(i) The tax treatment under the Code of all insurance
annuity of investment policies, plans or contracts; all financial
products, employee benefit plans, individual retirement accounts
or annuities; or any similar of related policy, contract, plan or
product, whether individual, group or otherwise, issued or sold
by the Company Insurance Subsidiaries is and at all times has
been in all material respects the same or more favorable to the
purchaser, policyholder or intended beneficiaries thereof as the
tax treatment under the Code for which such contracts qualified
or purported to qualify at the time of its issuance or purchase,
except for changes resulting from changes to the Code effective
after the date of such issuance or purchase. For purposes of
this Section 3.13(i), the provisions of the Code relating to the
tax treatment of such contracts shall include, but not be limited
to, Sections 72, 79, 89, 101, 104, 105, 106, 125, 130, 401, 402,
403, 404, 408, 412, 415, 419, 419A, 457, 501, 505, 817, 818, 7702
and 7702A of the Code.
SECTION 3.14 Benefit Plans; ERISA. (a) Each
"employee benefit plan" (as defined in Section 3(3) of ERISA),
bonus, deferred compensation, stock option, stock purchase or
other equity compensation plan, program or arrangement, each
employment, termination or severance agreement or plan, incentive
compensation or other agreement, whether written or oral, in each
case, which is sponsored, maintained or contributed to or
required to be contributed to by the Company or any other
Acquired Company at any time during the seven-calendar year
period immediately preceding the Closing Date for the benefit of
employees or directors of the Company or any other Acquired
Company or former employees or directors of the Company or any
other Acquired Company (collectively, the "Plans") is listed at
Section 3.14(a) of the Company Disclosure Schedule. Except as
may be required by applicable Law or regulatory action, neither
the Company, nor any Acquired Company, nor any of their
respective Affiliates, has any Contract, plan or commitment,
whether legally binding or not, to create any additional Plan or
to modify or change any existing Plan.
(b) With respect to each Plan, the Company has made
available to, or delivered or caused to be delivered to, Parent
and its counsel true and complete copies of the following
documents, as applicable, for each respective Plan: (i) all Plan
documents, with all amendments thereto or, if the Plan is not a
written Plan, a description thereof; (ii) the current summary
plan description with any applicable summaries of material
modifications thereto as well as any other material employee
communications; (iii) all current trust agreements and/or other
documents establishing Plan funding arrangements; (iv) the most
recent IRS determination letter and, if a request for such a
letter has been filed and is currently pending with the IRS, a
copy of such filing; (v) the three most recently prepared IRS
Forms 5500; (vi) the most recently prepared financial statements;
and (vii) all material related to contracts, service provider
agreements and investment management and investment advisory
agreements.
(c) Except as disclosed at Section 3.14(c) of the
Company Disclosure Schedule and except for the Financial Benefit
Group, Inc. Employee Stock Ownership Plan (the "FBGESOP"), each
Plan is in material compliance with applicable Law, including but
not limited to ERISA and the Code, and has been administered and
operated in all material respects in accordance with such
applicable Law and the terms of the Plan. Except for the
FBGESOP, each Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and no
event has occurred and no condition exists which could reasonably
be expected to result in the revocation of any such
determination. Other than with respect to those matters (the
"FBGESOP Matters") that have been specifically disclosed to the
IRS in writing in connection with the Company's application,
dated as of July 1996, under the Employee Plan Closing Agreement
Program ("CAP"), the FBGESOP is qualified under Section 401 of
the Code. The Company anticipates finalizing a closing agreement
pursuant to the requirements of Rev. Proc. 94-16 to the effect
that (x) the total non-deductible sanction payable as a result of
the tax qualification defects in the FBGESOP will not exceed
$10,000, and (y) provided that the Company corrects the defects
in the FBGESOP, the IRS will treat the FBGESOP as tax-qualified
and in compliance with the requirements of Section 401(a) of the
Code. Except as disclosed at Section 3.14(c) of the Company
Disclosure Schedule, other than with respect to the FBGESOP
Matters, all trusts maintained under the Plans are exempt from
taxation under Section 501(a) of the Code.
(d) Except as disclosed at Section 3.14(d) of the
Company Disclosure Schedule, no Plan is or has been covered by
Section 302 or Title IV of ERISA or is or has been subject to the
minimum funding requirements of Section 412 of the Code. No
liability has been, or could reasonably be expected to be,
incurred under Title IV of ERISA (other than for benefits payable
in the ordinary course of PBGC insurance premiums) or Section
412(f) or (n) of the Code by any entity required to be aggregated
with the Company or any other Acquired Company pursuant to
Section 4001(b) of ERISA and/or Section 414(b) or (c) of the Code
(and the regulations promulgated thereunder) with respect to any
"employee pension benefit plan" (as defined in Section 3(2) of
ERISA) which is not a Plan.
(e) Full payment has been made of all amounts which
the Company or any other Acquired Company were required under the
terms of the Plans to have paid as contributions to such Plans on
or prior to the date hereof (excluding any amounts not yet due).
(f) Except as disclosed at Section 3.14(f) of the
Company Disclosure Schedule, neither the Company nor any other
Acquired Company nor any other "disqualified person" or "party in
interest" (as defined in Section 4975(e)(2) of the Code and
Section 3(14) of ERISA, respectively) has engaged in any
transaction in connection with any Plan that could reasonably be
expected to result in the imposition of a material penalty
pursuant to Section 409 of ERISA or a Tax pursuant to Section
4975(a) of the Code. Except as disclosed at Section 3.14(f) of
the Company Disclosure Schedule, no Plan or related trust owns
any securities in violation of Section 407 of ERISA.
(g) No Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of the Acquired
Companies or any Subsidiary for periods extending beyond their
retirement or other termination of service, other than (i)
coverage mandated by applicable Law, (ii) death benefits under
any "pension plan," or (iii) benefits the full cost of which is
borne by the current or former employee (or his beneficiary).
(h) To the Knowledge of the Company, each Plan subject
to the requirements of Section 601 of ERISA has been operated in
material compliance therewith.
(i) Except as disclosed at Section 3.14 of the Company
Disclosure Schedule, neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will (x)
entitle any current or former director, employee or officer of
the Company or any other Acquired Company to severance pay,
unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (y) accelerate the time
of payment or vesting, or increase the amount of compensation due
any such director, employee or officer.
(j) Except as disclosed at Section 3.14(j) of the
Company Disclosure Schedule, no liability, claim, investigation,
audit, action or litigation has been incurred, made, commenced
or, to the Knowledge of the Company, is threatened or
anticipated, by or against the Company or any other Acquired
Company with respect to any Plan (other than for benefits payable
in the ordinary course).
SECTION 3.15 Properties. Except as disclosed in
Section 3.15 of the Company Disclosure Schedule (with the
paragraph references specified below):
(a) Each of the Acquired Companies:
(i) has good and valid title to all of its
properties, assets and other rights that do not
constitute real property, free and clear of all Liens;
(ii) owns, has valid leasehold interests in or
valid contractual rights to use, all of the assets,
tangible and intangible, used by, or necessary for the
conduct of, its business, except where the failure to
have such valid ownership, interests or rights do not,
individually or in the aggregate, have a Material
Adverse Effect on the Company;
(iii) owns and has good and marketable title in
fee simple to the real property owned by such party,
free and clear of all Liens; and
(iv) has good and valid rights of ingress and
egress to and from all the real property owned or
leased by such party.
(b) Each Acquired Company has the nonexclusive right
to use, free and clear of any royalty or other payment
obligations, claims of infringement or alleged infringement Known
to the Company, or other Liens:
(i) all marks, names, trademarks, service marks,
patents, patent rights, assumed names, logos, trade
secrets, copyrights, trade names, and service marks
that are used in the conduct of its business,
operations, or affairs (of which a true and complete
list and description has been made available to
Parent); and
(ii) all material computer software, programs,
and similar systems owned by or licensed to such
Acquired Company or used in the conduct of its
business, operations, or affairs (of which a true and
complete list and description). To the Company s
Knowledge, no Acquired Company is in conflict with or
in violation or infringement of, nor has any Acquired
Company received any notice of any conflict with or
violation or infringement of or any claimed conflict
with any asserted rights of any other Person with
respect to any intellectual property or any material
computer software, programs, or similar systems.
SECTION 3.16 Investments.
(a) The Statutory Financial Statements of the Company
set forth a list, which list is accurate and complete in all
material respects, of all securities, mortgages and other
investments (collectively, the Company Investments ) owned by
the Company Insurance Subsidiaries as of December 31, 1996,
together with the cost basis, book or amortized value, as the
case may be, as of December 31, 1996. Section 3.16(a) of the
Company Disclosure Schedule sets forth a list, which list is
accurate and complete in all material respects, of all Company
Investments by Company Insurance Subsidiaries at June 30, 1997.
All transactions in Company Investments by each of the Company
Insurance Subsidiaries from June 30, 1997 to the date hereof have
complied in all material respects with the investment policies of
such Company Insurance Subsidiary and all applicable insurance
laws and regulations.
(b) Except as set forth in the Statutory Financial
Statements of the Company, the Company Insurance Subsidiaries
have good and marketable title to the Company Investments listed
in the Statutory Financial Statements of the Company or acquired
in the ordinary course of business since June 30, 1997, other
than with respect to those Company Investments which have been
disposed of in the ordinary course of business or as contemplated
by this Agreement or redeemed in accordance with their terms
since such date and other than Permitted Liens or with respect to
statutory deposits which are subject to certain restrictions on
transfer.
SECTION 3.17 Contracts. Section 3.17 of the Company
Disclosure Schedule (with paragraph references corresponding to
those set forth below) contains a true and complete list of each
of the following Contracts or other documents or arrangements
(true and complete copies, or, if none, written descriptions, of
which have been made available to Parent, together with all
amendments thereto) to which any of the Acquired Companies is a
party or by which any of the Assets and Properties of any of the
Acquired Companies is bound:
(a) All employment, agency, consultation, contracts
for services or other Contracts of any type (except insurance and
annuity Contracts or Plans including, without limitation, loans
or advances) with any present Company Employee, if there exists
any present or future liability with respect to such Contract,
whether now existing or contingent) other than (i) Contracts
terminable without penalty or other Liability upon 30 days or
less notice, (ii) Contracts with consultants and similar
representatives who do not receive compensation of $100,000 or
more per year, (iii) employment or agency Contracts not
containing terms which are unduly burdensome to any of the
Acquired Companies with agents who do not receive compensation of
$100,000 or more per year, and (iv) agency Contracts not on the
standard form, copies of which have been made available to
Parent;
(b) All Contracts with any Person containing any
provision or covenant limiting the ability of any Acquired
Company to engage in any line of business or to compete with or
to obtain products or services from any Person or is a party
thereto, limiting the ability of any Person to compete with any
Acquired Company;
(c) All material partnership, joint venture, profit-
sharing, or similar Contracts with any Person except for any such
arrangement disclosed in the December 31, 1996 Annual Statement
(and the notes thereto) and Plans;
(d) All Contracts relating to the borrowing of money
by any Acquired Company or to the direct or indirect guarantee by
any Acquired Company of any obligation for borrowed money in
excess of $500,000 in the aggregate or any other Liability in
respect of indebtedness of any other Person, including without
limitation any Contract relating to (i) the maintenance of
compensating balances that are not terminable by the Acquired
Company without penalty or other Liability upon not more than 60
calendar days' notice, (ii) any line of credit or similar
facility, (iii) the payment for property, products, or services
of any other Person even if such property, products, or services
not conveyed, have not yet been delivered, or rendered, or (iv)
the obligation to take-or-pay, keep-well, make-whole, or maintain
surplus or earnings levels or perform other financial ratios or
requirements; and Section 3.17(d) of the Company Disclosure
Schedule contains a true and complete list of any requirements
for consents or approvals of creditors needed for the Company to
consummate the transactions contemplated hereby;
(e) All leases or subleases of real property used in
the business, operations, or affairs of the Company, and all
other material leases, subleases, or rental or use Contracts for
which the Company is liable;
(f) All Contracts relating to the future disposition
or acquisition of any material Assets or Properties of any Person
or of any interest in any business enterprise (other than the
disposition or acquisition of material Assets or Properties
(including Company Investments) in the ordinary course of
business and consistent with past practice);
(g) All Contracts or arrangements (including without
limitation those relating to allocation of expenses, personnel,
services, or facilities) with any Company Affiliate involving
annual payments of more than $100,000;
(h) All material reinsurance, coinsurance, or other
similar Contracts, and all trust agreements or other security
agreements related thereto, indicating, with respect to each
group of such Contracts (by reinsurer or coinsurer) or security
agreement, the information required to be disclosed in Schedule S
of an Annual Statement;
(i) All outstanding proxies, powers of attorney, or
similar delegations of authority, except for powers of attorney
for the service of process pursuant to applicable insurance or
corporate Laws;
(j) All Contracts for the provision of administrative
services by or to any Acquired Company;
(k) All material Contracts for any product, service,
equipment, facility, or similar item (other than insurance and
annuity Contracts and other than reinsurance, coinsurance, and
other similar Contracts) that by their respective terms do not
expire or terminate or are not terminable by an Acquired Company,
without penalty or other Liability, within three months after
March 31, 1998; and
(l) All other Contracts (other than insurance and
annuity Contracts and Contracts terminable without penalty or
other Liability upon 90 days or less notice) not otherwise
disclosed in the Company Disclosure Schedule that involve the
payment or potential payment, pursuant to the terms of such
Contracts, by or to any of the Acquired Companies of more than
$250,000 individually or $500,000 in the aggregate or that are
otherwise material to the Company.
Each Contract disclosed or required to be disclosed in
the Company Disclosure Schedule pursuant to this Section 3.17,
is in full force and effect and constitutes a valid, and binding
obligation of any of the Acquired Companies and of each other
Person that is a party thereto in accordance with its terms
subject to equitable rights and the rights of creditors; and (to
the Knowledge of the Company) none of the Acquired Companies nor
any other party to such Contract has materially violated,
breached or defaulted under any such Contract (or with or without
notice or lapse of time or both, would be in material violation
or breach of or default under any such Contract). Except as
disclosed in Section 3.17 of the Company Disclosure Schedule and
excluding Contracts that involve the payment or potential
payment, pursuant to the terms of such Contracts, by or to any of
the Acquired Companies of less than $100,000 or that are
otherwise not material to the Company, none of the Acquired
Companies is a party to or bound by any Contract that was not
entered into in the ordinary course of business and consistent
with past practice. None of the Acquired Companies is a party to
or bound by any collective bargaining or similar labor Contract.
SECTION 3.18 Threats of Cancellation. Except as
disclosed in Section 3.18 of the Company Disclosure Schedule,
since December 31, 1996, and to the Knowledge of the Company to
June 30, 1997, no group of policyholder Affiliates or Persons
writing, selling, or producing, either directly or through
reinsurance assumed, insurance business that individually or in
the aggregate for each such group or Person, respectively,
accounted for 3% or more of the premium or annuity income of the
Company Insurance Subsidiaries for the year ended December 31,
1996, has terminated or threatened to terminate its relationship
with the Company Insurance Subsidiaries.
SECTION 3.19 Operations Insurance. Section 3.19 of
the Company Disclosure Schedule contains a true and complete list
and description of all liability, property, workers compensation,
directors and officers liability, and other similar insurance
Contracts that insure the business, operations, or affairs of and
Acquired Company or affect or relate to the ownership, use, or
operations of any of their respective Assets and Properties and
(a) that have been issued to such Acquired Company (including
without limitation the names and addresses of the insurers, the
expiration dates thereof, and the annual premiums and payment
terms thereof) or (b) that are held by any Affiliate of the
Company (including any stockholder of the Company) for the
benefit of any Acquired Company following the Closing. All such
insurance is in full force and effect and (to the Knowledge of
the Company) is with financially sound and reputable insurers
and, in light of the business, operations, and affairs of the
Acquired Companies, is in amounts and provides coverage that are
reasonable and customary for Persons in similar businesses.
SECTION 3.20 Related Party Transactions. Except for
the transactions described in Section 3.20 of the Company
Disclosure Schedule, all transactions involving the Acquired
Companies that are required to be disclosed in the Company 10-K
in accordance with Item 404 of Regulation S-K have been so
disclosed, and to the knowledge of the Company, since
December 31, 1996, none of the Acquired Companies has entered
into any transactions that would be required to be disclosed in
future public filings under the Exchange Act pursuant to such
Item which have not already been disclosed in the Company SEC
Reports filed prior to the date hereof.
SECTION 3.21 Brokers; Schedule of Fees and Expenses.
Goldman, Sachs & Co. ("Goldman Sachs"), a copy of whose
engagement agreement has been provided to Parent, and Bush-
O'Donnell & Co., Inc. ("Bush-O'Donnell"), a copy of whose
engagement agreement has been provided to Parent, are each
entitled to fees from the Company in accordance with the
provisions of said engagement agreements by virtue of the
transactions contemplated hereby. Except for Goldman Sachs and
Bush-O'Donnell, there is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to
act on behalf of the Company who might be entitled to any fee or
commission upon consummation of the transactions contemplated by
this Agreement.
SECTION 3.22 Disclosure. To the Company s Knowledge,
neither the representations and warranties set forth in this
Article III nor any certificate required to be furnished by the
Company to Parent or Sub in connection with this Agreement or the
transactions contemplated hereby contains any untrue statement of
a material fact concerning any of the Acquired Companies or omits
to state a material fact concerning any of the Acquired Companies
necessary to make the statements herein or therein not misleading
in light of the circumstances in which they were made.
SECTION 3.23 Voting Requirements. The approval and
adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock (the "Company
Stockholder Approval") is the only vote of the holders of any
class or series of Company capital stock necessary to approve
this Agreement and the transactions contemplated by this
Agreement.
SECTION 3.24 SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all required reports, forms
and other documents with the SEC since January 1, 1995 (the
"Company SEC Documents"). As of its date, each Company SEC
Document complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents. To the Company s
Knowledge, none of the Company SEC Documents contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except to the extent that such
statements have been modified or superseded by a later filed
Company SEC Document.
(b) The consolidated financial statements of the
Company included in the Company SEC Documents comply as to form
in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods
indicated (except as may be indicated in the notes filed as a
part thereof) and fairly present, in all material respects, the
consolidated financial position of the Company as of the dates
thereof and the consolidated results of its operations and cash
flows for the respective periods indicated therein (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Company SEC
Documents, neither the Company nor any other Acquired Company has
any Liabilities required by GAAP to be set forth on a
consolidated balance sheet of the Company and the consolidated
other Acquired Companies or in the notes filed as a part thereof
(other than policyholder benefits payable in the ordinary course
of business and consistent with past practice) against, relating
to, or affecting any Acquired Company as of June 30, 1997
exceeding $1 million in the aggregate. None of the Acquired
Companies (other than the Company) is independently subject to
the informational reporting requirements of Section 13 of the
Exchange Act.
SECTION 3.25 Information Supplied. None of the
information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (i) the registration
statement on Form S-4 (or such other form as deemed appropriate)
to be filed with the SEC by Parent in connection with the
issuance of Parent Common Stock in the Merger (the "Form S-4")
will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the date the
Proxy Statement is first mailed to the Company's stockholders and
Parent's stockholders or at the time of the Company Special
Meeting and the Parent Special Meeting (as defined in Section
7.01(c)), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation
or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information
supplied by Parent or Sub for inclusion or incorporation by
reference in the Proxy Statement.
SECTION 3.26 Opinion of Financial Advisor. The Board
of Directors of the Company has received the written opinion of
Goldman Sachs, dated the date of this Agreement, that, as of such
date, the Merger Consideration is fair from a financial point of
view to the Company's stockholders, a signed copy of which has
been delivered to Parent.
SECTION 3.27 State Takeover Statute. The Merger is
not a control share acquisition subject to the provisions of
the Kansas Control Share Acquisition Act (KSA 17-1286 et seq.),
as such term is defined by such Act.
SECTION 3.28 Indenture. The Company is in compliance
with all covenants set forth in the Indenture pursuant to which
the Company Convertible Debentures were issued, and no
Fundamental Change (as defined in the Indenture) has occurred or
will occur as a result of the consummation of the Merger. The
Company Board of Directors has adopted resolutions authorizing
the redemption of the Company Convertible Debentures pursuant to
Section 1102 of the Indenture. For the 20 consecutive Trading
Days (as defined in the Indenture) ended September 19, 1997, the
average closing price of the Company Common Stock has exceeded
135% of the Conversion Price (as defined in the Indenture). The
Company Convertible Debentures may be redeemed pursuant to
Section 1102 of the Indenture provided that notices of redemption
(the "Redemption Notices") with respect thereto are given prior
to September 26, 1997.
SECTION 3.29. Certain Company Information. No IMO
doing business with any of the Company Insurance Subsidiaries
produced more than 5%, and no individual agent of the Company
Insurance Subsidiaries produced more than 1%, of the premiums
written by the Company Insurance Subsidiaries, neither (i) during
the period beginning January 1, 1997 through the date hereof
(except as disclosed in Section 3.29(b) of the Company Disclosure
Schedule) nor (ii) from the date hereof to the Closing Date
(except as disclosed by the Company to Parent in writing prior to
Closing).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub each jointly and severally represent and
warrant to the Company that, as of the date hereof and the
Closing Date:
SECTION 4.01 Organization, Standing and Corporate
Power. Parent and Sub are each corporations duly organized,
validly existing and in good standing under the laws of the
states of Iowa and Kansas, respectively, and have the requisite
power and authority to carry on its business as now being
conducted. Parent and Sub are duly qualified to do business and
is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes
such qualification necessary, other than in such jurisdictions
where the failure to be so qualified (individually or in the
aggregate) would not reasonably be expected to have a Material
Adverse Effect on Parent. Parent and Sub have each made
available to the Company complete and correct copies of their
respective Articles of Incorporation and By-laws and, to the
extent requested by the Company, the certificates of
incorporation and by-laws or comparable organization documents of
each of the "significant subsidiaries" within the meaning of Rule
1-02 of Regulation S-X of the SEC of Parent (the Parent
Subsidiaries ), in each case as amended to the date of this
Agreement. Neither Parent nor Sub is in violation of any
provision of its Articles of Incorporation or By-laws, except to
the extent that such violations would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
SECTION 4.02 Subsidiaries of Parent. Section 4.02 of
the Parent Disclosure Schedule lists each Parent Subsidiary and
the ownership or interest therein of Parent as of the date
hereof. Except as set forth in Section 4.02 of the Parent
Disclosure Schedule, all the outstanding shares of capital stock
of each Parent Subsidiary have been validly issued and are fully
paid and nonassessable and are owned by the Parent or by another
Parent Subsidiary, free and clear of all Liens.
SECTION 4.03 Authority of Parent and Sub. Each of
Parent and Sub has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated by this Agreement, subject to the
conditions set forth in this Agreement. The Board of Directors
of the Parent and the Sub, respectively, has unanimously approved
this Agreement and the transactions contemplated hereby and the
Board of Directors of Parent has resolved to recommend to the
stockholders of Parent that they approve the issuance of the
Parent Common Stock in connection with the Merger. The execution
and delivery of this Agreement by the Parent and Sub and the
consummation by the Parent and Sub of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Parent and Sub,
respectively, subject to Parent Stockholder Approval. This
Agreement has been duly executed and delivered by the Parent and
Sub and, assuming the due authorization, execution and delivery
by the Company, constitutes a valid and binding obligation of the
Parent and Sub, enforceable against the Parent and Sub in
accordance with its terms, except to the extent that (a)
enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium, or similar Laws now or
hereafter in effect relating to or limiting creditors rights
generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be
brought.
SECTION 4.04 No Conflicts or Violations. Except as
set forth in Section 4.04 of the Parent Disclosure Schedule, the
execution and delivery of this Agreement by Parent and by Sub do
not, and the performance by Parent and by Sub of their respective
obligations under this Agreement will not:
(a) violate any term or provision of any applicable
Law or any writ, judgment, decree, injunction, or similar order
naming Parent or Sub and Known to Parent or Sub;
(b) conflict with or result in a violation or breach
of any of the provisions of the articles or certificate of
incorporation or by-laws of Parent or Sub;
(c) result in the creation or imposition of any Lien
upon Parent or Sub or any of their respective Assets and
Properties;
(d) conflict with or result in a violation or breach
of, or constitute (with or without notice or lapse of time or
both) a default under, or give to any Person any right of
termination, cancellation, acceleration, or modification in or
with respect to, any Contract to which Parent or Sub is a party
or by which any of their respective Assets or Properties may be
bound (other than pursuant to the Revolving Credit and Term Loan
Agreement, dated as of December 11, 1996, among Parent, certain
signatory Banks thereto and The Chase Manhattan Bank (the "Parent
Credit Agreement"); or
(e) require Parent or Sub to obtain any other consent,
approval, or action of, or make any filing with or give any
notice to, any Person (including pursuant to any Laws);
except (i) as contemplated or disclosed in Sections 4.03, 4.04
and 4.05 hereof or the sections of the Parent Disclosure Schedule
relating thereto, and (ii) those violations, conflicts, Liens,
breaches, defaults and rights which do not individually or in the
aggregate with any other such matters, have a Material Adverse
Effect on the Parent or Sub.
SECTION 4.05 No Consents. No consent, approval, order
or authorization of, or registration, declaration or filing with,
any Governmental Entity is required by or with respect to Parent,
Sub or any other Parent Subsidiary in connection with the
execution and delivery of this Agreement by Parent or Sub, as the
case may be, or the consummation by Parent or Sub, as the case
may be, of the transactions contemplated by this Agreement,
except for (i) the filing of a premerger notification and report
form by Parent, the Company and Sub under the HSR Act, (ii) the
filing with the SEC of the Proxy Statement and the Form S-4,
(iii) the filing of the Certificate of Merger with the Kansas
Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do
business, (iv) such as may be required by any applicable state
securities or "blue sky" laws, (v) such filings, consents or
approvals with or from the Iowa Insurance Commission and such
other state insurance commissions and similar agencies as may be
required in connection with this Agreement and the transactions
contemplated by this Agreement, (vi) such filings with the Nasdaq
as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (vi) those that may
be required solely by reason of the Company's (as opposed to any
other third party's) participation in the Merger and the other
transactions contemplated by this Agreement, and (vii) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings, (x) as may be required under the laws
of any foreign country in which Parent or any Parent Subsidiary
conducts any business or owns any property or assets, (y) as are
set forth in Section 4.05 of the Parent Disclosure Schedule or
(z) that, if not obtained or made, would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
SECTION 4.06 Books and Records. The corporate minute
books of Parent, Sub and each Parent Subsidiary are complete and
accurate in all material respects and have been made available to
the Company.
SECTION 4.07 SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all required reports, forms and
other documents with the SEC since January 1, 1997 (the "Parent
SEC Documents"). As of its date, each Parent SEC Document
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents. To Parent s Knowledge,
none of the Parent SEC Documents contains any untrue statement of
a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, except to the extent that such statements
have been modified or superseded by a later filed Parent SEC
Document.
(b) The consolidated financial statements of the
Parent included in the Parent SEC Documents complies as to form
in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with United States
generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods indicated
(except as may be indicated in the notes thereto) and fairly
present, in all material respects, the consolidated financial
position of the Parent as of the dates thereof and the
consolidated results of its operations and cash flows for the
respective periods indicated therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
Except as set forth in the Filed Parent SEC Documents (as defined
in Section 4.09) or in Section 4.07 of the Parent Disclosure
Schedule, neither the Parent nor any Parent Subsidiary has any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance
sheet of the Parent and the consolidated Parent Subsidiaries or
in the notes filed as a part thereof and which, individually or
in the aggregate, would reasonably be expected to have a Material
Adverse Effect on Parent.
(c) None of the Parent Subsidiaries is independently
subject to the informational reporting requirements of the
Exchange Act.
SECTION 4.08 Information Supplied. None of the
information supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in (i) the Form S-4 will,
at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under
the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the date the
Proxy Statement is first mailed to the Company's stockholders and
Parent's stockholders or at the time of the Company Special
Meeting and the Parent Special 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, in light of the circumstances under which
they are made, not misleading. The Form S-4 will comply as to
form in all material respects with the requirements of the
Securities Act and Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty
is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied
by the Company for inclusion or incorporation by reference in the
Form S-4.
SECTION 4.09 Absence of Certain Changes. Except as
disclosed in the Parent SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed Parent
SEC Documents"), or as set forth in Section 4.09 of the Parent
Disclosure Schedule, from December 31, 1996 to the date of this
Agreement, Parent has conducted its business only in the ordinary
course and there has not been, occurred or arisen:
(a) any change in, or any event (including without
limitation any damage, destruction, or loss whether or not
covered by insurance), condition, or state of facts of any
character that individually or in the aggregate has or would
reasonably be expected to have a Material Adverse Effect on the
Parent;
(b) any declaration, setting aside, or payment of any
dividend (other than Parent's regular quarterly dividend) or
other distribution in respect of the capital stock of Parent or
Sub or any direct or indirect redemption, purchase or other
acquisition by Parent of any such stock or of any interest in or
right to acquire any such stock;
(c) any amendment, termination, waiver, disposal or
lapse of, or other failure to preserve, or regulatory agreement
with respect to any Permit of the Parent or any Parent Subsidiary
the result of which individually or in the aggregate has or would
reasonably be expected to have a Material Adverse Effect on the
Parent; or
(d) any binding agreement for the sale, merger or
transfer of Parent or any Parent Subsidiary or substantially all
of the assets or business thereof.
SECTION 4.10 Capitalization.
(a) The authorized capital stock of Parent consists of
145,000,000 shares, of which 75,000,000 shares are shares of
Series A Common Stock, no par value, of Parent ("Parent Common
Stock"), 45,000,000 shares are shares of Series B Common Stock,
no par value, of Parent common stock ("Series B Common Stock")
and 20,000,000 shares of preferred stock, ("Parent Preferred
Stock"). As of September 1, 1997, there were outstanding
18,155,989 shares of Parent Common Stock, 5,000,000 shares of
Series B Common Stock, no shares of Parent Preferred Stock and
Parent Options to purchase 664,000 shares of Parent Common Stock.
(b) All outstanding shares of capital stock of Parent
and each Parent Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable and all outstanding
shares of capital stock of Parent are free of preemptive rights.
Except as set forth in this Section 4.10, as of the date of this
Agreement, there are outstanding (i) no other shares of capital
stock or other voting securities of Parent, (ii) no securities of
Parent convertible into or exchangeable for shares of capital
stock or voting securities of Parent and (iii) no other options
or other rights to acquire from Parent, and no obligation of
Parent to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of Parent. All shares of Parent Common Stock
that are subject to issuance pursuant to the Merger, upon
issuance pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
(c) As of the date of this Agreement, the authorized
capital stock of Sub consists of 100 shares of common stock, par
value $0.01 per share, all of which have been validly issued, are
fully paid and nonassessable and are owned by Parent free and
clear of any Lien.
SECTION 4.11 Financial Statements.
(a) Parent has made available to the Company true and
complete copies of the following financial statements (the
"Parent Financial Statements"):
(i) audited (A) annual GAAP Statements for Parent
and (B) Annual Statements for AmerUs Life Insurance Company,
(the Parent Insurance Subsidiary ), for each of the years
ended December 31, 1994, 1995, and 1996, including all the
notes thereto (or such shorter period as such entity has
existed); and
(ii) unaudited (A) quarterly GAAP Statements for
Parent and (B) Quarterly Statements for the Parent Insurance
Subsidiaries, for each of the first three quarters of each
of 1995 and 1996, and the first two quarters of 1997,
including all the notes thereto (or such shorter period as
such entity has existed).
(b) Each such Parent Financial Statement (and the
notes thereto), and each GAAP Statement and Quarterly Statement
made available by Parent pursuant to Section 4.11(a), including
without limitation each balance sheet and each of the statements
of operations, capital and surplus account, and cash flow
contained therein was prepared in accordance with SAP ("SAP
Statements") or GAAP ("GAAP Statements"), respectively, except as
may be otherwise indicated in notes filed as a part thereof, as
the case may be, presents fairly in all material respects, the
financial condition and results of operations and cash flows of
the Parent and its consolidated subsidiaries or the Parent
Insurance Subsidiaries, as the case may be, as of the respective
dates thereof or for the respective periods presented therein,
subject, in the case of quarterly statements, to normal year end
adjustments. Each SAP Statement complied in all material
respects with all applicable Laws when filed with the applicable
insurance regulatory authority, and any deficiencies known to
Parent with respect to any such SAP Statement have been cured or
corrected to the satisfaction of such insurance regulatory
authority.
(c) Except as indicated on Section 4.11 of the Parent
Disclosure Schedule, Parent has not received written notice from
the Iowa Commissioner of Insurance ("ICI") asserting any
deficiency with respect to such SAP Statements.
(d) Since June 30, 1997, the Parent Insurance
Subsidiaries have filed all reports and other filings, together
with any amendments required to be made with respect thereto,
that it has been required to file with state insurance regulatory
authorities (the "Parent Insurance Subsidiaries Filings"), and
all of the Parent Insurance Subsidiaries Filings prior to the
date hereof complied, and all such filings made hereafter prior
to the Effective Time will comply, in all material respects with
applicable insurance laws, rules and regulations, and, except as
disclosed in Section 4.11 of the Parent Disclosure Schedule,
there are no material open or unresolved issues which were raised
by any insurance or securities regulatory authority and brought
to the attention of the Parent by such regulatory authority with
respect to any of such filings.
(e) Except where such would not reasonably be expected
to have a Material Adverse Effect on Parent, (i) Parent has no
reason to believe that any material amount recoverable pursuant
to Reinsurance Agreements is not fully collectible in due course,
and (ii) Parent Insurance Subsidiaries are entitled to take full
credit in their SAP Statements pursuant to applicable insurance
laws, rules and regulations for such reinsurance, coinsurance or
excess insurance ceded pursuant to any such Reinsurance
Agreement.
SECTION 4.12 Reserves.
(a) All Reserve Liabilities as established or
reflected in the SAP Statements of the Parent Insurance
Subsidiaries were determined in accordance with generally
accepted actuarial standards consistently applied, are fairly
stated in accordance with sound actuarial principles, are based
on actuarial assumptions that are in accordance with those called
for by the provisions of the related insurance and annuity
Contracts and in the related reinsurance, coinsurance and other
similar Contracts of the Parent Insurance Subsidiaries, and meet
in all material respects the requirements of the insurance Laws
of its state of domicile. Adequate provision for all such
Reserve Liabilities have been made (under generally accepted
actuarial principles consistently applied) to cover the total
amount of all reasonably anticipated matured and unmatured
benefits, dividends, claims and other liabilities of the Company
Insurance Subsidiaries under all insurance and annuity Contracts
under which the Company Insurance Subsidiaries have any liability
(including without limitation any liability arising under or as a
result of any reinsurance, coinsurance or other similar Contract)
on the respective dates of such SAP Statement based on then
current information regarding interest earnings, mortality and
morbidity experience, persistency and expenses. The Company
Insurance Subsidiaries own assets that qualify as legal reserve
assets under applicable insurance Laws in an amount at least
equal to all such Reserve Liabilities; and
(b) Adequate provision has been made for all estimated
losses, settlements, costs and expenses from pending suits,
actions and proceedings included in the December 31, 1996 Annual
Statement and the latest Quarterly Statements, and the reserves
and accrued Liabilities relating thereto were determined in
accordance with SAP and Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards
Board.
SECTION 4.13 Taxes. Except as disclosed in Section
4.13 of the Parent Disclosure Schedule:
(a) All Tax Returns required to be filed with respect
to Parent and each Parent Subsidiary have been duly and timely
filed, other than any Tax Returns the failure of which to timely
file would not reasonably be expected to have a Material Adverse
Effect on Parent. Except where failure to do so would not
reasonably be expected to have a Material Adverse Effect on
Parent (x) all such Tax Returns are true, correct and complete in
all material respects and (y) each of Parent and each Parent
Subsidiary (i) has duly and timely paid all Taxes that are shown
as due, or claimed or asserted by any taxing authority to be due,
from such company for the periods covered by such Tax Returns and
have made all required estimated payments of Taxes sufficient to
avoid any penalties for underpayment, or (ii) has duly provided
for all such Taxes in the applicable financial statements, and in
the SAP or GAAP Statements, in the case of Parent Insurance
Subsidiaries.
(b) Except where failure to do so would not reasonably
be expected to have a Material Adverse Effect on Parent, with
respect to any period or any portion thereof through the Closing
for which Tax Returns have not yet been filed, or for which Taxes
are not yet due or owing, Parent and each Parent Subsidiary has
made due and sufficient current accruals for such Taxes in
accordance with SAP in the case of Parent Insurance Subsidiaries
or otherwise in accordance with GAAP, and such current accruals
through the Closing are duly and fully provided for in the SAP or
GAAP Statements of such company for the period then ended.
SECTION 4.14 Litigation. Except as disclosed in the
Parent Filed SEC Documents or in Section 4.14 of the Parent
Disclosure Schedule:
(a) There are no actions, suits, investigations or
pending, or, to the Knowledge of Parent, threatened, against
Parent or any Parent Subsidiary or its Assets and Properties, at
law or in equity, in, before, or by any Person that individually
or in the aggregate have or would reasonably be expected to have
a Material Adverse Effect on the Parent.
(b) There are no writs, judgments, decrees or similar
orders of any Governmental Entity with competent jurisdiction
outstanding against Parent or any Parent Subsidiary that
individually exceed $100,000 or that individually or in the
aggregate have or would reasonably be expected to have a Material
Adverse Effect on the Parent.
As of the date of this Agreement, except as disclosed
in the Parent Filed SEC Documents, there is no suit, action or
proceeding of any Governmental Entity with competent jurisdiction
and pending, or, to the Knowledge of the Parent, threatened,
against Parent or any Parent Subsidiary that expressly seeks to
prevent or delay in any material respect the consummation of the
Merger or the transactions contemplated by this Agreement.
SECTION 4.15 Compliance with Laws; Regulatory Filings.
(a) The business of Parent and the Parent Subsidiaries
is being conducted in compliance in all respects with all
applicable Laws, including, without limitation, all insurance
laws, ordinances, rules, regulations, decrees and orders of any
Governmental Entity, and all notices, reports, documents and
other information required to be filed thereunder within the last
three years were properly filed in all respects and were in
compliance in all respects with such laws, except where the
failure to do so would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on Parent.
(b) Except where the failure to do so would not,
individually or in the aggregate, be reasonably expected to have
a Material Adverse Effect on Parent, (i) Parent and the Parent
Subsidiaries have all Permits the use and exercise of which are
necessary for the conduct of its business as now conducted, (ii)
the business of Parent and the Parent Subsidiaries has been and
is being conducted in compliance, in all material respects, with
all such Permits, (iii) all such Permits are in full force and
effect, and (iv) there is no proceeding or investigation pending
or threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation, suspension
or restriction of any such Permit.
(c) Parent and the Parent Subsidiaries have filed all
reports, statements, documents, registrations, filings or
submissions required to be filed by any of them with any
Governmental Entity, and, to the Knowledge of Parent, all such
reports, statements, documents, registrations, filings or
submissions were in all material respects true, complete and
accurate when filed except where the failure to file, in the
aggregate, would not have a Material Adverse Effect on Parent.
(d) Except as set forth on Section 4.15 of the Parent
Disclosure Schedule, and except where such would not individually
or in the aggregate, be reasonably expected to have a Material
Adverse Effect and no Real Estate has been used for the storage,
treatment, generation, transportation, manufacture, processing,
handling, production, distribution, deposit, burial, use, or
disposal of any Hazardous Substance except in compliance with
Environmental Laws, neither Parent nor any Parent Subsidiary has
any liability arising out of or resulting from a Release of any
Hazardous Substance on or from any Real Estate and Parent and
each Parent Subsidiary has complied in all material respects with
all applicable Environmental Laws relating to Real Estate and the
business, activities and processing respectively conducted
thereon.
SECTION 4.16 Properties. Except as disclosed in
Section 4.16 of the Parent Disclosure Schedule and except where
such would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on Parent and each of
the Parent Subsidiaries:
(a) has good and valid title to all of its properties,
assets and other rights that do not constitute real property,
free and clear of all Liens, except for Permitted Liens;
(b) owns, has valid leasehold interests in or valid
contractual rights to use, all of the assets, tangible and
intangible, used by, or necessary for the conduct of, its
business, except where the failure to have such valid ownership,
interests or rights do not, individually or in the aggregate,
have a Material Adverse Effect on Parent; and
(c) owns and has good and marketable title in fee
simple to the real property owned by such party, free and clear
of all liens except Permitted Liens.
SECTION 4.17 Investments.
(a) The Statutory Financial Statement of Parent
Insurance Subsidiary sets forth a list, which list is accurate
and complete in all material respects, of all securities,
mortgages and other investments (collectively, the Parent
Investments ) owned by the Parent Insurance Subsidiaries as of
December 31, 1996, together with the cost basis book or amortized
value, as the case may be, as of December 31, 1996. All
transactions in Parent Investments by each of the Parent
Insurance Subsidiaries from December 31, 1996 to the date hereof
have complied in all material respects with the investment
policies of such Parent Insurance Subsidiary and all applicable
insurance laws and regulations except where the failure to so
comply does not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
(b) Except as set forth in the Statutory Financial
Statements of the Parent Insurance Subsidiaries and except where
the failure to so comply does not, individually or in the
aggregate, have a Material Adverse Effect on Parent, the Parent
Insurance Subsidiaries have good and marketable title to the
Parent Investments listed in the Statutory Financial Statements
of the Parent Insurance Subsidiary or acquired in the ordinary
course of business since December 31, 1996, other than with
respect to those Parent Investments which have been disposed of
in the ordinary course of business or as contemplated by this
Agreement or redeemed in accordance with their terms since such
date and other than Permitted Liens or with respect to statutory
deposits which are subject to certain restrictions on transfer.
SECTION 4.18 Contracts. As of the date hereof, each
Contract listed as a material contract (pursuant to Item
601(10) of Regulation S-K) in the Parent SEC Documents is in full
force and effect and constitutes a valid, and binding obligation
of the Parent or Parent Subsidiary and of each other Person that
is a party thereto in accordance with its terms subject to
equitable rights and the rights of creditors; and (to the
Knowledge of Parent), neither Parent nor any Parent Subsidiary
nor any other party to such Contract has materially violated,
breached or defaulted under any such Contract (or with or without
notice or lapse of time or both, would be in material violation
or breach of or default under any such Contract).
SECTION 4.19 Voting Requirements; Voting. The
approval and adoption by Parent's stockholders of the issuance of
shares of Parent Common Stock in connection with the consummation
of the Merger ("Parent Stockholder Approval") as required by
Nasdaq is the only vote of the holders of any class or series of
Parent Capital Stock necessary to approve this Agreement and the
transactions contemplated by this Agreement. The Board of
Directors of AmerUs Group Co., the holder of approximately 70% of
the outstanding voting securities of Parent (the Group Shares ),
has resolved to vote its shares of Parent Common Stock to approve
the issuance of shares of Parent Common Stock in connection with
consummation of the Merger.
SECTION 4.20 Brokers; Schedule of Fees and Expenses.
Donaldson, Lufkin & Jenrette and Fox-Pitt & Kelton Inc. are the
only brokers, investment bankers, financial advisors or other
persons entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub, and such fee
or commission is payable by Parent.
SECTION 4.21 Benefit Plans; ERISA. Each Parent Plan
(as defined below) is in material compliance with applicable Law,
including but not limited to ERISA and the Code, and has been
administered and operated in all material respects in accordance
with such applicable Law and the terms of the Plan, except where
the failure to so administer and operate such Plan would not
reasonably be expected to have a Material Adverse Effect on the
Parent. For purposes of this Agreement, the term "Parent Plan"
shall mean each "employee benefit plan" (as defined in Section
3(3) of ERISA), bonus, deferred compensation, stock option, stock
purchase or other equity compensation plan, program or
arrangement, each employment, termination or severance agreement
or plan, incentive compensation or other agreement, whether
written or oral, in each case, which is sponsored, maintained or
contributed to or required to be contributed to by the Parent or
any Parent Subsidiaries at any time during the seven-year
calendar year period immediately preceding the Closing Date for
the benefit of employees or directors of the Parent or any Parent
Subsidiaries or former employees or directors of the Parent or
any Parent Subsidiaries. No liability has been, or could
reasonably be expected to be, incurred under Title IV of ERISA
(other than for benefits payable in the ordinary course or PBGC
insurance premiums) or Section 412(f) or (n) of the Code by an
entity required to be aggregated with the Parent or any of its
Affiliates pursuant to Section 4001(b) of ERISA and/or Section
414(b) or (c) of the Code (and the regulations promulgated
thereunder) with respect to any Parent Plan or "employee benefit
plan" (as defined in Section 3(2)) which is not a Parent Plan.
SECTION 4.22 Related Party Transactions. All
transactions involving Parent that are required to have been
disclosed in the Parent SEC Documents in accordance with Item 404
of Regulation S-K have been so disclosed, and to the Knowledge of
Parent, since December 31, 1996, neither it nor any Parent
Subsidiary has entered into any transactions that would be
required to be disclosed in future public filings under the
Exchange Act pursuant to such Item except for such transactions
that are on economic terms no less favorable to Parent or any
Parent Subsidiary, as the case may be, than Parent or such Parent
Subsidiary would be able to obtain in a comparable arms'-length
transaction with a Person that is not affiliated with Parent, or
as have been disclosed in Section 4.22 of the Parent Disclosure
Schedule.
SECTION 4.23 Disclosure. To Parent's Knowledge,
neither the representations and warranties set forth in this
Article IV nor any certificate required to be furnished by the
Parent, Parent Subsidiaries or Sub to the Company in connection
with this Agreement or the transactions contemplated hereby
contains any untrue statement of a material fact concerning
Parent, Parent Subsidiaries or Sub or omits to state a material
fact concerning any of them necessary to make the statements
herein or therein not misleading in light of the circumstances in
which they were made.
SECTION 4.24 Interim Operations of Sub. Sub was
formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and has not engaged in any
business activities or conducted any operations other than in
connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with Parent that, at
all times before the Closing, the Company will comply with all
covenants and provisions of this Article V, except to the extent
Parent may otherwise consent in writing, or to the extent
otherwise required or permitted by this Agreement.
SECTION 5.01 Contract and Regulatory Approvals. The
Company will (a) take all commercially reasonable steps necessary
or desirable, and proceed diligently and in good faith and use
all commercially reasonable efforts to obtain, as promptly as
practicable, all approvals required by any applicable Contract to
permit the consummation of the transactions contemplated hereby,
(b) take all commercially reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all
commercially reasonable efforts to obtain, as promptly as
practicable, all approvals, authorizations, and clearances of
governmental and regulatory authorities required to permit the
consummation of the transactions contemplated hereby (including
without limitation any required approvals of the insurance
regulatory authorities in Kansas, Florida, Michigan and
Connecticut), (c) provide such other information and
communications to such governmental and regulatory authorities as
Parent or such authorities may reasonably request, and (d)
cooperate with Parent and Sub in obtaining, as promptly as
practicable, all approvals, authorizations, and clearances of
governmental or regulatory authorities and others required of
Parent or Sub to consummate the transactions contemplated hereby.
SECTION 5.02 HSR Filings. The Company will (a) take
promptly all actions necessary to make the filings required of it
and the Acquired Companies under the HSR Act, (b) comply at the
earliest practicable date with any request for additional
information received from the Federal Trade Commission or
Antitrust Division of the Department of Justice pursuant to the
HSR Act, (c) cooperate with Parent and Sub in connection with
their filings under the HSR Act, and (d) request early
termination of the applicable waiting period.
SECTION 5.03 Conduct of Business. The Company will,
and will cause the Acquired Companies to, conduct its and their
respective businesses only in the ordinary course and consistent
with past practice, except as otherwise provided in this
Agreement or except as may be consented to by Parent in writing.
Without limiting the generality of the foregoing:
(a) The Company will use all commercially reasonable
efforts permitted by this Agreement to and cause each of the
Acquired Companies to (i) preserve intact its present business
organization, field force, reputation, and policyholder,
annuitant or customer relations, (ii) keep available the services
of its present key officers, directors, employees, agents,
consultants, and other similar representatives, (iii) maintain
all Permits to do business in each jurisdiction in which it has
such Permits, (iv) maintain in full force and effect all
Contracts, documents, and arrangements set forth in Section 3.17
of the Company Disclosure Schedule, except to the extent they are
terminated in the ordinary course of business, (v) maintain all
of its Assets and Properties in current working order and
condition, ordinary wear and tear excepted, (vi) continue all
current marketing and selling activities relating to its
business, operations, or affairs in accordance with its current
marketing plan and applicable Law, and (vii) with respect to the
Company Insurance Subsidiaries, maintain the rating
classification, or its equivalent, assigned as of the date hereof
to it by A.M. Best Company, Inc.
(b) The Company will maintain, and will cause each of
the Acquired Companies to maintain, their respective Books and
Records in the usual manner and consistent with past practice and
will not permit a material change in any applicable underwriting,
investment, actuarial, financial reporting, or accounting
practice or policy of each Acquired Company or in any assumption
underlying such a practice or policy, or in any method of
calculating any bad debt, contingency, or other reserve for
financial reporting purposes or for other accounting purposes
(including without limitation, any practice, policy, assumption,
or method relating to or affecting the determination of insurance
or annuities in force, premium or investment income, Reserve
Liabilities, or operating ratios with respect to expenses,
losses, or lapses).
(c) The Company will (i) prepare properly and file
duly and validly all reports and all Tax Returns required to be
filed with any governmental or regulatory authorities with
respect to its business, operations, or affairs and (ii) pay in
full and when due all Taxes indicated by such Tax Returns or
otherwise levied or assessed upon it or any of its Assets and
Properties, and withhold or collect and pay to the proper taxing
authorities or hold in separate bank accounts for such payment
all Taxes that it is required to so withhold or collect and pay,
unless reasonable reserves therefor have been established and
reflected in its Books and Records. The Company will not make
any tax election with respect to such Tax Returns without the
consent of Parent, which consent shall not be unreasonably
withheld. The Company shall not and shall not permit any
Acquired Company to settle any material audit, make or change any
material Tax election or file any amended Tax Return (except as
provided in Section 3.11 of the Company Disclosure Schedule). At
least 10 days prior to filing any income Tax Return or other
material Tax Return relating to the Company or any Acquired
Company, the Company shall deliver a copy of such Tax Return to
Parent for Parent's review and comment. The Company will refrain
from making, filing, or entering into (whether before or after
the closing) any election, consent, or agreement described in
Section 3.11(e) or Section 3.11(f) hereof with respect to any
Acquired Company or any of their respective Assets and
Properties.
(d) The Company will cause (i) all Reserve Liabilities
with respect to insurance and annuity Contracts established or
reflected in the Books and Records of the Company Insurance
Subsidiaries to be (A) established in accordance with the methods
for establishing Liabilities and reserving methods followed by
the Company Insurance Subsidiaries in the preparation of the
December 31, 1996 Annual Statement and (B) adequate (under
generally accepted actuarial principles consistently applied) to
cover the total amount of all reasonably anticipated matured and
unmatured benefits, dividends, losses, claims, expenses, and
other Liabilities of the Company Insurance Subsidiaries under all
insurance and annuity Contracts pursuant to which the Company
Insurance Subsidiaries has or will have any liability (including
without limitation any liability arising under or as a result of
any reinsurance, coinsurance, or other similar Contract) and (ii)
the Company Insurance Subsidiaries to continue to own assets that
qualify as legal reserve assets under all applicable insurance
Laws in an amount at least equal to its required Reserve
Liabilities.
(e) The Company will use all commercially reasonable
efforts to maintain in full force and effect until the Closing
substantially the same levels of coverage as the insurance
afforded under the Contracts described in Section 3.17 of the
Company Disclosure Schedule. Any and all benefits under such
Contracts paid or payable to any Acquired Company prior to the
Closing with respect to the business, operations, affairs, or
Assets and Properties of such Acquired Company shall be paid to
such Acquired Company.
(f) The Company will continue to and will cause the
other Acquired Companies to comply, in all material respects,
with all Laws applicable to its business, operations, or affairs.
(g) The Company will not and will cause the other
Acquired Companies not to incur any Liabilities outside of the
ordinary course of their respective businesses and consistent
with past practices.
SECTION 5.04 Financial Statements and Reports.
(a) As promptly as practicable but not later than (i)
sixty days following the end of each calendar quarter, the
Company will deliver to the Parent true and complete copies of
the quarterly GAAP consolidated balance sheet of the Acquired
Companies and the related consolidated statements of income of
the Acquired Companies for the quarter then ended, together with
any consolidating supplementary schedules related thereto and
(ii) forty-five days following the end of each calendar quarter,
the Company will deliver to the Parent a copy of the Quarterly
Statement of the Company Insurance Subsidiaries for such quarter,
prepared in accordance with SAP.
(b) As promptly as practicable, the Company will
deliver to the Parent true and complete copies of the Company's
monthly financial, marketing and investment reports distributed
to the Company's Board of Directors and at the request of Parent
such other material financial statements, reports, or analyses as
may be prepared or received by it or any of the Acquired
Companies and as relate to any of the business, operations, or
affairs of the Acquired Companies, including without limitation
normal internal reports which the Company prepares (such as those
reflecting monthly premiums, claims, and cash flow) and special
reports (such as those of financial or actuarial consultants), as
well as any reports prepared for the stockholders of the Company.
(c) As promptly as practicable, the Company will
deliver to the Parent the calculation of the accrued liability
with respect to each Plan which is a non-qualified deferred
compensation plan.
SECTION 5.05 Investments. Each of the Acquired
Companies will invest its future cash flow, any cash from matured
and maturing investments, any cash proceeds from the sale of its
Assets and Properties, and any cash funds currently held by it
exclusively in cash equivalent assets or in short-term
investments (consisting of United States government issued or
guaranteed securities, commercial paper rated A-1 or P-1, or
certificates of deposit issued by one or more of the banks or
financial institutions listed in Section 5.05 of the Company
Disclosure Schedule), except (i) as otherwise required by Law,
(ii) as required to provide cash (in the ordinary course of
business and consistent with past practice) to meet its
reasonably anticipated current obligations, (iii) in accordance
with past practices in the ordinary course of business, and in
the case of the Company and the Company Insurance Subsidiaries,
with the investment policies set forth in Section 5.05 of the
Company Disclosure Schedule, or (iv) as consented to by the
Parent. The Company Insurance Subsidiaries will not take any
actions, other than as otherwise permitted by this Agreement or
in the ordinary course of business and consistent with past
practice (including, without limitation, normal amortization and
depreciation of any depreciable asset) designed to cause the
assets of the Company Insurance Subsidiaries that are classified
as nonadmitted under SAP or by the applicable insurance
regulatory authorities, to be greater or less than their
respective dollar amounts as of December 31, 1996.
SECTION 5.06 Employee Matters. Except as may be
required by Law or by this Agreement or as disclosed in Section
5.06 of the Company Disclosure Schedule, or except for such
Contract representations, promises, changes, alterations, or
amendments that do not and will not result in any Liability to
any of the Acquired Companies, the Acquired Companies will
refrain from directly or indirectly, without the consent of
Parent:
(a) Making any representation or promise, oral or
written, to any Company Employee which is inconsistent with the
terms of any Plan;
(b) Making any change to, or amending in any way, the
Contracts, salaries, wages, or other compensation of any Company
Employee whose annual compensation exceeds $100,000 other than
routine changes or amendments that (i) are made in the ordinary
course of business and consistent with past practice, (ii) do not
and will not result in increases of more than 5% in the salary,
wages, or other compensation of any such Person, and (iii) do not
and will not exceed, in the aggregate, 5% of the total salaries,
wages, and other compensation of all Company Employees;
(c) Adopting, entering into, amending, altering or
terminating, partially or completely, any Plan; or making any
election made pursuant to the provisions of any Plan to
accelerate any payments, obligations or vesting schedules under
any Plans;
(d) Adopting, entering into, amending, altering, or
terminating, partially or completely, any employment, agency
consultation, or representation Contract that is, or had it been
in existence on the date of this Agreement would have been,
required to be disclosed in Section 3.17(a) of the Company
Disclosure Schedule;
(e) Approving any general or company wide pay
increases for Company Employees; or
(f) Entering into any Contract with any Company
Employee that is not terminable by any of the Acquired Companies,
without penalty or other Liability, upon not more than 60
calendar days notice.
Notwithstanding anything contained herein to the
contrary, the Company's Chief Executive Officer may award and pay
severance compensation (not to exceed $30,000 with respect to any
individual or $300,000 in the aggregate) to Company Employees
pursuant to the Severance Plan authorized by the Company's Board
of Directors in the resolutions of its March 27, 1997 meeting, a
true and correct copy of which resolutions has been provided to
Parent.
SECTION 5.07 No Charter Amendments. Each of the
Acquired Companies will refrain from amending its certificate of
incorporation or by-laws and from taking any action with respect
to any such amendment.
SECTION 5.08 No Issuance of Securities. Each of the
Acquired Companies will refrain from authorizing or issuing any
shares of their capital stock or other equity securities (except
as required pursuant to the terms of the existing Company
Options, Company Warrants, and Company Convertible Debentures) or
entering into any Contract or granting any option, warrant, or
right calling for the authorization or issuance of any such
shares or other equity securities, or creating or issuing any
securities directly or indirectly convertible into or
exchangeable for any such shares or other equity securities, or
issuing any options, warrants, or rights to purchase any such
convertible securities.
SECTION 5.09 No Dividends. Except as set forth in
Section 5.09 of the Company Disclosure Schedule, the Company will
refrain from declaring, setting aside, or paying any dividend
(other than the regular quarterly dividend of $0.03 per share of
Company Common Stock) or other distribution in respect of its
capital stock and from directly or indirectly redeeming,
purchasing, or otherwise acquiring any of its capital stock or
any interest in or right to acquire any such stock.
SECTION 5.10 No Disposal of Property. Except as set
forth in Section 5.10 of the Company Disclosure Schedule or as
otherwise expressly provided in this Agreement, each of the
Acquired Companies will refrain from (a) disposing of any of its
Assets and Properties and from permitting any of its Assets and
Properties to be subjected to any Liens, except to the extent any
such disposition or any such Lien is made or incurred in the
ordinary course of the business and consistent with past
practice, (b) selling any material part of its insurance
products, operations, or business to any third party (other than
sales of insurance products in the ordinary course of business
consistent with past practice), (c) entering into any Contracts
obligating it to administer the insurance operations of any other
Person, and (d) entering into any Contracts permitting any other
Person to administer its insurance operations.
SECTION 5.11 No Breach or Default. Each of the
Acquired Companies will refrain from violating, breaching, or
defaulting, and from taking or failing to take any action that
(with or without notice or lapse of time or both) would
constitute a material violation, breach, or default, in any way
under any term or provision of any Contract to which it is a
party or by which any of its Assets and Properties is or may be
bound.
SECTION 5.12 No Indebtedness. Except in the ordinary
course of business and consistent with past practice and except
for existing contractual obligations, each of the Acquired
Companies will refrain from creating, incurring, assuming,
guaranteeing, or otherwise becoming liable for, and from
canceling, paying, agreeing to cancel or pay, or otherwise
providing for a complete or partial discharge in advance of a
scheduled payment date with respect to, any Liability, and from
waiving any right to receive any direct or indirect payment or
other benefit under any Liability owing to such company.
SECTION 5.13 No Acquisitions. The Company will
refrain from (a) merging, consolidating, or otherwise combining
or agreeing to merge, consolidate, or otherwise combine with any
other Person, (b) acquiring or agreeing to acquire blocks of
business of all or substantially all the Assets and Properties or
capital stock or other equity securities of any other Person, or
(c) otherwise acquiring or agreeing to acquire control of any
other Person.
SECTION 5.14 Notice and Cure. The Company will notify
Parent promptly in writing of, and contemporaneously will provide
Parent with true and complete copies of any and all information
or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event,
transaction, or circumstance occurring after the date of this
Agreement and before the Effective Time that causes or will cause
any covenant or agreement under this Agreement to be breached, or
that renders or will render untrue any representation or warranty
of the Company contained in this Agreement as if the same were
made on or as of the date of such event, transaction, or
circumstance. The Company also will use all commercially
reasonable efforts to cure, before the Closing, any violation or
breach of any representation, warranty, covenant, or agreement
made by it in this Agreement, whether occurring or arising before
or after the date of this Agreement.
SECTION 5.15 Supplements to Schedules. The Company
shall at any time or from time to time after the date hereof and
prior to the Closing Date, supplement or amend the Company
Disclosure Schedule with respect to any matter arising after the
date hereof which, if existing or occurring at the date hereof,
would have been required to be set forth or described therein.
No supplement or amendment to the Company Disclosure Schedule
shall be deemed to cure any breach of a representation or
warranty of the Company made herein, or have any effect for the
purpose of determining the satisfaction of the conditions to
Closing set forth in Article VIII.
SECTION 5.16 No Solicitation, etc.
(a) Except as set forth below, the Company shall not,
nor shall the Company authorize or permit any of the Acquired
Companies, or any of its or their officers, directors, employees,
representatives or agents, to, directly or indirectly, encourage,
solicit, participate in, initiate or continue discussions or
negotiations with, or provide any information to, any Person
(other than Parent or Sub) with respect to, or take any action to
facilitate any inquiries or the making of, or enter into any
agreement (including any preliminary agreement) relating to, or
approve any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below).
The Company shall, and shall cause each Acquired Company to,
immediately cease and cause to be terminated any existing
activities, discussions, or negotiations by the Company, any
Acquired Company or any officer, director or employee of,
investment banker, attorney, accountant or other advisor or
representative of, the Company or any Acquired Company, with
parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the first sentence of this Section,
at any time prior to the approval of this Agreement and the
Merger by the Company's stockholders at the Company Special
Meeting (as defined below), the Company may furnish information
and access, in each case only in response to requests which were
not solicited on or after the date hereof, to any Person pursuant
to a customary confidentiality agreement, and may participate in
discussions and negotiate with such Person concerning an
Acquisition Proposal, if the Board of Directors of the Company
determines in its good faith judgment, following consultation
with outside counsel, that (i) such Person shall have submitted a
Competitive Proposal (as defined below) which was not solicited
on or after the date hereof, and (ii) that it is required to do
so in order to comply with its fiduciary duties to stockholders
under applicable Law. The Company's Board of Directors shall
notify Parent orally (within one Business Day), and in writing
(as promptly as practicable) of all inquiries and proposals that
it may receive relating to any Acquisition Proposal and the
material terms and conditions thereof, that it and any Acquired
Company or any of its or their officers, directors, employees,
representatives or agents may receive relating to any Acquisition
Proposal and thereafter keep Parent promptly advised of any
material developments with respect thereto.
(b) Except as set forth in this Section 5.16(b), the
Company's Board of Directors shall not withdraw or modify, or
propose to withdraw or modify, its recommendation of this
Agreement and the transactions contemplated hereby or approve or
recommend, or propose to approve or recommend, any Acquisition
Proposal. Notwithstanding the foregoing, if the Company's Board
of Directors determines in its good faith judgment, following
consultation with outside counsel and an independent financial
advisor, that (i) such Person shall have submitted a Superior
Proposal (as defined below) which was not solicited on or after
the date hereof, and (ii), that it is required to do so in order
to comply with its fiduciary duties to stockholders under
applicable law, the Company's Board of Directors may (x) withdraw
or modify, or propose to withdraw or modify, its recommendation
of the transactions contemplated hereby on account of such
Superior Proposal or (y) approve or recommend such Superior
Proposal or terminate this Agreement (and concurrently with or
after such termination, cause the Company to enter into any
agreement with respect to such Superior Proposal) but in each
case of the foregoing (x) and (y) only after providing at least
five Business Days' prior written notice to Parent (A) advising
Parent that the Company's Board of Directors has received or
become aware of a Superior Proposal, (B) specifying the material
terms and conditions of such Superior Proposal, and (C)
identifying the person making the Superior Proposal, and (D)
stating that it intends to withdraw its recommendation or approve
or recommend such Superior Proposal.
(c) Nothing contained in this Section 5.16 shall
prohibit the Company s Board of Directors from disclosing to the
Company s stockholders a position permitted by this Section 5.16
in accordance with Rules 14d-9 and 14e-2 promulgated under the
Exchange Act with respect to any tender offer for shares of
capital stock of the Company.
(d) "Acquisition Proposal" means any proposal, offer
or expression of interest from any Person involving a merger,
consolidation or other business combination with the Company or
any other Acquired Company or any proposal, offer or expression
of interest to acquire or cause to be acquired in any manner,
directly or indirectly, including, without limitation, through
any reinsurance or coinsurance transaction, all or a significant
portion of the business, assets, or capital stock of the Company
or any other Acquired Company, other than the transactions
contemplated by this Agreement.
(e) "Superior Proposal" means any bona fide
Acquisition Proposal from any Person and which is otherwise on
terms that the Company's Board of Directors determines in its
good faith reasonable judgment, following consultation with
outside counsel and an independent financial advisor, to be more
favorable to the Company's stockholders than the Merger and for
which financing, to the extent required, is then committed or
which, in the good faith judgement of the Board of Directors,
based upon the advice of its financial advisors, is reasonably
capable of being obtained by such third party on commercially
reasonable terms.
(f) "Competitive Proposal" means any bona fide
Acquisition Proposal from any Person that the Company's Board of
Directors determines in its good faith reasonable judgment, could
reasonably be expected to lead to a transaction which is
financially superior to the Merger.
SECTION 5.17 Notice to Warrant Holders. The Company
will cause to be mailed to the registered holders of Company
Warrants, at least 20 days before the Effective Time, a notice
stating (i) the date on which the Merger is expected to become
effective, and (ii) the date as of which it is expected that
holders of Company Common Stock of record will be entitled to
exchange their shares of Common Stock for Merger Consideration.
SECTION 5.18 Exercise of Call of Company Convertible
Debentures. (a) The Company will cause Redemption Notices to be
mailed to all registered holders of Company Convertible
Debentures prior to September 26, 1997, in accordance with
applicable provisions of the Indenture, and shall use its
commercially reasonable efforts to cause the redemption of all
outstanding Company Convertible Debentures in accordance with
Section 1102 of the Indenture (the "Redemption").
(b) In the event that the Company requires cash to pay
for any Company Convertible Debentures duly surrendered on the
Redemption Date (as defined in the Indenture), the Company may
request in writing not less than ten business days in advance of
the Redemption Date that Parent purchase, and Parent shall
purchase, at Parent's election, either such surrendered Company
Convertible Debentures or a new issue of convertible debentures
of the Company simultaneously with consummation of the
Redemption, in each case, in the amount actually redeemed and at
a price equal to par value and on terms which are substantially
identical to the Company Convertible Debentures (including
interest rate, maturity, conversion price and redemption
provisions). Notwithstanding the above, Parent may not convert
any Company Convertible Debenture into shares of Company Common
Stock, if and to the extent such conversion would require
applicable regulatory approvals, if any, which Parent has not
obtained.
ARTICLE VI
COVENANTS OF PARENT AND SUB
SECTION 6.01 Contract and Regulatory Approvals.
Parent and Sub will (a) take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith
and use all commercially reasonable efforts to obtain, as
promptly as practicable, all approvals required by any applicable
Contract to permit the consummation of the transactions
contemplated hereby, (b) take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith
and use all commercially reasonable efforts to obtain, as
promptly as practicable, all approvals, authorizations, and
clearances of governmental and regulatory authorities required to
permit the consummation of the transactions contemplated hereby,
(c) provide such other information and communications to such
governmental and regulatory authorities as Parent or such
authorities may reasonably request (including without limitation
any required approvals of the insurance regulatory authorities in
Iowa and any other applicable state insurance commission or
similar agency), and (d) cooperate with the Acquired Companies in
obtaining, as promptly as practicable, all approvals,
authorizations, and clearances of governmental or regulatory
authorities and others required of the Acquired Companies to
consummate the transactions contemplated hereby.
SECTION 6.02 HSR Filings. Parent and Sub will (a)
take promptly all actions necessary to make the filings required
of it and Sub under the HSR Act and make payment of the required
filing fee, (b) comply at the earliest practicable date with any
request for additional information received from the Federal
Trade Commission or Antitrust Division of the Department of
Justice pursuant to the HSR Act, (c) cooperate with the Acquired
Companies in connection with their filings under the HSR Act, and
(d) request early termination of the applicable waiting period.
SECTION 6.03 Notice and Cure. The Parent and Sub will
notify the Company promptly in writing of, and contemporaneously
will provide the Company with true and complete copies of any and
all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any
event, transaction, or circumstance occurring after the date of
this Agreement that causes or will cause any covenant or
agreement of the Parent under this Agreement and before the
Effective Time to be breached, or that renders or will render
untrue any representation or warranty of the Parent contained in
this Agreement as if the same were made on or as of the date of
such event, transaction, or circumstance. The Parent also will
use all commercially reasonable efforts to cure, before the
Closing, any violation or breach of any representation, warranty,
covenant, or agreement made by it in this Agreement, whether
occurring or arising before or after the date of this Agreement.
SECTION 6.04 Certain Further Tax Representations and
Covenants.
(a) All current Employees of the Company or any
Acquired Company as of the Closing shall be employed, immediately
after the Closing, by the Surviving Corporation. On and after
the Closing, the Parent and the Surviving Corporation shall honor
all provisions of all Plans in effect as of the Closing;
provided, however, that nothing in this Section 6.04 shall be
construed as preventing the Parent or the Surviving Corporation
from amending, modifying or terminating any of the Plans, or
other contracts, arrangements, commitments or understandings, in
accordance with their terms and applicable Law.
(b) The Parent, following the Closing Date, shall
permit such Employees who are retained as Employees of the
Surviving Corporation or who become Employees of the Parent or
any Parent Subsidiary thereafter, and who were participating in
the Plans immediately prior to the Closing Date, to participate
in corresponding Parent Plans (including but not limited to the
Parent's "Section 125" Plan) or continue participating in the
Plans on terms that are substantially similar to those provided
to similarly situated Employees of the Parent (or Parent
Subsidiary, as applicable). With respect to those Parent Plans
in which Employees of the Company will be participating on or
after the Closing Date, the Parent shall credit prior service of
Employees with the Company or any Acquired Company, as
applicable, for purposes of determining the vesting, eligibility,
waiting periods or qualification or participation of such
Employees under the Parent Plans and any successor benefit
programs to the extent that such service was recognized under the
Plans; such prior service credited under a Parent Plan shall
include service with other entities to the extent that such
service is credited by the Company or any Acquired Company for
purposes of any Plan similar to such Parent Plan. All Employees
of the Company or any Acquired Company shall receive credits for
payments made under any Plan which is a welfare plan under
Section 3(1) of ERISA during the plan year in which the Closing
occurs for purposes of satisfying the applicable deductibles and
maximum out-of-pocket limits of any similar welfare plans of the
Surviving Corporation, the Parent or any Parent Subsidiary during
the plan year in which the Closing occurs.
(c) The Parent shall reasonably cooperate with the
Surviving Corporation to maintain the qualified status of each
Plan intended to be qualified under Section 401(a) of the Code.
(d) As of the Closing, the Amvestors Financial
Corporation Employees' Stock Ownership Plan shall be frozen with
respect to participation.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Preparation of Form S-4 and the Proxy
Statement; Company Special Meeting and Parent Special Meeting.
(a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and file with the
SEC the Proxy Statement and Parent shall prepare and file with
the SEC the Form S-4, in which the Proxy Statement shall be
included as part of the prospectus. Each of the Company and
Parent shall use reasonable efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable
after such filing. Each of the Company and Parent shall use
reasonable efforts to cause the Proxy Statement to be mailed to
the Company's stockholders and, if required, Parent's
stockholders, respectively, as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent
shall also take any action required to be taken under any
applicable state securities or "blue sky" laws in connection with
the issuance of Parent Common Stock pursuant to the Merger, and
the Company shall furnish all information concerning the Company
and the holders of the Company Common Stock and rights to acquire
the Company Common Stock pursuant to the Company Employee Stock
Plans as may be reasonably requested in connection with any such
action.
(b) The Company shall, in accordance with all
applicable Laws, and the Articles of Incorporation and By-Laws of
the Company, duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Company Special
Meeting") as promptly as practicable after the date hereof for
the purpose of considering and taking action upon this Agreement
and such other matters as may be appropriate at the Company
Special Meeting. Notwithstanding anything in this Agreement to
the contrary, the Company shall not take any action which
interferes with the convening of the Company Special Meeting or
the taking of the stockholders' vote at the meeting. The Board
of Directors of the Company will include its recommendation that
the stockholders of the Company approve and adopt this Agreement
and the transactions contemplated hereby in any proxy or other
solicitation materials or communications prepared in connection
with the Company Special Meeting.
(c) Parent shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Parent Special Meeting")
for the purpose of obtaining the Parent Stockholder Approval.
Parent shall, through its Board of Directors, recommend to its
stockholders that they give the Parent Stockholder Approval
unless otherwise determined by the Board of Directors of Parent
in good faith, after consultation with outside counsel, as
necessary in order to comply with its fiduciary duties to Parent
and its stockholders under applicable law. The Company shall
vote or cause to be voted any shares of Parent Capital Stock
owned of record by the Company or any Acquired Company in favor
of the Parent Stockholder Approval.
SECTION 7.02 Letter of the Company's Accountants. The
Company shall use reasonable efforts to cause to be delivered to
the Company and Parent a letter of Deloitte & Touche, LLP, the
Company's independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall become
effective and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public accountants
in connection with registration statements similar to the
Form S-4.
SECTION 7.03 Letter of Parent's Accountants. Parent
shall use reasonable efforts to cause to be delivered to the
Company a letter of KPMG Peat Marwick LLP, Parent's independent
public accountants, dated a date within two business days before
the date on which the Form S-4 shall become effective and
addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance
for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
SECTION 7.04 Access to Information; Confidentiality.
(a) Each of the Company and Parent shall, and shall
cause each of its respective subsidiaries to, afford to the other
party and to the officers, directors, employees, accountants,
counsel, financial advisors and other representatives of such
other party, reasonable access during normal business hours
during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel
and records and, during such period, each of the Company and
Parent shall, and shall cause each of its respective subsidiaries
to, furnish promptly to the other party (i) a copy of each
report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements
of United States Federal or state securities laws and (ii) all
other information concerning its business, properties and
personnel as such other party may reasonably request. Such
information shall be held in confidence to the extent required
by, and in accordance with, the provisions of the letters dated
September 8, 1997, between the Company and Parent (the
"Confidentiality Agreements").
(b) In the event that this Agreement is terminated in
accordance with its terms, each party shall promptly redeliver to
the other all non-public written material provided pursuant to
this Section 7.04 and shall not retain any copies, extracts or
other reproductions in whole or in part of such written material.
In such event, all documents, memoranda, notes and other writings
prepared by Parent or the Company based on the information in
such material shall be destroyed (and Parent and the Company
shall use their respective reasonable best efforts to cause their
advisors and representatives to similarly destroy their
documents, memoranda and notes), and such destruction (and
reasonable best efforts) shall be certified in writing by an
authorized officer supervising such destruction.
SECTION 7.05 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties shall use reasonable
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from
third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by
this Agreement including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Entity vacated or reversed, and (iv) the execution and delivery
of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes
of, this Agreement; provided, however, that Parent shall not be
obligated to take any action pursuant to the foregoing if the
taking of such action or the obtaining of any waiver, consent,
approval or exemption is reasonably likely to result in the
imposition of a condition or restriction of the type referred to
in Section 8.01(g)(i) and (ii). In connection with and without
limiting the foregoing, Parent, the Company and their respective
Boards of Directors shall (i) take all action necessary so that
no state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or any other
transaction contemplated by this Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes
applicable to the Merger, this Agreement or any other transaction
contemplated by this Agreement, take all action necessary so that
the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize
the effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent,
and Parent or Sub shall give prompt notice to the Company, of
(i) any representation or warranty made by it or contained in
this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate
in any material respect or (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall be
deemed to cure any breach of the representations, warranties,
covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 7.06 Indemnification.
(a) Parent shall, to the fullest extent permitted by
law, cause the Surviving Corporation to honor, and will itself
honor, all the Company's obligations to indemnify each current or
former director and officer of the Company or the Company
subsidiaries (each, an "Indemnified Party" and collectively, the
"Indemnified Parties") for acts or omissions by such Indemnified
Parties occurring prior to the Effective Time to the extent that
such obligations of the Company exist on the date of this
Agreement, whether pursuant to the Company's Certificate of
Incorporation, By-laws or individual indemnity agreements. Any
amendment, repeal or other modification to the Certificate of
Incorporation or By-laws of the Company shall not affect the
obligations of Parent hereunder and shall not adversely affect
the rights thereunder of Indemnified Parties, unless such
modification is required by law.
(b) For a period of six years after the Effective Time
(it being understood that the Company has prepaid all premiums
for such policies through February 17, 2000), Parent shall cause
to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided
that Parent may substitute therefor policies containing terms
with respect to coverage and amounts identical or more extensive
to the coverage and amounts currently provided by the Company's
policy) with respect to claims arising from or related to facts
or events which occurred at or prior to the Effective Time;
provided, however, that Parent shall not be obligated to make
annual premium payments for such insurance to the extent such
premiums exceed 150% of the annual premiums paid as of the date
hereof by the Company for such insurance (such 150% amount, the
"Maximum Premium"). If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in
excess of the Maximum Premium, Parent shall maintain the most
advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium.
The Company represents to Parent that the Maximum Premium is
$300,000.
SECTION 7.07 Fees and Expenses. Except as provided in
Section 9.02, all fees and expenses, including any transfer taxes
or fees payable to any broker, investment banker or financial
advisor, incurred in connection with the Merger, this Agreement
and the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that expenses incurred in
connection with SEC filing fees, the printing and mailing of the
Proxy Statement and the Form S-4 shall be shared equally by
Parent and the Company.
SECTION 7.08 Public Announcements. Parent and Sub, on
the one hand, and the Company, on the other hand, shall consult
with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or
other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public
statement without such consultation and the prior approval of the
other party, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with
any national securities exchange.
SECTION 7.09 Tax Treatment. Each of Parent and the
Company shall use its reasonable best efforts to (i) not take any
action and (ii) not fail to take any action either before or
after the Effective Time which action or failure to act would
prevent, or would be likely to prevent, the Merger from
qualifying as a reorganization within the meaning of
Section 368(a) of the Code, and shall each use their reasonable
efforts to obtain the opinion of their respective counsel
referred to in Sections 8.02(d) and 8.03(d) of this Agreement.
SECTION 7.10 Affiliates. Prior to the Closing Date,
the Company shall use its reasonable efforts to deliver to Parent
a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of the
Company, "affiliates" of the Company (including all directors of
the Company) for purposes of Rule 145 under the Securities Act.
The Company shall use reasonable efforts to cause each such
person to deliver to Parent on or prior to the Closing Date a
written agreement substantially in the form attached hereto as
Annex B.
SECTION 7.11 Company Shareholder Tax Representation.
Immediately prior to the Closing Date, the Company shall deliver
to Parent a schedule identifying all persons who are five-percent
shareholders of the Company. The Company shall use reasonable
best efforts to obtain from such persons representations which
counsel may reasonably require in connection with their opinions
under Sections 8.02(d) and 8.03(d) of this Agreement.
SECTION 7.12 Certificates of Officers. Immediately
prior to the Closing Date, the Company, Sub and Parent shall
deliver to Parent and the Company, as appropriate, certificates
of officers and directors of Parent, Sub and the Company, as
appropriate, which counsel may reasonably require in connection
with their opinions under Sections 8.02(d) and 8.03(d) of this
Agreement.
SECTION 7.13 Stock Exchange Listing. Parent shall as
promptly as practicable prepare and submit to the Nasdaq a
listing application covering the shares of Parent Common Stock to
be issued in connection with the Merger and this Agreement, and
shall use all reasonable efforts to obtain, prior to the
Effective Time, approval for the listing of such shares, subject
to official notice of issuance.
SECTION 7.14 Other Actions and Agreements. Except as
expressly permitted by this Agreement, the Company and Parent
shall not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that would
reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue,
(ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of
the conditions to the Merger set forth in Article VIII not being
satisfied. Notwithstanding any other provision herein, any
consequence of the Company's good faith, commercially reasonable
compliance with Section 5.18 of this Agreement will not be
considered for purposes of determining whether a Material Adverse
Effect on the Company has occurred, whether a representation or
warranty has been breached or whether a condition to Parent's
obligations hereunder has been satisfied, provided Section 3.28
is accurate and the Company is in compliance with Section 5.18.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.01 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 on or
prior to the Closing Date of the following conditions:
(a) Company Stockholder Approval and Parent
Stockholder Approval. The Company shall have obtained the
Company Stockholder Approval and Parent shall have obtained the
Parent Stockholder Approval.
(b) Stock Exchange Listing. The shares of Parent
Company Stock issuable to the Company's stockholders in the
Merger and employees pursuant to this Agreement shall have been
approved for listing on the Nasdaq, subject to official notice of
issuance.
(c) Antitrust. The waiting periods (and any
extensions thereof) applicable to the transactions contemplated
by this Agreement under the HSR Act shall have been terminated or
shall have expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that subject to the
proviso in Section 7.05(a) each of the parties shall have used
reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the subject
of any stop order or proceedings seeking a stop order instituted
by the SEC or state regulatory authorities, and Parent shall have
received all state securities or "blue sky" authorizations
necessary to issue the Parent Common Stock pursuant to this
Agreement.
(f) Material Consents and Approvals. The Company,
Parent, each Acquired Company and each Parent Subsidiary shall
have obtained or made, as appropriate, such material consents,
approvals, orders, authorizations, registrations, declarations,
Permits or filings in connection with this Agreement and the
transactions contemplated by this Agreement or for the conduct of
their businesses as currently conducted or as expected to be
conducted (including without limitation any requisite action of
the insurance regulatory authorities in Iowa, Kansas, Florida,
Michigan and Connecticut and any other state insurance
commissions and similar agencies and Nasdaq), shall have been
obtained and shall be in full force and effect, in each case
without the abrogation or diminishment of the Permits currently
held by the Company or the imposition of significant restrictions
upon the transactions contemplated hereby or the conduct of the
business of the Surviving Corporation.
(g) No Litigation. There shall not be instituted,
pending, or threatened, any action, suit, investigation, or other
proceeding in, before, or by any Governmental Entity or other
Person (i) challenging the acquisition by Parent or Sub of any
shares of Company Common Stock, seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation
to the Company and the other Acquired Companies taken as a whole,
(ii) seeking to prohibit or limit the ownership or operation by
the Company, any Acquired Company, Parent or any Parent
Subsidiary of any material portion of the business or assets of
the Company, any Acquired Company, Parent or any Parent
Subsidiary or to compel the Company, any Acquired Company, Parent
or any Parent Subsidiary to dispose of or hold separate any
material portion of the business or assets of the Company, any
Acquired Company, Parent or any Parent Subsidiary, as a result of
the Merger or any of the other transactions contemplated by this
Agreement, or (iii) which otherwise is reasonably likely to have
a Material Adverse Effect on the Company or a Material Adverse
Effect on Parent.
SECTION 8.02 Conditions to Obligations of Parent and
Sub. The obligations of Parent and Sub to effect the Merger are
further subject to the satisfaction or waiver by Parent on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in this
Agreement that are qualified as to materiality shall be true and
correct, and the representations and warranties of the Company
set forth in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the
date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an earlier date
(in which case as of such date), and Parent shall have received a
certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company
to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and Parent shall have received a
certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company
to such effect.
(c) Officers' and Directors' Certificates. The
Company shall have delivered to Parent a certificate, dated the
Closing Date and executed by the Secretary of the Company,
certifying (a) that the Company has duly and validly taken all
corporate action necessary to authorize its execution and
delivery of this Agreement and its performance of its obligations
under this Agreement, (b) that the resolutions (true and complete
copies of which shall be attached to the certificate) of the
Board of Directors and stockholders of the Company with respect
to this Agreement and the transactions contemplated hereby have
been duly and validly adopted and are in full force and effect
and (c) as to the aggregate amount of legal and investment
banking fees incurred by the Company in connection with the
transactions contemplated by this Agreement. In addition, the
Company shall have delivered to Parent executed copies of the
certificates, dated the Closing Date, of officers and directors
of the Company, Parent and Sub that may reasonably be required by
counsel in connection with the tax opinions referred to in
Section 8.02(d) and 8.03(d) of this Agreement.
(d) Tax Opinion. Parent shall have received an
opinion dated the Closing Date from Skadden, Arps, Slate, Meagher
& Flom LLP, counsel to Parent and Sub, in form and substance
reasonably satisfactory to Parent, substantially to the effect
that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of
facts existing on the Closing Date, 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, Meagher & Flom LLP may
require and rely upon (and may incorporate by reference)
representations and covenants, including those contained in
certificates of officers of Parent, the Company, Sub and others.
The specific provisions of each such representation and covenant
shall be in form and substance reasonably satisfactory to
Skadden, Arps, Slate, Meagher & Flom LLP and each such
representation and covenant shall be dated on or before the date
of such opinion and shall not have been withdrawn or modified in
any material respect.
(e) Absence of Material Adverse Effect on the Company.
There shall not have occurred since the date of this Agreement
any event, change, effect or development which, individually or
in the aggregate, has had or is reasonably likely to have, a
Material Adverse Effect on the Company.
(f) Good Standing Certificates. The Company shall
have delivered to Parent at the Closing (i) certified
certificates of good standing dated not more than 21 calendar
days prior to the Closing Date from each of the jurisdictions
listed in Section 3.13(b) of the Company Disclosure Schedule with
respect to each of the Permits issued to an Acquired Company by
such jurisdiction and (ii) bringdown certificates of good
standing dated as of the Closing Date for insurance permits from
the state insurance commission of Kansas, with respect to
American, and of Florida, with respect to FBL.
SECTION 8.03 Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is further
subject to the satisfaction or waiver by the Company on or prior
to the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Sub set forth in
this Agreement that are qualified as to materiality shall be true
and correct, and the representations and warranties of Parent and
Sub set forth in this Agreement that are not so qualified shall
be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an earlier date
(in which case as of such date), and the Company shall have
received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to
such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to
such effect.
(c) Officers' and Directors' Certificates. Parent
shall have delivered to the Company a certificate, dated the
Closing Date and executed by the Secretary of Parent, certifying
(a) that Parent has duly and validly taken all corporate action
necessary to authorize its execution and delivery of this
Agreement and its performance of its obligations under this
Agreement, and (b) that the resolutions (true and complete copies
of which shall be attached to the certificate) of the Board of
Directors and stockholders of Parent with respect to this
Agreement and the transactions contemplated hereby have been duly
and validly adopted and are in full force and effect. In
addition, Parent shall have delivered to Parent executed copies
of the certificates, dated the Closing Date, of officers and
directors of Parent, Parent and Sub that may reasonably be
required by counsel in connection with the tax opinions referred
to in Section 8.02(d) and 8.03(d) of this Agreement.
(d) Tax Opinion. The Company shall have received an
opinion dated the Closing Date from Bryan Cave LLP, counsel to
the Company, in form and substance reasonably satisfactory to the
Company, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which
are consistent with the state of facts existing on the Closing
Date, 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, Bryan
Cave LLP may require and rely upon (and may incorporate by
reference) representations and covenants, including those
contained in certificates of officers of Parent, the Company, Sub
and others necessary to give such opinion and to provide
assurance to stockholders of the Company that they will not
recognize gain in the Merger, except to the extent cash is
received in exchange for fractional shares. The specific
provisions of each such representation and covenant shall be in
form and substance reasonably satisfactory to Bryan Cave LLP and
each such representation and covenant shall be dated on or before
the date of such opinion and shall not have been withdrawn or
modified in any material respect.
(e) Absence of Material Adverse Effect on Parent or
Delta. There shall not have occurred since the date of this
Agreement any event, change, effect or development which,
individually or in the aggregate, has had or is reasonably likely
to have, a Material Adverse Effect on Parent. Notwithstanding
any other provision of this Agreement, it is understood and
agreed that for all purposes of this Agreement, except for the
following sentence, no term, representation, warranty, covenant,
agreement or other provision hereunder shall be deemed to apply
to or include Delta Life Corporation, or its subsidiaries
(collectively, Delta ) or the effect of the acquisition of Delta
on Parent. In the event Parent acquires Delta, there shall not
have occurred any event, change, effect or development which,
individually or in the aggregate, has had or is reasonably likely
to have, a Material Adverse Effect on Parent.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination. This Agreement may be
terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Effective Time, upon notice by
the terminating party to the other party:
(a) at any time before the Closing, by mutual written
agreement of the parties; or
(b) at any time by the Company if any of the covenants
set forth in Article VI or representations and warranties set
forth in Article IV shall have been breached, or shall not have
been performed or complied with, in any material respect, at or
before the Closing Date and such breach, non-performance, or non-
compliance has not been cured or eliminated within 30 calendar
days after written notice thereof has been given to Parent, or if
a condition under Sections 8.01 or 8.03 to the Company s
obligations hereunder cannot be satisfied prior to the Outside
Date;
(c) at any time by Parent if any of the covenants set
forth in Article V or representations and warranties set forth in
Article III shall have been breached, or shall not have been
performed or complied with, in any material respect, before the
Closing Date and such breach, non-performance, or non-compliance
has not been cured or eliminated within 30 calendar days after
written notice thereof has been given to Company, or if a
condition under Sections 8.01 or 8.02 to Parent s obligations
hereunder cannot be satisfied prior to the Outside Date;
(d) by Parent or Company, if this Agreement and the
Merger shall have failed to receive the requisite approval of the
stockholders of (i) the Company at the Company Special Meeting,
or (ii) Parent at the Parent Special Meeting;
(e) at any time after June 30, 1998 (the "Outside
Date") by the Company or Parent, if the transactions contemplated
by this Agreement have not been consummated on or before such
date, provided, that this Agreement shall be extended not more
than ninety days thereafter if the Merger shall not have occurred
as a result of the failure to receive the governmental approvals
set forth in Section 3.06 of the Disclosure Schedule hereto, and
such failure to obtain approval is not caused by a breach of this
Agreement (or any representation, warranty, covenant, or
agreement included herein) by the party electing to terminate
pursuant to this clause (e);
(f) by the Company in accordance with Section
5.16(b);
(g) by Parent if the Board of Directors of the Company
shall have withdrawn or modified its recommendation of this
Agreement or the transactions contemplated hereby or approves or
recommends any Acquisition Proposal; or
(h) by the Company in accordance with Section 2.03(b),
unless Parent agrees to pay the Adjusted Merger Consideration.
SECTION 9.02 Effect of Termination.
(a) If this Agreement is validly terminated pursuant
to Section 9.01 hereof, this Agreement will forthwith become null
and void, and there will be no Liability on the part of Company
or Parent or Sub (or any of their respective Affiliates,
officers, directors, employees, agents, consultants, or other
representatives), except that (i) the provisions of this Section
9.02, Section 5.18, Section 7.07, the second sentence of Section
7.14, and Section 10.02 will continue to apply following any such
termination, (ii) the provisions relating to confidentiality in
Section 7.04 hereof will continue to apply following any such
termination and (iii) any such termination shall be without
prejudice to any claim which either party may have against the
other for breach of this Agreement (or any representation,
warranty, covenant, or agreement included herein). Without
limitation on remedies all reasonable out-of-pocket expenses
incurred in connection with this Agreement and the transactions
contemplated hereby by a non-breaching party who terminates this
Agreement pursuant to Section 9.01 hereof will be reimbursed
promptly by the breaching party.
(b) In the event this Agreement is terminated by the
Company pursuant to Section 9.01(f), or by Parent pursuant to
Section 9.01(g), the Company shall pay to Parent by wire transfer
of immediately available funds (A) within two Business Days
following such termination the amount of $10.8 million, plus (B)
within two Business Days following receipt of a written demand
therefor, an amount equal to all reasonable out-of-pocket
expenses incurred by Parent in connection with this Agreement and
the transactions contemplated hereby, it being understood that
such amounts are intended to constitute liquidated damages and
not as a penalty.
(c) In the event this Agreement is terminated (x) by
either the Company or Parent pursuant to Section 9.01(d)(i), or
(y) by either the Company or Parent pursuant to Section 9.01(e)
(provided solely in the case of this subsection (y) that the
Company's stockholders shall not have voted upon the approval of
this Agreement at the Company Special Meeting prior to the
Outside Date and such failure to vote was not primarily due to
Parent's actions or inactions), (i) the Company shall pay to
Parent by wire transfer of immediately available funds within two
Business Days following receipt of a written demand therefor, an
amount equal to all reasonable out-of-pocket expenses incurred by
Parent in connection with this Agreement and the transactions
contemplated hereby and in addition (ii) if the Company, at any
time within 24 months following the date of such termination,
approves, enters into an agreement with respect to, or there is
filed or publicly announced, (A) a merger, consolidation or other
business combination involving the Company or any other Acquired
Company or (B) any direct or indirect (including through any
reinsurance or coinsurance transaction) acquisition by any Person
of all or a significant portion of the business or assets of the
Company or any other Acquired Company or of the capital stock of
any Acquired Company, or (C) any transaction which would result
in the direct or indirect acquisition by any Person of the power
to direct the voting or disposition of shares of capital stock of
the Company representing 50% or more of the total voting power of
all outstanding shares of capital stock of the Company, or
otherwise resulting in a change in control of the Company, the
Company shall pay to Parent by wire transfer of immediately
available funds the amount of $10.8 million, it being understood
that such amounts are intended to constitute liquidated damages
and not as a penalty.
(d) In the event this Agreement is terminated by
Parent or the Company pursuant to Section 9.01(d)(i) and, prior
to the Company Special Meeting, (x) the Board of Directors of the
Company withdrew or modified its recommendation of this Agreement
or the transactions contemplated hereby or approved or
recommended any Acquisition Proposal, and (y) Parent had not
terminated this Agreement pursuant to Section 9.01(g), the
Company shall pay to Parent by wire transfer of immediately
available funds (A) within two Business Days following such
termination the amount of $10.8 million, plus (B) within two
Business Days following receipt of a written demand therefor, an
amount equal to all reasonable out-of-pocket expenses incurred by
Parent in connection with this Agreement and the transactions
contemplated hereby, it being understood that such amounts are
intended to constitute liquidated damages and not as a penalty.
SECTION 9.03 Amendment. This Agreement may be amended
by the parties at any time before or after the Company
Stockholder Approval or the Parent Stockholder Approval;
provided, however, that after the Company Stockholder Approval or
the Parent Stockholder Approval, there shall be made no amendment
that by law requires further approval by such stockholders
without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
SECTION 9.04 Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, or (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document
delivered pursuant to this Agreement, waive compliance with any
of the covenants 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.
SECTION 9.05 Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement pursuant to
Section 9.01, an amendment of this Agreement pursuant to Section
9.03 or an extension or waiver pursuant to Section 9.04 shall, in
order to be effective, require, in the case of Parent, Sub or the
Company, action by its Board of Directors or, in the case of an
extension or waiver pursuant to Section 9.04, the duly authorized
designee of its Board of Directors.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Nonsurvival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time. This Section 10.01
shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 10.02 Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in
writing (including by facsimile) and shall be deemed given upon
receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407
Phone: (515) 283-3260
Fax: (515) 283-3402
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Phone: (212) 735-3380
Fax: (212) 735-2000
Attention: Jeffrey W. Tindell, Esq.
(b) if to the Company, to:
AmVestors Financial Corporation
555 South Kansas Avenue
Topeka, Kansas 66603
Phone: (913) 232-6945
Fax: (913) 232-5827
Attention: President
with a copy to:
Bryan Cave LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Phone: (314) 259-2000
Fax: (314) 259-2020
Attention: J. Mark Klamer, Esq.
SECTION 10.03 Interpretation. When a reference is
made in this Agreement to a Section, Article, Annex or Exhibit,
such reference shall be to a Section or Article of, or an Annex
or Exhibit to, this Agreement unless otherwise indicated. In
this Agreement, unless a contrary intention appears, (i) the
words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision. The table of
contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without
limitation".
SECTION 10.04 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 10.05 Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
SECTION 10.06 Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents referred
to herein) (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement
and (b) except for the provisions of Sections 1.02 and 7.06 are
not intended to confer upon any person other than the parties any
rights or remedies. It is expressly agreed that the stockholders
of neither Parent nor the Company are intended beneficiaries of
any provision hereof.
SECTION 10.07 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof,
provided that the laws of the state of Kansas shall govern the
effects of the Merger contemplated hereby.
SECTION 10.08 Assignment. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent
of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations
under this Agreement to Parent or to any direct or indirect
wholly owned Parent Subsidiary, but no such assignment shall
relieve Sub of any of its obligations under this Agreement.
Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns. Parent shall cause
Sub to perform its obligations hereunder.
SECTION 10.09 Enforcement; Consent to Jurisdiction.
The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any court of the United
States located in the State of New York or in New York state
court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the
parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of New
York or any New York state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not
initiate any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other
than a Federal court sitting in the State of New York or a New
York state court.
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of
Company, Parent and Sub, effective as of the date first written
above.
AMERUS LIFE HOLDINGS, INC.
by: /s/ Roger K. Brooks
__________________________________
Name: Roger K. Brooks
Title: President
Signature Attested By:
/s/ James A. Smallenberger
______________________________________
Name: James A. Smallenberger
Title: Secretary
AFC CORP.
by: /s/ Roger K. Brooks
__________________________________
Name: Roger K. Brooks
Title: President
Signature Attested By:
/s/ James A. Smallenberger
______________________________________
Name: James A. Smallenberger
Title: Secretary
AMVESTORS FINANCIAL CORPORATION
by: /s/ Ralph W. Laster, Jr.
__________________________________
Name: Ralph W. Laster, Jr.
Title: Chairman and CEO
Signature Attested By:
/s/ Lynn F. Hammes
______________________________________
Name: Lynn F. Hammes
Title: Secretary
ANNEX A
GLOSSARY OF TERMS
The capitalized terms used in this Agreement and not
defined herein shall have the meanings set forth below. Other
terms are also defined in the text of the Agreement. Unless the
context otherwise requires, such capitalized terms shall include
the singular and plural and the conjunctive and disjunctive forms
of the terms defined.
"Affiliate" shall mean any Person that, directly or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the Person
specified.
"Agreement" shall mean this Agreement and Plan of
Merger, together with the annexes and exhibits attached hereto,
the Disclosure Schedules, and the other agreements and documents
to be executed and delivered pursuant hereto.
"Annual Statement" shall mean any annual statement of
the Company Insurance Subsidiaries or the Parent Insurance
Subsidiaries, as the case may be, filed with or submitted to the
insurance regulatory authority in the state in which the Company
Insurance Subsidiaries or the Parent Insurance Subsidiaries, as
the case may be, is domiciled on forms prescribed or permitted by
such authority.
"Acquired Companies" shall mean the Company, American
Investors Life Insurance Company, Financial Benefit Life
Insurance Company and any other direct or indirect subsidiary of
the Company.
"Assets and Properties" shall mean all assets or
properties of every kind, nature, character, and description
(whether real, personal, or mixed, whether tangible or
intangible, whether absolute, accrued, contingent, fixed, or
otherwise, and wherever situated) as now operated, owned, or
leased by a specified Person, including without limitation cash,
cash equivalents, securities, accounts and notes receivable, real
estate, equipment, furniture, fixtures, insurance or annuities in
force, goodwill, and going concern value.
"Books and Records" shall mean all accounting,
financial reporting, Tax, business, marketing, corporate, and
other files, documents, instruments, papers, books, and records
of a specified Person, including without limitation financial
statements, budgets, projections, ledgers, journals, deeds,
titles, policies, manuals, minute books, stock certificates and
books, stock transfer ledgers, Contracts, franchises, permits,
agency lists, policyholder lists, supplier lists, complaint
lists, underwriting manuals, correspondence files, marketing and
sales materials, reports, computer files, retrieval programs,
operating data or plans, and environmental studies or plans.
"Business Day" shall mean a day other than Saturday,
Sunday, or any day on which the principal commercial banks
located in New York are authorized or obligated to close under
the Laws of New York.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act.
"Closing" shall have the meaning ascribed to it in
Section 1.01(b).
"Closing Date" shall have the meaning ascribed to it in
Section 1.01(b).
"Code" shall mean the Internal Revenue Code of 1986, as
amended (including without limitation any successor code), and
the rules and regulations promulgated thereunder.
"Company" shall have the meaning ascribed to it in the
preamble to this Agreement.
"Company Affiliate" shall mean (a) each Affiliate of
Company, (b) each holder of 5% or more of any class of capital
stock of Company, (c) each executive officer or director of an
Acquired Company and (d) each of their respective Affiliates.
"Company Common Stock" shall have the meaning ascribed
to it in the Preamble.
Company Convertible Debentures shall have the meaning
ascribed to it in Section 3.03(d).
"Company Disclosure Schedule" shall mean the schedule
dated as of the date of this Agreement and furnished by Company
to Parent, and containing all lists, descriptions, exceptions,
and other information and materials as are required to be
included therein pursuant to this Agreement.
Company Warrants shall have the meaning ascribed to
it in Section 3.03(c).
"Contract" shall mean any agreement, lease, sublease,
license, sublicense, promissory note, evidence of indebtedness,
insurance policy, annuity contract, reinsurance agreement or
other contract or commitment (whether written or oral).
"Employee" shall mean any present or former officer,
director, employee, agent, regional director, consultant or other
similar representative of the Person referenced (including any
predecessor thereof).
"Environmental Laws" shall mean any Federal, state or
local law, statute, ordinance or regulation pertaining to health,
industrial hygiene, or the environmental condition on or under
any property including, without limitation, CERCLA and the Toxic
Substance Control Act, and the rules and regulations thereunder.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended (including without limitation
any successor act), and the rules and regulations promulgated
thereunder.
"GAAP" shall mean generally accepted accounting
principles, consistently applied throughout the specified period
and in the immediately prior comparable period.
"GAAP Statements" shall have the meaning ascribed to it
in Section 3.08(b).
"Hazardous Substance" shall mean (I) any and all
hazardous, toxic or dangerous waste, substance, pollutant,
contaminant, radiation or material defined as such in (or deemed
as such for purposes of) CERCLA, at the Closing Date, or any
other Environmental Law and (II) any petroleum or petroleum-based
products.
"IRS" shall mean the United States Internal Revenue
Service or any successor agency.
"Knowledge of Company" or any capitalized derivative
thereof means the actual knowledge of or knowledge which would
have been obtained in a reasonable investigation by an officer of
any Acquired Company with responsibility (sole or shared) for the
particular subject matter.
"Knowledge of Parent" or any capitalized derivative
thereof means the actual knowledge of or knowledge which would
have been obtained in a reasonable investigation by an officer of
Parent with responsibility (sole or shared) for the particular
subject matter.
"Laws" shall mean all laws, statutes, ordinances,
regulations, and other pronouncements having the effect of law of
the United States of America or any state, commonwealth, city,
county, municipality, court, tribunal, agency, government,
department, commission, bureau, or instrumentality thereof.
"Liabilities" shall mean all debts, obligations, and
other liabilities of a Person (whether absolute, accrued,
contingent, fixed, or otherwise, or whether due or to become due)
which are recognized as liabilities in accordance with SAP or
GAAP, as the case may be.
"Lien" shall mean any mortgage, pledge, assessment,
security interest, lease, sublease, lien, adverse claim, levy,
charge, covenant or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract, or other
Contract to give or to refrain from giving any of the foregoing
other than Permitted Liens.
"Material Adverse Effect" shall mean, with respect to
any Person, a material adverse effect on (I) the organization,
existence, Assets, Liabilities, business, sales force, new sales,
prospects, operations, condition (financial or otherwise), or
results of operations of such Person, together with any
subsidiaries thereof, taken as a whole, or (II) the ability of
such Person to perform its material obligations under this
Agreement, provided that the term Material Adverse Effect shall
not include any changes or effects on the organization,
existence, Assets, Liabilities, business, sales force, new sales,
prospects, operations, condition (financial or otherwise), or
results of operations on Parent, together with any subsidiaries
thereof, taken as a whole, caused by changes in general economic
conditions or changes generally affecting Parent's industry.
"Parent" shall have the meaning ascribed to it in the
preamble of this Agreement.
"Parent Common Stock" shall have the meaning ascribed
to it in Section 4.10.
"Parent Disclosure Schedule" shall mean the schedule
dated as of the date of this Agreement and furnished by Parent to
Company, and containing all lists, descriptions, exceptions, and
other information and materials as are required to be included
therein pursuant to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established under ERISA.
"Permitted Liens" of a Person shall mean the following
liens: (i) Liens for Taxes or assessments or other governmental
charges or levies, either not yet due and payable or to the
extent that nonpayment thereof is expressly permitted by the
terms of this Agreement; (ii) pledges or deposits securing
obligations under worker's compensation, unemployment insurance,
social security or public liability laws or similar legislation;
(iii) pledges or deposits securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to
which such Person is a party as lessee made in the ordinary
course of business; (iv) deposits securing public or statutory
obligations of such Person; (v) workers', mechanics', suppliers',
carriers', warehousemen's or other similar liens arising in the
ordinary course of business and securing indebtedness aggregating
not in excess of $500,000 at any time outstanding, not yet due
and payable; (vi) deposits securing or in lieu of surety, appeal
or customs bonds in proceedings to which such Person is a party;
(vii) pledges or deposits effected by such Person as a condition
to obtaining or maintaining any License of such Person; (viii)
any attachment or judgment lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall
not have been discharged within 60 days after the expiration of
any such stay; (ix) zoning restrictions, easements, licenses, or
other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so
long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates;
and (x) Liens under the provisions of insurance policies and
annuities in force and reinsurance and coinsurance contracts in
force.
"Person" shall mean any natural person, corporation,
general partnership, limited partnership, limited liability
company, proprietorship, trust, union, association, court,
tribunal, agency, government, department, commission, self-
regulatory organization, arbitrator, board, bureau,
instrumentality, or other entity, enterprise, authority, or
business organization.
"Quarterly Statement" of a Person shall mean (I) any
quarterly statement of such Person prepared in accordance with
GAAP, and (II) any quarterly statement of such Person s
Insurance Subsidiaries prepared in accordance with SAP and filed
with or submitted to the insurance regulatory authority in the
state in which it is domiciled on forms prescribed or permitted
by such authority.
"Real Estate" of a Person means all real property and
interests therein, including without limitation leasehold
interests, owned or held at any time since January 1, 1994 by
such Person.
"Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, dumping or other disposal in any amount into
or onto the air, ground or surface water, land, or other parts of
the environment, however caused, not permitted by or in
compliance with Environmental Laws.
"SAP" shall mean the accounting practices required or
permitted by the National Association of Insurance Commissioners
and the insurance regulatory authority in the state in which the
Company Insurance Subsidiaries or the Parent Insurance
Subsidiaries, as the case may be, is domiciled, consistently
applied throughout the specified period and in the immediately
prior comparable period.
"SAP Statements" shall have the meaning ascribed to it
in Section 3.08(b).
"Sub" shall have the meaning ascribed to it in the
preamble to this Agreement.
subsidiary" shall mean each of those Persons,
regardless of jurisdiction of organization, of which another
Person, directly or indirectly through one or more subsidiaries,
(I) owns beneficially securities having more than 50% of the
voting power in the election of directors (or persons fulfilling
similar functions or duties) of the owned Person (without giving
effect to any contingent voting rights), or (II) controls as the
general partner or managing member.
"Taxes" shall mean all taxes, charges, duties, fees,
levies, or other similar assessments or Liabilities, including
without limitation all net and gross income, gross receipts, ad
valorem, premium, excise, real property, personal property,
windfall profit, sales, use, transfer, license, withholding,
employment, payroll, Phase III, profit, estimated, severance,
stamp, occupation, value added, registration, environmental,
workers compensation, social security and franchise taxes imposed
by the United States of America, any possession thereof, or any
state, county, local, or foreign government, or any subdivision,
agency, or other similar Person of any of the foregoing; and such
term shall include any interest, fines, penalties, correction
fees, sanction amounts, assessments, or additions to tax relating
to, resulting from, attributable to, or incurred in connection
with any such tax or any contest or dispute thereof.
"Tax Returns" of a Person shall mean any report,
return, information return, or other document (including any
related or supporting information and any amendments thereto)
filed or required to be filed with any federal, state, local, or
foreign governmental entity or other authority in connection with
the determination, assessment or collection of any Tax (whether
or not such Tax is imposed on such Person) or the administration
of any laws, regulations or administrative requirements relating
to any Tax, or any statement required to be furnished to any
Person under any Tax Law.
ANNEX B
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[____________], 1997
AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407
Ladies and Gentlemen:
I have been advised that as of the date of this
letter I may be deemed to be an "affiliate" of AmVestors
Financial Corporation, a Kansas corporation (the
"Company"), as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Merger
dated as of September 19, 1997 (the "Merger Agreement")
among AmerUs Life Holdings, Inc., an Iowa corporation
("Parent"), AFC Corp., a Kansas corporation ("Merger
Sub"), and the Company, the Merger Sub will be merged
with and into the Company (the "Merger"). Capitalized
terms used in this letter without definition shall have
the meanings assigned to them in the Merger Agreement.
As a result of the Merger, I may receive shares
of common stock, no par value, of Parent (the "Parent
Shares"). I would receive such Parent Shares in exchange
for shares (or upon exercise of options for shares) owned
by me of common stock, no par value, of the Company (the
"Company Shares").
1. I represent, warrant and covenant to Parent
that in the event I receive any Parent Shares as a result
of the Merger:
A. I shall not make any sale, transfer or
other disposition of the Parent Shares in violation of
the Act or the Rules and Regulations.
B. I have carefully read this letter and the
Merger Agreement and discussed the requirements of such
documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the
Parent Shares, to the extent I felt necessary, with my
counsel or counsel for the Company.
C. I have been advised that the issuance of
the Parent Shares to me pursuant to the Merger has been
registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also
been advised that, because at the time the Merger is
submitted for a vote of the shareholders of the Company,
(a) I may be deemed to be an affiliate of the Company and
(b) the distribution by me of the Parent Shares has not
been registered under the Act, I may not sell, transfer
or otherwise dispose of the Parent Shares issued to me in
the Merger unless (i) such sale, transfer or other
disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the
Commission under the Act, (ii) such sale, transfer or
other disposition has been registered under the Act or
(iii) in the opinion of counsel reasonably acceptable to
Parent, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. I understand that Parent is under no
obligation to register the sale, transfer or other
disposition of the Parent Shares by me or on my behalf
under the Act or, except as provided in paragraph 2(A)
below, to take any other action necessary in order to
make compliance with an exemption from such registration
available.
E. I understand that Parent reserves the
right to place on the certificates for the Parent Shares
issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
[____________], 1997 BETWEEN THE REGISTERED
HOLDER HEREOF AND AMERUS LIFE HOLDINGS, INC., A
COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF AMERUS LIFE HOLDINGS,
INC."
F. I understand that unless a sale or
transfer is made in conformity with the provisions of
Rule 145, or pursuant to a registration statement, Parent
reserves the right to put the following legend on the
certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933."
G. Execution of this letter should not be
considered an admission on my part that I am an
"affiliate" of the Company as described in the first
paragraph of this letter, nor as a waiver of any rights I
may have to object to any claim that I am such an
affiliate on or after the date of this letter.
2. By Parent's acceptance of this letter, Parent
hereby agrees with me as follows:
A. For so long as and to the extent necessary
to permit me to sell the Parent Shares pursuant to Rule
145 and, to the extent applicable, Rule 144 under the
Act, Parent shall (a) use its reasonable efforts to (i)
file, on a timely basis, all reports and data required to
be filed with the Commission by it pursuant to Section 13
of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and (ii) furnish to me upon request a
written statement as to whether Parent has complied with
such reporting requirements during the 12 months (or such
shorter period as Parent has been subject thereto)
preceding any proposed sale of the Parent Shares by me
under Rule 145, and (b) otherwise use its reasonable
efforts to permit such sales pursuant to Rule 145 and
Rule 144. Parent hereby represents to me that it has
filed all reports required to be filed with the
Commission under Section 13 of the 1934 Act during the
preceding 12 months (or such shorter period as Parent has
been subject thereto).
B. It is understood and agreed that
certificates with the legends set forth in paragraphs E
and F above will be substituted by delivery of
certificates without such legend if (i) one year shall
have elapsed from the date the undersigned acquired the
Parent Shares received in the Merger and the provisions
of Rule 145(d)(2) are then available to the undersigned,
(ii) two years shall have elapsed from the date the
undersigned acquired the Parent Shares received in the
Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) Parent has
received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to Parent, or a
"no action" letter obtained by the undersigned from the
staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Very truly yours,
_________________________
Name:
Agreed and accepted this __day
of [____________], 1997, by
AMERUS LIFE HOLDINGS, INC.
By: ______________________
Name:
Title:
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
Dated as of August 13, 1997
Among
AmerUs Life Holdings, Inc.,
AmerUs Acquisition Corporation
And
Delta Life Corporation
Table of Contents
Page
ARTICLE I
DEFINITIONS . . . . . . . . . 2
1.1 "Affiliate" . . . . . . . . . . . . . . . . 2
1.2 "Agreement" . . . . . . . . . . . . . . . . 2
1.3 "Annual Statement" . . . . . . . . . . . . . 3
1.4 "Acquired Companies" . . . . . . . . . . . . 3
1.5 "Acquiror" . . . . . . . . . . . . . . . . . 3
1.6 "Assets and Properties" . . . . . . . . . . 3
1.7 "AVR" . . . . . . . . . . . . . . . . . . . 3
1.8 "Benefit Plans" . . . . . . . . . . . . . . 3
1.9 "Books and Records" . . . . . . . . . . . . 4
1.10 "Business Day" . . . . . . . . . . . . . . 4
1.11 "CERCLA" . . . . . . . . . . . . . . . . . 4
1.12 "Closing" . . . . . . . . . . . . . . . . . 4
1.13 "Closing Date" . . . . . . . . . . . . . . 4
1.14 "Code" . . . . . . . . . . . . . . . . . . 4
1.15 "Common Stock" . . . . . . . . . . . . . . 4
1.16 "Common Stock Class A" . . . . . . . . . . 4
1.17 "Common Stock Class B" . . . . . . . . . . 4
1.18 "Contract" . . . . . . . . . . . . . . . . 5
1.19 "Delta Affiliate" . . . . . . . . . . . . . 5
1.20 "Delta Employee" . . . . . . . . . . . . . 5
1.21 "Delta Employee Stock Option" . . . . . . . 5
1.22 "Delta Stock Plan" . . . . . . . . . . . . 5
1.23 "Designated Subsidiary" . . . . . . . . . . 5
1.24 "DGCL" . . . . . . . . . . . . . . . . . . 5
1.25 "Disclosure Schedule" . . . . . . . . . . . 5
1.26 "Employee Benefit Plan" . . . . . . . . . . 5
1.27 "Employee Welfare Benefit Plan" . . . . . . 6
1.28 "Environmental Laws" . . . . . . . . . . . 6
1.29 "ERISA" . . . . . . . . . . . . . . . . . . 6
1.30 "ERISA Affiliate" . . . . . . . . . . . . . 6
1.31 "Escrow Agent" . . . . . . . . . . . . . . 6
1.32 "GAAP" . . . . . . . . . . . . . . . . . . 6
1.33 "GAAP Statements" . . . . . . . . . . . . . 6
1.34 "Hazardous Substance" . . . . . . . . . . . 6
1.35 "HSR Act" . . . . . . . . . . . . . . . . . 6
1.36 "IMR" . . . . . . . . . . . . . . . . . . . 7
1.37 "IRS" . . . . . . . . . . . . . . . . . . . 7
1.38 "Knowledge of Acquiror" . . . . . . . . . . 7
1.39 "Knowledge of Delta" . . . . . . . . . . . 7
1.40 "Laws" . . . . . . . . . . . . . . . . . . 7
1.41 "Liabilities" . . . . . . . . . . . . . . . 7
1.42 "Lien" . . . . . . . . . . . . . . . . . . 7
1.43 "Material Adverse Effect" . . . . . . . . . 7
1.44 "PBGC" . . . . . . . . . . . . . . . . . . 8
1.45 "Permitted Encumbrances" . . . . . . . . . 8
1.46 "Person" . . . . . . . . . . . . . . . . . 9
1.47 "Preferred Stock" . . . . . . . . . . . . . 9
1.48 "Quarterly Statement" . . . . . . . . . . . 9
1.49 "Real Estate" . . . . . . . . . . . . . . . 9
1.50 "Release" . . . . . . . . . . . . . . . . . 9
1.51 "Reserve Liabilities" . . . . . . . . . . . 9
1.52 "SAP" . . . . . . . . . . . . . . . . . . . 9
1.53 "SAP Statements" . . . . . . . . . . . . . 10
1.54 "Subsidiaries" . . . . . . . . . . . . . . 10
1.55 "subsidiary" . . . . . . . . . . . . . . . 10
1.56 "Taxes" . . . . . . . . . . . . . . . . . 10
1.57 "Tax Returns" . . . . . . . . . . . . . . . 10
ARTICLE II
THE MERGER . . . . . . . . . 11
2.1 The Merger . . . . . . . . . . . . . . . . . 11
2.2 Closing . . . . . . . . . . . . . . . . . . 11
2.3 Effective Time . . . . . . . . . . . . . . . 11
2.4 Effects of the Merger . . . . . . . . . . . 12
2.5 Certificate of Incorporation and Bylaws . . 12
2.6 Directors . . . . . . . . . . . . . . . . . 12
2.7 Officers . . . . . . . . . . . . . . . . . . 12
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE
OF CERTIFICATES . . . . . . . . . . . . . . . . 12
3.1 Effect on Capital Stock . . . . . . . . . . 12
3.2 Exchange of Certificates . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DELTA . . 18
4.1 Organization, Standing and Corporate Power . 18
4.2 Acquired Companies . . . . . . . . . . . . . 18
4.3 Capital Structure . . . . . . . . . . . . . 19
4.4 Authority . . . . . . . . . . . . . . . . . 20
4.5 No Subsidiaries . . . . . . . . . . . . . . 21
4.6 No Conflicts or Violations . . . . . . . . . 21
4.7 Books and Records . . . . . . . . . . . . . 22
4.8 Financial Statements . . . . . . . . . . . . 22
4.9 Reserves . . . . . . . . . . . . . . . . . . 23
4.10 Absence of Changes . . . . . . . . . . . . 24
4.11 No Undisclosed Liabilities . . . . . . . . 28
4.12 Taxes . . . . . . . . . . . . . . . . . . . 28
4.13 Litigation . . . . . . . . . . . . . . . . 34
4.14 Compliance with Laws . . . . . . . . . . . 35
4.15 Benefit Plans, ERISA . . . . . . . . . . . 40
4.16 Properties . . . . . . . . . . . . . . . . 42
4.17 Contracts . . . . . . . . . . . . . . . . . 44
4.18 Threats of Cancellation . . . . . . . . . . 47
4.19 Licenses and Permits . . . . . . . . . . . 48
4.20 Operations Insurance . . . . . . . . . . . 48
4.21 Intercompany Liabilities . . . . . . . . . 49
4.22 Bank Accounts . . . . . . . . . . . . . . . 49
4.23 Brokers . . . . . . . . . . . . . . . . . . 49
4.24 Disclosure . . . . . . . . . . . . . . . . 49
4.25 Stockholders and Related Matters . . . . . 50
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AMERUS . . 51
5.1 Organization of AmerUs and Sub . . . . . . . 51
5.2 Authority of AmerUs and Sub . . . . . . . . 51
5.3 Organization of Designated Subsidiaries . . 51
5.4 No Conflicts or Violations . . . . . . . . . 52
5.5 Financing . . . . . . . . . . . . . . . . . 53
5.6 Brokers . . . . . . . . . . . . . . . . . . 53
5.7 Disclosure . . . . . . . . . . . . . . . . . 53
ARTICLE VI
COVENANTS OF DELTA . . . . . . . 54
6.1 Lender and Regulatory Approvals . . . . . . 54
6.2 HSR Filings . . . . . . . . . . . . . . . . 54
6.3 Investigation by AmerUs . . . . . . . . . . 55
6.4 No Negotiations, etc. . . . . . . . . . . . 55
6.5 Conduct of Business . . . . . . . . . . . . 57
6.6 Financial Statements and Reports . . . . . . 59
6.7 Investments . . . . . . . . . . . . . . . . 60
6.8 Employee Matters . . . . . . . . . . . . . . 60
6.9 No Charter Amendments . . . . . . . . . . . 62
6.10 No Issuance of Securities . . . . . . . . . 62
6.11 No Dividends . . . . . . . . . . . . . . . 62
6.12 No Disposal of Property . . . . . . . . . . 62
6.13 No Breach or Default . . . . . . . . . . . 63
6.14 No Indebtedness . . . . . . . . . . . . . . 63
6.15 No Acquisitions . . . . . . . . . . . . . . 63
6.16 Liabilities to Delta Affiliates . . . . . . 63
6.17 Tax Matters . . . . . . . . . . . . . . . . 64
6.18 Notice and Cure . . . . . . . . . . . . . . 64
6.19 Supplements to Schedules . . . . . . . . . 64
6.20 Stockholders Agreement . . . . . . . . . . 64
6.21 Stockholder Approval . . . . . . . . . . . 65
6.22 WARN Act Notification . . . . . . . . . . . 65
6.23 London Life Reinsurance Company
Negotiations . . . . . . . . . . . . . . . 65
ARTICLE VII
COVENANTS AND CERTAIN AGREEMENTS OF AMERUS . 66
7.1 Regulatory Approvals . . . . . . . . . . . . 66
7.2 HSR Filings . . . . . . . . . . . . . . . . 66
7.3 Notice and Cure . . . . . . . . . . . . . . 66
7.4 Employment and Consulting Agreements . . . . 67
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF AMERUS AND SUB . 67
8.1 Representations and Warranties . . . . . . . 67
8.2 Performance . . . . . . . . . . . . . . . . 67
8.3 Officer's Certificates . . . . . . . . . . . 68
8.4 HSR Act Approval . . . . . . . . . . . . . . 68
8.5 No Injunction . . . . . . . . . . . . . . . 68
8.6 No Proceeding or Litigation . . . . . . . . 69
8.7 Consents, Authorizations, etc. . . . . . . . 69
8.8 No Adverse Change . . . . . . . . . . . . . 69
8.9 Conformity With Annual Statement . . . . . . 70
8.10 Opinion of Counsel . . . . . . . . . . . . 70
8.11 Stockholder Matters . . . . . . . . . . . . 70
8.12 Dissenters' Rights . . . . . . . . . . . . 70
8.13 Employment and Non-Compete Agreement . . . 70
8.14 Severance Arrangements . . . . . . . . . . 70
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF DELTA . . . 71
9.1 Representations and Warranties . . . . . . . 71
9.2 Performance . . . . . . . . . . . . . . . . 71
9.3 Officer's Certificates . . . . . . . . . . . 71
9.4 HSR Act Approval. . . . . . . . . . . . . . 72
9.5 Merger Consideration . . . . . . . . . . . . 72
9.6 No Injunction . . . . . . . . . . . . . . . 72
9.7 Consents, Authorizations, etc. . . . . . . . 72
9.8 Opinion of Counsel. . . . . . . . . . . . . 72
ARTICLE X
SURVIVAL OF PROVISIONS; REMEDIES . . . . 72
10.1 Survival . . . . . . . . . . . . . . . . . 72
10.2 Available Remedies. . . . . . . . . . . . . 72
ARTICLE XI
TERMINATION . . . . . . . . . 73
11.1 Termination . . . . . . . . . . . . . . . . 73
11.2 Effect of Termination . . . . . . . . . . . 75
ARTICLE XII
NOTICES . . . . . . . . . . 77
12.1 Notices . . . . . . . . . . . . . . . . . . 77
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . 78
13.1 Entire Agreement . . . . . . . . . . . . . 78
13.2 Expenses . . . . . . . . . . . . . . . . . 79
13.3 Public Announcements . . . . . . . . . . . 79
13.4 Confidentiality . . . . . . . . . . . . . . 80
13.5 Further Assurances . . . . . . . . . . . . 80
13.6 Waiver . . . . . . . . . . . . . . . . . . 81
13.7 Amendment . . . . . . . . . . . . . . . . . 81
13.8 Counterparts; Facsimile Signatures . . . . 81
13.9 No Third Party Beneficiary . . . . . . . . 81
13.10 Governing Law . . . . . . . . . . . . . . 81
13.11 Binding Effect . . . . . . . . . . . . . . 82
13.12 Assignment Limited . . . . . . . . . . . . 82
13.13 Headings, Gender, etc. . . . . . . . . . . 82
13.14 Invalid Provisions. . . . . . . . . . . . 82
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of
August 13, 1997, among AmerUs Life Holdings, Inc., an
Iowa corporation ("AmerUs", also sometimes referred to
herein as "Acquiror"), AmerUs Acquisition Corporation, a
Delaware corporation ("Sub") and a wholly owned
subsidiary of AmerUs, and Delta Life Corporation, a
Delaware corporation ("Delta").
WHEREAS, Delta owns all of the issued and
outstanding common stock of Delta Life and Annuity
Company ("Delta Insurance"), a Tennessee life insurance
company.
WHEREAS the respective Boards of Directors of
AmerUs, Sub and Delta have approved the acquisition of
Delta by AmerUs on the terms and subject to the
conditions set forth in this Agreement and Plan of
Merger;
WHEREAS, on the basis of its financial
condition Acquiror has demonstrated to the satisfaction
of Delta its financial capability of performing its
obligations under this Agreement and the Board of
Directors of Delta has negotiated the transaction to
provide that the obtaining of financing by Acquiror is
not a condition to consummation of the Merger, which was
an important factor to the Delta Board of Directors in
approving the Merger and this Agreement;
WHEREAS, the respective Boards of Directors of
AmerUs, Sub, and Delta have approved the merger of Sub
into Delta, as set forth below (the "Merger"), upon the
terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of
Delta Common Stock Class A, par value $1.00 per share
(the "Common Stock Class A"), each issued and outstanding
share of Delta Common Stock Class B, par value $1.00 (the
"Common Stock Class B") (Common Stock Class A and Common
Stock Class B are sometimes herein referred to as "Common
Stock"), each issued and outstanding share of Series B
Convertible Preferred Stock of Delta, par value $.01 per
share ("Series B Preferred Stock"), each issued and
outstanding share of Series C Convertible Preferred Stock
of Delta, par value $.01 per share ("Series C Preferred
Stock"), and each issued and outstanding share of Series
D Convertible Preferred Stock of Delta, par value $.01
per share ("Series D Preferred Stock") (Series B
Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock are sometimes herein referred to as
"Preferred Stock"), other than Dissenting Shares (as
defined in Section 3.1(d)) will be converted into the
right to receive $65.25 per share, in all cases without
interest;
WHEREAS as an inducement for AmerUs and Sub to
enter into this Agreement, and in partial consideration
of the representations, warranties, covenants and
agreements of AmerUs and Sub contained herein, certain
stockholders of Delta have entered into Voting
Agreements, dated the date hereof, between each such
stockholder and AmerUs (the "Voting Agreements"); and
WHEREAS AmerUs, Sub and Delta desire to make
certain representations, warranties, covenants and
agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
The capitalized terms used in this Agreement
and not defined herein shall have the meanings set forth
below. Other terms are also defined in the text of the
Agreement. Unless the context otherwise requires, such
capitalized terms shall include the singular and plural
and the conjunctive and disjunctive forms of the terms
defined.
1.1 "AFFILIATE" shall mean any Person that,
directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under
common control with the Person specified.
1.2 "AGREEMENT" shall mean this Agreement and
Plan of Merger, together with the exhibits attached
hereto, the Disclosure Schedule, and the other agreements
and documents to be executed and delivered pursuant
hereto.
1.3 "ANNUAL STATEMENT" shall mean any annual
statement of Delta Insurance filed with or submitted to
the insurance regulatory authority in the state in which
Delta Insurance is domiciled on forms prescribed or
permitted by such authority.
1.4 "ACQUIRED COMPANIES" shall mean Delta and
any subsidiary of Delta, all of which under the terms of
this Agreement are being acquired by AmerUs, Sub or a
Designated Subsidiary.
1.5 "ACQUIROR" shall have the meaning ascribed
to it in the preamble of this Agreement.
1.6 "ASSETS AND PROPERTIES" shall mean all
assets or properties of every kind, nature, character,
and description (whether real, personal, or mixed,
whether tangible or intangible, whether absolute,
accrued, contingent, fixed, or otherwise, and wherever
situated) as now operated, owned, or leased by a
specified Person, including without limitation cash, cash
equivalents, securities, accounts and notes receivable,
real estate, equipment, furniture, fixtures, insurance or
annuities in force, goodwill, and going concern value.
1.7 "AVR" shall mean the asset valuation
reserve required by insurance regulatory authorities to
stabilize statutory surplus from non interest-related
fluctuations in the market value of bonds, stocks,
mortgage loans, real estate and other invested assets.
1.8 "BENEFIT PLANS" shall mean all Employee
Pension Benefit Plans, all Employee Welfare Benefit
Plans, all stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock,
and other stock plans (whether qualified or non-
qualified), and all other pension, welfare, severance,
retirement, bonus, deferred compensation, incentive
compensation, insurance (whether life, accident and
health, or other and whether key man, group, workers
compensation, or other), profit sharing, disability,
thrift, day care, legal services, leave of absence,
layoff, and supplemental or excess benefit plans, and all
other benefit Contracts, arrangements, or procedures
having the effect of a plan, in each case existing on or
before the Closing Date under which Delta or Delta
Insurance is or may hereafter become obligated in any
manner (including without limitation obligations to make
contributions or other payments) and which cover some or
all of the Delta Employees.
1.9 "BOOKS AND RECORDS" shall mean all
accounting, financial reporting, Tax, business,
marketing, corporate, and other files, documents,
instruments, papers, books, and records of a specified
Person, including without limitation financial
statements, budgets, projections, ledgers, journals,
deeds, titles, policies, manuals, minute books, stock
certificates and books, stock transfer ledgers,
Contracts, franchises, permits, agency lists,
policyholder lists, supplier lists, complaint lists,
underwriting manuals, correspondence files, marketing and
sales materials, reports, computer files, retrieval
programs, operating data or plans, and environmental
studies or plans.
1.10 "BUSINESS DAY" shall mean a day other than
Saturday, Sunday, or any day on which the principal
commercial banks located in New York are authorized or
obligated to close under the Laws of New York.
1.11 "CERCLA" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act.
1.12 "CLOSING" shall mean the closing of the
transactions contemplated by this Agreement as provided
in Section 2.2 hereof.
1.13 "CLOSING DATE" shall have the meaning
ascribed to it in Section 2.2.
1.14 "CODE" shall mean the Internal Revenue
Code of 1986, as amended (including without limitation
any successor code), and the rules and regulations
promulgated thereunder.
1.15 "COMMON STOCK" shall have the meaning
ascribed to it in the Preamble.
1.16 "COMMON STOCK CLASS A" shall have the
meaning ascribed to it in the Preamble.
1.17 "COMMON STOCK CLASS B" shall have the
meaning ascribed to it in the Preamble.
1.18 "CONTRACT" shall mean any agreement,
lease, sublease, license, sublicense, promissory note,
evidence of indebtedness, insurance policy, annuity
contract, reinsurance agreement or other contract or
commitment (whether written or oral).
1.19 "DELTA AFFILIATE" shall mean (a) each
Affiliate of Delta, (b) each holder of 5% or more of any
class of capital stock of Delta, (c) each executive
officer or director of an Acquired Company and (d) each
of their respective Affiliates.
1.20 "DELTA EMPLOYEE" shall mean any present or
former officer, director, employee, agent, regional
director, consultant or other similar representative of
any Acquired Company, or any predecessor thereof.
1.21 "DELTA EMPLOYEE STOCK OPTION" shall have
the meaning ascribed to it in Section 3.1(e).
1.22 "DELTA STOCK PLAN" shall mean Delta Life
Corporation's 1993 Long-Term Incentive Plan, as amended
by Agreement dated January 4, 1995, the Second Amended
and Restated 1989 Delta Life Corporation Stock Option
Plan and the Delta Life Corporation Amended and Restated
1987 Stock Option Plan.
1.23 "DESIGNATED SUBSIDIARY" shall mean any
direct or indirect subsidiary organized by the Acquiror
or its assigns that is designated by the Acquiror
pursuant to Section 2.1 in a writing delivered to Delta
at or before the Closing.
1.24 "DGCL" shall mean the General Corporation
Law of the State of Delaware.
1.25 "DISCLOSURE SCHEDULE" shall mean the
schedule dated as of the date of this Agreement and
furnished by Delta to the Acquiror, and containing all
lists, descriptions, exceptions, and other information
and materials as are required to be included therein
pursuant to this Agreement.
1.26 "EMPLOYEE BENEFIT PLAN" shall mean each
employee pension benefit plan (whether or not insured),
as defined in Section 3(2) of ERISA, which is or was in
existence on or before the Closing Date and to which any
Acquired Company is or would hereafter become obligated
in any manner as an employer.
1.27 "EMPLOYEE WELFARE BENEFIT PLAN" shall mean
each employee welfare benefit plan (whether or not
insured), as defined in Section 3(1) of ERISA, which is
or was in existence on or before the Closing Date and to
which any Acquired Company is or would hereafter become
obligated in any manner as an employer.
1.28 "ENVIRONMENTAL LAWS" shall mean any
Federal, state or local law, statute, ordinance or
regulation pertaining to health, industrial hygiene, or
the environmental condition on or under any property
including, without limitation, CERCLA and the Toxic
Substance Control Act, and the rules and regulations
thereunder.
1.29 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended (including
without limitation any successor act), and the rules and
regulations promulgated thereunder.
1.30 "ERISA AFFILIATE" shall mean any Person
under common control (as defined in Section 414 of the
Code) with any of the Acquired Companies.
1.31 "ESCROW AGENT" shall mean First Tennessee
Bank National Association, Memphis, Tennessee.
1.32 "GAAP" shall mean generally accepted
accounting principles, consistently applied throughout
the specified period and in the immediately prior
comparable period.
1.33 "GAAP STATEMENTS" shall mean the
consolidated financial statements of the Acquired
Companies prepared accordance with GAAP.
1.34 "HAZARDOUS SUBSTANCE" shall mean (I) any
and all hazardous, toxic or dangerous waste, substance,
pollutant, contaminant, radiation or material defined as
such in (or deemed as such for purposes of) CERCLA, at
the Closing Date, or any other Environmental Law and (II)
any petroleum or petroleum-based products.
1.35 "HSR ACT" shall mean Section 7A of the
Clayton Act (Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976), as amended (including without
limitation any successor act), and the rules and
regulations promulgated thereunder.
1.36 "IMR" shall mean the interest maintenance
reserve required by insurance regulatory authorities to
capture interest-rate related realized capital gains and
losses (net of Taxes) on fixed income investments.
1.37 "IRS" shall mean the United States
Internal Revenue Service or any successor agency.
1.38 "KNOWLEDGE OF ACQUIROR" means the actual
knowledge of or knowledge which would have been obtained
in a reasonable investigation by an officer of AmerUs
with responsibility (sole or shared) for the particular
subject matter.
1.39 "KNOWLEDGE OF DELTA" means the actual
knowledge of or knowledge which would have been obtained
in a reasonable investigation by an officer of any
Acquired Company with responsibility (sole or shared) for
the particular subject matter.
1.40 "LAWS" shall mean all laws, statutes,
ordinances, regulations, and other pronouncements having
the effect of law of the United States of America or any
state, commonwealth, city, county, municipality, court,
tribunal, agency, government, department, commission,
bureau, or instrumentality thereof.
1.41 "LIABILITIES" shall mean all debts,
obligations, and other liabilities of a Person (whether
absolute, accrued, contingent, fixed, or otherwise, or
whether due or to become due) which are recognized as
liabilities in accordance with SAP or GAAP, as the case
may be.
1.42 "LIEN" shall mean any mortgage, pledge,
assessment, security interest, lease, sublease, lien,
adverse claim, levy, charge, covenant or other
encumbrance of any kind, or any conditional sale
Contract, title retention Contract, or other Contract to
give or to refrain from giving any of the foregoing other
than Permitted Encumbrances.
1.43 "MATERIAL ADVERSE EFFECT" shall mean, with
respect to any Person, a material adverse effect on (I)
the organization, existence, authority, capitalization,
business, licenses, condition (financial or otherwise),
cash flow, management, sales force, solvency, prospects,
SAP results of operations, insurance or annuities in
force, SAP capital and surplus, AVR, IMR, Liabilities, or
Assets and Properties of such Person, or (II) the ability
of such Person to perform its obligations under this
Agreement.
1.44 "PBGC" shall mean the Pension Benefit
Guaranty Corporation established under ERISA.
1.45 "PERMITTED ENCUMBRANCES" shall mean the
following encumbrances: (i) Liens for Taxes or
assessments or other governmental charges or levies,
either not yet due and payable or to the extent that
nonpayment thereof is expressly permitted by the terms of
this Agreement; (ii) pledges or deposits securing
obligations under worker's compensation, unemployment
insurance, social security or public liability laws or
similar legislation; (iii) pledges or deposits securing
bids, tenders, contracts (other than contracts for the
payment of money) or leases to which any of the Acquired
Companies is a party as lessee made in the ordinary
course of business; (iv) deposits securing public or
statutory obligations of any of the Acquired Companies;
(v) workers', mechanics', suppliers', carriers',
warehousemen's or other similar liens arising in the
ordinary course of business and securing indebtedness
aggregating not in excess of $100,000 at any time
outstanding, not yet due and payable; (vi) deposits
securing or in lieu of surety, appeal or customs bonds in
proceedings to which any of the Acquired Companies is a
party; (vii) pledges or deposits effected by any of the
Acquired Companies as a condition to obtaining or
maintaining any License of such Person; (viii) any
attachment or judgment lien, unless the judgment it
secures shall not, within 60 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within
60 days after the expiration of any such stay; (ix)
zoning restrictions, easements, licenses, or other
restrictions on the use of real property or other minor
irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the
use, value, or marketability of such real property,
leases or leasehold estates; and (x) Liens under the
provisions of insurance policies and annuities in force
and reinsurance and coinsurance contracts in force.
1.46 "PERSON" shall mean any natural person,
corporation, general partnership, limited partnership,
limited liability company, proprietorship, trust, union,
association, court, tribunal, agency, government,
department, commission, self-regulatory organization,
arbitrator, board, bureau, instrumentality, or other
entity, enterprise, authority, or business organization.
1.47 "PREFERRED STOCK" shall have the meaning
ascribed to it in the Preamble.
1.48 "QUARTERLY STATEMENT" shall mean (I) any
quarterly statement of Delta prepared in accordance with
GAAP, and (II) any quarterly statement of Delta Insurance
prepared in accordance with SAP and filed with or
submitted to the insurance regulatory authority in the
state in which it is domiciled on forms prescribed or
permitted by such authority.
1.49 "REAL ESTATE" means all real property and
interests therein, including without limitation leasehold
interests, owned or held at any time since January 1,
1992 by any Acquired Company or nominee thereof.
1.50 "RELEASE" shall mean any spilling,
leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migrating,
dumping or other disposal in any amount into or onto the
air, ground or surface water, land, or other parts of the
environment, however caused, not permitted by or in
compliance with Environmental Laws.
1.51 "RESERVE LIABILITIES" shall have the
meaning ascribed to it in Section 4.9 hereof.
1.52 "SAP" shall mean the accounting practices
required or permitted by the National Association of
Insurance Commissioners and the insurance regulatory
authority in the state in which Delta Insurance is
domiciled, consistently applied throughout the specified
period and in the immediately prior comparable period.
1.53 "SAP STATEMENTS" shall mean the Annual
Statements, Quarterly Statements, and other financial
statements and presentations of Delta Insurance prepared
in accordance with SAP and delivered to the Acquiror
pursuant to either or both of Sections 4.8 and 6.6
hereof.
1.54 "SUBSIDIARIES" shall mean all subsidiaries
of Delta, including without limitation Delta Insurance
and each such other subsidiary as of the date hereof
listed in Section 4.5 of the Disclosure Schedule.
1.55 "SUBSIDIARY" shall mean each of those
Persons, regardless of jurisdiction of organization, of
which another Person, directly or indirectly through one
or more subsidiaries, (I) owns beneficially securities
having more than 50% of the voting power in the election
of directors (or persons fulfilling similar functions or
duties) of the owned Person (without giving effect to any
contingent voting rights), or (II) controls as the
general partner or managing member.
1.56 "TAXES" shall mean all taxes, charges,
duties, fees, levies, or other similar assessments or
Liabilities, including without limitation all net and
gross income, gross receipts, ad valorem, premium,
excise, real property, personal property, windfall
profit, sales, use, transfer, license, withholding,
employment, payroll, Phase III, profit, estimated,
severance, stamp, occupation, value added, registration,
environmental, workers compensation, social security and
franchise taxes imposed by the United States of America,
any possession thereof, or any state, county, local, or
foreign government, or any subdivision, agency, or other
similar Person of any of the foregoing; and such term
shall include any interest, fines, penalties, correction
fees, sanction amounts, assessments, or additions to tax
relating to, resulting from, attributable to, or incurred
in connection with any such tax or any contest or dispute
thereof.
1.57 "TAX RETURNS" shall mean any report,
return, information return, or other document (including
any related or supporting information and any amendments
thereto) filed or required to be filed with any federal,
state, local, or foreign governmental entity or other
authority in connection with the determination,
assessment or collection of any Tax (whether or not such
Tax is imposed on any Acquired Company) or the
administration of any laws, regulations or administrative
requirements relating to any Tax, or any statement
required to be furnished to any Person under any Tax Law.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to
the conditions set forth in this Agreement and in
accordance with the DGCL, Sub shall be merged with and
into Delta at the Effective Time (as hereinafter
defined). Following the Merger, the separate corporate
existence of Sub shall cease and Delta shall continue as
the surviving corporation (the "Surviving Corporation")
and shall succeed to and assume all the rights and
obligations of Delta in accordance with the DGCL. At the
election of AmerUs, any direct or indirect wholly owned
subsidiary of AmerUs may be substituted for Sub as a
constituent corporation in the Merger. In such event,
the parties agree to execute an appropriate amendment to
this Agreement in order to reflect the foregoing.
2.2 CLOSING. The Closing of the Merger will
take place (subject to the satisfaction or waiver of all
the conditions set forth in Articles VIII and IX hereof)
at 10:00 a.m. on a date to be specified by AmerUs or Sub
not more than five Business Days following the
satisfaction or waiver of those conditions set forth in
Articles VIII and IX capable of being satisfied prior to
the Closing (the "Closing Date"), at the offices of Delta
in Memphis, Tennessee. The parties agree to use all
reasonable efforts to cause the Closing to occur on or
before September 30, 1997.
2.3 EFFECTIVE TIME. On the Closing Date, or as
soon as practicable thereafter, the parties shall file
with the Secretary of State of the State of Delaware a
certificate of merger or other appropriate documents (in
any such case, the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under
the DGCL. The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the
Delaware Secretary of State, or at such other later time
as Sub and Delta shall agree and specify in the
Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
2.4 EFFECTS OF THE MERGER. The Merger shall
have the effects set forth in the applicable provisions
of Delaware law, including Section 259 of the DGCL.
2.5 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) The Second Amended and Restated Certificate of
Incorporation of Delta, as in effect immediately prior to
the Effective Time of the Merger, shall become the
Certificate of Incorporation of the Surviving Corporation
after the Effective Time, and thereafter may be amended
in accordance with its terms and as provided by law and
this Agreement.
(b) The By-laws of Delta as in effect on the
Effective Time shall become the By-laws of the Surviving
Corporation.
2.6 DIRECTORS. The directors of Sub
immediately prior to the Effective Time shall become the
directors of the Surviving Corporation, until the earlier
of their resignation or removal or until their respective
successors are duly elected and qualified, as the case
may be. The directors of Delta and each Subsidiary will
tender their resignations at the Closing.
2.7 OFFICERS. The officers of Delta
immediately prior to the Effective Time shall become the
officers of the Surviving Corporation, until the earlier
of their resignation or removal or until their respective
successors are duly elected and qualified, as the case
may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 EFFECT ON CAPITAL STOCK. As of the
Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Delta
Common Stock or Preferred Stock or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each share of the
capital stock of Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of Common
Stock.
(b) Cancellation of Subsidiary Stock. Each
share of Delta Common Stock that is owned by AmerUs or
any subsidiary thereof or by any subsidiary of Delta
shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered
in exchange therefor.
(c) Conversion of Common Stock and Preferred
Stock. Subject to Section 3.1(e) and Section 13.2, each
issued and outstanding share of Common Stock and
Preferred Stock shall be converted into the right to
receive from the Surviving Corporation in cash, without
interest, $65.25 per share (the "Merger Consideration").
As of the Effective Time, all such shares of Common Stock
and Preferred Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate
representing any such shares of Common Stock or Preferred
Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger
Consideration, without interest.
(d) Shares of Dissenting Holders.
Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Common
Stock and Preferred Stock shall not be converted into the
right to receive the Merger Consideration unless and
until the holder shall have failed to perfect or shall
have effectively withdrawn or lost his right to dissent
from the Merger under the DGCL. If any such holder shall
have so failed to perfect or have effectively withdrawn
or lost such right, such holder's Common Stock and/or
Preferred Stock, as applicable, shall thereupon be
converted into the right to receive the Merger
Consideration. Delta shall give AmerUs (i) prompt notice
of any notice or demands for appraisal or payment for
shares of Common Stock or Preferred Stock received by
Delta, and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to
any such demands or notices. Delta shall not, without
the prior written consent of AmerUs, make any payment
with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
(e) Delta Equity-Based Awards. Immediately
prior to the Effective Time, each outstanding option to
purchase Common Stock granted under the Delta Stock Plans
(each, a "Delta Employee Stock Option") and each
outstanding stock appreciation right granted under
Delta's 1993 Stock Appreciation Rights Plan (each, a
"SAR") shall be cancelled and each holder of a Delta
Employee Stock Option or SAR as of such date, whether or
not then vested, or in the case of a Delta Employee Stock
Option, exercisable, shall be paid for such Delta
Employee Stock Option or SAR, as the case may be, cash
equal to the excess of the Merger Consideration over the
sum of (x) the exercise price of such Delta Employee
Stock Option or the grant price of such SAR, as the case
may be, plus (y) the applicable amount required to be
withheld for applicable Taxes. Any Delta Employee Stock
Option or SAR that is not "in-the-money" shall be
cancelled and cease to exist, and no cash or other
consideration shall be paid or payable in exchange
therefor. A Delta Employee Stock Option or SAR shall be
"in-the-money" if the exercise price or grant price is
less than the Merger Consideration. The cancellation of
a Delta Employee Stock Option or SAR or the surrender of
any Delta Employee Stock Option or SAR to Delta in
exchange for the consideration provided herein, in each
case, shall be deemed a release of any and all rights the
holder had or may have had in such Delta Employee Stock
Option or SAR. For purposes of this subsection (e), the
term "grant price" means, with respect to a SAR, the
specified price of Common Stock set forth in the
agreement with respect to such SAR at the time the SAR
was granted.
(f) Delta Employee Termination Payments. (i)
Set forth on Exhibit 3.1(f)(i) attached hereto is a list
of certain Delta Employees who have employment agreements
with Delta or one of its Subsidiaries that provide
termination or severance payments in the event of a
change of control. Each such Delta Employee's employment
agreement shall be amended prior to Closing to provide
that the termination payments will be reduced as
necessary to assure that the aggregate payments to each
such Delta Employee that are contingent on a change in
ownership or control will not reach the threshold for
parachute payments under section 280G(b)(2)(A)(ii) of the
Code.
(ii) Set forth on Exhibit 3.1(f)(ii)
attached hereto is a list of certain Delta Employees who
have employment agreements with Delta or one of its
Subsidiaries that provide termination or severance
payments in the event of a change of control, which
agreements were amended by Delta and such Delta Employees
effective as of July 31, 1997. The terms and conditions
of each such Delta Employee's employment agreement, as so
amended, shall remain in full force and effect before, on
and after the Closing Date.
(iii) Exhibit 3.1(f)(iii) attached hereto
sets forth the name of one Delta Employee who has an
employment agreement with Delta that provides termination
or severance payments in the event of a change of
control. At Closing, such Delta Employee shall enter
into a mutually acceptable Employment and Non-Competition
Agreement with Delta, and such Delta Employee shall not
be "deemed" terminated for purposes of his employment
agreement.
(iv) Exhibit 3.1(f)(iv) attached hereto
sets forth the names of certain former Delta Employees
who had employment agreements with Delta or one of its
Subsidiaries that provided termination or severance
payments in the event of a change of control. Upon the
Closing Date, such Delta Employees shall receive the
change of control termination payments set forth in their
respective employment agreements net of any other
termination payments such Delta Employees have received
through the Closing Date.
(v) Exhibit 3.1(f)(v) attached hereto is
the name of a certain Delta Employee who has an
employment agreement with Delta or one of its
Subsidiaries that provides termination or severance
payments of six months' then current salary in the event
of a sale of Delta. Such Delta Employee shall receive
the payments described in her employment agreement on the
terms and conditions set forth therein.
(g) Payment of Accrued Dividend. Immediately
prior to the Effective Time, each issued and outstanding
share of Preferred Stock shall be paid a final dividend
in an amount equal to the regular dividend accrued
thereon from the preceding dividend payment date to the
Effective Time.
(h) Net Payments. The amount of any Merger
Consideration paid to any employees or agents of Delta or
any Acquired Company for shares of Common Stock or
Preferred Stock securing loans made to them by Delta or
an Acquired Company shall be paid net of the principal
amount of, and accrued interest on, any such loan at
Closing.
3.2 EXCHANGE OF CERTIFICATES.
(a) Exchange Procedure. Prior to the
Effective Time, Delta shall provide to each holder of
record of a certificate or certificates representing
outstanding shares of Common Stock and/or Preferred Stock
(the "Certificates"), whose shares are to be converted
into the right to receive the Merger Consideration
pursuant to Section 3.1, (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 Surviving
Corporation and shall be in such form and have such other
provisions as AmerUs may reasonably specify), and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration,
which in the case of both (i) and (ii) shall be
satisfactory in form and substance to AmerUs. On the
Closing Date, AmerUs or Sub shall deposit with the Escrow
Agent pursuant to the terms and conditions of the Escrow
Agreement attached hereto as Exhibit 3.2, in good funds,
the Merger Consideration payable with respect to each
issued and outstanding share of Common Stock and
Preferred Stock which is convertible into the right to
receive Merger Consideration pursuant to Section 3.1.
Upon surrender of a Certificate for cancellation to the
Escrow Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably
be required, and satisfaction of the conditions to
payment set forth in the Escrow Agreement, the holder of
such Certificate shall be paid in exchange therefor the
amount of cash into which the shares of Common Stock and
Preferred Stock theretofore represented by such
Certificate shall have been converted pursuant to Section
3.1, and the Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of
Common Stock or Preferred Stock which is not registered
in the transfer records of Delta, payment may be made to
a person other than the person in whose name the
Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the
registered holder of such Certificate or establish to the
satisfaction of the Escrow Agent that such tax has been
paid or is not applicable. Until surrendered as
contemplated by this Section 3.2, each Certificate shall
be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender
the amount of cash, without interest, into which the
shares of Common Stock or Preferred Stock theretofore
represented by such Certificate shall have been converted
pursuant to Section 3.1. No interest will be paid or
will accrue on the cash payable upon the surrender of any
Certificate. Any funds deposited with the Escrow Agent
which remain undistributed to the former holders of the
Certificates representing shares of Common Stock or
Preferred Stock for 180 days after the Effective Time
shall be delivered to the Surviving Corporation, upon
demand, and any former holders of shares of Common Stock
or Preferred Stock who have not theretofore complied with
this Article III shall thereafter look only to the
Surviving Corporation for payment of their claim for any
Merger Consideration, without any interest thereon.
(b) No Further Ownership Rights in Common
Stock and Preferred Stock. All cash paid upon the
surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in
full satisfaction of all rights pertaining to the shares
of Common Stock and Preferred Stock theretofore
represented by such Certificates, and, from and after the
Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving
Corporation of the shares of Common Stock and Preferred
Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation
for any reason, they shall be cancelled and exchanged as
provided in this Article III, except as otherwise
provided by law.
(c) No Liability. None of AmerUs, Sub, Delta,
Delta Insurance or the Paying Agent shall be liable to
any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property,
escheat or similar law.
(d) Maximum Merger Consideration. In no event
shall the aggregate Merger Consideration to be paid in
exchange for all shares of Common Stock, Preferred Stock,
and in respect of the Delta Employee Stock Options,
exceed $162,941,098.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DELTA
Delta hereby represents and warrants to AmerUs
and Sub as follows:
4.1 ORGANIZATION, STANDING AND CORPORATE POWER.
Each Acquired Company is a corporation, partnership or
other legal entity duly organized, validly existing and
in good standing under the laws of the jurisdiction in
which it is organized and has the requisite power and
authority to carry on its business as now being
conducted. Each Acquired Company is duly qualified to do
business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or
leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the
failure to be so qualified (individually or in the
aggregate) would not have a Material Adverse Effect.
Delta has made available to AmerUs complete and correct
copies of its Second Amended and Restated Certificate of
Incorporation and By-laws and, to the extent requested by
AmerUs, the certificates of incorporation and by-laws or
comparable organization documents of the Acquired
Companies, in each case as amended to the date of this
Agreement. Delta is not in violation of any provision of
its Second Amended and Restated Certificate of
Incorporation or By-laws, and no Acquired Company is in
violation of any provisions of its certificate of
incorporation, by-laws or comparable organizational
documents, except to the extent that such violations
would not, individually or in the aggregate, have a
Material Adverse Effect.
4.2 ACQUIRED COMPANIES. Section 4.2 of the
Disclosure Schedule lists each Acquired Company and the
ownership or interest therein of Delta. Except as
disclosed in Section 4.2 of the Disclosure Schedule, all
the outstanding shares of capital stock of each Acquired
Company have been validly issued and are fully paid and
nonassessable and are owned by Delta or by a Subsidiary
of Delta, free and clear of all Liens. Except for the
capital stock of the Acquired Companies and except for
the ownership interests set forth in Section 4.2 of the
Disclosure Schedule, Delta does not own, directly or
indirectly, any capital stock or other ownership
interest, with a fair market value as of the date of this
Agreement greater than $100,000, in any Person.
4.3 CAPITAL STRUCTURE. The authorized capital
stock of Delta (the "Delta Capital Stock") consists of
15,000,000 shares of Common Stock Class A, 1,650,000
shares of Common Stock Class B, 600,000 shares of Series
A Preferred Stock, 700,000 shares of Series B Preferred
Stock, 300,000 shares of Series C Preferred Stock, and
58,718 shares of Series D Preferred Stock. Except as
set forth in Section 4.3 of the Disclosure Schedule, as
of the date of this Agreement and at the Effective Time:
(i) 1,069,850 shares of Common Stock Class A are
outstanding, 720,746 shares of Common Stock Class B are
outstanding, no shares of Series A Preferred Stock are
outstanding, 319,065 shares of Series B Preferred Stock
are outstanding, 205,200 shares of Series C Preferred
Stock are outstanding and 58,718 shares of Series D
Preferred Stock are outstanding, all of which were
validly issued, fully paid and nonassessable, and no
shares of any other series of Delta Capital Stock were
outstanding; (ii) 0 shares of Common Stock are held by
Delta in its treasury; and (iii) 471,098 shares of Common
Stock Class A are issuable upon the exercise of
outstanding Delta Employee Stock Options. Except as set
forth on Section 4.3 of the Disclosure Schedule, no
shares of capital stock or other voting securities of
Delta (other than as set forth in the preceding sentence)
are issued, reserved for issuance or outstanding.
Section 4.3 of the Disclosure Schedule sets forth a true,
complete and accurate list of all outstanding,
unexercised Delta Employee Stock Options and SARs, and
the respective exercise prices and grant prices therefor.
Except as set forth above, there are not any bonds,
debentures, notes or other indebtedness of Delta having
the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters
on which stockholders of Delta must vote. Except as set
forth above and except as set forth in Section 4.3 of the
Disclosure Schedule, there are not any options, warrants,
calls, rights, commitments, agreements, arrangements or
undertakings of any kind (collectively, "Options") to
which any Acquired Company is a party or by which any of
them is bound relating to the issued or unissued capital
stock of any Acquired Company, or obligating any Acquired
Company to issue, transfer, grant or sell any shares of
capital stock or other equity interests in, or securities
convertible or exchangeable for any capital stock or
other equity interests in, any Acquired Company or
obligating any Acquired Company to issue, grant, extend
or enter into any such Options. All shares of Delta
Capital Stock that are subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in
the instrument pursuant to which they are issuable, will
be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 4.3 of the
Disclosure Schedule, as of the date of this Agreement,
there are not any outstanding contractual obligations of
any Acquired Company to repurchase, redeem or otherwise
acquire any shares of capital stock of any Acquired
Company, or make any investment in excess of $100,000 (in
the form of a loan, capital contribution or otherwise)
in, any Acquired Company or any other person.
4.4 AUTHORITY. (a) Delta has all requisite
corporate power and authority to enter into this
Agreement and, except as otherwise indicated herein,
subject to the approval of its stockholders, to
consummate the transactions contemplated by this
Agreement. The Board of Directors of Delta has
unanimously approved this Agreement and the transactions
contemplated by this Agreement, has determined that this
Agreement and the transactions contemplated hereby
(including, without limitation, the Merger) are fair to
and in the best interests of the stockholders of Delta,
and has resolved to recommend to the stockholders that
they approve this Agreement and the transactions
contemplated hereby. The execution and delivery of this
Agreement by Delta and the consummation by Delta of the
transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the
part of Delta, subject to stockholder approval and
compliance with the Stockholders' Agreement (as defined
in Section 4.25(b) hereof), if and to the extent that
such Stockholders' Agreement contains provisions that are
determined to be applicable to the Merger. This
Agreement has been duly executed and delivered by Delta
and, assuming the due authorization, execution and
delivery by each of AmerUs and Sub, constitutes a valid
and binding obligation of Delta, enforceable against
Delta in accordance with its terms.
(b) The Board of Directors of Delta has duly
approved the transactions contemplated by this Agreement
for purposes of Section 203 of the DGCL such that the
provisions of Section 203 of the DGCL will not apply to
the transactions contemplated by this Agreement.
4.5 NO SUBSIDIARIES. Except for the
subsidiaries disclosed in Section 4.5 of the Disclosure
Schedule, each Acquired Company has no subsidiaries and
does not control (whether directly or indirectly, whether
through the ownership of securities or by Contract or
proxy or otherwise, and whether alone or in combination
with others) any corporation, partnership, business
organization, or other similar Person. For purposes of
this Section, "control" shall mean the right to elect a
majority of the Board of Directors or other governing
body of any such entity or Person or otherwise manage,
direct or govern the business operations of such entity
or Person.
4.6 NO CONFLICTS OR VIOLATIONS. Subject to the
items set forth in Section 4.6 of the Disclosure Schedule
the execution and delivery of this Agreement by Delta
does not, and the performance by Delta of its obligations
under this Agreement will not:
(a) violate any term or provision of any Law
or any writ, judgment, decree, injunction, or
similar order applicable to any Acquired Company;
(b) conflict with or result in a violation or
breach of, or constitute (with or without notice or
lapse of time or both) a default under, any of the
terms, conditions or provisions of the articles or
certificate of incorporation or by-laws of Delta;
(c) result in the creation or imposition of
any Lien upon any Acquired Company or any of their
respective Assets and Properties that individually
or in the aggregate with any other Liens has or
would reasonably be expected to have a Material
Adverse Effect on any Acquired Company;
(d) conflict with or result in a violation or
breach of, or constitute (with or without notice or
lapse of time or both) a default under, or give to
any Person any right of termination, cancellation,
acceleration, or modification in or with respect to,
any Contract to which any Acquired Company is a
party or by which any of their respective Assets or
Properties may be bound and as to which any such
conflicts, violations, breaches, defaults, or rights
individually or in the aggregate have or would
reasonably be expected to have a Material Adverse
Effect on any Acquired Company; or
(e) require any Acquired Company to obtain any
consent, approval, or action of, or make any filing
with or give any notice to, any Person (including
pursuant to any Laws) except those which the failure
to obtain, make, or give individually or in the
aggregate with any other such failures would not
have a Material Adverse Effect on any Acquired
Company. Section 4.6(e) of the Disclosure Schedule
contains a true, accurate and complete list of all
consents, approvals, actions, filings and notices
required in connection with the execution, delivery
and performance of this Agreement by Delta under any
Laws.
4.7 BOOKS AND RECORDS. The minute books and
other similar records of each Acquired Company contain a
record, which is true and complete in all material
respects, of all formal action taken at all meetings and
by all written consents in lieu of meetings of
stockholders, Boards of Directors, and each committee
thereof, with respect to each Acquired Company. The
Books and Records of each Acquired Company accurately
reflect in all material respects the business and
financial condition of Delta and each such Acquired
Company, and have been maintained in all material
respects in accordance with good business and bookkeeping
practices.
4.8 FINANCIAL STATEMENTS. Delta has previously
delivered to the Acquiror, or will have delivered to the
Acquiror upon completion, true and complete copies of the
following financial statements (the "Financial
Statements"):
(a) audited (i) annual GAAP Statements for
Delta and (ii) Annual Statements for Delta
Insurance, for each of the years ended December 31,
1992, 1993, 1994, 1995, and 1996, including all the
notes relating thereto; and
(b) unaudited Quarterly Statements for Delta
and Delta Insurance, for each of the first three
quarters of each of 1995 and 1996, and the first
quarter of 1997, including all the notes relating
thereto.
Each such Financial Statement (and the notes
relating thereto), and each quarterly GAAP Statement and
Quarterly Statement delivered by Delta pursuant to
Section 6.6, including without limitation each balance
sheet and each of the statements of operations, capital
and surplus account, and cash flow contained therein, is
accurate, was prepared in accordance with SAP ("SAP
Statements") or GAAP ("GAAP Statements"), as the case may
be, is true and complete and presents fairly in all
material respects the financial condition and results of
operations and cash flows of Delta and its consolidated
subsidiaries or Delta Insurance, as the case may be, as
of the respective dates thereof or for the respective
periods presented therein, subject, in the case of
quarterly statements, to normal year-end adjustments.
Each SAP Statement complied in all material respects with
all applicable Laws when filed with the applicable
insurance regulatory authority, and any deficiencies
known to Delta or Delta Insurance with respect to any
such SAP Statement have been cured or corrected to the
satisfaction of such insurance regulatory authority.
4.9 RESERVES.
(a) Except as set forth in Section 4.9 of the
Disclosure Schedule, all reserves and other
liabilities with respect to insurance and annuities
and for claims and benefits incurred but not
reported ("Reserve Liabilities") as established or
reflected in the SAP Statements of Delta Insurance
were determined in accordance with generally
accepted actuarial standards consistently applied,
are fairly stated in accordance with sound actuarial
principles, are based on actuarial assumptions that
are in accordance with those called for by the
provisions of the related insurance and annuity
Contracts and in the related reinsurance,
coinsurance and other similar Contracts of Delta
Insurance, and meet in all material respects the
requirements of the insurance Laws of its state of
domicile. Adequate provision for all such Reserve
Liabilities have been made (under generally accepted
actuarial principles consistently applied) to cover
the total amount of all reasonably anticipated
matured and unmatured benefits, dividends, claims
and other liabilities of Delta Insurance under all
insurance and annuity Contracts under which Delta
Insurance has any liability (including without
limitation any liability arising under or as a
result of any reinsurance, coinsurance or other
similar Contract) on the respective dates of such
SAP Statement based on then current information
regarding interest earnings, mortality and morbidity
experience, persistency and expenses. Delta
Insurance owns assets that qualify as legal reserve
assets under applicable insurance Laws in an amount
at least equal to all such Reserve Liabilities; and
(b) Except as set forth in Section 4.9 of the
Disclosure Schedule, adequate provision has been
made for all estimated losses, settlements, costs
and expenses from pending suits, actions and
proceedings included in the December 31, 1996 Annual
Statement and the latest Quarterly Statement, and
the reserves and accrued Liabilities relating
thereto were determined in accordance with SAP.
4.10 ABSENCE OF CHANGES. Except as disclosed
in Section 4.10 of the Disclosure Schedule, since
December 31, 1996: (i) there has not been, occurred, or
arisen any change in, or any event (including without
limitation any damage, destruction, or loss whether or
not covered by insurance), condition, or state of facts
of any character that individually or in the aggregate
has or would reasonably be expected to have a Material
Adverse Effect on any Acquired Company, (ii) each
Acquired Company has operated only in the ordinary course
of business and consistent with past practice, and (iii)
(without limiting the generality of the foregoing) there
has not been, occurred or arisen:
(a) any declaration, setting aside, or payment
of any dividend or other distribution in respect of
the capital stock of any Acquired Company or any
direct or indirect redemption, purchase or other
acquisition by any Acquired Company of any such
stock or of any interest in or right to acquire any
such stock;
(b) any employment, deferred compensation, or
other salary, wage or compensation Contract entered
into between any Acquired Company and any Delta
Employee, except for normal and customary Contracts
with agents and consultants in the ordinary course
of business and consistent with past practice; or
any increase in the salary, wages, or other
compensation of any kind, whether current or
deferred, of any Delta Employee, other than routine
increases that were made in the ordinary course of
business and consistent with past practice and that
did not result in an increase of more than 10% of
the respective salary, wages or compensation of any
such Person, except for increases which relate to
increases in production by agents consistent with
the terms of their existing Contracts; or any
creation of any Benefit Plan or any contribution to
(other than a contribution made in the ordinary
course of business and consistent with past
practice) or amendment or modification of any
Benefit Plan; or any election by or on behalf of any
Acquired Company made pursuant to the provisions of
any Benefit Plan to accelerate any payments,
obligations or vesting schedules under any Benefit
Plans;
(c) any issuance, sale or disposition by any
Acquired Company of any debenture, note, stock or
other security issued by such Acquired Company, or
any modification or amendment of any right of the
holder of any outstanding debenture, note, stock or
other security issued by such Acquired Company;
(d) any Lien created on or in any of the
Assets and Properties of any Acquired Company or
assumed by any Acquired Company with respect to any
of such Assets and Properties which Lien related to
Liabilities individually or in the aggregate
exceeding $100,000;
(e) any prepayment of any Liabilities (other
than pursuant to any insurance or annuity Contract)
individually or in the aggregate exceeding $10,000;
(f) any Liability involving the borrowing of
money by any Acquired Company, except in the
ordinary course of business and consistent with past
practice;
(g) any damage, destruction or loss (whether
or not covered by insurance), but not including
unrealized losses on investment securities,
affecting any of the Assets and Properties of any
Acquired Company which damage, destruction or loss
individually exceeds $100,000;
(h) any work stoppage, strike, labor
difficulty or union organizational campaign (in
process or, to the Knowledge of Delta, threatened)
materially affecting any Acquired Company;
(i) any material change in any crediting,
underwriting, actuarial, dividend, investment,
financial reporting, marketing or accounting
practice or policy followed by any Acquired Company,
or in any assumption underlying such a practice or
policy, or in any method of calculating any bad
debt, contingency, or other reserve for financial
reporting or any other accounting purposes;
(j) any payment, discharge, or satisfaction by
an Acquired Company of any Lien or Liability other
than Liens or Liabilities that (i) were paid,
discharged, or satisfied since December 31, 1996 in
the ordinary course of business and consistent with
past practice, or (ii) were paid, discharged, or
satisfied as required under this Agreement;
(k) except for fair value received, in the
ordinary course of business and consistent with past
practice, any cancellation of any Liability owed to
any Acquired Company by any other Person;
(l) any sale, transfer, or conveyance of any
investments, or any other Assets and Properties
except in the ordinary course of business and
consistent with past practice;
(m) any amendment, termination, waiver,
disposal or lapse of, or other failure to preserve,
or regulatory agreement with respect to, any
license, permit or other form of authorization of
any Acquired Company the result of which
individually or in the aggregate has or would
reasonably be expected to have a Material Adverse
Effect on such Acquired Company;
(n) any transaction or arrangement under which
any Acquired Company guaranteed, paid, lent or
advanced any amount to or in respect of, or sold,
transferred, pledged or leased any of its Assets and
Properties or any services to, (i) any Delta
Affiliate (except for payments of salaries and wages
to officers of the Acquired Companies in the
ordinary course of business and consistent with past
practice) or (ii) any business or other Person in
which an Acquired Company or any Delta Affiliate has
any material interest except for advances made to,
or reimbursements of, officers and directors of
Acquired Companies for travel and other business
expenses in reasonable amounts in the ordinary
course of business and consistent with past
practice;
(o) except for actions taken with respect to
insurance policies and annuities in force, in the
ordinary course of business and consistent with past
practice, any material amendment of or any failure
to perform all of its obligations under, or any
default under, or any waiver of any right under, or
any termination (other than on the stated expiration
date) of, any Contract that involves or reasonably
would involve the annual expenditure or receipt by
any Acquired Company of more than $10,000;
(p) any decrease of more than 3% in the amount
of, or any material change in the nature of, the
insurance and annuities in force of Delta Insurance
or any material change in the amount or nature of
the Reserve Liabilities of Delta Insurance;
(q) any amendment to the articles or
certification of incorporation or by-laws of any
Acquired Company;
(r) any agreement for the sale, merger or
transfer of any Acquired Company;
(s) any termination, amendment or entering
into by Delta Insurance as ceding or assuming
insurer of any reinsurance, coinsurance or other
similar Contract or any trust agreement or security
agreement related thereto;
(t) any expenditure or commitment for
additions to property, plant, equipment or other
tangible or intangible capital assets of any
Acquired Company, in excess of the budgeted amounts
set forth in Section 4.10(t) of the Disclosure
Schedule, which expenditures or commitments do not
exceed $100,000 in the aggregate;
(u) any amendment or introduction by Delta
Insurance of any insurance or annuity Contract other
than in the ordinary course of business consistent
with past practices;
(v) any restriction or limitation in any
license or other authorization or business or
operations of any Acquired Company, including Delta
Insurance; or
(w) any Contract to take any of the actions
described in this Section 4.10 other than actions
expressly permitted under this Section 4.10.
4.11 NO UNDISCLOSED LIABILITIES. Except to the
extent reflected in the balance sheet included in the
December 31, 1996 annual GAAP Statement (and the notes
relating thereto), or except as disclosed in Section 4.11
of the Disclosure Schedule, there were no Liabilities
(other than policyholder benefits payable in the ordinary
course of business and consistent with past practice)
against, relating to, or affecting any Acquired Company
as of December 31, 1996 exceeding $100,000 in the
aggregate.
4.12 TAXES. Except as disclosed in Section
4.12 of the Disclosure Schedule (with paragraph
references corresponding to those set forth below):
(a) All Tax Returns required to be filed with
respect to each Acquired Company or the affiliated,
combined or unitary group of which any such company
is or was a member have been duly and timely filed,
and all such Tax Returns are true, correct and
complete in all material respects. Each Acquired
Company (i) has duly and timely paid all Taxes and
other charges that are due on such Tax Returns, or
claimed or asserted by any taxing authority to be
due, from such company for the periods covered by
such Tax Returns and have made all required
estimated payments of Taxes sufficient to avoid any
penalties for underpayment unless such Taxes are
being contested in good faith and adequate reserves
therefor have been established on the Acquired
Companies' books and records, or (ii) has duly
provided for all such Taxes in the applicable
financial statements, and in the SAP and GAAP
Statements, in the case of Delta Insurance. There
are no Liens with respect to Taxes (except for Liens
with respect to real property Taxes not yet due)
upon any of the Assets and Properties of any such
company.
(b) With respect to any period or portion
thereof through the Closing for which Tax Returns
have not yet been filed, or for which Taxes are not
yet due or owing, each Acquired Company has
established due and sufficient reserves for the
payment of such Taxes in accordance with SAP and
GAAP in the case of Delta Insurance or otherwise in
accordance with GAAP, and such current reserves
through the Closing are duly and fully provided for
in all material respects in the SAP and GAAP
Statements of such company for the period then
ended.
(c) The United States federal income Tax
Returns of each Acquired Company and of each
affiliated group (within the meaning of the Code) of
which any Acquired Company is or has been a member
have been audited or examined by the IRS, or the
statute of limitations for all periods through the
respective years specified in Section 4.12(c) of the
Disclosure Schedule has expired. The state, local
and foreign income Tax Returns of each Acquired
Company and of each affiliated or consolidated group
of which they are or have been members have been
audited or examined, or all statutes of limitation
for all applicable state, local and foreign taxable
periods through the respective years specified in
Section 4.12(c) of the Disclosure Statement have
expired. All deficiencies which have been asserted,
proposed or assessed as a result of the above
referenced examinations have been paid in full or
finally settled or adequately reserved against to
the extent there is a reasonable possibility that
the position of any of the above referenced taxing
authorities will be sustained, and to the Knowledge
of Delta, no issue has been raised by any taxing
authority in any such examination which, by
application of the same or similar principles,
reasonably could be expected to result in a material
proposed deficiency for any other period not so
examined. To the Knowledge of Delta, no state of
facts exists or has existed which would constitute
grounds for the assessment of any material Tax
liability with respect to any Acquired Company for
the periods which have not been audited by the above
referenced taxing authorities. There are no
outstanding agreements, waivers or arrangements
extending the statutory period of limitation
applicable to any Tax Return or claim for, or the
period for the collection or assessment of, Taxes
due from any company for any taxable period. Delta
has previously delivered or made available to the
Acquiror true, correct and complete copies of each
of (i) the most recent audit reports relating to the
United States federal, state, local and foreign
income taxes due from each Acquired Company and (ii)
the United States federal, state, local and foreign
income Tax Returns, for each of the last three
taxable years, filed by each Acquired Company, and
Delta has made available to Acquiror for inspection
true, correct and complete copies of such Tax
Returns, (insofar as such Tax Returns relate to any
Acquired Company) filed by any affiliated or
consolidated group of which any Acquired Company was
then a member.
(d) No audit or other proceeding by any U.S.
or foreign court, governmental or regulatory
authority, or similar Person is pending or
threatened with respect to any Taxes due from any
Acquired Company or any Tax Return filed or required
to be filed by or relating to any Acquired Company.
No assessment or deficiency for any Tax is proposed
or, based on existing facts and circumstances, is
threatened against any Acquired Company or any
Assets and Properties of any Acquired Company.
(e) No election under any of Section 108, 168,
338, 441, 463, 472, 1017, 1033 or 4977 of the Code
(or any predecessor provisions) has been made or
filed by or with respect to any Acquired Company or
any of their Assets and Properties. No consent to
the application of Section 341(f)(2) of the Code (or
any predecessor provision) has been made or filed by
or with respect to any Acquired Company or any of
their Assets and Properties. None of the Assets and
Properties of any Acquired Company is an asset or
property that the Acquiror or any of its Affiliates
is or will be required to treat as being (i) owned
by any other Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately before
the enactment of the Tax Reform Act of 1986 or (ii)
tax-exempt use property within the meaning of
Section 168(h)(1) of the Code. No election has been
made under Section 815(d)(1) of the Internal Revenue
Code of 1954, as amended and in effect immediately
before the enactment of the Deficit Reduction Act of
1984. No closing agreement pursuant to Section 7121
of the Code (or any predecessor provision) or any
similar provision of any state, local or foreign Law
has been entered into by or with respect to any
Acquired Company or any of their Assets and
Properties.
(f) No Acquired Company has agreed to or is
required to make any material adjustment pursuant to
Section 481(a) or 807(f)(1) of the Code (or any
predecessor provision) by reason of any change in
any accounting method or change in basis for
determining the reserves of such company or
otherwise, and no Acquired Company has any
application pending with any taxing authority
requesting permission for any changes in any
accounting method or in the basis for determining
reserves of any of them. The IRS has not proposed
any such adjustment or change in accounting method
or in the basis of determining reserves of any of
them.
(g) No Acquired Company has been or is in
material violation (or with notice or lapse of time
or both, would be in violation) of any applicable
Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or
similar provisions under any foreign laws). Each
Acquired Company has duly and timely withheld in all
material respects from employee salaries, wages and
other compensation and paid over to the appropriate
taxing authorities all amounts required to be so
withheld and paid over for all periods under all
applicable Laws.
(h) Except as disclosed in Section 4.12(h) of
the Disclosure Schedule, no Acquired Company is a
party to, is bound by, or has any obligation under,
any tax sharing agreement or arrangement of any
kind, whether written or verbal or similar Contract.
Delta is not a foreign person within the meaning of
Section 1445(f)(3) of the Code.
(i) No Acquired Company has made any direct,
indirect or deemed distributions that have been or
to the Knowledge of Delta, could be taxed under
Section 815 of the Code.
(j) All ceding commission expenses paid or
accrued by Delta Insurance in connection with any
reinsurance arrangement or Contract or transaction
have been capitalized and amortized over the life or
lives of such reinsurance arrangement or Contract in
accordance with the decision of the United States
Supreme Court in Colonial American Life Insurance
Company v. Commissioner of Internal Revenue, 109
S.Ct. 240 (1989) or, in the case of any such expense
incurred on or after September 30, 1990, in
accordance with Sections 848 and 197 of the Code.
(k) No material Liabilities have been proposed
in connection with any audit or other proceeding by
any U.S. or foreign court, governmental or
regulatory authority, or similar person with respect
to any Taxes due from any Acquired Company or Tax
Return filed by or relating to any Acquired Company.
(l) Each reserve item with respect to each
Acquired Company set forth in its respective 1996
Federal income tax return was determined in all
material respects in accordance with Section 807 of
the Code or other applicable Code Sections, and has
been consistently applied with respect to the filing
of the Federal income tax returns for all years
through December 31, 1995 for which the statute of
limitations has not expired, and will be
consistently applied for any Tax Return filed on or
prior to the Closing Date.
(m) As of December 31, 1996, no Acquired
Company had and during the period from December 31,
1996 through the Closing Date will have, any Tax
liability in respect of Taxes to any stockholder of
Delta or any of such stockholder's Affiliates that
resulted or will result from a transaction with an
Affiliate prior to the Closing Date that would
require payment after December 31, 1996.
(n) No Acquired Company will make an election
to reattribute losses of such Acquired Company as
provided by Section 1.1502-20(g) of the Regulations
to the Code.
(o) Delta Insurance satisfies the definition
of life insurance company under section 816 of the
Code.
(p) Except as disclosed in Section 4.12(p) of
the Disclosure Schedule, none of the Acquired
Companies has entered into any compensatory
agreements (whether written or oral) with respect to
the performance of services for which payment
thereunder would result in a nondeductible expense
to such Company pursuant to section 162(m) or 280G
of the Code.
(q) All material elections with respect to
Federal income Taxes affecting the Acquired
Companies are set forth in Section 4.12(q) of the
Disclosure Schedule.
(r) Except as set forth in Section 4.12(r) of
the Disclosure Schedule, there is no power of
attorney given by or binding upon any of the
Acquired Companies with respect to Taxes for any
period for which the statute of limitations
(including any waivers or extensions) has not yet
expired.
(s) There are no outstanding balances of
deferred gain or loss accounts related to any
deferred intercompany transactions to which any of
the Acquired Companies was a party.
(t) None of the Acquired Companies is a party
to or otherwise subject to any arrangement entered
into in anticipation of the Closing, not in
accordance with past practice and not required by
this Agreement, (i) having the effect of or giving
rise to the recognition of a deduction or loss
before the Closing Date, and a corresponding
recognition of taxable income or gain after the
Closing Date, or (ii) that would reasonably be
expected to have the effect of or give rise to the
recognition of taxable income or gain by any
Acquired Company after the Closing Date without the
receipt of or entitlement to a corresponding amount
of cash.
(u) Section 4.12(u) of the Disclosure Schedule
sets forth the amount of any existing policyholders
surplus account and shareholders surplus account
with respect to the Acquired Companies within the
meaning of Section 815 of the Code.
(v) Except for federal income Tax Returns, the
Acquired Companies do not file or join in filing any
consolidated, unitary, combined or similar Tax
Returns with any corporation other than the Acquired
Companies.
(w) None of the Acquired Companies has
requested any extension of time within which to file
any Return, which Return has not since been filed.
(x) Delta has filed, as a common parent
corporation of an "affiliate group" (within the
meaning of Section 1504(a) of the Code) a
consolidated return for federal income tax purposes
on behalf of itself and each other Acquired
Corporation which is an "includible corporation"
(within the meaning of Section 1504(b) of the Code).
(y) Delta is not and has not been a United
States real property holding company (as defined in
Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(ii) of the
Code.
(z) All transactions which could give rise to
an understatement of federal income tax (within the
meaning of Section 6661 of the Code) were adequately
disclosed (or, with respect to Tax Returns filed
before the Closing will be adequately disclosed) on
the Tax Returns required in accordance with Section
6661(b)(2)(B) of the Code.
4.13 LITIGATION. Except as disclosed in
Section 4.13 of the Disclosure Schedule (with paragraph
references corresponding to those set forth below):
(a) There are no actions, suits,
investigations or proceedings pending, or, to the
Knowledge of Delta, threatened, against any Acquired
Company or its Assets and Properties, at law or in
equity, in, before, or by any Person that
individually or in the aggregate have or would
reasonably be expected to have a Material Adverse
Effect on any Acquired Company.
(b) There are no actions, suits,
investigations or proceedings pending or, to the
Knowledge of Delta, threatened, and no event, fact
or circumstance has arisen or occurred (other than
claims for benefits under insurance policies and
annuities in force) that may reasonably be expected
to result in the commencement of any action, suit,
proceeding or investigation, against any Acquired
Company or any of its Assets and Properties, at law
or in equity, in, before, or by any Person that
individually involves a claim or claims for any
injunction or similar relief or for damages
exceeding $50,000 or an unspecified amount of
damages, or that individually or in the aggregate
have or would reasonably be expected to have a
Material Adverse Effect on such Acquired Company.
(c) There are no writs, judgments, decrees or
similar orders of any Person outstanding against any
Acquired Company that individually exceed $25,000 or
that individually or in the aggregate have or would
reasonably be expected to have a Material Adverse
Effect on such Acquired Company and there are no
injunctions or similar orders of any Person
outstanding against any Acquired Company.
4.14 COMPLIANCE WITH LAWS. No Acquired Company
has been or is in violation (or with or without notice or
lapse of time or both, would be in violation) of any term
or provision of any Law or any writ, judgment, decree,
injunction or similar order applicable to any Acquired
Company or any of its Assets and Properties, except for
violations (i) which have been cured, (ii) which have
been resolved or settled through agreements with
applicable governmental authorities or which are barred
by an applicable statute of limitations, (iii) which have
not had, and are not reasonably likely to have, a
Material Adverse Effect on such Acquired Company, or (iv)
that have been previously disclosed to counsel for
Acquiror. Without limiting the generality of the
foregoing, except as disclosed in Section 4.14 of the
Disclosure Schedule or as previously disclosed to counsel
for Acquiror:
(a) Since January 1, 1990, each Acquired
Company has duly and validly filed or caused to be
so filed all material reports, statements,
documents, registrations, filings or submissions
that were required by Law to be filed with any
Person; all such filings complied with applicable
Laws in all material respects when filed, and no
material deficiencies have been asserted by any
Person with respect to any such filings.
(b) Delta has previously delivered to the
Acquiror the reports reflecting the results of the
two most recent market conduct and financial
examinations of Delta Insurance issued by any
insurance regulatory authority and all material
deficiencies or violations in such reports have been
resolved to the satisfaction of all applicable
insurance regulatory authorities.
(c) All outstanding insurance and annuity
Contracts issued, reinsured or underwritten by Delta
Insurance are, to the extent required under
applicable Laws, on forms approved by the insurance
regulatory authority of the jurisdiction where
issued or have been filed with and not objected to
by such authority within the period provided for
objection, and have been filed or registered as
required with all other applicable governmental
authorities.
(d) All insurance or annuity Contract benefits
payable by Delta Insurance and (to the Knowledge of
Delta) by any other Person that is a party to or
bound by any reinsurance, coinsurance, or other
similar Contract with Delta have in all material
respects been paid in accordance with the terms of
the insurance, annuity, and other Contracts under
which they arose.
(e) All insurance or annuity Contracts issued
or underwritten by Delta Insurance have been
marketed and sold in compliance with all applicable
Laws.
(f) No outstanding insurance or annuity
Contract issued, reinsured, or underwritten by Delta
Insurance entitles the holder thereof or any other
Person to receive dividends, distributions, or other
benefits based on the revenues or earnings of Delta
Insurance or any other Person.
(g) The underwriting standards utilized and
ratings applied by Delta Insurance and (to the
Knowledge of Delta) by any other Person that is a
party to or bound by any reinsurance, coinsurance,
or other similar Contract with Delta Insurance
conform in all material respects to industry
accepted practices and to the standards and ratings
required pursuant to the terms of the respective
reinsurance, coinsurance, or other similar Contracts
and by applicable Law.
(h) Neither Delta nor Delta Insurance has
received any information which would cause it to
believe that the financial condition of any other
party to any reinsurance, coinsurance, or other
similar Contracts with Delta Insurance is so
impaired as to result in a default thereunder.
(i) Each insurance agent, at the time such
agent wrote, sold, or produced business for Delta
Insurance at any time since December 31, 1990, was
duly licensed as an insurance agent (for the type of
business written, sold, or produced by such
insurance agent) in the particular jurisdiction in
which such agent wrote, sold, or produced such
business and no such insurance agent violated (or
with or without notice or lapse of time or both,
would have violated) any term or provision of any
Law or any writ, judgment, decree, injunction, or
similar order applicable to the writing, sale, or
production of business for Delta Insurance, except
for violations which have been cured, which have
been resolved or settled through agreements with
applicable governmental authorities or which are
barred by an applicable statute of limitations or
have not had, or are not reasonably likely to have,
a Material Adverse Effect on Delta Insurance.
(j) The tax treatment under the Code of all
insurance annuity or investment policies, plans, or
contracts; all financial products, employee benefit
plans, individual retirement accounts or annuities;
or any similar or related policy, contract, plan, or
product, whether individual, group, or otherwise,
issued or sold by Delta Insurance is and at all
times has been in all material respects the same or
more favorable to the purchaser, policyholder or
intended beneficiaries thereof as the tax treatment
under the Code for which such contracts qualified or
purported to qualify at the time of its issuance or
purchase, except for changes resulting from changes
to the Code effective after the date of such
issuance or purchase. For purposes of this Section
4.14(j), the provisions of the Code relating to the
tax treatment of such contracts shall include, but
not be limited to, Sections 72, 79, 101, 104, 105,
106, 125, 130, 401, 402, 403, 404, 408, 412, 415,
419, 419A, 457, 501, 505, 817, 818, 7702, and 7702A
of the Code, to the extent applicable.
(k) No regional director of Delta Insurance
produced in 1996 more than 5% of the premiums
written by Delta Insurance.
(l) No individual agent of Delta Insurance
produced in 1996 more than 1% of the premiums
written by Delta Insurance; and no individual
policyholder or contractholder represented in 1996
more than 1% of the premiums written by Delta
Insurance.
(m) All advertising and marketing materials
used with respect to the sales and marketing of
insurance and annuity Contracts issued by Delta
Insurance are in conformity in all material respects
with applicable Law.
(n) (i) Section 4.14 of the Disclosure
Schedule contains a true and complete list of
(I) each master or prototype (as well as any
individually designed) pension, profit sharing,
defined benefit, Code Section 401(k), and other
retirement or employee benefit plan or Contract
(including, but not limited to, simplified
employee pension plans, Code Section 403(a),
(b) and (c) annuities, Keogh plans, and
individual retirement accounts and annuities)
offered or sold by any Acquired Company to, or
maintained or sponsored for the benefit of any
employees of, any other Person, and (II) each
determination letter or opinion letter relating
to the creation or amendment of any such plan
or Contract. Each such plan or Contract in all
material respects conforms with, and has been
offered, sold, maintained and sponsored in
accordance with, all applicable Laws. Except
as set forth in Section 4.14(n) of the
Disclosure Schedule, no Acquired Company is a
fiduciary within the meaning of ERISA with
respect to any plan or Contract referenced in
this Section 4.14.
(ii) Each plan or Contract referenced in
Section 4.14(n)(i) has been timely amended to
comply with any amendment to the Code, ERISA or
other applicable Law or regulation, or in such
cases where the adoption of formal amendments
is not yet required, such plan or Contract has
been duly operated in compliance with any
applicable change in the Code, ERISA or other
applicable Law or regulations.
(iii) No Acquired Company has engaged in any
prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the
Code with respect to any plan or Contract
referenced in Section 4.14(n)(i).
(iv) To the Knowledge of Delta and except as
disclosed in Section 4.14(n) of the Disclosure
Schedule, no Person to whom any Acquired
Company has offered or sold any plan or
Contract referenced in Section 4.14(n)(i) is
under examination or investigation by the
Internal Revenue Service, the U.S. Department
of Labor or any other governmental agency with
respect to such plan or Contract or with
respect to the Tax liabilities of such Person
or such Person's current or former employees
with respect to such plan or Contract.
(v) No Acquired Company provides administrative
or other contractual services for any plan or
Contract referenced in Section 4.14(n)(1),
including, but not limited to, any third party
administrative services for an Employee Welfare
Benefit Plan.
(vi) To the extent that any Acquired Company
maintains any collective or commingled funds or
accounts which restrict the Persons who may
invest therein to tax-exempt entities or
qualified plans, each such fund or account (of
which a true and complete list and description
is disclosed in Section 4.14 of the Disclosure
Schedule) has been established, maintained and
operated in accordance with all applicable
Laws, has maintained its tax-exempt status and
has no Persons investing within it other than
Persons permitted under Section 401(a)(24) of
the Code.
(vii) In addition to the representations and
warranties contained in Section 4.14 hereof,
there are no claims pending, or (to the
Knowledge of Delta) threatened against any
Acquired Company or any of their respective
Assets or Properties, under any fiduciary
liability insurance policy issued by or to any
of them that individually or in the aggregate
has or would reasonably be expected to have a
Material Adverse Effect on any Acquired
Company.
(o) No Real Estate has been used for the
storage, treatment, generation, transportation,
manufacture, processing, handling, production,
distribution, deposit, burial, use, or disposal of
any Hazardous Substance except in compliance with
Environmental Laws. No Acquired Company has any
liability arising out of or resulting from a Release
of any Hazardous Substance on or from any Real
Estate. Each Acquired Company has complied in all
material respects with all applicable Environmental
Laws relating to Real Estate and the business,
activities and processing respectively conducted
thereon.
4.15 BENEFIT PLANS, ERISA. Each "employee
benefit plan" (as defined in Section 3 (3) of ERISA),
bonus, deferred compensation, stock option, stock
purchase or other equity compensation plan, program or
arrangement, each employment, termination or severance
agreement or plan, incentive compensation or other
agreement whether written or oral relating to employment
or fringe benefits for employees, former employees,
officers or directors of Delta or any of its
Subsidiaries, maintained or contributed to by Delta of
any of its Subsidiaries at any time during the 7-calendar
year period immediately preceding the Closing Date
(collectively, the "Plans") is listed at Section 4.15 of
the Disclosure Schedule, attached hereto, and except as
disclosed at Section 4.15 of the Disclosure Schedule, is
in material compliance with applicable Law and has been
administered and operated in all material respects in
accordance with such applicable Law and the terms of the
Plan. No Plan is or has been covered by Section 302 or
Title IV of ERISA or is or has been subject to the
minimum funding requirements of Section 412 of the Code.
Each Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue
Service and no event has occurred and no condition exists
which could reasonably be expected to result in the
revocation of any such determination. All trusts
maintained under the Plans are exempt from taxation under
Section 501(a) of the Code. Full payment has been made
of all amounts which Delta or any of its Subsidiaries
were required under the terms of the Plans to have paid
as contributions to such Plans on or prior to the date
hereof (excluding any amounts not yet due). Neither
Delta nor any of its Subsidiaries nor any other
"disqualified person" or "party in interest" (as defined
in Section 4975(e)(2) of the Code and Section 3 (14) of
ERISA, respectively) has engaged in any transaction in
connection with any Plan that could reasonably be
expected to result in the imposition of a penalty
pursuant to Section 409 of ERISA or a Tax pursuant to
Section 4975(a) of the Code. No Plan provides medical,
surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former
employees of the Acquired Companies or any Subsidiary for
periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated
by applicable Law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which is borne
by the current or former employee (or his beneficiary).
Each Plan subject to the requirements of Section 601 or
ERISA has been operated in compliance therewith. Except
as listed at Section 4.15 of the Disclosure Schedule, no
individual shall accrue or receive additional benefits,
services or accelerated rights to payment of benefits as
a direct result of the transactions contemplated by this
Agreement. No material liability, claim, investigation,
audit, action or litigation has been incurred, made,
commenced or, to the Knowledge of Delta, is threatened or
anticipated, by or against Delta or any of its
Subsidiaries with respect to any Plan (other than for
benefits payable in the ordinary course). No plan or
related trust owns any securities in violation of Section
407 of ERISA. No material liability has been, or could
reasonably be expected to be, incurred under Title IV of
ERISA (other than for benefits payable in the ordinary
course of PBGC insurance premiums) or Section 412(f) or
(n) of the Code by any entity required to be aggregated
with Delta or any of its Subsidiaries pursuant to Section
4001 (b) of ERISA and/or Section 414(b) or (c) of the
Code (and the regulations promulgated thereunder) with
respect to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) which is not a Plan.
With respect to each Plan, Delta has delivered or caused
to be delivered to Acquiror and its counsel true and
complete copies of the following documents, as
applicable, for each respective Plan: (i) all Plan
documents, with all amendments thereto or, if the Plan is
not a written Plan, a description thereof; (ii) the
current summary plan description with any applicable
summaries of material modifications thereto as well as
any other material employee communications; (iii) all
current trust agreements and/or other documents
establishing Plan funding arrangements; (iv) the most
recent Internal Revenue Service determination letter and,
if a request for such a letter has been filed and is
currently pending with the Internal Revenue Service, a
copy of such filing; (v) the three most recently prepared
Internal Revenue Service Forms 5500; (vi) the most
recently prepared financial statements; and (vii) all
material related to contracts, service provider
agreements and investment management and investment
advisory agreements. Prior to 1997, Delta was exempt
from any requirement to prepare audited financial
statements for any Plan.
4.16 PROPERTIES. Except as disclosed in
Section 4.16 of the Disclosure Schedule (with paragraph
references corresponding to those set forth below):
(a) Delta Insurance has good and valid title
to all debentures, notes, stocks, securities, and
other assets that are of a type required to be
disclosed in Schedules A through E of its Annual
Statement, if applicable, and that are owned by it,
free and clear of all Liens.
(b) (i) None of the mortgage loans or other
long term invested assets held by Delta Insurance,
of the type required to be disclosed in Schedule B
or BA of its Annual Statement, if applicable, is or
has been at any time since December 31, 1995, in
default for more than 60 days as to any payment of
interest or principal due thereon and, to the
Knowledge of Delta, the financial condition of any
other party to such loan or asset is not so impaired
as to cause a default thereunder, (ii) there is no
existing circumstance or condition with respect to
such loan or asset or any property mortgaged or
pledged as collateral for the repayment thereof that
would cause such loan to be subject to imminent
default, and (iii) there is no valid right of
offset, defense or counterclaim to such loan or
asset.
(c) Except with respect to (i) Permitted
Encumbrances, (ii) real property owned by Delta or
Delta Insurance and leased to any Person, and (iii)
real property not used in the conduct of the
business of Delta or Delta Insurance, each of the
Acquired Companies owns good and indefeasible title
to, or has a valid leasehold interest in, all real
property used in the conduct of its business,
operations, or affairs, or of a type required to be
disclosed in Schedule A of an Annual Statement, if
applicable, free and clear of all Liens. No
improvement on any such real property owned, leased,
or held by such Acquired Company encroaches upon any
real property of any other Person. Each Acquired
Company owns, leases, or has a valid right under
Contract or otherwise to use adequate means of
ingress and egress to, from, and over all such real
property.
(d) Each Acquired Company owns good and
indefeasible title to, or has a valid leasehold
interest in or has a valid right under Contract to
use, all tangible personal property that is used in
the conduct of its business, operations, or affairs,
free and clear of all Liens. All such tangible
personal property is, except for reasonable wear and
tear, in good operating condition and repair and is
suitable for its current uses.
(e) Each Acquired Company has, and
immediately after the Closing will have, the
nonexclusive right to use, after the Closing, free
and clear of any royalty or other payment
obligations, claims of infringement or alleged
infringement, or other Liens, (i) all marks, names,
trademarks, service marks, patents, patent rights,
assumed names, logos, trade secrets, copyrights,
trade names, and service marks that are used in the
conduct of its business, operations, or affairs (of
which a true and complete list and description is
disclosed in Section 4.16(e) of the Disclosure
Schedule), and (ii) all material computer software,
programs, and similar systems owned by or licensed
to such Acquired Company or used in the conduct of
its business, operations, or affairs (of which a
true and complete list and description is disclosed
in Section 4.16(e) of the Disclosure Schedule). No
Acquired Company is in conflict with or in violation
or infringement of, nor has any Acquired Company
received any notice of any conflict with or
violation or infringement of or any claimed conflict
with any asserted rights of any other Person with
respect to any intellectual property or any material
computer software, programs, or similar systems,
including without limitation any of such items
disclosed in Section 4.16(e) of the Disclosure
Schedule.
4.17 CONTRACTS. Section 4.17 of the Disclosure
Schedule (with paragraph references corresponding to
those set forth below) contains a true and complete list
of each of the following Contracts or other documents or
arrangements (true and complete copies, or, if none,
written descriptions, of which have been made available
to the Acquiror, together with all amendments thereto) to
which any of the Acquired Companies is a party or by
which any of the Assets and Properties of any of the
Acquired Companies is bound:
(a) all employment, marketing, agency,
consultation, contracts for services or other
Contracts of any type (except insurance and annuity
Contracts or Benefit Plans including, without
limitation, loans or advances) with any present
Delta Employee, including, without limitation, any
"Super producer" contracts, if there exists any
present or future liability with respect to such
Contract, whether now existing or contingent) other
than (i) Contracts terminable without penalty or
other Liability upon 30 days or less notice, (ii)
Contracts with consultants and similar
representatives who do not receive compensation of
$100,000 or more per year, (iii) employment or
agency Contracts not containing terms which are
unduly burdensome to any of the Acquired Companies
with agents who do not receive compensation of
$100,000 or more per year, and (iv) agency Contracts
not on the standard form attached hereto as Exhibit
I, and the name, position, and rate of compensation
of each such Person and the expiration date of each
such Contract, as well as all sick leave, vacation,
holiday, and other similar practices, procedures,
and policies of any of the Acquired Companies
established or administered other than as Benefit
Plans;
(b) all Contracts with any Person containing
any provision or covenant limiting the ability of
any Acquired Company to engage in any line of
business or to compete with or to obtain products or
services from any Person or limiting the ability of
any Person to compete with or to provide products or
services to any Acquired Company;
(c) all material partnership, joint venture,
profit-sharing, or similar Contracts with any Person
except for any such arrangement disclosed in the
December 31, 1996 Annual Statement (and the notes
relating thereto) and Benefit Plans;
(d) all Contracts relating to the borrowing of
money by any Acquired Company or to the direct or
indirect guarantee by any Acquired Company of any
obligation for borrowed money in excess of $100,000
in the aggregate or any other Liability in respect
of indebtedness of any other Person, including
without limitation any Contract relating to (i) the
maintenance of compensating balances that are not
terminable by the Acquired Company without penalty
or other Liability upon not more than 60 calendar
days' notice, (ii) any line of credit or similar
facility, (iii) the payment for property, products,
or services of any other Person even if such
property, products, or services not conveyed, have
not yet been delivered, or rendered, or (iv) the
obligation to take-or-pay, keep-well, make-whole, or
maintain surplus or earnings levels or perform other
financial ratios or requirements; and Section
4.17(d) of the Disclosure Schedule contains a true
and complete list of any requirements for consents
or approvals of creditors needed for the Seller to
consummate the transactions contemplated hereby;
(e) all leases or subleases of real property
used in the business, operations, or affairs of
Delta, and all other material leases, subleases, or
rental or use Contracts for which Delta is liable;
(f) all Contracts relating to the future
disposition or acquisition of any material Assets or
Properties of any Person or of any interest in any
business enterprise (other than the disposition or
acquisition of material Assets or Properties in the
ordinary course of business and consistent with past
practice);
(g) all Contracts or arrangements (including
without limitation those relating to allocation of
expenses, personnel, services, or facilities) with
any Delta Affiliate;
(h) all reinsurance, coinsurance, or other
similar Contracts, and all investment contracts,
trust agreements or other security agreements
related thereto, indicating, with respect to each
group of such Contracts (by reinsurer or coinsurer)
or security agreement, the information required to
be disclosed in Schedule S of an Annual Statement;
(i) all outstanding proxies, powers of
attorney, or similar delegations of authority,
except for powers of attorney for the service of
process pursuant to applicable insurance or
corporate Laws;
(j) all Contracts for the provision of
administrative, underwriting, claims handling or
other services by or to any Acquired Company;
(k) all material Contracts for any product,
service, equipment, facility, or similar item (other
than insurance and annuity Contracts and other than
reinsurance, coinsurance, and other similar
Contracts) that by their respective terms do not
expire or terminate or are not terminable by an
Acquired Company, without penalty or other
Liability, within three months after December 31,
1997; and
(l) all other Contracts (other than insurance
and annuity Contracts and Contracts terminable
without penalty or other Liability upon 90 days or
less notice) that involve the payment or potential
payment, pursuant to the terms of such Contracts, by
or to any of the Acquired Companies of more than
$50,000 individually or $250,000 in the aggregate or
that are otherwise material to the Acquired
Companies, taken as a whole.
Each Contract disclosed or required to be disclosed in
the Disclosure Schedule pursuant to this Section 4.17,
is in full force and effect and constitutes a valid and
binding obligation of any of the Acquired Companies and,
to the Knowledge of Delta, of each other Person that is a
party thereto in accordance with its terms subject to
equitable rights and the rights of creditors; and none of
the Acquired Companies nor (to the Knowledge of Delta)
any other party to such Contract has materially violated,
breached or defaulted under any such Contract (or with or
without notice or lapse of time or both, would be in
material violation or breach of or default under any such
Contract). Except as disclosed in Section 4.17 of the
Disclosure Schedule, none of the Acquired Companies is a
party to or bound by any Contract that was not entered
into in the ordinary course of business and consistent
with past practice. None of the Acquired Companies is a
party to or bound by any collective bargaining or similar
labor Contract.
4.18 THREATS OF CANCELLATION. Except as
disclosed in Section 4.18 of the Disclosure Schedule,
since December 31, 1995, no policyholder, group of
policyholder Affiliates, or Persons writing, selling, or
producing, either directly or through reinsurance
assumed, insurance business that individually or in the
aggregate for each such policyholder, group or Person,
respectively, accounted for 3% or more of the premium or
annuity income of Delta Insurance for the year ended
December 31, 1996, has terminated or (to the Knowledge of
Delta) threatened to terminate its relationship with
Delta Insurance.
4.19 LICENSES AND PERMITS. Except as disclosed
in Section 4.19 of the Disclosure Schedule (with
paragraph references corresponding to those set forth
below):
(a) Each Acquired Company owns or validly
holds, all licenses, franchises, permits, approvals,
authorizations, exemptions, classifications,
certificates, registrations, and similar documents
or instruments that are required for its business,
operation, and affairs and that the failure to so
own or hold has or would reasonably be expected to
have a Material Adverse Effect on such Acquired
Company; and
(b) all such licenses, franchises, permits,
approvals, authorizations, exemptions,
classifications, certificates, registrations, and
similar documents or instruments are valid, binding,
and in full force and effect, and none of such
licenses, franchises, permits, approvals,
authorizations, exemptions, classifications,
certificates, registrations, and similar documents
or instruments will lapse or become invalid or
subject to any material limitations immediately
after the Closing as a result of the Merger.
4.20 OPERATIONS INSURANCE. Section 4.20 of the
Disclosure Schedule contains a true and complete list and
description of all liability, property, workers
compensation, directors and officers liability, and other
similar insurance Contracts that insure the business,
operations, or affairs of and Acquired Company or affect
or relate to the ownership, use, or operations of any of
their respective Assets and Properties and (a) that have
been issued to such Acquired Company (including without
limitation the names and addresses of the insurers, the
expiration dates thereof, and the annual premiums and
payment terms thereof) or (b) that are held by any
Affiliate of Delta (including any stockholder of Delta)
for the benefit of any Acquired Company following the
Closing. All such insurance is in full force and effect
and (to the Knowledge of Delta) is with financially sound
and reputable insurers and, in light of the business,
operations, and affairs of the Acquired Companies, is in
amounts and provides coverage that are reasonable and
customary for Persons in similar businesses.
4.21 INTERCOMPANY LIABILITIES. Except as
reflected in the December 31, 1996 Annual Statement, or
except as disclosed in Section 4.21 of the Disclosure
Schedule, (a) there are no Liabilities between any
Acquired Company and any other Affiliate (including any
stockholder of Delta) of Delta, and (b) no Affiliate of
Delta (including any stockholder of Delta) provides or
causes to be provided to Delta any products, services,
equipment, facilities, or similar items. Except as
disclosed in Section 4.21 of the Disclosure Schedule,
since December 31, 1996, no such intercompany Liabilities
in excess of an aggregate of $100,000 have been paid, and
no settlements of such intercompany Liabilities have been
made.
4.22 BANK ACCOUNTS. Section 4.22 of the
Disclosure Schedule contains (a) a true and complete list
of the names and locations of all banks, trust companies,
securities brokers, and other financial institutions at
which an Acquired Company has an account or safe deposit
box or maintains a banking, custodial, trading, or other
similar relationship and (b) a true and complete list and
description of each such account, box, and relationship,
indicating in each case the account number and the names
of the respective officers, employees, agents, or other
similar representatives of Delta transacting business
with respect thereto.
4.23 BROKERS. Except for the fee payable to
Lazard Freres & Co. LLC for providing a fairness opinion,
all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out on
behalf of Delta without the intervention of any Person as
to give rise to any valid claim by any Person against the
Acquiror, a Designated Subsidiary, or Delta for a
finder's fee, brokerage commission, or similar payment.
4.24 DISCLOSURE. Neither this Agreement nor
any certificate required to be furnished by Delta to the
Acquiror, Sub or any Designated Subsidiary in connection
with this Agreement or the transactions contemplated
hereby contains any untrue statement of a material fact
concerning any of the Acquired Companies or omits to
state a material fact concerning any of the Acquired
Companies necessary to make the statements herein or
therein not misleading in light of the circumstances in
which they were made. Delta shall not be deemed to have
made to AmerUs, Sub or any Designated Subsidiary any
representation or warranty other than as expressly made
by Delta in Article IV hereof. Without limiting the
generality of the foregoing, and notwithstanding any
otherwise express representations and warranties made by
Delta in Article IV hereof, Delta makes no representation
or warranty with respect to:
(a) any projections, estimates or budgets
heretofore delivered to or made available to AmerUs, Sub
or any Designated Subsidiary of future revenues,
expenses, or expenditures or future results of
operations; or
(b) except as expressly covered by
representations and warranties contained in Article IV
hereof, any other information or documents (financial or
otherwise) made available to AmerUs, Sub or any
Designated Subsidiary or their respective counsel,
accountants or advisors with respect to Delta or any of
the Acquired Companies.
4.25 STOCKHOLDERS AND RELATED MATTERS.
(a) Delta represents and warrants that the Merger
requires the affirmative vote of holders of 66-2/3% of
the outstanding shares of each of the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock
and Common Stock Class B. In addition, the Merger
requires the vote of holders of a majority of the
outstanding shares of Common Stock Class A, with each
series of Preferred Stock and the Common Stock Class B
being entitled to vote with the Common Stock Class A on
the basis of one vote for each share held.
(b) Delta has provided AmerUs with copies of
the Stockholders' Agreement dated as of December 21, 1990
and Amendment I to the Stockholders' Agreement dated as
of March 31, 1992 and Amendment II to the Stockholders'
Agreement, dated as of December 1, 1993 (together, the
"Stockholders' Agreement"). To the knowledge of Delta,
without any investigation, there are no other agreements,
verbal or written, by or among all or any of the
stockholders of Delta, other than a Letter Agreement,
dated February 23, 1996 which has been provided by Delta
to AmerUs. Nothing contained herein is intended to state
or imply that the Stockholders' Agreement (or such Letter
Agreement) is applicable to this Agreement or the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AMERUS
AmerUs hereby represents and warrants to Delta as
follows:
5.1 ORGANIZATION OF AMERUS AND SUB. AmerUs is
a corporation duly organized, and validly existing, under
the Laws of Iowa and Sub is a corporation duly organized,
and validly existing, under the Laws of Delaware, and
each of AmerUs and Sub has the requisite power and
authority to enter into this Agreement and to perform its
obligations under this Agreement. AmerUs is duly
licensed, qualified, or admitted to do business in all
jurisdictions in which the failure to be so licensed,
qualified, or admitted, individually or in the aggregate
with other such failures, has or would reasonably be
expected to have a Material Adverse Effect on AmerUs.
5.2 AUTHORITY OF AMERUS AND SUB. Each of
AmerUs and Sub has duly and validly approved this
Agreement and the transactions contemplated hereby. The
execution and delivery of this Agreement by AmerUs and by
Sub and the performance by AmerUs and Sub of their
respective obligations under this Agreement have been
duly and validly authorized by all necessary corporate
action. This Agreement constitutes a valid, and binding
obligation of AmerUs and of Sub and is enforceable
against AmerUs and Sub, respectively, in accordance with
its terms, except to the extent that (a) enforcement may
be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar Laws now or
hereafter in effect relating to or limiting creditors
rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to
the discretion of the court or other similar Person
before which any proceeding therefor may be brought.
5.3 ORGANIZATION OF DESIGNATED SUBSIDIARIES.
On the Closing Date, each Designated Subsidiary will be a
corporation duly organized, and validly existing, and in
good standing under the Laws of its jurisdiction of
incorporation and will have full corporate power and
authority to consummate the transactions contemplated
hereby.
5.4 NO CONFLICTS OR VIOLATIONS. The execution
and delivery of this Agreement by AmerUs and by Sub do
not, and the performance by AmerUs and by Sub of their
respective obligations under this Agreement will not:
(a) subject to obtaining the approvals
contemplated by Sections 7.1 and 7.2 hereof, violate
any term or provision of any Law or any writ,
judgment, decree, injunction, or similar order
applicable to AmerUs or Sub;
(b) conflict with or result in a violation or
breach of, or constitute (with or without notice or
lapse of time or both) a default under, any of the
terms, conditions, or provisions of the articles or
certificate of incorporation or by-laws of AmerUs or
Sub;
(c) result in the creation or imposition of
any Lien upon AmerUs or Sub or any of their
respective Assets and Properties that individually
or in the aggregate with any other Liens has or
would reasonably be expected to have a Material
Adverse Effect on AmerUs or Sub;
(d) conflict with or result in a violation or
breach of, or constitute (with or without notice or
lapse of time or both) a default under, or give to
any Person any right of termination, cancellation,
acceleration, or modification in or with respect to,
any Contract to which AmerUs or Sub is a party or by
which any of their respective Assets and Properties
may be bound other than (i) the consent of The Chase
Manhattan Bank, as Administrative Agent, and the
holders of 66 2/3% of the outstanding debt, under
each of the Revolving Credit and Term Loan Agreement
dated as of December 11, 1996 of Acquiror, and the
Credit Agreement dated as of January 29, 1997 of
AmerUs Group Co., each as amended, (ii) the consent
of American Mutual Holding Company pursuant to the
Amended and Restated Intercompany Agreement by and
among American Mutual Holding Company, AmerUs Group
Co. and the Acquiror, and (iii) those Contracts as
to which any such conflicts, violations, breaches,
defaults, or rights individually or in the aggregate
do not have or would not reasonably be expected to
have a Material Adverse Effect on AmerUs or Sub; or
(e) require AmerUs or Sub to obtain any
consent, approval or action of, or make any filing
with or give any notice to, any Person except (i) as
contemplated in Section 7.1 or 7.2 hereof, (ii) or
those which the failure to obtain, make, or give
individually or in the aggregate with other such
failures has or would reasonably be expected to have
no Material Adverse Effect on AmerUs or Sub.
5.5 FINANCING. AmerUs will have the requisite
funds at Closing equal to the Merger Consideration as
contemplated by Article III hereof.
5.6 BROKERS. Except for the fee payable to
Fox-Pitt, Kelton Inc., all negotiations relative to this
Agreement and the transactions contemplated hereby have
been carried out by AmerUs directly with Delta, without
the intervention of any Person on behalf of the AmerUs in
such manner as to give rise to any valid claim by any
Person against any of the Acquired Companies for a
finder s fee, brokerage commission, or similar payment.
5.7 DISCLOSURE. Neither this Agreement nor any
certificate to be furnished by AmerUs to Delta in
connection with this Agreement or the transactions
contemplated hereby, contains any untrue statement of a
material fact concerning any of AmerUs, Sub or any
Designated Subsidiary or omits to state a material fact
concerning any of the foregoing necessary to make the
statements herein or therein not misleading in light of
the circumstances in which they were made. Neither
AmerUs, nor Sub nor any Designated Subsidiary shall be
deemed to have made to Delta any representation or
warranty other than as expressly made by AmerUs in
Article V hereof. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express
representations and warranties made by AmerUs in Article
V hereof, AmerUs makes no representation or warranty with
respect to:
(a) any projections, estimates or budgets
heretofore delivered to or made available to Delta of
future revenues, expenses or expenditures or future
results of operations; or
(b) except as expressly covered by
representations and warranties contained in Article V
hereof, any other information or documents (financial or
otherwise) made available to Delta or its counsel,
accountants or advisors with respect to AmerUs, Sub or
any Designated Subsidiary.
ARTICLE VI
COVENANTS OF DELTA
Delta covenants and agrees with AmerUs that, at
all times before the Closing, Delta will comply with all
covenants and provisions of this Article VI, except to
the extent AmerUs may otherwise consent in writing, or to
the extent otherwise required or permitted by this
Agreement.
6.1 LENDER AND REGULATORY APPROVALS. Delta
will (a) take all commercially reasonable steps necessary
or desirable, and proceed diligently and in good faith
and use all commercially reasonable efforts to obtain, as
promptly as practicable, all approvals required by any
applicable Contract, (b) take all commercially reasonable
steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts
to obtain, as promptly as practicable, all approvals,
authorizations, and clearances of governmental and
regulatory authorities required to permit the
consummation of the transactions contemplated hereby, (c)
provide such other information and communications to such
governmental and regulatory authorities as AmerUs or such
authorities may reasonably request, and (d) cooperate
with AmerUs, Sub and each Designated Subsidiary in
obtaining, as promptly as practicable, all approvals,
authorizations, and clearances of governmental or
regulatory authorities and others required of AmerUs, Sub
or any Designated Subsidiary to consummate the
transactions contemplated hereby, including without
limitation any required approvals of the insurance
regulatory authorities in Tennessee.
6.2 HSR FILINGS. Delta will (a) take promptly
all actions necessary to make the filings required of it
and the Acquired Companies under the HSR Act, (b) comply
at the earliest practicable date with any request for
additional information received from the Federal Trade
Commission or Antitrust Division of the Department of
Justice pursuant to the HSR Act, (c) cooperate with
AmerUs and Sub in connection with their filings under the
HSR Act, and (d) request early termination of the
applicable waiting period.
6.3 INVESTIGATION BY AMERUS. Subject to the
provisions of Section 13.4, Delta will provide AmerUs,
its lenders, and their respective counsel, accountants,
actuaries, and other representatives with access, upon
reasonable notice and during normal business hours, to
all facilities, officers, employees, agents, accountants,
actuaries, Assets and Properties, and Books and Records
of Delta and will furnish AmerUs and such other Persons
during such period with all such information and data
(including without limitation copies of Contracts,
Benefit Plans, and other Books and Records) concerning
the business, operations, and affairs of Delta as AmerUs
or any of such other Persons reasonably may request.
6.4 NO NEGOTIATIONS, ETC. (a) Except as set
forth below, Delta shall not, nor shall Delta authorize
or permit any of its Subsidiaries, officers, directors,
employees, representatives or agents, to, directly or
indirectly, encourage, solicit, participate in, initiate
or continue discussions or negotiations with, or provide
any information to, any Person (other than AmerUs, Sub,
or any Designated Subsidiary) with respect to, or take
any action to facilitate any inquiries or the making of,
or enter into any agreement (including any preliminary
agreement) relating to, or approve any proposal that
constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (as defined below).
Notwithstanding the preceding sentence, at any time prior
to the approval of this Agreement and the Merger by
Delta's stockholders, whether at the Special Meeting (as
defined below) or by written consent, Delta may furnish
information and access, in each case only in response to
unsolicited requests therefor, to any Person pursuant to
a customary confidentiality agreement, and may
participate in discussions and negotiate with such Person
concerning an Acquisition Proposal, if the Board of
Directors of Delta determines in its good faith judgment
following consultation with outside counsel and an
independent financial advisor, that (i) such Person shall
have submitted an unsolicited Superior Proposal (as
defined below), and (ii) it is required to do so in order
to comply with its fiduciary duties to stockholders under
applicable Law. Delta's Board of Directors shall notify
AmerUs orally (within one Business Day), and in writing
(as promptly as practicable) of all the relevant details
relating to all inquiries and proposals that it and any
of its Subsidiaries, officers, directors, employees,
representatives or agents may receive relating to any
Acquisition Proposal and, if such inquiries or proposals
are in writing, Delta shall provide a copy of such
written Acquisition Proposal to AmerUs immediately after
receipt thereof and thereafter keep AmerUs promptly
advised of any development with respect thereto.
(b) Except as set forth in this Section
6.4(b), Delta's Board of Directors shall not withdraw or
modify, or propose to withdraw or modify, its
recommendation of this Agreement and the transactions
contemplated hereby or approve or recommend, or propose
to approve or recommend, any Acquisition Proposal.
Notwithstanding the foregoing, if Delta's Board of
Directors determines in its good faith judgment,
following consultation with outside counsel and an
independent financial advisor, that (i) it has received
an unsolicited Superior Proposal and (ii) it is required
to do so in order to comply with its fiduciary duties to
stockholders under applicable law, Delta's Board of
Directors may withdraw its recommendation of the
transactions contemplated hereby or approve or recommend
such unsolicited Superior Proposal, but in each case only
after providing at least five Business Days' prior
written notice to AmerUs (A) advising AmerUs that Delta's
Board of Directors has received or become aware of a
Superior Proposal, (B) specifying the material terms and
conditions of such Superior Proposal, (C) identifying the
person making the Superior Proposal, and (D) stating that
it intends to withdraw its recommendation or approve or
recommend such Superior Proposal.
(c) "Acquisition Proposal" means any proposal,
offer or expression of interest from any Person involving
a merger, consolidation or other business combination
with Delta or any of its Subsidiaries or any proposal,
offer or expression of interest to acquire or cause to be
acquired in any manner, directly or indirectly,
including, without limitation, through any reinsurance or
coinsurance transaction, all or a significant portion of
the business, assets, or capital stock of Delta or any of
its Subsidiaries, other than the transactions
contemplated by this Agreement.
(d) "Superior Proposal" means any bona fide
Acquisition Proposal from any Person for which any
required financing is committed and which is otherwise on
terms that Delta's Board of Directors determines in its
good faith reasonable judgment, following consultation
with outside counsel and an independent financial
advisor, to be more favorable to Delta's stockholders
than the Merger.
6.5 CONDUCT OF BUSINESS. Delta will, and will
cause the Acquired Companies to, conduct its and their
respective businesses only in the ordinary course and
consistent with past practice, except as otherwise
provided in this Agreement or except as may be consented
to by AmerUs in writing. Without limiting the generality
of the foregoing:
(a) Delta will use all commercially reasonable
efforts to and cause each of the Acquired Companies
to (i) preserve intact its present business
organization, field force, reputation, and
policyholder, annuitant or customer relations, (ii)
keep available the services of its present key
officers, directors, employees, agents, consultants,
and other similar representatives, (iii) except as
to Vermont, maintain all licenses, qualifications,
and authorizations to do business in each
jurisdiction in which it is so licensed, qualified,
or authorized, (iv) maintain in full force and
effect all Contracts, documents, and arrangements
set forth in Section 4.17 of the Disclosure
Schedule, except to the extent they are terminated
in the ordinary course of business, (v) maintain all
of its Assets and Properties in good working order
and condition, ordinary wear and tear excepted, (vi)
continue all current marketing and selling
activities relating to its business, operations, or
affairs in accordance with its current marketing
plan and applicable Law, and (vii) with respect to
Delta Insurance, maintain the rating classification,
or its equivalent, assigned as of the date hereof to
it by A.M. Best Company, Inc.
(b) Delta will maintain, and will cause each
of the Acquired Companies to maintain, their
respective Books and Records in the usual manner and
consistent with past practice and will not permit a
material change in any applicable underwriting,
investment, actuarial, financial reporting, or
accounting practice or policy of any Acquired
Company or in any assumption underlying such a
practice or policy, or in any method of calculating
any bad debt, contingency, or other reserve for
financial reporting purposes or for other accounting
purposes (including without limitation any practice,
policy, assumption, or method relating to or
affecting the determination of insurance or
annuities in force, premium or investment income,
Reserve Liabilities, or operating ratios with
respect to expenses, losses, or lapses).
(c) Delta will (i) prepare properly and file
duly and validly all reports and all Tax Returns
required to be filed with any governmental or
regulatory authorities with respect to its business,
operations, or affairs, and (ii) pay in full and
when due all Taxes indicated by such Tax Returns or
otherwise levied or assessed upon it or any of its
Assets and Properties, and withhold or collect and
pay to the proper taxing authorities or hold in
separate bank accounts for such payment all Taxes
that it is required to so withhold or collect and
pay, unless reasonable reserves therefor have been
established and reflected in its Books and Records.
(d) Delta will cause (i) all Reserve
Liabilities with respect to insurance and annuity
Contracts established or reflected in the Books and
Records of Delta Insurance to be (A) established in
accordance with the methods for establishing
Liabilities and reserving methods followed by Delta
Insurance in the preparation of the December 31,
1996 Annual Statement and (B) adequate (under
generally accepted actuarial principles consistently
applied) to cover the total amount of all reasonably
anticipated matured and unmatured benefits,
dividends, losses, claims, expenses, and other
Liabilities of Delta Insurance under all insurance
and annuity Contracts pursuant to which Delta
Insurance has or will have any liability (including
without limitation any liability arising under or as
a result of any reinsurance, coinsurance, or other
similar Contract); and (ii) Delta Insurance to
continue to own assets that qualify as legal reserve
assets under all applicable insurance Laws in an
amount at least equal to its required Reserve
Liabilities.
(e) Delta will use all commercially reasonable
efforts to maintain in full force and effect until
the Closing substantially the same levels of
coverage as the insurance afforded under the
Contracts listed in Section 4.20 of the Disclosure
Schedule. Any and all benefits under such Contracts
paid or payable to any Acquired Company prior to the
Closing with respect to the business, operations,
affairs, or Assets and Properties of such Acquired
Company shall be paid to such Acquired Company.
(f) Delta will continue to and will cause the
other Acquired Companies to comply, in all material
respects, with all Laws applicable to its business,
operations, or affairs.
(g) Delta will not and will cause the other
Acquired Companies not to incur any Liabilities
outside of the ordinary course of their respective
businesses and consistent with past practices.
6.6 FINANCIAL STATEMENTS AND REPORTS.
(a) As promptly as practicable after each
calendar quarter ending between the date hereof and
the Closing Date, Delta will deliver to AmerUs true
and complete copies of the Quarterly Statement filed
by Delta Insurance for each quarter then ended.
(b) As promptly as practicable but not later
than (i) sixty days following the end of each
calendar quarter, Delta will deliver to the Acquiror
a quarterly GAAP consolidated balance sheet of the
Acquired Companies and the related consolidated
statements of income of the Acquired Companies for
the quarter then ended, together with any
consolidating supplementary schedules related
thereto, and (ii) forty-five days following the end
of each calendar quarter, Delta will deliver to the
Acquiror a copy of the Quarterly Statement of Delta
Insurance for such quarter, prepared in accordance
with SAP.
(c) As promptly as practicable, Delta will
deliver to the Acquiror true and complete copies of
such other material financial statements, reports,
or analyses as may be prepared or received by it or
any of the Acquired Companies and as relate to any
of the business, operations, or affairs of the
Acquired Companies, including without limitation
normal internal reports which Delta prepares (such
as those reflecting monthly premiums, claims, and
cash flow) and special reports (such as those of
financial or actuarial consultants), as well as any
reports prepared for the stockholders of Delta.
(d) As promptly as practicable, Delta will
deliver to the Acquiror the calculation of the
accrued liability with respect to each Benefit Plan
which is a non-qualified deferred compensation plan.
6.7 INVESTMENTS. Each of the Acquired
Companies will invest its future cash flow, any cash from
matured and maturing investments, any cash proceeds from
the sale of its Assets and Properties, and any cash funds
currently held by it exclusively in cash equivalent
assets or in short-term investments (consisting of United
States government issued or guaranteed securities,
commercial paper rated A-1 or P-1, or certificates of
deposit issued by one or more of the banks or financial
institutions listed in Section 6.7 of the Disclosure
Schedule), except (i) as otherwise required by Law, (ii)
as required to provide cash (in the ordinary course of
business and consistent with past practice) to meet its
reasonably anticipated current obligations, (iii) in
accordance with past practices in the ordinary course of
business, and in the case of Delta and Delta Insurance,
with the investment policies set forth in Section 6.7 of
the Disclosure Schedule, or (iv) as consented to by the
Acquiror. Delta Insurance will not take any actions,
other than as otherwise permitted by this Agreement or in
the ordinary course of business and consistent with past
practice (including, without limitation, normal
amortization and depreciation of any depreciable asset)
designed to cause the assets of Delta Insurance that are
classified as nonadmitted under SAP or by the applicable
insurance regulatory authorities, to be greater or less
than their respective dollar amounts as of December 31,
1996.
6.8 EMPLOYEE MATTERS. Except as may be
required by Law, by this Agreement or as disclosed in
Section 6.8 of the Disclosure Schedule, or except for
such Contract representations, promises, changes,
alterations, or amendments that do not and will not
result in any Liability to any of the Acquired Companies,
the Acquired Companies will refrain from directly or
indirectly, without the consent of Acquiror:
(a) making any representation or promise,
oral or written, to any Delta Employee which is
inconsistent with the terms of any Benefit
Plan;
(b) making any change to, or amending in
any way, the Contracts, salaries, wages, or
other compensation of any Delta Employee whose
annual compensation exceeds $100,000 other than
routine changes or amendments that (a) are made
in the ordinary course of business and
consistent with past practice, (b) do not and
will not result in increases of more than 5% in
the salary, wages, or other compensation of any
such Person, and (c) do not and will not
exceed, in the aggregate, 5% of the total
salaries, wages, and other compensation of all
Delta Employees;
(c) adopting, entering into, amending,
altering or terminating, partially or
completely, any Benefit Plan; or any election
made pursuant to the provisions of any Benefit
Plan, to accelerate any payments, obligations
or vesting schedules under any Benefit Plans;
(d) adopting, entering into, amending,
altering, or terminating, partially or
completely, any employment, agency
consultation, or representation Contract that
is, or had it been in existence on the date of
this Agreement would have been, required to be
disclosed in Section 4.17(a) of the Disclosure
Schedule;
(e) approving any general or company wide pay
increases for Delta Employees; or
(f) entering into any Contract with any Delta
Employee that is not terminable by any of the
Acquired Companies, without penalty or other
Liability, upon not more than 60 calendar days
notice.
6.9 NO CHARTER AMENDMENTS. Each of the
Acquired Companies will refrain from amending its
certificate of incorporation or by-laws and from taking
any action with respect to any such amendment.
6.10 NO ISSUANCE OF SECURITIES. Each of the
Acquired Companies will refrain from authorizing or
issuing any shares of their capital stock or other equity
securities or entering into any Contract or granting any
option, warrant, or right calling for the authorization
or issuance of any such shares or other equity
securities, or creating or issuing any securities
directly or indirectly convertible into or exchangeable
for any such shares or other equity securities, or
issuing any options, warrants, or rights to purchase any
such convertible securities.
6.11 NO DIVIDENDS. Except as set forth in
Section 6.11 of the Disclosure Schedule, Delta will
refrain from declaring, setting aside, or paying any
dividend or other distribution in respect of its capital
stock and from directly or indirectly redeeming,
purchasing, or otherwise acquiring any of its capital
stock or any interest in or right to acquire any such
stock.
6.12 NO DISPOSAL OF PROPERTY. Except as set
forth in Section 6.12 of the Disclosure Schedule or as
otherwise expressly provided in this Agreement, each of
the Acquired Companies will refrain from (a) disposing of
any of its Assets and Properties and from permitting any
of its Assets and Properties to be subjected to any
Liens, except to the extent any such disposition or any
such Lien is made or incurred in the ordinary course of
the business and consistent with past practice, (b)
selling any material part of its insurance products,
operations, or business to any third party (other than
sales of insurance products in the ordinary course of
business consistent with past practice), (c) entering
into any contracts obligating it to administer the
insurance operations of any other Person, and (d)
entering into any Contracts permitting any other Person
to administer its insurance operations.
6.13 NO BREACH OR DEFAULT. Each of the
Acquired Companies will refrain from violating,
breaching, or defaulting, and from taking or failing to
take any action that (with or without notice or lapse of
time or both) would constitute a material violation,
breach, or default, in any way under any term or
provision of any Contract to which it is a party or by
which any of its Assets and Properties is or may be
bound.
6.14 NO INDEBTEDNESS. Except in the ordinary
course of business and consistent with past practice and
except for existing contractual obligations, each of the
Acquired Companies will refrain from creating, incurring,
assuming, guaranteeing, or otherwise becoming liable for,
and from canceling, paying, agreeing to cancel or pay, or
otherwise providing for a complete or partial discharge
in advance of a scheduled payment date with respect to,
any Liability, and from waiving any right to receive any
direct or indirect payment or other benefit under any
Liability owing to such company.
6.15 NO ACQUISITIONS. Delta will refrain from
(a) merging, consolidating, or otherwise combining or
agreeing to merge, consolidate, or otherwise combine with
any other Person, (b) acquiring or agreeing to acquire
blocks of business of all or substantially all the Assets
and Properties or capital stock or other equity
securities of any other Person, or (c) otherwise
acquiring or agreeing to acquire control of any other
Person.
6.16 LIABILITIES TO DELTA AFFILIATES. Except
for agreements between or among Delta and its
Subsidiaries, at least five Business Days before the
Closing, Delta will deliver to the Acquiror a true and
complete list and description of all Liabilities between
Delta and any Delta Affiliate to be outstanding on the
Closing Date. At or prior to the Closing, all such
Liabilities shall be paid, except as otherwise
specifically provided herein or agreed by Acquiror.
Delta will not enter into any Contract or, except as
required by any Contract disclosed in Section 4.17(g) of
the Disclosure Schedule, engage in any transaction with
any other Delta Affiliate. Except as otherwise
specifically provided herein or in a notice from Acquiror
prior to the Closing Date, on the Closing Date Delta will
terminate and will cause the other Acquired Companies to
terminate each Contract between Delta and any Delta
Affiliate, including without limitation each Contract
disclosed in Section 4.17(g) of the Disclosure Schedule.
6.17 TAX MATTERS. Delta shall not and shall
not permit any Acquired Company to settle any material
audit, make or change any material Tax election or file
any amended Tax Return (except as provided in Section
4.12(f) of the Disclosure Schedule). At least 10 days
prior to filing any income Tax Return or other material
Tax Return relating to Delta or any Acquired Company,
Delta shall deliver a copy of such Tax Return to Acquiror
for Acquiror's review and comment.
6.18 NOTICE AND CURE. Delta will notify the
Acquiror promptly in writing of, and contemporaneously
will provide the Acquiror with true and complete copies
of any and all information or documents relating to, and
will use all commercially reasonable efforts to cure
before the Closing, any event, transaction, or
circumstance occurring after the date of this Agreement
that causes or will cause any covenant or agreement under
this Agreement to be breached, or that renders or will
render untrue any representation or warranty of Delta
contained in this Agreement as if the same were made on
or as of the date of such event, transaction, or
circumstance. Delta also will use all commercially
reasonable efforts to cure, before the Closing, any
violation or breach of any representation, warranty,
covenant, or agreement made by it in this Agreement,
whether occurring or arising before or after the date of
this Agreement.
6.19 SUPPLEMENTS TO SCHEDULES. Delta shall at
any time or from time to time after the date hereof and
prior to the Closing Date, supplement or amend the
Disclosure Schedule with respect to any matter arising
after the date hereof which, if existing or occurring at
the date hereof, would have been required to be set forth
or described therein. No supplement or amendment to the
Disclosure Schedule shall be deemed to cure any breach of
a representation or warranty of Delta made herein, or
have any effect for the purpose of determining the
satisfaction of the conditions to Closing set forth in
Article VIII.
6.20 STOCKHOLDERS AGREEMENT. Delta shall take
all actions that may be necessary in order to obtain the
valid waiver of any provisions of the Stockholders
Agreement or shall otherwise comply with the provisions
of the Stockholders Agreement, to the extent applicable
to the Merger. Delta shall not, directly or indirectly,
assert any rights that it may have under the Stockholders
Agreement on account of this Agreement or the Merger, or
assign or transfer to any other Person any such rights,
it being understood that nothing in this Section 6.20 is
intended to state or imply that the Stockholders
Agreement is applicable to this Agreement or the Merger.
6.21 STOCKHOLDER APPROVAL. Delta shall, in
accordance with all applicable Laws, and the Second
Amended and Restated Certificate of Incorporation and By-
Laws of Delta, duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special
Meeting") or solicit the written consent of its
stockholders (the "Consent Solicitation") as promptly as
practicable after the date hereof for the purpose of
considering and taking action upon this Agreement and
such other matters as may be appropriate at the Special
Meeting or pursuant to the Consent Solicitation.
Notwithstanding anything in this Agreement to the
contrary, Delta shall not take any action which
interferes with the convening of the Special Meeting or
the taking of the stockholders' vote at the meeting or
the Consent Solicitation. The Board of Directors of
Delta will include its recommendation that the
stockholders of Delta approve and adopt this Agreement
and the transactions contemplated hereby in any proxy or
other solicitation materials or communications prepared
in connection with the Special Meeting or the Consent
Solicitation.
6.22 WARN ACT NOTIFICATION. Delta shall, upon the
request of Acquiror, provide any notices required under,
and otherwise take all steps necessary to comply with,
all applicable "plant closing", "mass layoff" or other
similar Laws, including, but not limited to, the Worker
Adjustment and Retraining Notification Act.
6.23 LONDON LIFE REINSURANCE COMPANY NEGOTIATIONS.
Delta shall jointly with Acquiror negotiate with London
Life Reinsurance Company to seek a reduction or
elimination of the margin relating to the Delta Insurance
Index Advantage product. If a reduction is agreed to,
then Acquiror shall have the right to determine the
amount of the new margin. London Life Reinsurance
Company shall remain the coinsurer in connection with the
Index Advantage product.
ARTICLE VII
COVENANTS AND CERTAIN AGREEMENTS OF AMERUS
7.1 REGULATORY APPROVALS. The Acquiror will,
or will cause Sub or any Designated Subsidiary to, (a)
take all commercially reasonable steps necessary or
desirable, and proceed diligently and in good faith and
use all commercially reasonable efforts to obtain, as
promptly as practicable, all approvals, authorizations,
and clearances of governmental and regulatory authorities
required of the Acquiror, Sub or such Designated
Subsidiary to consummate the transactions contemplated
hereby, including without limitation any required
approvals of the insurance regulatory authorities in
Tennessee, (b) provide such other information and
communications to such governmental and regulatory
authorities as Delta or such authorities may reasonably
request, and (c) cooperate with Delta in obtaining, as
promptly as practicable, all approvals, authorizations,
and clearances of governmental or regulatory authorities
required to consummate the transactions contemplated
hereby.
7.2 HSR FILINGS. The Acquiror will (a) take
promptly all actions necessary to make the filings
required of the Acquiror or its Affiliates under the HSR
Act, (b) comply at the earliest practicable date with any
request for additional information received by the
Acquiror or its Affiliates from the Federal Trade
Commission or Antitrust Division of the Department of
Justice pursuant to the HSR Act, (c) cooperate with Delta
in connection with the filings under the HSR Act, and (d)
request early termination of the applicable waiting
period.
7.3 NOTICE AND CURE. The Acquiror will notify
Delta promptly in writing of, and contemporaneously will
provide Delta with true and complete copies of any and
all information or documents relating to, and will use
all commercially reasonable efforts to cure before the
Closing, any event, transaction, or circumstance
occurring after the date of this Agreement that causes or
will cause any covenant or agreement of the Acquiror
under this Agreement to be breached, or that renders or
will render untrue any representation or warranty of the
Acquiror contained in this Agreement as if the same were
made on or as of the date of such event, transaction, or
circumstance. The Acquiror also will use all commercially
reasonable efforts to cure, before the Closing, any
violation or breach of any representation, warranty,
covenant, or agreement made by it in this Agreement,
whether occurring or arising before or after the date of
this Agreement.
7.4 EMPLOYMENT AND CONSULTING AGREEMENTS.
AmerUs will use all commercially reasonable efforts to
enter into (or to cause Delta to enter into) a mutually
agreeable Employment and Non-Competition Agreement with
the Delta Employee set forth on Exhibit 3.1(f)(iii)
hereto
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF AMERUS AND SUB
The obligations of AmerUs and Sub hereunder are
subject to the fulfillment, at or before the Closing, of
each of the following conditions (all or any of which may
be waived in whole or in part by the Acquiror).
8.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Delta set forth in this
Agreement that are qualified as to materiality shall be
true and correct, and the representations and warranties
of Delta set forth in this Agreement that are not so
qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of
the Closing Date, except to the extent any such
representation or warranty expressly relates to an
earlier date (in which case as of such date), and AmerUs
shall have received a certificate signed on behalf of
Delta by its Chairman, President and Chief Executive
Officer, Executive Vice President and Chief Operating
Officer and (to the extent of her actual knowledge)
Senior Vice President, Secretary and General Counsel to
such effect.
8.2 PERFORMANCE. Delta shall have performed
and complied in all material respects with all
agreements, covenants, obligations, and conditions
required by this Agreement to be so performed or complied
with at or before the Closing, including those
specifically referred to elsewhere in this Article VIII,
and AmerUs shall have received a certificate signed on
behalf of Delta by its Chairman, President and Chief
Executive Officer, Executive Vice President and Chief
Operating Officer and (to the extent of her actual
knowledge) Senior Vice President, Secretary and General
Counsel to such effect.
8.3 OFFICER'S CERTIFICATES. Delta shall have
delivered to the Acquiror a certificate, dated the
Closing Date in form reasonably acceptable to Acquiror
and executed by the Chairman, President and Chief
Executive Officer, the Executive Vice President and Chief
Operating Officer and (to the extent of her actual
knowledge) the Senior Vice President, Secretary and
General Counsel of Delta, certifying with respect to the
fulfillment of the conditions set forth in this Article
VIII. In addition, Delta shall have delivered to the
Acquiror a certificate, dated the Closing Date and
executed by the Secretary of Delta, certifying (a) that
Delta has duly and validly taken all corporate action
necessary to authorize its execution and delivery of this
Agreement and its performance of its obligations under
this Agreement, (b) that the resolutions (true and
complete copies of which shall be attached to the
certificate) of the Board of Directors and stockholders
of Delta with respect to this Agreement and the
transactions contemplated hereby have been duly and
validly adopted and are in full force and effect and (c)
as to the aggregate amount of legal and investment
banking fees incurred by Delta in connection with the
transactions contemplated by this Agreement.
8.4 HSR ACT APPROVAL. All waiting periods
applicable to this Agreement and the transactions
contemplated hereby under the HSR Act shall have expired
or been waived.
8.5 NO INJUNCTION. There shall not be in
effect on the Closing Date any writ, judgment,
injunction, decree, or similar order of any court or
similar Person restraining, enjoining, or otherwise
preventing consummation of any of the transactions
contemplated by this Agreement.
8.6 NO PROCEEDING OR LITIGATION. There shall
not be instituted, pending, or threatened, any action,
suit, investigation, or other proceeding in, before, or
by any court, governmental or regulatory authority or
other Person, to restrain, enjoin, or otherwise prevent
consummation of any of the transactions contemplated by
this Agreement or to recover any damages or obtain other
relief as a result of this Agreement or any of the
transactions contemplated hereby or as a result of any
Contract entered into in connection with or as a
condition precedent to the consummation hereof, which
action, suit, investigation or other proceeding could, in
the reasonable opinion of the Acquiror, result in a
decision, ruling, or finding that individually or in the
aggregate has or could reasonably be expected to have a
Material Adverse Effect on the Surviving Corporation.
8.7 CONSENTS, AUTHORIZATIONS, ETC. Delta,
Delta Insurance and AmerUs shall have obtained or made,
as appropriate, such material consents, approvals,
orders, authorizations, registrations, declarations,
permits or filings in connection with this Agreement and
the transactions contemplated by this Agreement for the
conduct of their businesses as currently conducted or as
expected to be conducted. All orders, consents, permits,
authorizations, approvals, and waivers of every Person
disclosed pursuant to Section 4.6(e) (including without
limitation any requisite action of the insurance
regulatory authorities in Tennessee and the NASD), in
each case without the abrogation or diminishment of the
authority or license currently held by Delta Insurance or
Delta Life Securities, Inc. or the imposition of
significant restrictions upon the transactions
contemplated hereby or the conduct of the business of the
Surviving Corporation, shall have been obtained and shall
be in full force and effect.
8.8 NO ADVERSE CHANGE. There shall not have
been, occurred, or arisen since the date of this
Agreement any change, event (including without limitation
any damage, destruction, or loss whether or not covered
by insurance), condition, or state of facts of any
character that individually or in the aggregate has or
could reasonably be expected to have a Material Adverse
Effect on Delta or Delta Insurance.
8.9 CONFORMITY WITH ANNUAL STATEMENT. No
matter, event, condition or state of facts of any
character shall have come to the attention of AmerUs
which, in the judgment of AmerUs, differs materially and
adversely from the statements and information set forth
in the 1996 Annual Statement of Delta Life.
8.10 OPINION OF COUNSEL. Delta shall have
delivered to the Acquiror the opinion, substantially in
the form of Exhibit 8.10 hereto, dated the Closing Date,
of Waring Cox, PLC, special counsel to Delta.
8.11 STOCKHOLDER MATTERS. The stockholders
of Delta shall have approved the Merger by the requisite
vote at the Special Meeting or through the Consent
Solicitation, and the transfer, option and disposition
provisions of the Stockholders' Agreement, if applicable
to the Merger, shall not have been exercised by any party
to the Stockholders' Agreement.
8.12 DISSENTERS' RIGHTS. Delta shall not have
received notices of intent to perfect rights as a
dissenting shareholder under the DGCL from the holders of
more than 5% of the outstanding Common Stock and
Preferred Stock.
8.13 EMPLOYMENT AND NON-COMPETE AGREEMENT.
The Acquiror and Mr. Cody Phillips shall have entered
into a mutually acceptable Employment and Non-Competition
Agreement which shall be in full effect and force as of
the Closing Date.
8.14 SEVERANCE ARRANGEMENTS. No payments made
by any Acquired Company or by the Surviving Corporation
in connection with the transactions contemplated by this
Agreement would constitute "parachute payments" within
the meaning of Section 280G of the Code.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF DELTA
The obligations of Delta hereunder are subject
to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be
waived in whole or in part by Delta).
9.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of AmerUs set forth in
this Agreement that are qualified as to materiality shall
be true and correct, and the representations and
warranties of AmerUs set forth in this Agreement that are
not so qualified shall be true and correct in all
material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on
and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an
earlier date (in which case as of such date), and Delta
shall have received a certificate signed on behalf of
AmerUs by the Chief Executive Officer and the Chief
Financial Officer to such effect.
9.2 PERFORMANCE. AmerUs shall have performed
and complied with all agreements, covenants, obligations,
and conditions required by this Agreement to be so
performed or complied with at or before the Closing and
Delta shall have received a certificate signed on behalf
of AmerUs by the Chief Executive Officer and the Chief
Financial Officer to such effect.
9.3 OFFICER'S CERTIFICATES. AmerUs shall have
delivered to Delta a certificate, dated the Closing Date
in form reasonably acceptable to Delta and executed by
the Chief Executive Officer and Chief Financial Officer
of AmerUs, certifying with respect to the fulfillment of
the conditions set forth in this Article IX. In
addition, AmerUs shall have delivered to Delta a
certificate, dated the Closing Date and executed by the
secretary or any assistant secretary of AmerUs,
certifying that AmerUs has duly and validly taken all
corporate action necessary to authorize its execution and
delivery of this Agreement and its performance of its
obligations under this Agreement, and that the
resolutions (true and complete copies of which shall be
attached to the certificate) of the Board of Directors of
AmerUs with respect to this Agreement and the
transactions contemplated hereby have been duly and
validly adopted and are in full force and effect.
9.4 HSR ACT APPROVAL. All waiting periods
applicable to this Agreement and the transactions
contemplated hereby under the HSR Act shall have expired
or been waived.
9.5 MERGER CONSIDERATION. The Merger
Consideration shall be deposited with the Escrow Agent
pursuant to Section 2.3.2.
9.6 NO INJUNCTION. There shall not be in
effect on the Closing Date any writ, judgment,
injunction, decree, or similar order of any court or
similar Person restraining, enjoining, or otherwise
preventing consummation of any of the transactions
contemplated by this Agreement.
9.7 CONSENTS, AUTHORIZATIONS, ETC. All orders,
consents, permits, authorizations, approvals and waivers
of every Person disclosed pursuant to Section 5.4(e) and
necessary to permit Delta to perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby shall have been obtained and shall be
in full force and effect.
9.8 OPINION OF COUNSEL. AmerUs shall have
delivered to Delta the opinion, in form and substance
reasonably acceptable to Delta, dated the Closing Date,
of Joseph K. Haggerty, Esq. counsel to AmerUs,
substantially in the form attached as Exhibit 9.8 hereto.
ARTICLE X
SURVIVAL OF PROVISIONS; REMEDIES
10.1 SURVIVAL. Except for Section 13.4, the
representations, warranties, covenants and agreements
respectively required to be made by Delta and the
Acquiror in this Agreement will not survive after the
Effective Time. Thereafter, Delta and its Affiliates
will have no liability (for damages, indemnification or
otherwise) with respect to any representation, warranty,
covenant or obligation to be performed or complied with
prior to the Closing (except to the extent such liability
is attributable to actual fraud on the part of Delta or
any such Affiliates).
10.2 AVAILABLE REMEDIES. Each party expressly
agrees that, consistent with its intention and agreement
to be bound by the terms of this Agreement and to
consummate the transactions contemplated hereby, subject
only to the performance or satisfaction of precedent
conditions or of precedent requirements imposed upon
another party hereto, the remedy of specific performance
shall be available to a non-breaching and non-defaulting
party to enforce performance of this Agreement by a
breaching or defaulting party, including, without
limitation, to require the consummation of the Closing on
the Closing Date. The rights and remedies provided for
in this Agreement are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have
at law or in equity.
ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be
terminated, and the transactions contemplated hereby may
be abandoned, upon notice by the terminating party to the
other party:
(a) at any time before the Closing, by mutual
written agreement of the parties; or
(b) at any time by Delta if any of the
covenants set forth in Article VII shall have been
breached or any of the conditions set forth in
Article IX hereof shall not have been satisfied,
performed, or complied with, in any material
respect, at or before the Closing Date and such
breach, non-satisfaction, non-performance, or non-
compliance has not been cured or eliminated within
30 calendar days after notice thereof has been given
to the Acquiror, provided that at the time of such
termination Delta has neither breached any of the
covenants set forth in Article VI nor failed to
satisfy, perform, or comply with any of the
conditions set forth in Article VIII hereof, in any
material respect;
(c) at any time by the Acquiror if any of the
covenants set forth in Article VI shall have been
breached or any of the conditions set forth in
Article VIII hereof shall not have been satisfied,
performed, or complied with, in any material
respect, before the Closing Date and such breach,
non-satisfaction, non-performance, or non-compliance
has not been cured or eliminated within 30 days
after notice thereof has been given to Delta,
provided that at the time of such termination the
Acquiror has neither breached any of the covenants
set forth in Article VII nor failed to satisfy,
perform, or comply with any of the conditions set
forth in Article IX hereof, in any material respect;
(d) by the Acquiror if (i) any supplement to
the Disclosure Schedule or other information
provided pursuant to Section 6.6, 6.19 or 6.20
discloses any material event, trend, condition,
contract, Liability, action, suit, proceeding,
claim, circumstance or fact of any character that is
not acceptable to the Acquiror, in its sole
discretion, and the Acquiror gives notice thereof to
Delta within seven days after receipt by the
Acquiror of such supplement or information, and such
event, trend, condition, contract, Liability,
action, suit, proceeding, claim, circumstance or
fact has not been cured or eliminated within 20 days
after notice thereof has been given to Delta, or
(ii) the Quarterly Statement of Delta Insurance for
the second quarter of 1997, when filed with the
Tennessee insurance regulatory authorities, is not
substantially identical to the portions thereof
provided by Delta to the Acquiror on August 13,
1997;
(e) by the Acquiror or Delta, if this
Agreement and the Merger shall have failed to
receive the requisite approval of the stockholders
of Delta at the Special Meeting or by written
consent pursuant to the Consent Solicitation;
(f) at any time after December 31, 1997, by
Delta or the Acquiror, if the transactions
contemplated by this Agreement have not been
consummated on or before such date, provided, that
this Agreement shall be extended not more than
ninety days thereafter if the Merger shall not have
occurred as a result of the failure to receive the
governmental approvals set forth in Section 4.6(e)
of the Disclosure Schedule hereto, and such failure
to obtain approval is not caused by a breach of this
Agreement (or any representation, warranty,
covenant, or agreement included herein) by the party
electing to terminate pursuant to this clause (f);
(g) by Delta or the Acquiror if, at any time
prior to approval of this Agreement and the Merger
at the Special Meeting or by action of the
stockholders of Delta taken by written consent
pursuant to the Consent Solicitation, a third party
shall have made an Acquisition Proposal which the
Board of Directors of Delta determines by majority
vote in its good faith reasonable judgment, after
consultation with outside counsel and an independent
financial advisor, is a Superior Proposal;
(h) by the Acquiror if the Board of Directors
of Delta shall have withdrawn or modified, or
proposed to withdraw or modify, its recommendation
of this Agreement or the transactions contemplated
hereby or approves or recommends, or proposes to
approve or recommend, any Acquisition Proposal; or
(i) by the Acquiror if Delta, one or more
stockholders of Delta, or any other Person shall
have exercised a right or option to acquire or
purchase Common Stock or Preferred Stock pursuant to
the terms of the Stockholders' Agreement, it being
understood that nothing in this Section 11.1(i) is
intended to state or imply that the Stockholders'
Agreement is applicable to this Agreement or the
Merger.
11.2 EFFECT OF TERMINATION. (a) If this
Agreement is validly terminated pursuant to Section 11.1
hereof, this Agreement will forthwith become null and
void, and there will be no Liability on the part of Delta
or the Acquiror or Sub (or any of their respective
Affiliates, officers, directors, employees, agents,
consultants, or other representatives), except that (i)
the provisions of this Section 11.2, Article XII and
Section 13.2 will continue to apply following any such
termination, (ii) the provisions relating to
confidentiality in Section 13.4 hereof will continue to
apply following any such termination and (iii) any such
termination shall be without prejudice to any claim which
either party may have against the other for breach of
this Agreement (or any representation, warranty,
covenant, or agreement included herein). All reasonable
out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby by a
non-breaching party who terminates this Agreement
pursuant to Section 11.1 hereof will be reimbursed
promptly by the breaching party.
(b) In the event this Agreement is terminated
by Delta pursuant to Section 11.1(g) or by the Acquiror
pursuant to Section 11.1(h), Delta shall pay to Acquiror
by wire transfer of immediately available funds (A)
within two Business Days following such termination the
amount of $5 million, plus (B) within two Business Days
following receipt of a written demand therefor, an amount
equal to all reasonable out-of-pocket expenses incurred
by Acquiror in connection with this Agreement and the
transactions contemplated hereby, it being understood
that such amounts are intended to constitute liquidated
damages and not as a penalty.
(c) In the event this Agreement is terminated
by either Delta or the Acquiror pursuant to Section
11.1(e), or by the Acquiror pursuant to Section 11.1(g),
(i) Delta shall pay to Acquiror by wire transfer of
immediately available funds within two Business Days
following receipt of a written demand therefor, an amount
equal to all reasonable out-of-pocket expenses incurred
by Acquiror in connection with this Agreement and the
transactions contemplated hereby, and in addition (ii) if
Delta or one or more stockholders of Delta, at any time
within twenty-four months following the date of such
termination, approves, enters into an agreement with
respect to, or publicly announces, (A) a merger,
consolidation or other business combination involving
Delta or any of its Subsidiaries or (B) any direct or
indirect (including through any reinsurance or
coinsurance transaction) acquisition by any Person of all
or a significant portion of the business or assets of
Delta or any of its Subsidiaries or of the capital stock
of any of the Subsidiaries of Delta, or (C) any
transaction which would result in the direct or indirect
acquisition by any Person of the power to direct the
voting or disposition of shares of capital stock of Delta
representing 50% or more of the total voting power of all
outstanding shares of capital stock of Delta, or
otherwise resulting in a change in control of Delta, or
(D) the Company shall have filed a registration statement
with the Securities and Exchange Commission pursuant to a
demand made by a stockholder under the Registration
Rights Agreement, as amended, by and among the Company
and certain stockholders, and such registration statement
shall have been declared effective then within two
Business Days following the date of such approval,
agreement or public announcement, Delta shall pay to
Acquiror by wire transfer of immediately available funds
the amount of $5 million, it being understood that such
amounts are intended to constitute liquidated damages and
not as a penalty.
(d) In the event this Agreement is terminated
by Acquiror pursuant to Section 11.1(i), Delta shall pay
to Acquiror by wire transfer of immediately available
funds (A) within two Business Days following such
termination the amount of $5 million, plus (B) within two
Business Days following receipt of a written demand
therefor, an amount equal to all reasonable out-of-pocket
expenses incurred by Acquiror in connection with this
Agreement and the transactions contemplated hereby, it
being understood that such amounts are intended to
constitute liquidated damages and not as a penalty.
ARTICLE XII
NOTICES
12.1 NOTICES. All notices and other
communications under this Agreement must be in writing
and will be deemed to have been duly given upon (a)
confirmation of receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or
when delivered by hand or (c) the expiration of five
Business Days after the day when mailed by registered or
certified mail (postage prepaid, return receipt
requested), addressed to the respective parties at the
following addresses (or such other address for a party as
shall be specified by like notice):
If to Delta, to:
Delta Life Corporation
530 Oak Court, Suite 200
Memphis, TN 38117
Attn: Allen O. Jones, Jr.
Executive Vice President
and Chief Operating Officer
Fax No.: (901)685-7265
With a copy to:
Delta Life Corporation
530 Oak Court, Suite 200
Memphis, TN 38117
Attn: Bettye S. Adams, Esq.
Senior Vice President, Secretary and
General Counsel
Fax No.: (901)684-0337
And to:
Waring Cox PLC
1300 Morgan Keegan Tower
50 North Front St.
Memphis, TN 38103-1190
Attn: Clayton D. Smith, Esq.
Fax No.: (901) 543-8030
If to Acquiror:
AmerUs Life Holdings, Inc.
611 5th Street
Des Moines, IA 50309
Attn: Roger K. Brooks
Chairman, President and
Chief Executive Officer
Fax No.: (515)283-3402
With Copy to:
AmerUs Life Holdings. Inc.
611 5th Street
Des Moines, IA 50309
Attn: Joseph K. Haggerty, Esq.
Senior VP and General Counsel
Fax No.: (515)283-3402
And to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attn: Jeffrey W. Tindell, Esq.
Fax No.:(212)735-2000
ARTICLE XIII
MISCELLANEOUS
13.1 ENTIRE AGREEMENT. Except for documents
executed by Delta and the Acquiror pursuant hereto, this
Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter of
this Agreement, and this Agreement (including the
exhibits hereto, the Disclosure Schedule and other
Contracts and documents delivered in connection herewith)
contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
13.2 EXPENSES. Except as otherwise expressly
provided in this Agreement (including, without
limitation, Section 11.2 hereof), each of Delta and the
Acquiror will pay its own costs and expenses in
connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, any
expenses incurred by Delta for legal and investment
banking fees in connection with this Agreement and the
transactions contemplated hereby in excess of an
aggregate amount of $500,000 shall be borne and paid for
by the stockholders of Delta and shall be deducted from
the cash consideration otherwise payable to them under
Article III hereof. Such amount not in excess of
$500,000 shall be paid by the Surviving Corporation at
the Closing, and each party to whom any portion of such
amount is paid shall deliver to Acquiror a receipt for
such amount, which receipt shall state that such payment
fully satisfies all amounts relating to services rendered
in connection with this Agreement and the transactions
contemplated hereby.
13.3 PUBLIC ANNOUNCEMENTS. At all times at or
before the Closing, AmerUs and Delta will each consult
with the other before issuing or making any reports,
statements, or releases to the public with respect to
this Agreement or the transactions contemplated hereby
and will use good faith efforts to agree on the text of a
joint public report, statement, or release or will use
good faith efforts to obtain the other party's approval
of the text of any public report, statement, or release
to be made solely on behalf of a party. If Delta and the
Acquiror are unable to agree on or approve any such
public report, statement, or release and such report,
statement, or release is, in the opinion of legal counsel
to a party, required by Law or may be appropriate in
order to discharge such party's disclosure obligations,
then such party may make or issue the legally required
report, statement, or release. Any such report,
statement, or release approved or permitted to be made
pursuant to this Section 13.3 may be disclosed or
otherwise provided by Delta or the Acquiror to any
Person, including without limitation to any employee or
customer of either party hereto and to any governmental
or regulatory authority.
13.4 CONFIDENTIALITY. Each of Delta and the
Acquiror will hold, and will cause its respective
Affiliates and their respective officers, directors,
employees, agents, consultants, and other representatives
to hold, in strict confidence, unless compelled to
disclose by judicial or administrative process (including
without limitation in connection with obtaining the
necessary approval of insurance regulatory authorities)
or by other requirements of Law, all confidential
documents and confidential or proprietary information
concerning the other party furnished to it by the other
party or such other party's officers, directors,
employees, agents, consultants, or representatives in
connection with this Agreement or the transactions
contemplated hereby, except to the extent that such
documents or information can be shown to have been (a)
previously lawfully known by the party receiving such
documents or information, (b) in the public domain
through no fault of such receiving party, or (c) later
acquired by the receiving party from other sources not
themselves bound by, and in breach of, a confidentiality
agreement. Except as provided in Sections 6.1, 6.2, 7.1
and 7.2 hereof, no party hereto will disclose or
otherwise provide any such confidential or proprietary
documents or information to any other Person, except to
the Acquiror's lenders and investors and to either
party's respective auditors, actuaries, attorneys,
financial advisors, and other consultants and advisors
who need such documents or information in connection with
this Agreement, and the parties hereto agree to cause
each of the foregoing to be subject to and bound by the
confidentiality provisions hereof. Moreover in the event
of termination of this Agreement, as provided in Section
11.1, no party hereto or any of their respective
Affiliates will knowingly attempt to contact, solicit,
engage, or otherwise employ or hire any employee,
regional director or agent of the other for a period of
12 months immediately following such termination.
13.5 FURTHER ASSURANCES; COOPERATION WITH
CAPITAL-RAISING. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the
parties shall use reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions
contemplated by this Agreement including, without
limitation, providing all information needed to secure
the financing of the Merger Consideration.
(b) Delta shall assist and cooperate with the
Acquiror in connection with an offering of securities of
the Acquiror to the extent such cooperation is necessary
to comply with the rules and regulations of the
Securities and Exchange Commission or is otherwise
reasonably requested by the Acquiror.
13.6 WAIVER. Any term or condition of this
Agreement may be waived at any time by the party that is
entitled to the benefit thereof; such waiver must be in
writing and must be executed by the Chairman of the
Board, chief executive officer, chief financial officer,
general counsel, or chief operating officer of such
party. A waiver on one occasion will not be deemed to be
a waiver of the same or any other breach on a future
occasion. All remedies, either under this Agreement, or
by Law or otherwise afforded, will be cumulative and not
alternative.
13.7 AMENDMENT. This Agreement may be modified
or amended only by a writing duly executed by or on
behalf of all parties hereto.
13.8 COUNTERPARTS; FACSIMILE SIGNATURES. This
Agreement may be executed simultaneously in any number of
counterparts, each of which will be deemed an original,
but all of which will constitute one and the same
instrument. Signatures may be exchanged by facsimile,
and such signatures will be deemed originals.
13.9 NO THIRD PARTY BENEFICIARY. The terms and
provisions of this Agreement are intended solely for the
benefit of the parties hereto, and their respective
successors or assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any
other Person.
13.10 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the Laws of
the State of Delaware applicable to a Contract executed
and performable in such state.
13.11 BINDING EFFECT. This Agreement is
binding upon and will inure to the benefit of the parties
and their respective successors and assignees.
13.12 ASSIGNMENT LIMITED. Except as otherwise
provided herein, this Agreement or any right hereunder or
part hereof may not be assigned by any party hereto
without the prior written consent of the other party
hereto. As contemplated by Section 2.1 hereof, each of
AmerUs and Sub may assign its rights (but not its
obligations) in this Agreement pursuant to an assignment
under which a Designated Subsidiary assumes and agrees to
perform all of the obligations of AmerUs or Sub hereunder
provided.
13.13 HEADINGS, GENDER, ETC. The headings used
in this Agreement have been inserted for convenience and
do not constitute matter to be construed or interpreted
in connection with this Agreement. Unless the context of
this Agreement otherwise requires, (a) words of any
gender are deemed to include each other gender; (b) words
using the singular or plural number also include the
plural or singular number, respectively; (c) the terms
"hereof," "herein," "hereby," "hereto," and derivative or
similar words refer to this entire Agreement; (d) the
terms "Article" or "Section" refer to the specified
Article or Section of this Agreement; and (e) all
references to "dollars" or "$" refer to currency of the
United States of America.
13.14 INVALID PROVISIONS. If any provision of
this Agreement is held to be illegal, invalid, or
unenforceable under any present or future Law, and if the
rights or obligations of Delta or the Acquiror under this
Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b)
this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never
comprised a part hereof; (c) the remaining provisions of
this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom; and
(d) in lieu of such illegal, invalid, or unenforceable
provision, there will be added automatically as a part of
this Agreement a legal, valid, and enforceable provision
as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible.
IN WITNESS WHEREOF, this Agreement has been
duly executed and delivered by the duly authorized
officers of Delta, AmerUs and Sub, effective as of the
date first written above.
AMERUS LIFE HOLDINGS, INC.
by: /s/ Roger K. Brooks
Name: Roger K. Brooks
Title: Chairman, President
and Chief Executive
Officer
AMERUS ACQUISITION CORPORATION
by: /s/ Roger K. Brooks
Name: Roger K. Brooks
Title: Chairman, President
and Chief Executive
Officer
DELTA LIFE CORPORATION
by: /s/ Gerald Tsai, Jr.
Name: Gerald Tsai, Jr.
Title: Chairman, President
and Chief Executive
Officer
Exhibit 3.1(f)(i)
Gerald Tsai, Jr.
Allen O. Jones, Jr.
Exhibit 3.1(f)(ii)
Bettye S. Adams
Marilyn D. Johnson
Michael P. Hydanus
Lura L. Bond
James L. Bergin
James D. Wingett
Danielle K. Schonbaum
Exhibit 3.1(f)(iii)
Cody Phillips
Exhibit 3.1(f)(iv)
John Chandler
David W. Rikard
Exhibit 3.1(f)(v)
Nancy Fatjo
