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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): February 12, 1997
USLIFE Corporation
(Exact name of registrant as specified in its charter)
New York 1-5683 13-2578598
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
125 Maiden Lane, New York, New York 10038
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 709-6000
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(b) On February 12, 1997, USLIFE Corporation (the "Company") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with American General
Corporation ("American General") and Texas Stars Corporation, a wholly owned
subsidiary of American General ("Merger Sub"). The Merger Agreement provides for
the merger (the "Merger") of Merger Sub with and into the Company subject to the
terms and conditions set forth therein. Pursuant to the terms of the Merger
Agreement, each shareholder of the Company will have the right to receive, in
exchange for each share of common stock of the Company shares of common stock of
American General. The exchange ratio for American General common stock will be
determined by dividing $49.00 by the average of the high and low sales prices,
regular way, per share of American General common stock as reported in The Wall
Street Journal during the ten New York Stock Exchange trading days ending on
(and including) the fifth trading day prior to closing and is subject to a
minimum of 1.09 shares and a maximum of approximately 1.29 shares of American
General common stock for each share of the Company's common stock. The Merger
is intended to be a tax-free transaction and to qualify for pooling of interest
accounting treatment.
Consummation of the Merger is subject to the approval of the
shareholders of the Company and American General and certain regulatory
authorities, and the satisfaction or waiver of various other conditions as more
fully described in the Merger Agreement. There can be no assurance that the
Merger will be consummated.
ITEM 5. OTHER EVENTS.
Effective as of February 13, 1997, the Amended and Restated
Rights Agreement, dated as of June 24, 1986, as further amended and restated
heretofore, between the Company and The Chase Manhattan Bank, as Rights Agent
(the "Rights Agreement") was amended in order to, among other things, (i)
prevent Merger Sub and American General from becoming an Acquiring Person (as
defined in the Rights Agreement) as a result of the Merger, (ii) prevent a
Flip-in Date, Stock Acquisition Date, Flip-over Transaction or Event or
Separation Date (each, as defined in the Rights Agreement) from occurring as a
result of the Merger or other transactions contemplated by the Merger Agreement
and (iii) provide that all outstanding Rights (as defined in the Rights
Agreement) will expire immediately prior to the effective time of the Merger.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
2 Agreement and Plan of Merger, dated as of February 12, 1997, among
American General Corporation, Texas Stars Corporation and the Company.
4 Amendment No. 1, dated as of February 13, 1997, to the Amended and
Restated Rights Agreement, dated as of June 24, 1986, as further
amended and restated heretofore, between USLIFE Corporation and The
Chase Manhattan Bank, as Rights Agent.
99 Press Release, dated February 13, 1997.
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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 here unto duly authorized.
USLIFE CORPORATION
Date: February 21, 1997 By /s/ Richard G. Hohn
------------------------------------
Name: Richard G. Hohn
Title: Senior Vice President-Investor
Relations, Secretary & Counsel
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EXHIBIT INDEX
Exhibit Exhibit
Number Description
2 Agreement and Plan of Merger, dated as of February 12, 1997,
among American General Corporation, Texas Stars Corporation
and the Company.
4 Amendment No. 1, dated as of February 13, 1997, to the Amended
and Restated Rights Agreement, dated as of June 24, 1986, as
further amended and restated heretofore, between USLIFE
Corporation and The Chase Manhattan Bank, as Rights Agent.
99 Press Release, dated February 13, 1997.
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Exhibit 2
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN GENERAL CORPORATION,
TEXAS STARS CORPORATION
AND
USLIFE CORPORATION
DATED AS OF FEBRUARY 12, 1997
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1. The Merger..................................................1
Section 2. Closing.....................................................2
Section 3. Effective Time of the Merger................................2
Section 4. Directors and Officers of the Surviving Corporation.........2
ARTICLE II
SHAREHOLDER APPROVAL
Section 1. Shareholder Meetings........................................2
Section 2. Proxy Statement/Prospectus; Registration Statement..........3
Section 3. No False or Misleading Statements...........................4
ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 1. Conversion of Shares........................................5
Section 2. Fractional Interests........................................6
Section 3. Dissenting Shares...........................................6
Section 4. Exchange of Certificates....................................7
Section 5. No Liability................................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERICAN GENERAL
CORPORATION AND MERGER SUB
Section 1. Organization................................................9
Section 2. Capitalization.............................................10
Section 3. Merger Sub and American General Corporation Subsidiaries...11
Section 4. Authority Relative to this Agreement.......................12
Section 5. Consents and Approvals; No Violations......................13
Section 6. American General Corporation SEC Reports...................14
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Section 7. Statutory Financial Statements............................15
Section 8. Absence of Certain Changes................................15
Section 9. Litigation................................................16
Section 10. Absence of Undisclosed Liabilities........................16
Section 11. No Default................................................16
Section 12. Taxes.....................................................17
Section 13. Title to Property.........................................18
Section 14. Insurance Practices; Permit and Insurance Licenses........19
Section 15. Regulatory Filings........................................20
Section 16. Investments...............................................20
Section 17. Reserves..................................................21
Section 18. Ownership of Company Common Stock.........................21
Section 19. Information in Proxy Statement/Prospectus and
Registration Statement..................................21
Section 20. Brokers...................................................22
Section 21. Employee Benefit Plans; ERISA.............................22
Section 22. Labor Relations; Employees................................25
Section 23. Environmental Matters.....................................25
Section 24. Related Party Transactions................................25
Section 25. Opinion of Financial Advisor..............................26
Section 26. Derivatives...............................................26
Section 27. Contracts.................................................26
Section 28. Intellectual Property.....................................28
Section 29. Investment Advisor; Investment Company....................28
Section 30. Disclosure................................................28
Section 31. Investigation by American General Corporation.............29
Section 32. Pooling of Interests......................................29
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 1. Organization..............................................29
Section 2. Capitalization............................................30
Section 3. Company Subsidiaries......................................30
Section 4. Authority Relative to this Agreement......................32
Section 5. Consents and Approvals: No Violations.....................32
Section 6. Company SEC Reports.......................................33
Section 7. Statutory Financial Statements............................34
Section 8. Absence of Certain Changes................................34
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Section 9. Litigation................................................34
Section 10. Absence of Undisclosed Liabilities; Actuarial Appraisal...35
Section 11. No Default................................................35
Section 12. Taxes.....................................................36
Section 13. Title to Property.........................................36
Section 14. Insurance Practices; Permits and Insurance Licenses.......37
Section 15. Regulatory Filings........................................38
Section 16. Investments...............................................38
Section 17. Reserves..................................................39
Section 18. Repurchases of Company Common Stock.......................39
Section 19. Information in Proxy Statement/Prospectus and
Registration Statement................................39
Section 20. Brokers...................................................40
Section 21. Employee Benefit Plans; ERISA.............................40
Section 22. Labor Relations; Employees................................42
Section 23. Environmental Matters.....................................43
Section 24. Related Party Transactions................................43
Section 25. Opinion of Financial Advisor..............................43
Section 26. Derivatives...............................................43
Section 27. Contracts.................................................44
Section 28. Intellectual Property.....................................45
Section 29. Investment Advisor; Investment Company....................45
Section 30. Disclosure................................................46
Section 31. Investigation by the Company..............................46
Section 32. Pooling of Interests......................................46
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 1. Conduct of Business by the Company Pending the Merger.....46
Section 2. Conduct of Business by American General Corporation
Pending the Merger....................................49
Section 3. Amendment to Rights Plan..................................52
Section 4. Redemption of Company Preferred Stock.....................53
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 1. Access and Information...................................53
Section 2. Acquisition Proposals....................................53
Section 3. Fiduciary Duties.........................................54
Section 4. Filings; Other Action....................................55
Section 5. Public Announcements.....................................56
Section 6. Employee Benefits........................................56
Section 7. Stock Exchange Listing...................................56
Section 8. Surviving Corporation Directors..........................56
Section 9. Employee Stock Options...................................57
Section 10. Company Indemnification Provision........................57
Section 11. Comfort Letters..........................................57
Section 12. Tax Matters; Pooling of Interests........................58
Section 13. Intercompany Dividends...................................58
Section 14. Affiliates...............................................59
Section 15. Additional Matters.......................................59
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 1. Conditions to Each Party's Obligation to Effect the
Merger.............................................59
Section 2. Conditions to Obligation of the Company to Effect the
Merger.............................................61
Section 3. Conditions to Obligations of American General
Corporation and Merger Sub to Effect the Merger....62
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 1. Termination by Mutual Consent............................63
Section 2. Termination by Either American General Corporation
or the Company.....................................63
Section 3. Termination by American General Corporation..............64
Section 4. Termination by the Company...............................64
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Section 5. Effect of Termination and Abandonment......................64
ARTICLE X
GENERAL PROVISIONS
Section 1. Survival of Representations, Warranties and Agreements.....65
Section 2. Notices....................................................65
Section 3. Descriptive Headings.......................................66
Section 4. Entire Agreement; Assignment...............................66
Section 5. Governing Law..............................................67
Section 6. Expenses...................................................67
Section 7. Amendment..................................................68
Section 8. Waiver.....................................................68
Section 9. Counterparts; Effectiveness................................68
Section 10. Severability; Validity; Parties in Interest................68
Section 11. Enforcement of Agreement...................................68
Section 12. Definition of "knowledge" of the Company and of
American General Corporation.............................69
EXHIBIT A CERTIFICATE OF INCORPORATION OF TEXAS STARS
CORPORATION..............................................A-1
EXHIBIT B BYLAWS OF MERGER SUB.....................................B-1
EXHIBIT C-1 FORM OF COMPANY AFFILIATE AGREEMENT......................C-1-1
EXHIBIT C-2 FORM OF AMERICAN GENERAL CORPORATION AFFILIATE
AGREEMENT................................................C-2-1
EXHIBIT D EMPLOYEE BENEFITS MATTERS................................D-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 12, 1997,
by and among AMERICAN GENERAL CORPORATION, a Texas corporation ("American
General Corporation"), TEXAS STARS CORPORATION, a New York corporation and a
wholly-owned subsidiary of American General Corporation ("Merger Sub"), and
USLIFE CORPORATION, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of American
General Corporation, Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company upon the terms and subject to the
conditions set forth herein (the "Merger"); and
WHEREAS, American General Corporation, Merger Sub and the
Company intend that the Merger qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and qualify for pooling-of-interest accounting treatment.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1. The Merger. Upon the terms and subject to the
conditions hereof, at the Effective Time (as defined in Section 1.3 hereof),
Merger Sub shall be merged with and into the Company in accordance with the
applicable provisions of the New York Business Corporation Law (the "NYBCL") and
the separate corporate existence of Merger Sub shall thereupon cease, and the
Company shall be the surviving corporation in the Merger (the "Surviving
Corporation") and all the properties, rights, privileges, immunities, powers and
purposes of the Company and of Merger Sub shall vest in the Surviving
Corporation, and all liabilities, obligations and penalties of Merger Sub and
the Company shall become the liabilities, obligations and penalties of the
Surviving Corporation, and the Merger shall have the other effects set forth in
the NYBCL. Pursuant to the Merger, (a) the Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended
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as provided by law and such Certificate of Incorporation and (b) the Bylaws of
Merger Sub as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation, until thereafter amended as provided by
law, such Bylaws and the Certificate of Incorporation of the Surviving
Corporation.
Section 2. Closing. The Company shall as promptly as
practicable notify American General Corporation, and American General
Corporation and Merger Sub shall as promptly as practicable notify the Company,
when the conditions to such party's or parties' obligation to effect the Merger
contained in Article VIII have been satisfied. The closing of the Merger (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York, at 10:00 a.m., New York time, on
the sixth business day after the later of these notices has been given (the
"Closing Date"), unless another date or place is agreed to in writing by the
parties hereto; provided, however, that the parties hereto agree to use all
reasonable efforts to consummate the Closing on April 30, 1997, or as soon as
practicable thereafter.
Section 3. Effective Time of the Merger. The Merger shall
become effective when an appropriate Certificate of Merger is executed, verified
and delivered to the Department of State of the State of New York as provided by
the NYBCL, or at such later time as the parties hereto shall have designated in
such Certificate of Merger as the effective time of the Merger (the "Effective
Time"), which filings shall be made as soon as practicable after the closing of
the transactions contemplated by this Agreement in accordance with Section 1.2
hereof.
Section 4. Directors and Officers of the Surviving
Corporation. Prior to the Effective Time, American General Corporation and the
Company shall mutually agree on the composition of the Board of Directors and
the officers of the Surviving Corporation. The directors and officers of the
Surviving Corporation shall hold office until their respective successors shall
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
ARTICLE II
SHAREHOLDER APPROVAL
Section 1. Shareholder Meetings. In order to consummate the
Merger, (i) the Company, acting through its Board of Directors and subject to
Section 7.3, shall, in accordance with applicable law, its Certificate of
Incorporation and its By-Laws, duly call,
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give notice of, convene and hold a special meeting of its shareholders (the
"Company Special Meeting"), and (ii) American General Corporation, acting
through its Board of Directors, shall, in accordance with applicable law, duly
call, give notice of, convene and hold a special meeting of its shareholders
(the "American General Corporation Special Meeting" and, together with the
Company Special Meeting, the "Special Meetings"), in each case as soon as
practicable after the Registration Statement (as hereinafter defined) is
declared effective (the date on which such Company Special Meeting is held, the
"Company Meeting Date", and the date on which such American General Corporation
Special Meeting is held, the "American General Corporation Meeting Date"), for
the purpose of (A) in the case of the Company Special Meeting, voting upon the
adoption of this Agreement and (B) in the case of the American General
Corporation Special Meeting, authorizing the issuance of the Shares (as
hereinafter defined) as Merger Consideration (as hereinafter defined). Each of
the Company (subject to Section 7.3) and American General Corporation shall
include in the Proxy Statement/Prospectus (as hereinafter defined) the
recommendation of its respective Board of Directors that its respective
shareholders vote (i) in the case of the Company, in favor of the approval of
the Merger and the adoption of this Agreement, and (ii) in the case of American
General Corporation, in favor of the issuance of the Shares as Merger
Consideration.
Section 2. Proxy Statement/Prospectus; Registration Statement.
In connection with the solicitation of approval of the principal terms of this
Agreement and the Merger by the Company's and American General Corporation's
shareholders, the Company and American General Corporation shall as promptly as
practicable prepare and file with the Securities and Exchange Commission (the
"SEC") a preliminary joint proxy statement relating to the Merger and this
Agreement and use reasonable best efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement/Prospectus (as
hereinafter defined). The Company and American General Corporation shall respond
as promptly as practicable to any comments made by the SEC with respect to the
preliminary proxy statement and shall cause a definitive proxy statement to be
mailed to their respective shareholders at the earliest practicable date. Such
definitive proxy statement shall also constitute a prospectus of American
General Corporation with respect to the American General Corporation Common
Stock (as hereinafter defined) to be issued in the Merger (such proxy statement
and prospectus are referred to herein as the "Proxy Statement/Prospectus"),
which prospectus is to be filed with the SEC as part of a registration statement
on Form S-4 (the "Registration Statement") for the purpose of registering the
American General Corporation Common Stock under the Securities Act of 1933, as
amended (the "Securities Act"). American General Corporation shall as promptly
as practicable prepare and file with the SEC the Registration Statement.
American General Corporation, after consultation with the Company, shall respond
as promptly as practicable to any comments made by the SEC with respect to the
Registration Statement, and shall use
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reasonable best efforts to have the Registration Statement declared effective by
the SEC. American General Corporation shall also take any action required to be
taken under applicable state securities laws in connection with the issuance of
American General Corporation Common Stock in the Merger, and the Company shall
furnish all information concerning the Company and the holders of Company Common
Stock (as hereinafter defined) as may be reasonably requested by American
General Corporation in connection with such action.
Section 3. No False or Misleading Statements. The information
provided and to be provided by each of American General Corporation and the
Company specifically for use in the Registration Statement and the Proxy
Statement/Prospectus shall not, with respect to the information supplied by such
party, in the case of the Registration Statement, on the date the Registration
Statement becomes effective and, in the case of the Proxy Statement/Prospectus,
on the date upon which the Proxy Statement/Prospectus is mailed to the
shareholders of the Company and American General Corporation or on the date upon
which approval of the Merger by the shareholders of the Company and of American
General Corporation is obtained, 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 were made, not misleading. Each of American General Corporation and the
Company agrees to correct as promptly as practicable any such information
provided by it that shall have become false or misleading in any material
respect and to take all steps necessary to file with the SEC and have declared
effective or cleared by the SEC any amendment or supplement to the Registration
Statement or the Proxy Statement/Prospectus so as to correct the same and to
cause the Proxy Statement/Prospectus as so corrected to be disseminated to the
shareholders of the Company and of American General Corporation to the extent
required by applicable law. The Registration Statement and the Proxy
Statement/Prospectus shall comply as to form in all material respects with the
provisions of the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and other applicable law.
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ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 1. Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of any of the parties
hereto or any holder of any of the following securities:
(a) Each share of Common Stock , par value $1.00 per share, of
the Company (the "Company Common Stock" and the shares of such Common
Stock, the "Shares") issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section
3.1(c) hereof) shall, at the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof, be converted
into the right to receive a number of duly authorized, validly issued,
fully paid and nonassessable shares of common stock of American General
Corporation (together with the attached Series A Junior Participating
Preferred Stock Purchase Rights, issued in accordance with the Rights
Agreement, dated as of July 27, 1989, between Purchaser and Texas
Commerce Bank, as Rights Agent, as amended by the First Amendment
Rights Agreement, dated as of October 26, 1992, between Purchaser and
the First Chicago Trust Company of New York, as Rights Agent, as such
amended agreement may be amended from time to time, the "American
General Corporation Common Stock"), par value $0.50 per share (the
"Merger Consideration"), calculated by dividing (x) $49.00 by (y) the
Average American General Price (as hereinafter defined), rounded to
four decimal places (such fraction being referred to herein as the
"Exchange Ratio"). As used herein, the "Average American General Price"
shall mean the average of the high and low sales prices, regular way,
per share of American General Corporation Common Stock as reported in
The Wall Street Journal during the ten consecutive New York Stock
Exchange ("NYSE") trading days (each, a "Trading Day") ending on (and
including) the fifth Trading Day prior to the Effective Time (the
"Trading Average"); provided, however, that if the Trading Average is
less than $37.8750, then the Average American General Price shall be
$37.8750; and if the Trading Average is greater than $44.8750, then the
Average American General Price shall be $44.8750. All Shares of Company
Common Stock converted or exchanged into Merger Consideration shall no
longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each certificate previously evidencing
any such Shares of Company Common Stock shall thereafter represent the
right to receive, upon the surrender of such certificate in accordance
with the provisions of Section 3.4, only the Merger Consideration. The
holders of such certificates previously evidencing such Shares of
Company Common Stock outstanding immediately prior
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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.
(b) Each share of Common Stock of Merger Sub, par value $1.00
per share, issued and outstanding immediately prior to the Effective
Time, shall, at the Effective Time, by virtue of the Merger and without
any action on the part of American General Corporation, be converted
into one fully paid and nonassessable share of common stock, par value
$1.00 per share, of the Surviving Corporation.
(c) All Shares of Company Common Stock that are owned by the
Company as treasury stock and (except for shares held in a separate
account or mutual fund managed by a American General Corporation
Subsidiary or a pension trust established for the benefit of American
General Corporation retirees) any Shares of Company Common Stock owned
by American General Corporation or Merger Sub or any other direct or
indirect wholly owned American General Corporation Subsidiary (as
defined in Section 4.3(b) hereof) shall, at the Effective Time, be
canceled and retired and shall cease to exist and no American General
Corporation Common Stock or other consideration shall be delivered in
exchange therefor.
(d) On and after the Effective Time, holders of certificates
which immediately prior to the Effective Time represented outstanding
Shares (the "Certificates") shall cease to have any rights as
stockholders of the Company, except the right to receive the Merger
Consideration for each Share held by them.
Section 2. Fractional Interests. No certificates or scrip
representing fractional shares of American General Corporation Common Stock
shall be issued in connection with the Merger, and such fractional interests
will not entitle the owner thereof to any rights as a shareholder of American
General Corporation. In lieu of a fractional interest in a share of American
General Corporation Common Stock, each holder of a Share or Shares of Company
Common Stock exchanged pursuant to Section 3.4 who would otherwise have been
entitled to receive a fraction of a share of American General Corporation Common
Stock shall receive cash (without interest) in an amount equal to the product of
such fractional interest multiplied by the Average American General Price.
Section 3. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, no Share of Company Common Stock outstanding
immediately prior to the Effective Time, the holder of which shall have complied
with the provisions of Sections 623 and 910 of the NYBCL as to dissenter's
rights (a "Dissenting Share"), shall be deemed converted into and to represent
the right to receive Merger Consideration
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hereunder, and the holders of Dissenting Shares, if any, shall be entitled to
payment, solely from the Surviving Corporation, of the appraised value of such
Dissenting Shares to the extent permitted by and in accordance with the
provisions of Sections 623 and 910 of the NYBCL; provided, however, that (i) if
any holder of Dissenting Shares shall, under the circumstances permitted by the
NYBCL, subsequently deliver a written withdrawal of his or her demand for
appraisal of such Dissenting Shares, or (ii) if any holder fails to establish
his or her entitlement to rights to payment as provided in such Sections 623 and
910, or (iii) if neither any holder of Dissenting Shares nor the Surviving
Corporation has filed a petition demanding a determination of the value of all
Dissenting Shares within the time provided in such Sections 623 and 910, such
holder or holders (as the case may be) shall forfeit such right to payment for
such Dissenting Shares pursuant to such Sections 623 and 910, and each such
Share shall not be considered a Dissenting Share but shall thereupon be
converted into the Merger Consideration. The Company shall give American General
Corporation (X) prompt notice of any written demands for appraisal of any
Company Common Stock, attempted withdrawals of such demands, and any other
instruments received by the Company relating to shareholders' rights of
appraisal and (Y) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the NYBCL. The Company shall not,
except with the prior written consent of American General Corporation,
voluntarily make any payment with respect to any demands for appraisals of
Company Common Stock, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
Section 4. Exchange of Certificates.
(a) As soon as practicable after the execution and delivery of
this Agreement and, in any event, not less than five business days
prior to the mailing of the Proxy Statement/Prospectus to holders of
Company Common Stock, American General Corporation shall designate a
bank or trust company (or such other person or persons as shall be
reasonably acceptable to American General Corporation and the Company)
to act as exchange agent (the "Exchange Agent") in effecting the
exchange of certificates that, prior to the Effective Time, represented
Shares of Company Common Stock (the "Certificates") for the Merger
Consideration pursuant to Section 3.1(a) hereof (and cash in lieu of
fractional interests in accordance with Section 3.2). Upon the
surrender of each such Certificate representing Shares of Company
Common Stock, the Exchange Agent shall pay the holder of such
Certificate the Merger Consideration (and cash in lieu of fractional
interests in accordance with Section 3.2), and such Certificate shall
forthwith be cancelled. Until so surrendered and exchanged, each such
Certificate that prior to the Effective Time represented Shares of
Company Common Stock (other than Shares of Company Common Stock to be
cancelled in accordance with Section 3.1(c)) shall
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represent solely the right to receive Merger Consideration (and cash in
lieu of fractional interests in accordance with Section 3.2). No
interest shall be paid or accrued on Merger Consideration.
(b) As of the Effective Time, American General Corporation
shall deposit or cause to be deposited in trust with the Exchange
Agent, for the benefit of the holders of Shares of Company Common
Stock, for exchange in accordance with this Article III, the Merger
Consideration.
(c) As promptly as practicable following the date which is six
months after the Effective Time, the Exchange Agent shall deliver to
the Surviving Corporation all shares of American General Corporation
Common Stock, Certificates and other documents in its possession
relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate may surrender such Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws
and, in the case of Dissenting Shares, subject to applicable law)
receive in exchange therefor the Merger Consideration (and cash in lieu
of fractional interests in accordance with Section 3.2), without any
interest thereon.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Shares of
Company Common Stock. If, after the Effective Time, Certificates
formerly representing Shares of Company Common Stock are presented to
the Surviving Corporation or the Exchange Agent, they shall be
cancelled and (subject to applicable abandoned property, escheat and
similar laws and, in the case of Dissenting Shares, subject to
applicable law) exchanged for Merger Consideration (and cash in lieu of
fractional interests in accordance with Section 3.2) without any
interest thereon, as provided in this Article III.
(e) No dividends or other distributions declared or made after
the Effective Time with respect to shares of American General
Corporation Common Stock shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of American
General Corporation Common Stock such holder is entitled to receive,
and no cash payment in lieu of fractional interests shall be paid
pursuant to Section 3.2, in each case, until the holder of such
Certificate shall surrender such Certificate, in accordance with the
provisions of this Agreement.
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(f) The Exchange Agent or American General Corporation shall
be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as the Exchange Agent, American General Corporation
or the Surviving Corporation, as the case may be, is required to deduct
and withhold with respect to such payment under the Code or any
provision of state, local or foreign tax law. Any amounts so withheld
shall be treated for all purposes of this Agreement as having been paid
to the holder of the Company Common Stock in respect of which such
deduction and withholding was made.
Section 5. No Liability. Neither American General Corporation,
the Company nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any Merger Consideration in respect of such
shares (or dividends or distributions with respect thereto) delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by American
General Corporation, the posting by such person of a bond in customary form and
amount as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration (and cash in lieu of
fractional interests in accordance with Section 3.2), without any interest or
other payments thereon, upon due surrender and delivery of such affidavit
pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERICAN GENERAL
CORPORATION AND MERGER SUB
Except as otherwise disclosed to the Company in a letter
delivered to it prior to the execution hereof (which letter contains appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "American General Corporation
Disclosure Letter"), American General Corporation represents and warrants to the
Company as follows:
Section 1. Organization. Each of American General Corporation
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the States of Texas and New York, respectively, with
the corporate power and authority and all necessary governmental approvals to
own, lease and operate its properties
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and to carry on its business as it is now being conducted or presently proposed
to be conducted. Each of American General Corporation and Merger Sub is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not individually or in the aggregate
have a material adverse effect on the business, assets, liabilities, results of
operations or financial condition of American General Corporation, Merger Sub
and the American General Corporation Subsidiaries (as hereinafter defined),
taken as a whole (a "American General Corporation Material Adverse Effect").
Section 2. Capitalization. As of December 31, 1996: (i) the
authorized capital stock of American General Corporation consisted of
300,000,000 shares of American General Corporation Common Stock and 60,000,000
shares of Preferred Stock, par value $1.50 per share of American General
Corporation ("American General Corporation Preferred Stock"), (ii) 203,090,677
shares of American General Corporation Common Stock, and 2,317,701 shares of
American General Corporation Preferred Stock (all of which are shares in the
series designated 7% Convertible Preferred Stock), were issued and outstanding
and (iii) stock options to acquire 2,933,184 shares of American General
Corporation Common Stock (the "American General Corporation Stock Options") were
outstanding under all stock option plans of American General Corporation. All
the issued and outstanding shares of capital stock of American General
Corporation are validly issued, fully paid and nonassessable and free of
preemptive rights. All the shares of American General Corporation Common Stock
reserved for issuance in exchange for shares of Company Common Stock at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. Since December 31, 1996 to the date hereof, no shares of American
General Corporation's capital stock have been issued, except American General
Corporation Common Stock issued pursuant to the exercise of American General
Corporation Stock Options or upon conversion of shares of 7% Convertible
Preferred Stock. Except for (i) American General Corporation Stock Options, (ii)
2,317,701 shares of 7% Convertible Preferred Stock of American General
Corporation, (iii) 4,500,000 shares of 6% Convertible Monthly Income Preferred
Securities, Series A, of American General Delaware, L.L.C. and (iv) the Series A
Junior Participating Preferred Stock Purchase Rights attached to the American
General Corporation Common Stock as of the date of this Agreement, there are no
options, warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating American General Corporation to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock. American General Corporation has delivered to the Company a
complete and correct copy of the Rights Agreement, dated as of July 29, 1989, as
amended and supplemented as of the date hereof
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(the "American General Rights Agreement") relating to the Series A Junior
Preferred Stock Purchase Rights issued thereunder.
Section 3. Merger Sub and American General Corporation
Subsidiaries.
(a) The authorized capital stock of Merger Sub consists of 100
shares of Common Stock, par value $.01 per share. As of the date
hereof,100 shares of Common Stock of Merger Sub are issued and
outstanding and are owned by American General Corporation.
(b) Each subsidiary of American General Corporation set forth
on Exhibit 21 to the Annual Report on Form 10-K for the year ended
December 31, 1995 of American General Corporation, other than Merger
Sub (collectively the "American General Corporation Subsidiaries"), is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the
corporate power and authority and all necessary government approvals to
own, lease and operate its properties and to carry on its business as
now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority or
necessary governmental approvals would not individually or in the
aggregate have a American General Corporation Material Adverse Effect.
Each American General Corporation Subsidiary is duly qualified or
licensed and in good standing to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not individually or in
the aggregate have a American General Corporation Material Adverse
Effect. Section 4.3(b) of the American General Corporation Disclosure
Letter sets forth the name of each of the American General Corporation
Subsidiaries that is as of the date hereof a significant subsidiary as
such term is defined in Rule 1-02 of Regulation S-X under the Exchange
Act (collectively, the "American General Corporation Significant
Subsidiaries") and the state or jurisdiction of its incorporation.
(c) Section 4.3(c) of the American General Corporation
Disclosure Letter sets forth the name of each of the American General
Corporation Significant Subsidiaries that is as of the date hereof an
insurance company (collectively, the "American General Corporation
Insurance Subsidiaries"). Except as set forth in the American General
Corporation SEC Reports or in Section 4.3(c) of the American General
Corporation Disclosure Letter, each of the American General Corporation
Insurance Subsidiaries is (i) duly licensed or authorized as an
insurance company in
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its jurisdiction of incorporation and (ii) duly licensed or authorized
as an insurance company in each other jurisdiction where it is required
to be so licensed or authorized.
(d) Except as set forth in the American General Corporation
SEC Reports or in Section 4.3(d) of the American General Corporation
Disclosure Letter, American General Corporation is, directly or
indirectly, the record and beneficial owner of all the outstanding
shares of capital stock of Merger Sub and of each of the American
General Corporation Significant Subsidiaries, there are no proxies with
respect to any such shares, and no equity securities of Merger Sub or
of any American General Corporation Significant Subsidiary are or may
become required to be issued by reason of any options, warrants, rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
or exercisable for, shares of any capital stock of Merger Sub or of any
American General Corporation Significant Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which
American General Corporation or any American General Corporation
Significant Subsidiary is or may be bound to issue, redeem, purchase or
sell additional shares of capital stock of Merger Sub or of any
American General Corporation Significant Subsidiary or securities
convertible into or exchangeable or exercisable for any such shares.
Except as set forth in the American General Corporation SEC Reports or
in Section 4.3(d) of the American General Corporation Disclosure
Letter, all of such shares so owned by American General Corporation are
validly issued, fully paid and nonassessable and are owned by it free
and clear of any Encumbrances (as hereinafter defined) securing
obligations not reflected in the American General Corporation SEC
Reports.
Section 4. Authority Relative to this Agreement. Each of
American General Corporation and Merger Sub has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by American
General Corporation and Merger Sub and the consummation by American General
Corporation and Merger Sub of the transactions contemplated hereby have been
duly authorized by the Board of Directors of American General Corporation and
Merger Sub, and by American General Corporation as the sole shareholder of
Merger Sub by written consent, and, other than the approval of the issuance of
the shares of American General Corporation Common Stock as Merger Consideration
by the American General Corporation stockholders, no other corporate proceedings
on the part of American General Corporation or Merger Sub are necessary to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of American General
Corporation and Merger Sub and
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(assuming this Agreement constitutes a valid and binding obligation of the
Company) constitutes a valid and binding agreement of each of American General
Corporation and Merger Sub, enforceable against American General Corporation and
Merger Sub in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles.
Section 5. Consents and Approvals; No Violations. Except (a)
for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), the Securities Act, the Exchange Act, the
rules of the NYSE, state or foreign laws relating to takeovers, state securities
or blue sky laws, state insurance laws and the regulations promulgated
thereunder and the filing of the Certificate of Merger as required by the NYBCL
(collectively, the "Governmental Requirements"), or (b) where the failure to
make any filing with, or to obtain any permit, authorization, consent or
approval of, any court or tribunal or administrative, governmental or regulatory
body, agency, commission, division, department, public body or other authority
(a "Government Entity") would not prevent or delay the consummation of the
Merger, or otherwise prevent American General Corporation or Merger Sub from
performing its respective obligations under this Agreement, and would not
individually or in the aggregate have a American General Corporation Material
Adverse Effect, no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution, delivery
and performance of this Agreement by American General Corporation and Merger Sub
and the consummation of the transactions contemplated by this Agreement. Except
as set forth in Section 4.5 of the American General Corporation Disclosure
Letter, no material consent or approval of any other party is required to be
obtained by American General Corporation or Merger Sub for the execution,
delivery or performance of this Agreement, or the performance by American
General Corporation or Merger Sub of the transactions contemplated hereby.
Neither the execution, delivery or performance of this Agreement by American
General Corporation or Merger Sub, nor the consummation by American General
Corporation or Merger Sub of the transactions contemplated hereby, nor
compliance by American General Corporation or Merger Sub with any of the
provisions hereof, will (i) conflict with or result in any breach of any
provisions of the Articles or Certificate of Incorporation, as the case may be,
or Bylaws of American General Corporation or Merger Sub or the Articles or
Certificate of Incorporation, as the case may be, or Bylaws of any of the
American General Corporation Subsidiaries, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, acceleration,
vesting, payment, exercise, suspension or revocation) under, any of the terms,
conditions, or provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, license, contract, agreement, plan or other instrument or
obligation to which American General Corporation, Merger Sub or any of the
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<PAGE> 20
American General Corporation Subsidiaries is a party or by which any of them or
any of their properties or assets may be bound, (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to American General
Corporation, Merger Sub, any American General Corporation Subsidiary or any of
their properties or assets, (iv) result in the creation or imposition of any
Encumbrance (as hereinafter defined) on any asset of American General
Corporation, Merger Sub or any American General Corporation Subsidiary, or (v)
cause the suspension or revocation of any permit, license, governmental
authorization, consent or approval necessary for American General Corporation,
Merger Sub or any of the American General Corporation Subsidiaries to conduct
its business as currently conducted, except in the case of clauses (ii), (iii),
(iv) and (v) for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations which would
not individually or in the aggregate have a American General Corporation
Material Adverse Effect.
Section 6. American General Corporation SEC Reports. American
General Corporation has delivered to the Company true and complete copies of
each Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report
on Form 8-K, Proxy Statement, Schedule 13D filed with respect to American
General Corporation, Form S-4, and the prospectus included in any other
registration statement as presently in effect and as last amended, pursuant to
which American General Corporation has registered equity securities for sale in
underwritten offerings (including any amendments thereto), filed by American
General Corporation with the SEC since January 1, 1994 through the date hereof
(collectively, the "American General Corporation SEC Reports"). As of the
respective dates such American General Corporation SEC Reports were filed or, if
any such American General Corporation SEC Reports were amended, as of the date
such amendment was filed, each of the American General Corporation SEC Reports
(i) complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder and (ii) did not contain any untrue statement of a material fact or
omit 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. Each of (i) the audited and consolidated
financial statements of American General Corporation (including any related
notes and schedules) included (or incorporated by reference) in its Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, and (ii) the
unaudited consolidated interim financial statements of American General
Corporation (including any related notes and schedules) included (or
incorporated by reference) in its Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, fairly present, in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of American
General Corporation and the American General Corporation Subsidiaries as of the
dates thereof and the consolidated
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results of their operations and changes in their financial position for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
Section 7. Statutory Financial Statements. The Annual
Statements and Quarterly Statements of the American General Corporation
Insurance Subsidiaries, as filed with the departments of insurance for all
applicable domiciliary states for the years ended December 31, 1994 and December
31, 1995 (the "Annual Statutory Statements of American General Corporation") and
the quarters ended March 31, June 30 and September 30, 1995, and March 31, June
30, and September 30, 1996 (collectively, the "Quarterly Statutory Statements of
American General Corporation"), respectively, together with all exhibits and
schedules thereto (all Annual Statutory Statements of American General
Corporation and all Quarterly Statutory Statements of American General
Corporation, together with all exhibits and schedules thereto, referred to in
this Section 4.7 are hereinafter referred to as the "Statutory Financial
Statements of American General Corporation"), have been prepared in accordance
with the accounting practices prescribed or permitted by the departments of
insurance for all applicable domiciliary states for purposes of financial
reporting to the respective state's insurance regulators ("State Statutory
Accounting Principles"), and such accounting practices have been applied on a
basis consistent with State Statutory Accounting Principles throughout the
periods involved, except as expressly set forth in the notes, exhibits or
schedules thereto, and the Statutory Financial Statements of American General
Corporation present fairly in all material respects the financial position and
the results of operations for the American General Corporation Insurance
Subsidiaries as of the dates and for the periods therein in accordance with
State Statutory Accounting Principles. American General Corporation has
delivered to the Company true and complete copies of the Annual Statutory
Statements of American General Corporation and the Quarterly Statutory
Statements of American General Corporation.
Section 8. Absence of Certain Changes. Except as set forth in
Section 4.8 of the American General Corporation Disclosure Letter, since
September 30, 1996, there has been no event or condition (other than (i) any
event or condition resulting from general economic conditions (including without
limitation changes in interest rates), (ii) any occurrence or condition
affecting the life insurance, reinsurance and/or consumer finance industries
generally (including without limitation any change or proposed change in
insurance laws or regulations in any jurisdiction), or (iii) any occurrence or
condition arising out of the transactions contemplated by this Agreement or the
public announcement thereof, but excluding in the case of clauses (i) or (ii),
any such event, condition or occurrence that has had, or is reasonably likely to
have, a disproportionate effect on American General Corporation and the American
General Corporation Subsidiaries, taken as a whole) which has had (or is
reasonably likely to result in) a American General Corporation Material
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<PAGE> 22
Adverse Effect, and American General Corporation and the American General
Corporation Significant Subsidiaries have in all material respects conducted
their businesses in the ordinary course consistent with past practices and have
not taken any action which, if taken after the date hereof, would violate
Section 6.2 hereof.
Section 9. Litigation. Except as disclosed in Section 4.9 of
the American General Corporation Disclosure Letter or the American General
Corporation SEC Reports, there is no suit, action, proceeding or investigation
(whether at law or equity, before or by any federal, state or foreign court,
tribunal, commission, board, agency or instrumentality, or before any
arbitrator) pending or, to the knowledge of American General Corporation,
threatened against or affecting American General Corporation, Merger Sub or any
of the American General Corporation Subsidiaries or any American General
Corporation Plan, the outcome of which, in the reasonable judgment of American
General Corporation, is likely individually or in the aggregate to have a
American General Corporation Material Adverse Effect, nor is there any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against American
General Corporation, Merger Sub or any of the American General Corporation
Subsidiaries having, or which, insofar as can reasonably be foreseen, in the
future would be reasonably likely to have, a American General Corporation
Material Adverse Effect.
Section 10. Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in American
General Corporation's financial statements (or reflected in the notes thereto)
included in the American General Corporation SEC Reports or disclosed in Section
4.10 of the American General Corporation Disclosure Letter or which were
incurred after September 30, 1996 in the ordinary course of business and
consistent with past practices or in connection with the transactions
contemplated by this Agreement or liabilities incurred in connection with
acquisitions made after September 30, 1996, American General Corporation and the
American General Corporation Subsidiaries do not have any material liabilities
or obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet (or reflected
in the notes thereto) of American General Corporation.
Section 11. No Default. Except as set forth in the American
General Corporation SEC Reports or Section 4.11 of the American General
Corporation Disclosure Letter, neither American General Corporation, Merger Sub
nor any of the American General Corporation Subsidiaries is in violation or
breach of, or default under (and no event has occurred which with notice or the
lapse of time or both would constitute a violation or breach of, or default
under) any term, condition or provision of (a) its Articles or Certificate
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of Incorporation, as the case may be, or Bylaws, (b) any note, bond, mortgage,
deed of trust, security interest, indenture, license, agreement, plan, contract,
lease, commitment or other instrument or obligation to which American General
Corporation, Merger Sub or any of the American General Corporation Subsidiaries
is a party or by which they or any of their properties or assets may be bound or
affected, (c) any order, writ, injunction, decree, statute, rule or regulation
applicable to American General Corporation, Merger Sub or any of the American
General Corporation Subsidiaries or any of their properties or assets, or (d)
any permit, license, governmental authorization, consent or approval necessary
for American General Corporation, Merger Sub or any of the American General
Corporation Subsidiaries to conduct their respective businesses as currently
conducted, except in the case of clauses (b), (c) and (d) above for violations,
breaches or defaults which would not individually or in the aggregate have a
American General Corporation Material Adverse Effect.
Section 12. Taxes.
(a) Except as set forth in the American General Corporation
SEC Reports or Section 4.12 of the American General Corporation
Disclosure Letter:
(1) American General Corporation and the American
General Corporation Subsidiaries have (x) duly filed (or there
has been filed on their behalf) with the appropriate
governmental authorities all income Tax Returns (as
hereinafter defined) and all other material Tax Returns
required to be filed by them on or prior to the date hereof,
and (y) duly paid in full or made provision in accordance with
GAAP (or there has been paid or provision has been made on
their behalf) for the payment of all material Taxes (as
hereinafter defined) for all periods or portions thereof
ending through the date hereof;
(2) no federal, state, local or foreign audits or
other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of
the American General Corporation or any American General
Corporation Subsidiary wherein an adverse determination or
ruling in any one such proceeding or in all such proceedings
in the aggregate would have a American General Corporation
Material Adverse Effect;
(3) the federal income Tax Returns of American
General Corporation and the American General Corporation
Subsidiaries have been examined by the Internal Revenue
Service (or the applicable statutes of limitation for the
assessment of federal income Taxes for such periods have
expired) for all periods through and including December 31,
1987, and no
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material deficiencies were asserted as a result of such
examinations that have not been resolved and fully paid; and
(4) to the knowledge of American General Corporation,
no insurance contracts or insurance policies issued by
American General Corporation or any American General
Corporation Subsidiary fail to comply with the applicable
provisions of Code Section 7702 where the failure to so
comply, individually or in the aggregate, would reasonably be
expected to have a American General Corporation Material
Adverse Effect.
(b) "Taxes" shall mean all federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to
tax, or penalties applicable thereto. "Tax Returns" shall mean all
federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information returns and any
amendments to any of the foregoing relating to Taxes.
Section 13. Title to Property.
(a) Except as set forth in the American General Corporation
SEC Reports or Section 4.13(a) of the American General Corporation
Disclosure Letter, each of American General Corporation and American
General Corporation Subsidiaries (i) has good and valid title to all
the properties, assets and other rights used in its business that do
not constitute real property, free and clear of all Encumbrances,
except for such Encumbrances that do not, individually or in the
aggregate, have a American General Corporation Material Adverse Effect,
and (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 leasehold interests or such valid contractual rights do
not, individually or in the aggregate, have a American General
Corporation Material Adverse Effect.
(b) Except as set forth in the American General Corporation
SEC Reports or Section 4.13(b) of the American General Corporation
Disclosure Letter or as would not reasonably be expected to result in a
American General Corporation Material Adverse Effect, each of American
General Corporation and the American General Corporation Subsidiaries:
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<PAGE> 25
(i) owns and has good and valid title to the real
property owned by such party and used in its business, free
and clear of all mortgages, pledges, liens, charges,
encumbrances, defects, security interests, claims, options and
restrictions of any kind ("Encumbrances"), except for (A)
minor imperfections of title, easements and rights of way,
none of which, individually or in the aggregate, materially
detracts from the value of or impairs the use of the affected
property or impairs the operation of American General
Corporation or any of the American General Corporation
Subsidiaries and (B) liens for current taxes not yet due and
payable ("Permitted American General Corporation Liens");
(ii) is in peaceful and undisturbed possession of the
space and/or estate under each lease under which it is a
tenant, and there are no material defaults by it as tenant
thereunder; and
(iii) has good and valid rights of ingress and egress
to and from all the real property owned or leased by such
party from and to the public street systems for all usual
street, road and utility purposes.
Section 14. Insurance Practices; Permit and Insurance
Licenses.
(a) The business of each of the American General Corporation
Insurance Subsidiaries 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 of the American General Corporation Insurance
Subsidiaries has all permits and insurance licenses the use and
exercise of which are necessary for the conduct of its business as now
conducted, other than such permits and insurance licenses the absence
of which would not, individually or in the aggregate, be reasonably
expected to have a American General Corporation Material Adverse
Effect. The business of each of the American General Corporation
Insurance Subsidiaries has been and is being conducted in compliance,
in all material respects, with all such permits and insurance licenses.
To the knowledge of American General Corporation, all such permits and
insurance licenses are in full force and effect, and there is no
proceeding or investigation pending or threatened which
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would reasonably be expected to lead to the revocation, amendment,
failure to renew, limitation, suspension or restriction of any such
permit or insurance license.
Section 15. Regulatory Filings. American General Corporation
has made available for inspection by the Company complete copies of all material
registrations, filings and submissions made since January 1, 1994 by American
General Corporation or any of the American General Corporation Subsidiaries with
any Governmental Entity and any reports of examinations issued since January 1,
1994 by any such Governmental Entity that relate to American General Corporation
or any of the American General Corporation Subsidiaries. American General
Corporation and the American General Corporation Subsidiaries 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 reasonably be expected to have a
American General Corporation Material Adverse Effect; and, to the knowledge of
American General Corporation, all such reports, statements, documents,
registrations, filings or submissions were in all material respects true,
complete and accurate when filed.
Section 16. Investments.
(a) American General Corporation has made available to the
Company a list, which list is accurate and complete in all material
respects, of all securities, mortgages and other investments
(collectively, the "American General Corporation Investments") owned by
American General Corporation and the American General Corporation
Insurance Subsidiaries as of December 31, 1996, together with their
cost basis book or amortized value, as the case may be, as of December
31, 1996. All transactions in American General Corporation Investments
by each of the American General Corporation Insurance Subsidiaries from
January 1, 1997 to the date hereof have complied in all material
respects with the investment policies of such American General
Corporation Insurance Subsidiary and all applicable insurance laws and
regulations.
(b) Except as set forth in Section 4.16(b) of the American
General Corporation Disclosure Letter, the American General Corporation
Insurance Subsidiaries have good and marketable title to the American
General Corporation Investments and to those securities, mortgages and
other investments acquired in the ordinary course of business since
December 31, 1996, other than with respect to those American General
Corporation Investments which have been disposed of in the ordinary
course of business or redeemed in accordance with their terms since
such date and other than American General Corporation Permitted Liens
and other
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than with respect to statutory deposits which are subject to certain
restrictions on transfer.
(c) Section 4.16(c) of the American General Corporation
Disclosure Letter identifies American General Corporation Investments
which to the knowledge of American General Corporation (i) are expected
to be written down as of December 31, 1996, or (ii) are as of December
31, 1996 in default in the payment of principal or interest.
Section 17. Reserves. The aggregate reserves of the American
General Corporation Insurance Subsidiaries as recorded in the Statutory
Accounting Statements of American General Corporation have been determined in
accordance with generally accepted actuarial principles consistently applied
(except as set forth therein). Except as disclosed in the American General
Corporation SEC Reports or Section 4.17 of the American General Corporation
Disclosure Letter, the insurance reserving practices and policies of the
American General Corporation Insurance Subsidiaries have not changed, in any
material respect, since December 31, 1995 and the results of the application of
such practices and policies are reflected in the Statutory Accounting Statements
of the American General Corporation Insurance Subsidiaries. All reserves of the
American General Corporation Insurance Subsidiaries set forth in the Statutory
Accounting Statements of American General Corporation are, to the knowledge of
American General Corporation, fairly stated in accordance with sound actuarial
principles and meet the requirements of the insurance laws of the applicable
insurance authority, except where the failure to so state such reserves or meet
such requirements would not have a American General Corporation Material Adverse
Effect.
Section 18. Ownership of Company Common Stock. As of the date
hereof, American General Corporation and the American General Corporation
Subsidiaries are not beneficial owners (as defined in Rule 16a-1(a) (2) of the
Exchange Act) of any shares of Company Common Stock except for any shares held
in a separate account or mutual fund managed by a American General Corporation
Subsidiary or in a pension trust for the benefit of American General Corporation
retirees.
Section 19. Information in Proxy Statement/Prospectus and
Registration Statement. The Registration Statement (or any amendment thereof or
supplement thereto), at the date it becomes effective and at the time of the
Special Meetings, will not 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, except that no representation is made by American
General Corporation with respect to statements made therein based on information
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supplied by the Company in writing for inclusion in the Registration Statement.
None of the information supplied by American General Corporation for inclusion
or incorporation by reference in the Proxy Statement/Prospectus will, at the
date mailed to American General Corporation shareholders and to the Company's
shareholders and at the time of the Special Meetings, 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 Registration
Statement will comply in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
Section 20. Brokers. Except as set forth in Section 4.20 of
the American General Corporation Disclosure Letter, no person is entitled to any
brokerage, financial advisory, finder's or similar fee or commission payable by
American General Corporation in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of American General
Corporation.
Section 21. Employee Benefit Plans; ERISA.
(a) Section 4.21(a) of the American General Corporation
Disclosure Letter contains a true and complete list of each deferred
compensation and each incentive compensation, stock purchase, stock
option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")); each
profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed
to by American General Corporation or by any trade or business, whether
or not incorporated (an "ERISA Affiliate"), that together with American
General Corporation would be deemed a "single employer" within the
meaning of section 4001(b) of ERISA, or to which American General
Corporation or an ERISA Affiliate is party, whether written or oral,
for the benefit of any employee or former employee of American General
Corporation or any American General Corporation Subsidiary (the
"Plans"). Each of the Plans that is subject to section 302 or Title IV
of ERISA or section 412 of the Code is hereinafter referred to in this
Section 4.21 as a "Title IV Plan." Neither American General
Corporation, any American General Corporation Subsidiary nor any ERISA
Affiliate has any commitment or formal plan, whether legally binding or
not, to create any additional employee benefit plan or modify or change
any exist-
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ing Plan that would affect any employee or former employee of American
General Corporation or any American General Corporation Subsidiary.
(b) With respect to each Plan, American General Corporation
has hereto fore delivered or made available to the Company true and
complete copies of the Plan and any amendments thereto (or if the Plan
is not a written Plan, a description thereof), any related trust or
other funding vehicle, any reports or summaries required under ERISA
or the Code and the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify
under section 401 of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) No liability under Title IV or section 302 of ERISA has
been incurred by American General Corporation or any ERISA Affiliate
that has not been satisfied in full, and no condition exists that
presents a material risk to American General Corporation or any ERISA
Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which
premiums have been paid when due). Insofar as the representation made
in this section 4.21(c) applies to sections 4064, 4069 or 4204 of Title
IV of ERISA, it is made with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to
which American General Corporation or any ERISA Affiliate made, or was
required to make, contributions during the five (5)-year period ending
on the last day of the most recent plan year ended prior to the Closing
Date.
(d) The PBGC has not instituted proceedings to terminate any
Title IV Plan and no condition exists that presents a material risk
that such proceedings will be instituted.
(e) As of the date hereof, with respect to each Title IV Plan,
the present value of accrued benefits under such plan, based upon the
actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such plan's actuary with respect to such
plan did not exceed, as of its latest valuation date, the then current
value of the assets of such plan allocable to such accrued benefits.
(f) No Title IV Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Title IV Plan ended
prior to the Closing Date. All contributions required to be made with
respect to any Plan on or prior to the Closing Date have been timely
made.
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(g) No Title IV Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Title IV Plan a plan
described in section 4063(a) of ERISA. Neither American General
Corporation nor any ERISA Affiliate has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively
defined in sections 4203 and 4205 of ERISA (or any liability result ing
therefrom has been satisfied in full).
(h) Neither American General Corporation or any American
General Corporation Subsidiary, any Plan, any trust created thereunder,
nor any trustee or administrator thereof has engaged in a transaction
in connection with which American General Corporation, any American
General Corporation Subsidiary, or any American General Corporation
Plan could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section
4975 or 4976 of the Code that would reasonably be expected to have a
American General Corporation Material Adverse Effect.
(i) Except as set forth in Section 4.21(i) of the American
General Corporation Disclosure Letter, each Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code.
(j) Each Plan intended to be "qualified" within the meaning of
section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code.
Each Plan intended to satisfy the requirements of Section 501(c)(9) has
satisfied such requirements.
(k) Except as set forth in Section 4.21(k) of the American
General Corporation Disclosure Letter, no Plan provides medical,
surgical, hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of American General
Corporation or any American General Corporation 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).
(l) There is no matter pending (other than routine
qualification determination filings, copies of which have been
furnished to the Company or will be promptly furnished to the Company
when made) with respect to any of the Plans before the Internal Revenue
Service, Department of Labor or PBGC.
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Section 22. Labor Relations; Employees. Except as set forth in
the American General Corporation SEC Reports or Section 4.22 of the American
General Corporation Disclosure Letter:
(a) None of the employees of American General Corporation or
any of the American General Corporation Subsidiaries are represented by
any labor organization and, to the knowledge of American General
Corporation, no union claims to represent these employees have been
made. To the knowledge of American General Corporation, there have been
no union organizing activities with respect to employees of American
General Corporation or American General Corporation Subsidiaries within
the past five years. To the knowledge of American General Corporation,
American General Corporation and the American General Corporation
Subsidiaries are not, and have not been, engaged in any unfair labor
practices as defined in the National Labor Relations Act or similar
applicable law, ordinance or regulation, nor is there pending any
unfair labor practice charge.
(b) American General Corporation and the American General
Corporation Subsidiaries have not during the past two years effectuated
a "plant closing" or "mass layoff" (as defined in the Worker Adjustment
and Retraining Notification Act) affecting any of their sites of
employment or one or more facilities or operating units within any site
of employment or facility, nor is any such action scheduled within the
90 day period prior to the Effective Time.
Section 23. Environmental Matters. Except as disclosed in
Section 4.23 of the American General Corporation Disclosure Letter or the
American General Corporation SEC Reports, with respect to real property owned or
leased by American General Corporation or any of the American General
Corporation Subsidiaries currently or within the past two years, including
foreclosure property, to the knowledge of American General Corporation, there
are no past or present actions, conditions or occurrences that could form the
basis of any outstanding claim under Environmental Laws against, or liability
under such laws of, American General Corporation or any of the American General
Corporation Subsidiaries, except for such claims or liabilities which in the
aggregate would not reasonably be expected to result in a American General
Corporation Material Adverse Effect.
Section 24. Related Party Transactions. Except for the
transactions described in the American General Corporation SEC Reports or
Section 4.24 of the American General Corporation Disclosure Letter, all
transactions involving American General Corporation or any of the American
General Corporation Subsidiaries that are required to be disclosed in the
American General Corporation SEC Reports in accordance
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with Item 404 of Regulation S-K have been so disclosed, and to the knowledge of
American General Corporation since December 31, 1995, neither American General
Corporation nor any of the American General Corporation Subsidiaries 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 American General Corporation
SEC Reports filed prior to the date hereof.
Section 25. Opinion of Financial Advisor. American General
Corporation has received a written opinion from Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") dated as of the date hereof, to the effect
that the consideration to be paid by American General Corporation pursuant to
the Merger is fair to American General Corporation from a financial point of
view.
Section 26. Derivatives. As of December 31, 1996, none of
American General Corporation or any of the American General Corporation
Subsidiaries was subject to any material exposure, individually or in the
aggregate, under any agreements relating to Derivatives.
Section 27. Contracts.
(a) Section 4.27 of the American General Corporation
Disclosure Letter sets forth a list of each contract to which American
General Corporation or any of the American General Corporation
Subsidiaries is a party or by which it is bound which:
(i) has been entered into since September 30, 1996
and would be required to be filed by American General
Corporation as an exhibit to a American General Corporation
SEC Report filed after such date under Item 10 of Rule 601 of
Regulation S-K under the Exchange Act;
(ii) is a reinsurance or retrocession contract which
requires the payment of premiums by American General
Corporation or any of the American General Corporation
Subsidiaries of amounts in excess of $2,000,000 per year;
(iii) contains covenants limiting the freedom of
American General Corporation or any of the American General
Corporation Subsidiaries to engage in any line of business in
any geographic area or to compete with any person or entity or
restricting the ability of any of the American General
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Corporation Subsidiaries to acquire equity securities of any
person or entity; or
(iv) is an employment or severance contract
applicable to any employee of American General Corporation or
any of the American General Corporation Subsidiaries,
including without limitation contracts to employ executive
officers and other contracts with officers or directors of
American General Corporation or any of the American General
Corporation Subsidiaries, other than any such contract which
(A) by its terms is terminable by American General Corporation
or any of the American General Corporation Subsidiaries on not
more than 60 days' notice without material liability, or (B)
does not require payments by American General Corporation or
any American General Corporation Subsidiary individually in
excess of $100,000 or in the aggregate in excess of $2,000,000
(collectively, together with such contracts as are filed as
exhibits to the American General Corporation SEC Reports, the
"American General Corporation Contracts").
(b) With respect to each of the American General Corporation
Contracts, to the knowledge of American General Corporation, except as
disclosed in Section 4.27 of the American General Corporation
Disclosure Letter:
(i) such contract is (assuming due power and
authority of, and due execution and delivery by, the other
party or parties thereto) valid and binding upon each party
thereto and is in full force and effect;
(ii) there is no material default or claim of
material default thereunder and no event has occurred which,
with the passage of time or the giving of notice (or both),
would constitute a material default thereunder, or would
permit material modification, acceleration or termination
thereof; and
(iii) the consummation of the transactions
contemplated by this Agreement will not give rise to a right
of the other party or parties thereto to terminate such
contract or impose liability under the terms thereof on
American General Corporation or any of the American General
Corporation Subsidiaries; provided, that this representation
shall not be deemed to give assurances regarding rights of
termination based on any decrease in insurance industry
ratings of American General Corporation or the American
General Corporation Subsidiaries resulting from the
declaration and/or payment of any of the extraordinary
dividends contemplated by Section 7.12 hereof.
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Section 28. Intellectual Property. Except as set forth on
Section 4.28 of the American General Corporation Disclosure Letter, American
General Corporation and each American General Corporation Subsidiary has the
right to use, free and clear of any royalty or other payment obligations, claims
of infringement or alleged infringement or other Liens, other than Permitted
American General Corporation Liens and other than contractual agreements with
respect to licensing and maintenance fees, all American General Intellectual
Property (as hereinafter defined) that is material to the conduct of its
business; and neither American General Corporation nor any American General
Corporation Subsidiary is in material default under any license or similar
agreements under which American General Corporation or any of the American
General Corporation Subsidiaries has obtained rights to use or permit its
customers or agents to use any American General Corporation Intellectual
Property owned by others and neither American General Corporation nor any of the
American General Corporation Subsidiaries has made a claim that the other party
thereto is in default. As used herein, "American General Intellectual Property"
shall mean all patents and trademarks, service marks, trade names, jingles,
assumed names, trade secrets and other proprietary information, copyrights,
licenses, permits and other similar intangible property rights and interest
applied for, issued to or presently owned or used by American General
Corporation or any of the American General Corporation Subsidiaries or under
which American General Corporation or any of the American General Corporation
Subsidiaries is licensed or franchised.
Section 29. Investment Advisor; Investment Company. Except as
set forth in Section 4.29 of the American General Corporation Disclosure Letter,
neither American General Corporation nor any of the American General Corporation
Subsidiaries conducts activities of an "investment advisor" as such term is
defined in Section 2 (a) (20) of the Investment Company Act of 1940, as amended
("ICA"), whether or not registered under the Investment Advisers Act of 1940, as
amended. Except as disclosed in Section 4.29 of the American General Corporation
Disclosure Letter, neither American General Corporation nor any of the American
General Corporation Subsidiaries is an "investment company" as defined under the
ICA, and neither American General Corporation nor any of the American General
Corporation Subsidiaries sponsors any person that is such an investment company.
Section 30. Disclosure. No representation or warranty by
American General Corporation or the American General Corporation Subsidiaries in
this Agreement (including the American General Corporation Disclosure Letter),
and no statement contained in the American General Corporation SEC Reports and
the Statutory Financial Statements of American General Corporation, contains any
untrue statement of a material fact or omits to state any material fact
necessary, in light of the circumstances under which it was made, to make the
statements herein or therein not misleading. There is no fact known to American
General Corporation which would reasonably be expected to have a American
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General Corporation Material Adverse Effect which has not been set forth in the
American General Corporation SEC Reports, the Statutory Financial Statements of
American General Corporation or in this Agreement (including the American
General Corporation Disclosure Letter).
Section 31. Investigation by American General Corporation.
American General Corporation agrees, to the fullest extent permitted by law,
that none of the respective directors, officers, employees, affiliates, agents
or representatives of the Company or of any of the Company Subsidiaries shall
have any liability or responsibility whatsoever to American General Corporation
on any basis (including, without limitation, in contract or tort, under federal
or state securities laws or otherwise) based upon any information provided or
made available, or statements made, to American General Corporation prior to the
execution of this Agreement.
Section 32. Pooling of Interests. Following consultation with
the independent public accountants of American General Corporation, neither
American General Corporation nor Merger Sub has any reason to believe that the
Merger will not qualify for pooling of interests accounting treatment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to American General Corporation
in a letter delivered to it prior to the execution hereof (which letter contains
appropriate references to identify the representations and warranties herein to
which the information in such letter relates) (the "Company Disclosure Letter"),
the Company represents and warrants to American General Corporation as follows:
Section 1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted or presently proposed to be conducted.
The Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not individually or
in the aggregate have a material adverse effect on the business, assets,
liabilities, results of operations or financial
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condition of the Company and the Company Subsidiaries, taken as a whole (a
"Company Material Adverse Effect").
Section 2. Capitalization. As of February 6, 1997: (i) the
authorized capital stock of the Company consisted of 120,000,000 shares of
Company Common Stock and 10,800,000 shares of Preferred Stock; (ii) 34,509,812
shares of Company Common Stock, 4,232 shares of $4.50 Series A Convertible
Preferred Stock (the "Series A Preferred Stock") and 1,678 shares of $5.00
Series B Convertible Preferred Stock (the "Series B Preferred Stock," and
together with the Series A Preferred Stock, the "Company Preferred Stock") were
issued and outstanding; and (iii) stock options to acquire 1,360,180 shares of
Company Common Stock (such options, together with (a) up to no more than 175,661
shares of restricted stock that may be issued in connection with the exercise of
such options under the Company's restricted stock plans and arrangements, (b)
any additional options as may be granted upon exercise of such options in
accordance with the "reload" provisions of the Company's stock option plans, and
(c) any additional shares of restricted stock that may be issued in connection
with the exercise of the "reload" options referred to in clause (b), the
"Company Stock Incentives") were outstanding under all stock option plans of the
Company. All the issued and outstanding shares of Company Common Stock and
Company Preferred Stock are validly issued, fully paid and nonassessable and
free of preemptive rights. Since February 6, 1997 to the date hereof, no shares
of the Company's capital stock have been issued, except Company Common Stock
issued upon exercise of Company Stock Incentives or upon conversion of Company
Preferred Stock. Except for (i) Company Stock Incentives, (ii) 4,232 shares of
Series A Preferred Stock (iii) 1,678 shares of Series B Preferred Stock and (iv)
as set forth in Section 5.2 of the Company Disclosure Letter, as of the date of
this Agreement there are no options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating the Company
to issue, transfer, sell, redeem, repurchase or otherwise acquire any shares of
its capital stock.
Section 3. Company Subsidiaries.
(a) Each subsidiary of the Company set forth on Exhibit 21 to
the Annual Report on Form 10-K for the year ended December 31, 1995 of
the Company (collectively, together with USLIFE Financial Institution
Marketing Group, Inc., the "Company Subsidiaries") is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has the corporate power and
authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority or necessary
governmental approvals would not individually or in the aggregate have
a Company Material Adverse Effect. Each
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Company Subsidiary is duly qualified or licensed and in good standing
to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good
standing would not individually or in the aggregate have a Company
Material Adverse Effect.
(b) Section 5.3(b) of the Company Disclosure Letter sets forth
the name of each of the Company Subsidiaries that is an insurance
company (collectively, the "Company Insurance Subsidiaries"). Except as
disclosed in the Company SEC Reports (as defined below) or Section
5.3(b) of the Company Disclosure Letter, each of the Company Insurance
Subsidiaries is (i) duly licensed or authorized as an insurance company
in its jurisdiction of incorporation and (ii) duly licensed or
authorized as an insurance company in each other jurisdiction where it
is required to be so licensed or authorized.
(c) Except as set forth in the Company SEC Reports or Section
5.3(c) of the Company Disclosure Letter, the Company is, directly or
indirectly, the record and beneficial owner of all of the outstanding
shares of capital stock of each of the Company Subsidiaries, there are
no proxies with respect to any such shares, and no equity securities of
any Company Subsidiary are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable or exercisable for, shares of
any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which the
Company or any Company Subsidiary is or may be bound to issue, redeem,
purchase or sell additional shares of capital stock of any Company
Subsidiary or securities convertible into or exchangeable or
exercisable for any such shares. Except as set forth in the Company SEC
Reports or Section 5.3(c) of the Company Disclosure Letter, all of such
shares so owned by the Company are validly issued, fully paid and
nonassessable and are owned by it free and clear of any Encumbrances,
restraints on alienation, or any other restrictions with respect to the
transferability or assignability thereof (other than restrictions on
transfer imposed by federal or state securities laws).
(d) Except for the Company Subsidiaries, the Company
Investments (as hereinafter defined), and as set forth in the Company
SEC Reports or Section 5.3(d) of the Company Disclosure Letter, the
Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation,
partnership, joint
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venture or other business association or entity that directly or
indirectly conducts any activity which is material to the Company.
Section 4. Authority Relative to this Agreement. The Company
has the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors, and no other corporate proceedings on the part of the Company, other
than obtaining shareholder approval pursuant to Section 2.1 hereof, are
necessary to authorize this Agreement or the transactions contemplated hereby.
Subject to the foregoing, this Agreement has been duly and validly executed and
delivered by the Company and (assuming this Agreement constitutes a valid and
binding obligation of American General Corporation and Merger Sub) constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally from
time to time in effect and to general equitable principles.
Section 5. Consents and Approvals: No Violations. Except (a)
for the Governmental Requirements, or (b) where the failure to make any filing
with, or to obtain any permit, authorization, consent or approval of, any
Governmental Entity would not prevent or delay the consummation of the Merger,
or otherwise prevent the Company from performing its obligations under this
Agreement, and would not individually or in the aggregate have a Company
Material Adverse Effect, no filing with, and no permit, authorization, consent
or approval of, any Governmental Entity is necessary for the execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement. Except as set forth
on Section 5.5 of the Company Disclosure Letter, no material consent or approval
of any other party (including, but not limited to, any party to any Company
Contracts (as defined below)) is required to be obtained by the Company or any
Company Subsidiary for the execution, delivery or performance of this Agreement
or the performance by the Company of the transactions contemplated hereby.
Except as set forth in Section 5.5 of the Company Disclosure Letter, neither the
execution, delivery or performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the provisions hereof, will (i) conflict
with or result in any breach of any provisions of the Articles or Certificate of
Incorporation, as the case may be, or Bylaws of the Company or the Certificate
or Articles of Incorporation, as the case may be, or Bylaws of any of the
Company Subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation,
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vesting, payment, exercise, acceleration, suspension or revocation) under, any
of the terms, conditions or provisions of any note, bond, mortgage, deed of
trust, security interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which the Company or any of the Company Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound or affected, (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, of the Company Subsidiaries or any
of their properties or assets, (iv) result in the creation or imposition of any
Encumbrance on any asset of the Company or any Company Subsidiary or (v) cause
the suspension or revocation of any permit, license, governmental authorization,
consent or approval necessary for the Company or any of the Company Subsidiaries
to conduct its business as currently conducted, except in the case of clauses
(ii), (iii), (iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or revocations
which would not individually or in the aggregate have a Company Material Adverse
Effect.
Section 6. Company SEC Reports. The Company has delivered to
American General Corporation true and complete copies of each registration
statement, report and proxy or information statement (including exhibits and any
amendments thereto) filed by the Company with the SEC since January 1, 1994
through the date hereof (collectively, the "Company SEC Reports"). As of the
respective dates the Company SEC Reports were filed or, if any such Company SEC
Reports were amended, as of the date such amendment was filed, each of the
Company SEC Reports (i) complied in all material respects with all applicable
requirements of the Securities Act and Exchange Act, and the rules and
regulations promulgated thereunder and (ii) did not contain any untrue statement
of a material fact or omit 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. Each of (i) the
audited consolidated financial statements of the Company (including any related
notes and schedules) included (or incorporated by reference) in its Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 and (ii) the
unaudited consolidated interim financial statements for the Company (including
any related notes and schedules) included (or incorporated by reference) in its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, fairly
present, in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and the Company Subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in their financial position
for the periods then ended (subject to normal year-end adjustments, in the case
of any unaudited interim financial statements).
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Section 7. Statutory Financial Statements. The Annual
Statements and Quarterly Statements of the Company Insurance Subsidiaries, as
filed with the respective departments of insurance for all applicable
domiciliary states for the years ended December 31, 1994 and December 31, 1995
(the "Annual Statutory Statements of the Company") and the quarters ended March
31, June 30, and September 30, 1995, and March 31, June 30, and September 30,
1996 (collectively, the "Quarterly Statutory Statements of the Company"),
respectively, together with all exhibits and schedules thereto (all Annual
Statutory Statements of the Company and all Quarterly Statutory Statements of
the Company, together with all exhibits and schedules thereto, referred to in
this Section 5.7 are hereinafter referred to as the "Statutory Financial
Statements of the Company"), have been prepared in accordance with the
applicable State Statutory Accounting Principles, and such accounting practices
have been applied on a basis consistent with State Statutory Accounting
Principles throughout the periods involved, except as expressly set forth in the
notes, exhibits or schedules thereto, and the Statutory Financial Statements of
the Company present fairly in all material respects the financial position and
the results of operations for the Company Insurance Subsidiaries as of the dates
and for the periods therein in accordance with State Statutory Accounting
Principles. The Company has delivered to American General Corporation true and
complete copies of the Annual Statutory Statements of the Company and the
Quarterly Statutory Statements of the Company.
Section 8. Absence of Certain Changes. Since September 30,
1996, there has been no event or condition (other than (i) any event or
condition resulting from general economic conditions (including without
limitation changes in interest rates), (ii) any occurrence or condition
affecting the life insurance or reinsurance industry generally (including
without limitation any change or proposed change in insurance laws or
regulations in any jurisdiction), (iii) any occurrence or condition arising out
of the transactions contemplated by this Agreement or the public announcement
thereof, but excluding in the case of clauses (i) or (ii), any such event,
condition or occurrence that has had, or is reasonably likely to have, a
disproportionate effect on the Company and Company Subsidiaries taken as a
whole) which has had (or is reasonably likely to result in) a Company Material
Adverse Effect, and except as set forth in Section 5.8 of the Company Disclosure
Letter, the Company and the Company Subsidiaries have in all material respects
conducted their businesses in the ordinary course consistent with past practices
and have not taken any action which, if taken after the date hereof, would
violate Section 6.1 hereof.
Section 9. Litigation. Except as disclosed in the Company SEC
Reports or as set forth in Section 5.9 of the Company Disclosure Letter, there
is no suit, action, proceeding or investigation (whether at law or equity,
before or by any federal, state or foreign court, tribunal, commission, board,
agency or instrumentality, or before any arbitrator) pending or, to the
knowledge of the Company, threatened against or affecting the
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Company or any of the Company Subsidiaries or any Company Plan, the outcome of
which, in the reasonable judgment of the Company, is likely individually or in
the aggregate to have a Company Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Company or any of the Company Subsidiaries or any Company Plan
having, or which, insofar as can reasonably be foreseen, in the future would be
reasonably likely to have, a Company Material Adverse Effect.
Section 10. Absence of Undisclosed Liabilities; Actuarial
Appraisal. Except for liabilities or obligations which are accrued or reserved
against in the Company's financial statements (or reflected in the notes
thereto) included in the Company SEC Reports or disclosed in Section 5.10 of the
Company Disclosure Letter or which were incurred after September 30, 1996 in the
ordinary course of business and consistent with past practices or in connection
with the transactions contemplated by this Agreement, the Company and the
Company Subsidiaries do not have any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in a consolidated balance sheet (or reflected in the notes thereto) of
the Company. The Company has not within the past three years obtained a detailed
actuarial appraisal which incorporates significant nonpublic information,
performed by an independent actuarial consultant, of the aggregate value of the
consolidated life insurance operations of the Company and the Company Insurance
Subsidiaries.
Section 11. No Default. Except as set forth in the Company SEC
Reports or Section 5.11 of the Company Disclosure Letter, neither the Company
nor any of the Company Subsidiaries is in violation or breach of, or default
under (and no event has occurred which with notice or the lapse of time or both
would constitute a violation or breach of, or a default under) any term,
condition or provision of (a) its Articles or Certificate of Incorporation, as
the case may be, or Bylaws, (b) any note, bond, mortgage, deed of trust,
security interest, indenture, license, agreement, plan, contract, lease,
commitment or other instrument or obligation to which the Company or any of the
Company Subsidiaries is a party or by which they or any of their properties or
assets may be bound or affected, (c) any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of the Company
Subsidiaries or any of their properties or assets, or (d) any permit, license,
governmental authorization, consent or approval necessary for the Company or any
of the Company Subsidiaries to conduct their respective businesses as currently
conducted, except in the case of clauses (b), (c) and (d) above for breaches,
defaults or violations which would not individually or in the aggregate have a
Company Material Adverse Effect.
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Section 12. Taxes. Except as set forth in the Company SEC
Reports or Section 5.12 of the Company Disclosure Letter:
(a) the Company and the Company Subsidiaries have (i) duly
filed (or there has been filed on their behalf) with the appropriate
governmental authorities all income Tax Returns and all other material
Tax Returns required to be filed by them on or prior to the date
hereof, and (ii) duly paid in full or made provision in accordance with
GAAP (or there has been paid or provision has been made on their
behalf) for the payment of all material Taxes for all periods or
portions thereof ending through the date hereof;
(b) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary wherein an adverse determination or ruling in any one such
proceeding or in all such proceedings in the aggregate would have a
Company Material Adverse Effect;
(c) the federal income Tax Returns of the Company and the
Company Subsidiaries have been examined by the Internal Revenue Service
(or the applicable statutes of limitation for the assessment of federal
income Taxes for such periods have expired) for all periods through and
including December 31, 1988, and no material deficiencies were asserted
as a result of such examinations that have not been resolved and fully
paid; and
(d) to the knowledge of the Company, no insurance contracts or
insurance policies issued by the Company or any Company Subsidiary fail
to comply with the applicable provisions of Code Section 7702 where the
failure to so comply, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect.
Section 13. Title to Property.
(a) Except as set forth in the Company SEC Reports or Section
5.13(a) of the Company Disclosure Letter, each of the Company and the
Company Subsidiaries (i) has good and valid title to all the
properties, assets and other rights used in its business that do not
constitute real property, free and clear of all Encumbrances, except
for such Encumbrances that do not, individually or in the aggregate,
have a Company Material Adverse Effect, and (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
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failure to have such valid leasehold interests or such valid
contractual rights do not, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) Except as set forth in the Company SEC Reports or Section
5.13(b) of the Company Disclosure Letter or as would not reasonably be
expected to result in a Company Material Adverse Effect, each of the
Company and the Company Subsidiaries:
(i) owns and has good and valid title to the real
property owned by such party and used in its business, free
and clear of all Encumbrances, except for (A) minor
imperfections of title, easements and rights of way, none of
which, individually or in the aggregate, materially detracts
from the value of or impairs the use of the affected property
or impairs the operation of the Company or any of the Company
Subsidiaries and (B) liens for current taxes not yet due and
payable ("Permitted Company Liens");
(ii) is in peaceful and undisturbed possession of the
space and/or estate under each lease under which it is a
tenant, and there are no material defaults by it as tenant
thereunder; and
(iii) has good and valid rights of ingress and egress
to and from all the real property owned or leased by such
party from and to the public street systems for all usual
street, road and utility purposes.
Section 14. Insurance Practices; Permits and Insurance
Licenses.
(a) The business of each of the Company Insurance Subsidiaries
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 of the Company Insurance Subsidiaries has all permits
and insurance licenses the use and exercise of which are necessary for
the conduct of its business as now conducted, other than such permits
and insurance licenses the absence of which would not, individually or
in the aggregate, be reasonably expected to have a Company Material
Adverse Effect. The business of each of the Company Insurance
Subsidiaries has been and is being conducted in compliance, in all
material
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respects, with all such permits and insurance licenses. To the
knowledge of the Company, all such permits and insurance licenses 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, suspension or
restriction of any such permit or insurance license.
Section 15. Regulatory Filings. The Company has made available
for inspection by American General Corporation complete copies of all material
registrations, filings and submissions made since January 1, 1994 by the Company
or any of the Company Subsidiaries with any Governmental Entity and any reports
of examinations issued since January 1, 1994 by any such Governmental Entity
that relate to the Company or any of the Company Subsidiaries. The Company and
the Company Subsidiaries 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 reasonably be expected to have a Company Material Adverse Effect; 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.
Section 16. Investments.
(a) The Company has made available to American General
Corporation 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 and the
Company Insurance Subsidiaries as of December 31, 1996, together with
their cost basis, book or amortized value, as the case may be, as of
December 31, 1996. All transactions in Company Investments by each
Company Insurance Subsidiary from January 1, 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 Section 5.16(b) of the Company
Disclosure Letter, the Company Insurance Subsidiaries have good and
marketable title to the Company Investments and to those securities,
mortgages and other investments acquired in the ordinary course of
business since December 31, 1996, other than with respect to those
Company Investments which have been disposed of in the ordinary course
of business or redeemed in accordance with their terms since such date
and other than Permitted Company Liens or with respect to statutory
deposits which are subject to certain restrictions on transfer, and
none of the Company Investments consists of securities loaned to third
parties.
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(c) Section 5.16(c) of the Company Disclosure Letter
identifies the Company Investments which to the knowledge of the
Company (i) are expected to be written down as of December 31, 1996 or
(ii) are as of December 31, 1996 in default in the payment of principal
or interest.
Section 17. Reserves. The aggregate reserves of the Company
Insurance Subsidiaries as recorded in the Statutory Accounting Statements of the
Company have been determined in accordance with generally accepted actuarial
principles consistently applied (except as set forth therein). Except as
disclosed in the Company SEC Reports or Section 5.17 of the Company Disclosure
Letter, the insurance reserving practices and policies of the Company Insurance
Subsidiaries have not changed, in any material respect, since December 31, 1995
and the results of the application of such practices and policies are reflected
in the Statutory Accounting Statements of the Company. All reserves of the
Company Insurance Subsidiaries set forth in the Statutory Accounting Statements
of the Company are, to the knowledge of the Company, fairly stated in accordance
with sound actuarial principles and meet the requirements of the insurance laws
of the applicable insurance authority, except where the failure to so state such
reserves or meet such requirements would not have a Company Material Adverse
Effect.
Section 18. Repurchases of Company Common Stock. Except as set
forth in Section 5.18 of the Company Disclosure Letter, since December 31, 1996,
the Company has not repurchased any shares of Company Common Stock, other than
de minimis amounts of shares repurchased from Company Plans (as hereinafter
defined).
Section 19. Information in Proxy Statement/Prospectus and
Registration Statement. The Proxy Statement/Prospectus (or any amendment thereof
or supplement thereto), at the date mailed to Company shareholders and to
American General Corporation shareholders and at the time of the Special
Meetings, will not 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, except that no representation is made by the Company with
respect to statements made therein based on information supplied by American
General Corporation in writing for including in the Proxy Statement/Prospectus.
None of the information supplied by the Company for inclusion or incorporation
by reference in the Registration Statement will, at the date it becomes
effective and at the time of the Special Meetings, 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/Prospectus will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
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Section 20. Brokers. Except for Goldman, Sachs & Co. ("Goldman
Sachs"), no person is entitled to any brokerage, financial advisory, finder's or
similar fee or commission payable by the Company in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company.
Section 21. Employee Benefit Plans; ERISA.
(a) Section 5.21(a) of the Company Disclosure Letter contains
a true and complete list of each deferred compensation and each
incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each severance or
termination pay, medical, surgical, hospitalization, life insurance and
other "welfare" plan, fund or program (within the meaning of section
3(1) of ERISA); each profit-sharing, stock bonus or other "pension"
plan, fund or program (within the meaning of section 3(2) of ERISA);
each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or
not incorporated (a "Company ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning of
section 4001(b) of ERISA, or to which the Company or a Company ERISA
Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of the Company or any Company Subsidiary
(the "Company Plans"). Each of the Company Plans that is subject to
section 302 or Title IV of ERISA or section 412 of the Code is
hereinafter referred to in this Section 5.21 as a "Company Title IV
Plan." Neither the Company, any Company Subsidiary nor any Company
ERISA Affiliate has any commitment or formal plan, whether legally
binding or not, to create any additional employee benefit plan or
modify or change any existing Company Plan that would affect any
employee or former employee of the Company or any Company Subsidiary.
(b) With respect to each Company Plan, the Company has
heretofore delivered or made available to American General Corporation
true and complete copies of the Company Plan and any amendments thereto
(or if the Company Plan is not a written plan, a description thereof),
any related trust or other funding vehicle, any reports or summaries
required under ERISA or the Code and the most recent determination
letter received from the Internal Revenue Service with respect to each
Company Plan intended to qualify under section 401 of the Internal
Revenue Code of 1986, as amended (the "Code").
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(c) No liability under Title IV or section 302 of ERISA has
been incurred by the Company or any Company ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a
material risk to the Company or any Company ERISA Affiliate of
incurring any such liability, other than liability for premiums due the
Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been
paid when due). Insofar as the representation made in this section
5.21(c) applies to sections 4064, 4069 or 4204 of Title IV of ERISA, it
is made with respect to any employee benefit plan, program, agreement
or arrangement subject to Title IV of ERISA to which the Company or any
Company ERISA Affiliate made, or was required to make, contributions
during the five (5)-year period ending on the last day of the most
recent plan year ended prior to the Closing Date.
(d) The PBGC has not instituted proceedings to terminate any
Company Title IV Plan and no condition exists that presents a material
risk that such proceedings will be instituted.
(e) As of the date hereof, with respect to each Company Title
IV Plan, the present value of accrued benefits under such plan, based
upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with respect to
such plan did not exceed, as of its latest valuation date, the then
current value of the assets of such plan allocable to such accrued
benefits.
(f) No Company Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of
each Company Title IV Plan ended prior to the Closing Date. All
contributions required to be made with respect to any Company Plan on
or prior to the Closing Date have been timely made.
(g) No Company Title IV Plan is a "multiemployer pension
plan," as defined in section 3(37) of ERISA, nor is any Company Title
IV Plan a plan de scribed in section 4063(a) of ERISA. Neither the
Company nor any Company ERISA Affiliate has made or suffered a
"complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA (or any
liability resulting therefrom has been satisfied in full).
(h) Neither the Company or any Company Subsidiary, any Company
Plan, any trust created thereunder, nor any trustee or administrator
thereof has engaged in a transaction in connection with which the
Company, any Company Sub-
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sidiary, or any Company Plan could be subject to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed
pursuant to section 4975 or 4976 of the Code that would reasonably be
expected to have a Company Material Adverse Effect.
(i) Except as set forth in Section 5.21(i) of the Company
Disclosure Letter, each Company Plan has been operated and administered
in all material respects in accordance with its terms and applicable
law, including but not limited to ERISA and the Code.
(j) Each Company Plan intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under section 501(a) of
the Code. Each Company Plan intended to satisfy the requirements of
Section 501(c)(9) has satisfied such requirements.
(k) Except as set forth in Section 5.21(k) of the Company
Disclosure Letter, no Company Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Company 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).
(l) There is no matter pending (other than routine
qualification determination filings, copies of which have been
furnished to American General Corporation or will be promptly furnished
to American General Corporation when made) with respect to any of the
Company Plans before the Internal Revenue Service, Department of Labor
or PBGC.
Section 22. Labor Relations; Employees. Except as set forth in
the Company SEC Reports or Section 5.22 of the Company Disclosure Letter:
(a) None of the employees of the Company or the Company
Subsidiaries are represented by any labor organization and, to the
knowledge of the Company, no union claims to represent these employees
have been made. To the knowledge of the Company, there have been no
union organizing activities with respect to employees of the Company or
the Company Subsidiaries within the past five years. To the knowledge
of the Company, the Company and Company Subsidiaries are not, and have
not been, engaged in any unfair labor practices as defined in the
National Labor
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Relations Act or similar applicable law, ordinance or regulation, nor
is there pending any unfair labor practice charge.
(b) The Company and the Company Subsidiaries have not during
the past two years effectuated a "plant closing" or "mass layoff" (as
defined in the Worker Adjustment and Retraining Notification Act)
affecting any of their sites of employment or one or more facilities or
operating units within any site of employment or facility, nor is any
such action scheduled within the 90 day period prior to the Effective
Time.
Section 23. Environmental Matters. Except as disclosed in the
Company SEC Reports or Section 5.23 of the Company Disclosure Letter and in any
environmental report obtained by American General Corporation in connection with
its due diligence review of the Company, with respect to real property owned or
leased by the Company or any of the Company Subsidiaries currently or within the
last two years, including foreclosure property, to the knowledge of the Company,
there are no past or present actions, conditions or occurrences that could form
the basis of any outstanding claim under Environmental Laws against, or
liability under such laws of, the Company or any of the Company Subsidiaries,
except for such claims or liabilities which in the aggregate would not
reasonably be expected to result in a Company Material Adverse Effect.
Section 24. Related Party Transactions. Except for the
transactions described in the Company SEC Reports or Section 5.24 of the Company
Disclosure Letter, all transactions involving the Company or any of the Company
Subsidiaries that are required to be disclosed in the Company SEC Reports in
accordance with Item 404 of Regulation S-K have been so disclosed, and to the
knowledge of the Company, since December 31, 1995, neither the Company nor any
of the Company Subsidiaries 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 25. Opinion of Financial Advisor. The Company has
received an opinion from Goldman Sachs dated the date hereof to the effect that
the Merger Consideration to be received by the shareholders of the Company
pursuant to this Agreement is fair as of the date hereof to such shareholders.
Section 26. Derivatives. As of December 31, 1996, none of the
Company or any of the Company Subsidiaries was subject to any material exposure,
individually or in the aggregate, under any agreements relating to Derivatives.
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Section 27. Contracts.
(a) Section 5.27 of the Company Disclosure Letter sets forth a
list of each contract to which the Company or any of the Company
Subsidiaries is a party or by which it is bound which:
(i) has been entered into since September 30, 1996
and would be required to be filed by the Company as an exhibit
to a Company SEC Report filed after such date under Item 10 of
Rule 601 of Regulation S-K under the Exchange Act;
(ii) is a reinsurance or retrocession contract which
requires the payment of premiums by the Company or any of the
Company Subsidiaries of amounts in excess of $2,000,000 per
year;
(iii) contains covenants limiting the freedom of the
Company or any of the Company Subsidiaries to engage in any
line of business in any geographic area or to compete with any
person or entity or restricting the ability of any of the
Company Subsidiaries to acquire equity securities of any
person or entity; or
(iv) is an employment or severance contract
applicable to any employee of the Company or any of the
Company Subsidiaries, including without limitation contracts
to employ executive officers and other contracts with officers
or directors of the Company or any of the Company
Subsidiaries, other than any such contract which (A) by its
terms is terminable by the Company or any of the Company
Subsidiaries on not more than 60 days' notice without material
liability, or (B) does not require payments by the Company or
any Company Subsidiary individually in excess of $100,000 or
in the aggregate in excess of $2,000,000.
(collectively, together with such contracts as are filed as exhibits to the
Company SEC Reports, the "Company Contracts").
(b) With respect to each of the Company Contracts, to the
knowledge of the Company, except as disclosed in Section 5.27 of the
Company Disclosure Letter:
(i) such contract is (assuming due power and
authority of, and due execution and delivery by, the other
party or parties thereto) valid and binding upon each party
thereto and is in full force and effect;
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(ii) there is no material default or claim of
material default thereunder and no event has occurred which,
with the passage of time or the giving of notice (or both),
would constitute a material default thereunder, or would
permit material modification, acceleration or termination
thereof; and
(iii) the consummation of the transactions
contemplated by this Agreement will not give rise to a right
of the other party or parties thereto to terminate such
contract or impose liability under the terms thereof on the
Company or any of the Company Subsidiaries; provided, that
this representation shall not be deemed to give assurances
regarding rights of termination based on any decrease in
insurance industry ratings of the Company or the Company
Subsidiaries resulting from the declaration and/or payment of
any of the extraordinary dividends contemplated by Section
7.12 hereof.
Section 28. Intellectual Property. Except as set forth on
Section 5.28 of the Company Disclosure Letter, the Company and each Company
Subsidiary has the right to use, free and clear of any royalty or other payment
obligations, claims of infringement or alleged infringement or other Liens,
other than Permitted Company Liens and other than contractual agreements with
respect to licensing and maintenance fees, all Company Intellectual Property (as
hereinafter defined) that is material to the conduct of its business; and
neither the Company nor any Company Subsidiary is in material default under any
license or similar agreements under which the Company or any of the Company
Subsidiaries has obtained rights to use or permit its customers or agents to use
any Company Intellectual Property owned by others and neither the Company nor
any of the Company Subsidiaries has made a claim that the other party thereto is
in default. As used herein, "Company Intellectual Property" shall mean all
patents and trademarks, service marks, trade names, jingles, assumed names,
trade secrets and other proprietary information, copyrights, licenses, permits
and other similar intangible property rights and interest applied for, issued to
or presently owned or used by the Company or any of the Company Subsidiaries or
under which the Company or any of the Company Subsidiaries is licensed or
franchised.
Section 29. Investment Advisor; Investment Company. Except as
disclosed in Section 5.29 of the Company Disclosure Letter, neither the Company
nor any of the Company Subsidiaries conducts activities of an "investment
advisor" as such term is defined in Section 2 (a) (20) of the ICA, whether or
not registered under the Investment Advisers Act of 1940, as amended. Except as
disclosed in Section 5.29 of the Company Disclosure Letter, neither the Company
nor any of the Company Subsidiaries is an "investment company" as defined under
the ICA, and neither the Company nor any of the Company Subsidiaries sponsors
any person that is such an investment company.
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Section 30. Disclosure. No representation or warranty by the
Company or the Company Subsidiaries in this Agreement (including the Company
Disclosure Letter), and no statement contained in the Company SEC Reports and
the Statutory Financial Statements of the Company, contains any untrue statement
of a material fact or omits to state any material fact necessary, in light of
the circumstances under which it was made, to make the statements herein or
therein not misleading. There is no fact known to the Company which would
reasonably be expected to have a Company Material Adverse Effect which has not
been set forth in the Company SEC Reports, the Statutory Financial Statements of
the Company or in this Agreement (including the Company Disclosure Letter).
Section 31. Investigation by the Company. The Company agrees,
to the fullest extent permitted by law, that none of the respective directors,
officers, employees, affiliates, agents or representatives of American General
Corporation or of any of the American General Corporation Subsidiaries shall
have any liability or responsibility whatsoever to the Company on any basis
(including, without limitation, in contract or tort, under federal or state
securities laws or otherwise) based upon any information provided or made
available, or statements made, to the Company prior to the execution of this
Agreement.
Section 32. Pooling of Interests. Following consultation with
its independent public accountants, the Company has no reason to believe that
the Merger will not qualify for pooling of interests accounting treatment.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 1. Conduct of Business by the Company Pending the
Merger. From the date hereof until the Effective Time, unless American General
Corporation shall otherwise agree in writing, or except as set forth in the
Company Disclosure Letter or as otherwise contemplated by this Agreement, the
Company and the Company Subsidiaries shall conduct their respective businesses
in the ordinary course consistent with past practice and shall use all
reasonable efforts to preserve intact their business organizations and
relationships with third parties (including but not limited to their respective
relationships with policyholders, insureds, agents, underwriters, brokers and
investment customers) and to keep available the services of their present
officers and key employees, subject to the terms of this Agreement. Except as
set forth in the Company Disclosure Letter or as otherwise provided in this
Agreement, from the date hereof until the Effective Time, without the prior
written consent of American General Corporation:
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(a) the Company shall not adopt or propose any change in its
Restated Certificate of Incorporation or Bylaws;
(b) the Company shall not declare, set aside or pay any
dividend or other distribution with respect to any shares of capital
stock of the Company (except for regular quarterly dividends payable in
an amount no greater than $.25 per share on the Company Common Stock,
$1.125 per share on the Series A Preferred Stock, and $1.25 per share
on the Series B Preferred Stock), or split, combine or reclassify any
of the Company's capital stock, and the Company and the Company
Subsidiaries shall not repurchase, redeem or otherwise acquire any
shares of capital stock or other securities of, or other ownership
interests in, the Company;
(c) subject to Section 7.3, the Company shall not, and shall
not permit any Company Subsidiary to, merge or consolidate with any
other person or (except in the ordinary course of business) acquire a
material amount of assets of any other person;
(d) the Company shall not, and shall not permit any Company
Subsidiary to, sell, lease, license or otherwise surrender, relinquish
or dispose of (i) any material facility owned or leased by the Company
or any Company Subsidiary or (ii) any assets or property which are
material to the Company and the Company Subsidiaries, taken as a whole,
except pursuant to existing contracts or commitments (the material
terms of which have been disclosed to American General Corporation
prior to the date hereof), or in the ordinary course of business
consistent with past practice;
(e) the Company shall not, and shall not permit any Company
Subsidiary to, settle any material audit, make or change any material
Tax election or file any material amendment to any material Tax Return;
(f) except as set forth in a certificate of the President of
the Company previously delivered to American General Corporation, the
Company and the Company Subsidiaries shall not issue any capital stock
(other than pursuant to the Company Stock Incentives, and upon the
conversion of Company Preferred Stock) or other securities or enter
into any amendment of any material term of any outstanding security of
the Company, and the Company and the Company Subsidiaries shall not
incur any material indebtedness except in the ordinary course of
business pursuant to existing credit facilities or arrangements, amend
or otherwise increase, accelerate the payment or vesting of the amounts
payable or to become payable under or fail to make any required
contribution to, any Company Plan (as hereinafter defined) or
materially increase any non-salary benefits payable to any
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employee or former employee, except in the ordinary course of business
consistent with past practice or as otherwise permitted by this
Agreement;
(g) except as set forth in a certificate of the President of
the Company previously delivered to American General Corporation, the
Company shall not, and shall not permit any Company Subsidiary to, (i)
grant any increase in the compensation or benefits (including, but not
limited to, salary, bonus, stock option, restricted stock awards,
annual incentive plan or book unit plan of the Company) of directors,
officers, employees, consultants or agents of the Company or any
Company Subsidiary, or (ii) enter into or amend any employment
agreement or other employment arrangement with any employee of the
Company or any Company Subsidiary;
(h) the Company shall not change any method of accounting or
accounting practice by the Company or any Company Subsidiary, except
for any such required change in GAAP or applicable Statutory Accounting
Principles;
(i) the Company shall not, and shall not permit any Company
Subsidiary to, take any action that would reasonably be expected to
cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code;
(j) the Company shall not, and shall not permit any Company
Subsidiary to, take any action that could, directly or indirectly,
reasonably be expected to cause the Merger to fail to qualify for
pooling-of-interest accounting treatment;
(k) the Company shall not permit any Company Insurance
Subsidiary to conduct transactions in Company Investments except in
compliance with the investment policies of such Company Insurance
Subsidiary in effect on the date hereof and all applicable insurance
laws and regulations;
(l) the Company shall not, and shall not permit any Company
Subsidiary to, enter into any agreement to purchase, or to lease for a
term in excess of one year, any real property (other than real property
constituting a Company Investment), provided that the Company, or any
Company Subsidiary, (i) may as a tenant, or a landlord, renew any
existing lease for a term not to exceed eighteen months and (ii)
nothing herein shall prevent the Company, in its capacity as a
landlord, from renewing any lease pursuant to an option granted prior
to the date hereof;
(m) the Company shall not, and shall not permit any Company
Subsidiary to, agree or commit to do any of the foregoing;
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(n) except to the extent necessary to comply with the
requirements of applicable laws and regulations, the Company shall not,
and shall not permit any Company Subsidiary to, (i) take, or agree or
commit to take, any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect
at, or as of any time prior to, the Effective Time, (ii) omit, or agree
or commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material
respect at any such time, provided however, that the Company shall be
permitted to take or omit to take such action which (without any
uncertainty) can be cured, and in fact is cured, at or prior to the
Effective Time or (iii) take, or agree or commit to take, any action
that would result in, or is reasonably likely to result in, any of the
conditions of the Merger set forth in Article VIII not being satisfied;
and
(o) none of the Company Insurance Subsidiaries shall make any
material change in its underwriting, claims management or reserving
practices.
Section 2. Conduct of Business by American General Corporation
Pending the Merger. From the date hereof until the Effective Time, unless the
Company shall otherwise agree in writing, or except as set forth in the American
General Corporation Disclosure Letter or as otherwise contemplated by this
Agreement, American General Corporation and American General Corporation
Subsidiaries shall conduct their respective businesses in the ordinary course
consistent with past practice and shall use all reasonable efforts to preserve
intact their business organizations and relationships with third parties
(including but not limited to their respective relationships with policyholders,
insureds, agents, underwriters, brokers and investment customers) and to keep
available the services of their present officers and key employees, subject to
the terms of this Agreement. Except as set forth in the American General
Corporation Disclosure Letter or as otherwise provided in this Agreement, from
the date hereof until the Effective Time, without the prior written consent of
the Company:
(a) American General Corporation shall not adopt or propose
any change in its Restated Articles of Incorporation or Bylaws;
(b) American General Corporation shall not declare, set aside
or pay any dividend or other distribution with respect to any shares of
capital stock of the Company (except for regular quarterly dividends
payable in an amount no greater than $.35 per quarter per share of
American General Corporation Common Stock, and $.6453 per quarter per
share of American General Corporation 7% Convertible Preferred Stock),
or split, combine or reclassify any of American General Corporation's
capital stock;
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(c) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, merge or
consolidate with any other person or (except in the ordinary course of
business) acquire a material amount of assets of any other person;
(d) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, sell, lease,
license or otherwise surrender, relinquish or dispose of (i) any
material facility owned or leased by American General Corporation or
any American General Corporation Subsidiary or (ii) any assets or
property which are material to American General Corporation and the
American General Corporation Subsidiaries, taken as a whole, except
pursuant to existing contracts or commitments (the material terms of
which have been disclosed to the Company prior to the date hereof), or
in the ordinary course of business consistent with past practice;
(e) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, settle any
material audit, make or change any material Tax election or file any
material amendment to any material Tax Return;
(f) American General Corporation and the American General
Corporation Subsidiaries shall not issue any capital stock (other than
pursuant to the exercise of American General Corporation Stock Options
or upon conversion of shares of American General Corporation 7%
Convertible Preferred Stock) or other securities or enter into any
amendment of any material term of any outstanding security of American
General Corporation, and American General Corporation and the American
General Corporation Subsidiaries shall not incur any material
indebtedness except in the ordinary course of business pursuant to
existing credit facilities or arrangements, amend or otherwise
increase, accelerate the payment or vesting of the amounts payable or
to become payable under or fail to make any required contribution to,
any American General Corporation Plan (as hereinafter defined) or
materially increase any non-salary benefits payable to any employee or
former employee, except in the ordinary course of business consistent
with past practice or as otherwise permitted by this Agreement;
(g) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, (i) grant any
increase in the compensation or benefits of directors, officers,
employees, consultants or agents of American General Corporation or any
American General Corporation Subsidiary, or (ii) enter into or amend
any employment agreement or other employment
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arrangement with any employee of American General Corporation or any
American General Corporation Subsidiary;
(h) American General Corporation shall not change any method
of accounting or accounting practice by American General Corporation or
any American General Corporation Subsidiary, except for any such
required change in GAAP or applicable Statutory Accounting Principles;
(i) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, take any action
that would reasonably be expected to cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the
Code;
(j) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, take any action
that could, directly or indirectly, cause the Merger to fail to qualify
for pooling-of-interests accounting treatment;
(k) American General Corporation shall not permit any American
General Corporation Insurance Subsidiary to conduct transactions in
American General Corporation Investments except in compliance with the
investment policies of such American General Corporation Insurance
Subsidiary in effect on the date hereof and all applicable insurance
laws and regulations;
(l) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, enter into any
agreement to purchase, or to lease for a term in excess of one year,
any real property (other than real property constituting a American
General Corporation Investment), provided that American General
Corporation or any American General Corporation Subsidiary, (i) may as
a tenant, or a landlord, renew any existing lease for a term not to
exceed eighteen months and (ii) nothing herein shall prevent American
General Corporation in its capacity as a landlord, from renewing any
lease pursuant to an option granted prior to the date hereof;
(m) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, agree or commit
to do any of the foregoing;
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(n) except to the extent necessary to comply with the
requirements of applicable laws and regulations, American General
Corporation shall not, and shall not permit any American General
Corporation Subsidiary to, (i) take, or agree or commit to take, any
action that would make any representation and warranty of American
General Corporation hereunder inaccurate in any material respect at, or
as of any time prior to, the Effective Time, (ii) omit, or agree or
commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material
respect at any such time, provided however, that American General
Corporation shall be permitted to take or omit to take such action
which (without any uncertainty) can be cured, and in fact is cured, at
or prior to the Effective Time or (iii) take, or agree or commit to
take, any action that would result in, or is reasonably likely to
result in, any of the conditions of the Merger set forth in Article
VIII not being satisfied; and
(o) none of the American General Corporation Insurance
Subsidiaries shall make any material change in its underwriting, claims
management or reserving practices.
Section 3. Amendment to Rights Plan. Within one business day
following the execution of this Agreement, the Board of Directors of the Company
(a) shall amend the Amended and Restated Rights Agreement, dated as of June 24,
1986 and amended and restated as of January 24, 1989 and as further amended and
restated as of September 27, 1994 (the "Company Rights Agreement"), between the
Company and Chemical Bank (as successor by merger to Manufacturers Hanover Trust
Company), as Rights Agent, so that (i) American General Corporation will not
become an "Acquiring Person" as a result of the consummation of the transactions
contemplated by this Agreement, (ii) no "Stock Acquisition Date" or "Separation
Date" (as such terms are defined in the Company Rights Agreement) will occur as
a result of the consummation of the transactions contemplated by this Agreement,
and (iii) all outstanding "Rights" (the "Company Rights") issued and outstanding
under the Company Rights Agreement will expire immediately prior to the
Effective Time. Except as provided above with respect to the transactions
contemplated by this Agreement, and subject to the exercise of its fiduciary
duties as provided in Section 7.3, the Board of Directors of the Company shall
not (a) amend the Company Rights Agreement, or (b) take any actions with respect
to, or make any determination under, the Company Rights Agreement, including,
but not limited to, any redemption of the Company Rights or any action that
would have the effect of facilitating an Acquisition Proposal (as defined in
Section 7.2), unless the Board of Directors of the Company determines in good
faith, following consultation with independent legal counsel, that in order to
comply with its fiduciary duties to stockholders under applicable law it is
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necessary to make any such amendment, take any such action or make any such
determination.
Section 4. Redemption of Company Preferred Stock. The Board of
Directors of the Company shall take all action necessary to call for redemption
all outstanding shares of Company Preferred Stock at the redemption price stated
in the Company's Restated Certificate of Incorporation as soon as practicable
following the date of this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 1. Access and Information. The Company and American
General Corporation shall each afford to the other and to the other's financial
advisors, legal counsel, accountants, consultants, financing sources, and other
authorized representatives access during normal business hours throughout the
period prior to the Effective Time to all of its books, records, properties,
plants and personnel and, during such period, each shall furnish as promptly as
practicable to the other (a) a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of federal securities laws,
and (b) all other information as such other party reasonably may request,
provided that neither party shall disclose to the other any competitively
sensitive information and no investigation pursuant to this Section 7.1 shall
affect any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Merger. Each party shall
continue to abide by the terms of the confidentiality agreement between American
General Corporation and the Company, dated January 28, 1997 (the
"Confidentiality Agreement").
Section 2. Acquisition Proposals. The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney, accountant
or other advisor or representative of, the Company or any of its subsidiaries
to, directly or indirectly, (i) solicit, initiate or encourage the submission of
any Acquisition Proposal (as hereinafter defined) or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or agree to or endorse, or take any other action to facilitate,
any Acquisition Proposal or any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided, however, that nothing contained in this Section 7.2 shall prohibit the
Board of Directors of the Company from furnishing information to, or entering
into discussions or negotiations with, any person or
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entity that makes an unsolicited bona fide Acquisition Proposal if, and only to
the extent that (A) the Board of Directors of the Company, after consultation
with and based upon the advice of independent legal counsel, determines in good
faith that such action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties to the Company's stockholders under applicable
law and (B) prior to taking such action, the Company (x) provides reasonable
notice to American General Corporation to the effect that it is taking such
action and (y) receives from such person or entity an executed
confidentiality/standstill agreement in reasonably customary form. The Company
shall notify American General Corporation of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) as promptly as practicable after its
receipt thereof, and shall provide American General Corporation with a copy of
any written Acquisition Proposal or amendments or supplements thereto, and shall
thereafter inform American General Corporation on a prompt basis of the status
of any discussions or negotiations with such a third party, and any material
changes to the terms and conditions of such Acquisition Proposal, and shall
promptly give American General Corporation a copy of any information delivered
to such person which has not previously been reviewed by American General
Corporation. The term "Acquisition Proposal" as used herein means any tender or
exchange offer involving the capital stock of the Company or any of the Company
Subsidiaries, any proposal for a merger, consolidation or other business
combination involving the Company or any of the Company Subsidiaries, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company or any of the
Company Subsidiaries, any proposal or offer with respect to any recapitalization
or restructuring of the Company or any of the Company Subsidiaries, or any
proposal or offer with respect to any other transaction similar to any of the
foregoing with respect to the Company or any of the Company Subsidiaries, other
than the Merger contemplated by this Agreement. Immediately after the execution
and delivery of this Agreement, the Company will, and will cause its
Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to, cease
and terminate any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Acquisition Proposal
and shall notify each party that it, or any officer, director, investment
advisor, financial advisor, attorney or other representative retained by it, has
had discussions with during the 30 days prior to the date of this Agreement that
the Board of Directors of the Company no longer seeks the making of any
Acquisition Proposal.
Section 3. Fiduciary Duties. The Board of Directors of the
Company shall not (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to American General Corporation or Merger Sub, the approval or
recommendation by such Board of Directors of this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, (iii) enter into any agreement (other
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than a confidentiality/standstill agreement entered into in accordance with
Section 7.2(B)) with respect to any Acquisition Proposal, or (iv) terminate this
Agreement in response to an Acquisition Proposal unless, in each case, the
Company receives an unsolicited Acquisition Proposal and the Board of Directors
of the Company determines in good faith, following consultation with independent
legal counsel, that in order to comply with its fiduciary duties to stockholders
under applicable law it is necessary for the Board of Directors to withdraw or
modify its approval or recommendation of this Agreement or the Merger, approve
or recommend such Acquisition Proposal, enter into an agreement with respect to
such Acquisition Proposal or terminate this Agreement. Nothing contained in
this Section 7.3 shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders which,
in the good faith reasonable judgment of the Board of Directors of the Company
based on the advice of independent legal counsel, is required under applicable
law; provided that, except as otherwise permitted in this Section 7.3, the
Company does not withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal. Notwithstanding anything
contained in this Agreement to the contrary, any action by the Board of
Directors permitted by, and taken in accordance with, this Section 7.3 shall not
constitute a breach of this Agreement by the Company.
Section 4. Filings; Other Action. Subject to the terms and
conditions herein provided, as promptly as practicable, the Company, American
General Corporation and Merger Sub shall: (i) promptly make all filings and
submissions under the HSR Act and all filings required by the insurance
regulatory authorities in New York, and deliver notices and consents to
jurisdiction to state insurance departments, each as reasonably may be required
to be made in connection with this Agreement and the transactions contemplated
hereby, (ii) use reasonable best efforts to cooperate with each other in (A)
determining which filings are required to be made prior to the Effective Time
with, and which material consents, approvals, permits, notices or authorizations
are required to be obtained prior to the Effective Time from, governmental or
regulatory authorities of the United States, the several states or the District
of Columbia, the Commonwealth of Puerto Rico and foreign jurisdictions in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (B) timely making all
such filings and timely seeking all such consents, approvals, permits, notices
or authorizations, and (iii) use reasonable best efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary
or appropriate to consummate the transactions contemplated by this Agreement as
soon as practicable. In connection with the foregoing, the Company will provide
American General Corporation, and American General Corporation will provide the
Company, with copies of correspondence, filings or communications (or memoranda
setting forth the substance thereof) between such party or
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any of its representatives, on the one hand, and any governmental agency or
authority or members of their respective staffs, on the other hand, with respect
to this Agreement and the transactions contemplated hereby.
Each of American General Corporation and the Company
acknowledge that certain actions may be necessary with respect to the foregoing
in making notifications and obtaining clearances, consents, approvals, waivers
or similar third party actions which are material to the consummation of the
transactions contemplated hereby, and each of American General Corporation and
the Company agree to take such action as is necessary to complete such
notifications and obtain such clearances, approvals, waivers or third party
actions, provided, however, that nothing in this Section 7.4 or elsewhere in
this Agreement shall require any party hereto to take any action that would
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of American General Corporation and
its Subsidiaries taken as a whole (after giving effect to the consummation of
the Merger).
Section 5. Public Announcements. American General Corporation,
on the one hand, and the Company, on the other hand, agree that they will not
issue any press release or otherwise make any public statement or respond to any
press inquiry with respect to this Agreement or the transactions contemplated
hereby without the prior approval of the other party (which approval will not be
unreasonably withheld), except as may be required by applicable law.
Section 6. Employee Benefits. From and after the Effective
Time, American General Corporation agrees to take, and following the Effective
Time to cause the Company to take, the actions described in Exhibit D hereto.
Section 7. Stock Exchange Listing. American General
Corporation shall as promptly as practicable prepare and submit to the New York
Stock Exchange a listing application covering the shares of American General
Corporation 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 8. Surviving Corporation Directors. American General
Corporation shall take all necessary action to cause the persons mutually agreed
upon by American General Corporation and the Company to be appointed to the
Board of Directors of the Surviving Corporation as of the Effective Time, to
serve until the next annual election of directors of American General
Corporation.
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Section 9. Employee Stock Options. From and after the
Effective Time, each of the Employee Stock Options which is outstanding and
unexercised at the Effective Time shall be treated in accordance with the terms
of Exhibit D hereto.
Section 10. Company Indemnification Provision. American
General Corporation agrees that all rights to indemnification existing in favor
of the present or former directors, officers, employees, fiduciaries and agents
of the Company or any of the Company Subsidiaries (collectively, the
"Indemnified Parties") as provided in the Company's Articles of Incorporation or
By-Laws or the certificate or articles of incorporation, by-laws or similar
organizational documents of any of the Company Subsidiaries as in effect as of
the date hereof or pursuant to the terms of any indemnification agreements
entered into between the Company and any of the Indemnified Parties with respect
to matters occurring prior to the Effective Time shall survive the Merger and
shall continue in full force and effect (without modification or amendment,
except as required by applicable law or except to make changes permitted by law
that would enlarge the Indemnified Parties' right of indemnification), to the
fullest extent and for the maximum term permitted bylaw, and shall be
enforceable by the Indemnified Parties against the Surviving Corporation.
American General Corporation shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company (provided that American
General Corporation may substitute therefor policies of at least equivalent
coverage containing terms and conditions which are no less advantageous) with
respect to matters occurring prior to the Effective Time, provided that in no
event shall American General Corporation or the Surviving Corporation be
required to expend to maintain or procure insurance coverage pursuant to this
Section 7.10 any amount per annum in excess of 200% of the aggregate premiums
paid in 1996 on an annualized basis for such purpose. In the event the payment
of such amount for any year is insufficient to maintain such insurance or
equivalent coverage cannot otherwise be obtained, the Surviving Corporation
shall purchase as much insurance as may be purchased for the amount indicated.
The provisions of this Section 7.10 shall survive the consummation of the Merger
and expressly are intended to benefit each of the Indemnified Parties.
Section 11. Comfort Letters.
(a) American General Corporation shall use all reasonable
efforts to cause Ernst & Young LLP, American General Corporation's
independent accountants, to deliver to the Company a letter dated as of
the date of the Proxy Statement/Prospectus and addressed to the
Company, in form and substance reasonably satisfactory to the Company,
in connection with the procedures undertaken by them with respect to
the financial statements and other financial
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information of American General Corporation contained in the
Registration Statement and the other matters contemplated by AICPA
Statement No. 72 and customarily included in comfort letters relating
to transactions similar to the Merger.
(b) The Company shall use all reasonable efforts to cause KPMG
Peat Marwick LLP, the Company's independent accountants, to deliver to
American General Corporation a letter dated as of the date of the Proxy
Statement/Prospectus and addressed to American General Corporation, in
form and substance reasonably satisfactory to American General
Corporation, in connection with the procedures undertaken by them with
respect to the financial statements and other financial information of
the Company and the Company Subsidiaries contained in the Registration
Statement and the other matters contemplated by AICPA Statement No. 72
and customarily included in comfort letters relating to transactions
similar to the Merger.
Section 12. Tax Matters; Pooling of Interests.
(a) The Company and American General Corporation shall each
reasonably cooperate in connection with obtaining the opinions of
special counsel described in Sections 8.2(b) and 8.3(b) including,
without limitation, providing to special counsel such representations
that are reasonably required by special counsel to enable them to
render such opinions.
(b) The parties intend for the Merger to qualify as a
reorganization under Section 368(a) of the Code; each party and its
affiliates shall use all reasonable efforts to cause the Merger to so
qualify; neither party nor any affiliate shall take any action that
would cause the Merger not to so qualify; and the parties will take the
position for all purposes that the Merger so qualifies.
(c) The parties intend for the Merger to qualify as a pooling
of interests transaction for accounting purposes; each party shall use
all reasonable efforts to cause the Merger to so qualify; neither party
nor any affiliate shall take any action that would cause the Merger not
to so qualify; and the parties will take the position for all purposes
that the Merger so qualifies.
Section 13. Intercompany Dividends. On or before the date
immediately prior to the Closing Date, subject to compliance with applicable law
and the receipt of all necessary approvals, the Company shall use all reasonable
efforts to cause (i) All American Life Insurance Company to pay a dividend to
the Company of at least $86 million and (ii) The Old Line Life Insurance Company
of America to pay a dividend to the Company
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of at least $29 million (collectively, such dividends are referred to as the
"Intercompany Dividends"), such Intercompany Dividends to be paid in the form of
demand promissory notes, or such other form as the parties may mutually agree.
Section 14. Affiliates. The Company and American General
Corporation shall use all reasonable efforts to obtain and deliver to each other
prior to the Closing executed letter agreements (i) in the case of the letter
agreement to be delivered by the Company, in the form attached as Exhibit C-1
hereto and (ii) in the case of the letter agreement to be delivered by American
General Corporation, in the form attached as Exhibit C-2 hereto, from all
persons who, in the reasonable judgment of the Company or American General
Corporation, respectively, may be deemed to be affiliates of the Company or
American General Corporation, respectively, under Rule 145 of the Securities
Act. For a period of at least two years following the Effective Time, American
General Corporation or any successor issuer thereto shall make available
adequate current public information with respect to itself, within the meaning
of Rule 144(c) under the Securities Act. In addition, American General
Corporation agrees to publish financial results covering at least 30 days of
combined operations as soon as practicable after the Effective Time.
Section 15. Additional Matters. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including using all reasonable efforts to obtain
all necessary waivers, consents and approvals in connection with the
Governmental Requirements and any other third party consents and to effect all
necessary registrations and filings. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of American General
Corporation, Merger Sub and the Company shall take all such necessary action.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
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(a) any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of Justice or
Federal Trade Commission challenging or seeking to enjoin the
consummation of this transaction, which action shall have not been
withdrawn or terminated;
(b) no statute, rule, regulation, executive order, decree,
ruling or preliminary or permanent injunction shall have been enacted,
entered, promulgated or enforced by any federal or state court or
governmental authority having jurisdiction which prohibits, restrains,
enjoins or restricts consummation of the Merger;
(c) each of the Company and American General Corporation shall
have made such filings, and obtained such permits, authorizations,
consents, or approvals, required by Governmental Requirements to
consummate the transactions contemplated hereby, and the appropriate
forms shall have been executed, filed and approved as required by the
corporate and insurance laws and regulations of the states of New York
and such other states as may have jurisdiction over the transactions
contemplated by this Agreement pursuant to insurance holding company or
other insurance laws or regulations; provided, however, that such
permits, authorizations, consents and approvals may be subject to (i)
conditions customarily imposed by insurance regulatory authorities in
transactions of the type contemplated by this Agreement or (ii) other
conditions that would not reasonably be expected to have a material
adverse effect on the business, financial condition or results of
operations of American General Corporation and its Subsidiaries taken
as a whole (after giving effect to the consummation of the Merger);
(d) this Agreement and the Merger shall have been adopted and
approved by the requisite vote of the holders of the Company Common
Stock in accordance with the applicable provisions of the NYBCL;
(e) the shareholders of American General Corporation shall
have voted to approve the issuance of Shares of American General
Corporation Common Stock as Merger Consideration;
(f) the Registration Statement shall have become effective
under the Securities Act and shall not be the subject of any stop order
or proceedings seeking a stop order; and
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(g) the shares of American General Corporation Common Stock
issuable to the Company's shareholders pursuant to this Agreement shall
have been authorized for listing on the NYSE upon official notice
thereof.
Section 2. Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) each of American General Corporation and Merger Sub shall
have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Effective
Time; the representations and warranties of American General
Corporation and Merger Sub contained in this Agreement shall be true
and correct in all respects as of the date of this Agreement and at and
as of the Effective Time as if made at and as of such time (except to
the extent such representations and warranties specifically relate to
an earlier date, in which case as of such earlier date) except as
contemplated by this Agreement and except to the extent that the
failure of such representations and warranties to be true and correct
would not, in the aggregate, be reasonably likely to result in a
American General Corporation Material Adverse Effect; and the Company
shall have received a certificate of the Chairman of the Board, the
President, an Executive Vice President, a Senior Vice President or the
Chief Financial Officer of American General Corporation as to the
satisfaction of this condition;
(b) the Company shall have received an opinion from Debevoise
& Plimpton, special counsel to the Company, dated the Effective Time,
to the effect that, on the basis of certain facts, representations and
assumptions set forth in such opinion which are consistent with the
stated facts existing at the Effective Time, the Merger will be treated
for Federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, and that American General Corporation,
Merger Sub and the Company will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. In rendering the
opinion described in the preceding sentence, such counsel may require
and rely upon representations contained in certificates of officers of
American General Corporation, Merger Sub and the Company and their
respective subsidiaries received pursuant to Section 7.12 hereof; and
(c) the audited GAAP financial statements of American General
Corporation for the fiscal year ended December 31, 1996 shall not
reflect any event, change or effect having, or which would be
reasonably likely to have, in the aggregate, a American General
Corporation Material Adverse Effect.
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Section 3. Conditions to Obligations of American General
Corporation and Merger Sub to Effect the Merger. The obligations of American
General Corporation and Merger Sub to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) the Company shall have performed in all material respects
its obligations under this Agreement required to be performed by it at
or prior to the Effective Time; and the representations and warranties
of the Company contained in this Agreement shall be true and correct in
all respects as of the date of this Agreement and at and as of the
Effective Time as if made at and as of such time (except to the extent
such representations and warranties specifically relate to an earlier
date, in which case as of such earlier date), except as contemplated by
the Company Disclosure Letter or this Agreement and except to the
extent that the failure of such representations and warranties to be
true and correct would not, in the aggregate, be reasonably likely to
result in a Company Material Adverse Effect; and American General
Corporation and Merger Sub shall have received a Certificate of the
Chairman of the Board, the President, or a Vice President of the
Company as to the satisfaction of this condition;
(b) American General Corporation shall have receive an opinion
from Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to
American General Corporation, dated the Effective Time, to the effect
that, on the basis of certain facts, representations and assumptions
set forth in such opinion which are consistent with the stated facts
existing at the Effective Time, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, and that American General Corporation, Merger Sub
and the Company will each be a party to that reorganization within the
meaning of Section 368(b) of the Code. In rendering the opinion
described in the preceding sentence, such counsel may require and rely
upon representations contained in certificates of officers of American
General Corporation, Merger Sub and the Company and their respective
subsidiaries received pursuant to Section 7.12 hereof;
(c) the audited GAAP financial statements of the Company for
the fiscal year ended December 31, 1996 shall not reflect any event,
change or effect having, or which would be reasonably likely to have,
in the aggregate, a Company Material Adverse Effect;
(d) American General Corporation shall have received a letter
of its independent public accountants, dated the Closing Date, in form
and substance reasonably satisfactory to it stating that the Merger
will qualify as a transaction to
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be accounted for in accordance with the pooling-of-interests method of
accounting under the requirements of APB No. 16; and
(e) all outstanding shares of Company Preferred Stock shall
either have been redeemed or converted into Shares of Company Common
Stock, in accordance with the terms of the certificate of designation
of such Company Preferred Stock.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 1. Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Effective Time by mutual written
agreement of American General Corporation and the Company.
Section 2. Termination by Either American General Corporation
or the Company. This Agreement may be terminated and the Merger may be abandoned
by action of the Board of Directors of either American General Corporation or
the Company if (a) this Agreement and the transactions contemplated thereby
shall fail to receive the requisite vote for approval and adoption by the
shareholders of the Company at the Company Special Meeting, (b) the issuance of
American General Corporation Common Stock as Merger Consideration shall fail to
receive the requisite vote for approval by the shareholders of American General
Corporation at the American General Corporation Special Meeting, (c) the Merger
shall not have been consummated before October 31, 1997, provided, however, that
this Agreement may be extended by written notice of either American General
Corporation or the Company to a date not later than December 31, 1997, if the
Merger shall not have been consummated as a direct result of the condition set
forth in Section 8.1(c) not having been satisfied by such date or (d) a United
States federal or state court of competent jurisdiction or United States federal
or state governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to clause (c) shall not have taken any action that would
cause it to be in material violation of any of its representations, warranties
or covenants set forth in this Agreement, and the party seeking to terminate
this Agreement pursuant to clause (d) shall have used all reasonable efforts to
remove such injunction, order or decree.
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Section 3. Termination by American General Corporation. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of the Board of Directors of American General
Corporation, if (a) there has been a breach by the Company of any representation
or warranty contained in this Agreement which would have or would be likely to
have a Company Material Adverse Effect, or (b) there has been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the Company, which breach, in the case of clauses (a) and (b), is not curable
or, if curable, is not cured within thirty (30) days after written notice of
such breach has been given by American General Corporation to the Company; or
(c) if the Board of Directors of the Company shall have taken or resolved to
take any of the actions set forth in clauses (i), (ii), (iii), or (iv) of
Section 7.3.
Section 4. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of the Company, if (a) there has been a
breach by American General Corporation of any representation or warranty
contained in this Agreement which would have or would be likely to have a
American General Corporation Material Adverse Effect, or (b) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of American General Corporation, which breach, in the case
of clauses (a) and (b), is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach has been given by the
Company to American General Corporation; or (c) if the Board of Directors of the
Company shall have taken or resolved to take any of the actions set forth in,
and in accordance with the terms of, clauses (i), (ii), (iii) or (iv) of Section
7.3.
Section 5. Effect of Termination and Abandonment. In the event
of termination of the Agreement and the abandonment of the Merger pursuant to
this Article IX, written notice thereof shall as promptly as practicable be
given to the other parties to this Agreement and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as provided
herein: (a) there shall be no liability or obligation on the part of American
General Corporation, the American General Corporation Subsidiaries, the Company
or the Company Subsidiaries or their respective officers and directors, and all
obligations of the parties shall terminate, except for (i) the obligations of
the parties pursuant to this Section 9.5, (ii) the provisions of Sections 4.20,
5.20, 7.5, 10.4, 10.5, 10.6 and 10.10, (iii) the obligations of the parties set
forth in the Confidentiality Agreement referred to in Section 7.1 hereof
(provided, however, that if this Agreement is terminated by the Company pursuant
to Section 9.4(c), American General Corporation shall no longer be bound by any
standstill provisions of the Confidentiality Agreement), and except that (iv) a
party who is in material breach of its representations, warranties, covenants or
agreements set forth in this
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Agreement shall be liable for damages occasioned by such breach, including
without limitation any expenses incurred by the other party in connection with
this Agreement and the transactions contemplated hereby, and (b) all filings,
applications and other submissions made pursuant to the transactions
contemplated by this Agreement shall, to the extent practicable, be withdrawn
from the agency or person to which made.
ARTICLE X
GENERAL PROVISIONS
Section 1. Survival of Representations, Warranties and
Agreements. No representations or warranties in this Agreement or in any
instrument delivered pursuant to this Agreement, shall survive beyond the
Effective Time. This Section 10.1 shall not limit any covenant or agreement set
forth in this Agreement, which covenants and agreements shall survive the
Effective Time.
Section 2. Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed 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):
(a) If to American General Corporation or Merger Sub, to:
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Telecopy: (713) 831-1300
Attention: Jon P. Newton, Esq.
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With copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopy: (212) 735-2000
Attention: Morris J. Kramer, Esq.
(b) If to the Company, to:
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Telecopy: (212) 709-6410
Attention: Wesley E. Forte, Esq.
with copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Telecopy: (212) 909-6836
Attention: Michael W. Blair, Esq.
Section 3. Descriptive Headings. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 4. Entire Agreement; Assignment. This Agreement
(including the Exhibits, Company Disclosure Letter, American General Corporation
Disclosure Letter and other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior agreements and
understandings (other than those contained in the Confidentiality Agreement,
which are hereby incorporated by reference herein), both written and oral, among
the parties or any of them, with respect to the subject matter hereof,
including, without limitation, any transaction between or among the parties
hereto. This Agreement shall not be assigned by operation of law or otherwise,
except that Merger Sub may assign all of its rights and obligations hereunder to
any direct wholly-owned subsidiary of American General Corporation which shall
then be substituted for Merger Sub for all purposes hereof; provided, however,
that no such assignment shall be made if such
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assignment would have a material adverse effect on the Company, the Company's
shareholders or the likelihood that the transaction contemplated hereby would be
consummated.
Section 5. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to the provisions thereof relating to conflicts of law, provided,
that the laws of the respective states of incorporation of the parties hereto
shall govern the respective internal rights and obligations of the parties and
the effects of the Merger contemplated hereby.
Section 6. Expenses. (a) Except as provided in clause (b) and
clause (c) of this Section 10.6, whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except that those expenses incurred in connection with
printing and mailing the Proxy Statement/Prospectus, as well as the filing fees
relating to the Registration Statement and the HSR Act, will be shared equally
by American General Corporation and the Company.
(b) In the event that (i) this Agreement is terminated by
American General Corporation pursuant to Section 9.3(c), (ii) this Agreement is
terminated by the Company pursuant to Section 9.4(c), or (iii) prior to the
termination of this Agreement any person or entity shall have commenced a tender
or exchange offer which would, if successful, result in the acquisition by such
person or entity of twenty percent (20%) or more of the outstanding shares of
Company Common Stock and such tender or exchange offer is completed not later
than six (6) months following the termination of this Agreement, the Company
shall promptly, but not later than two business days after the date of any such
termination (or the date of completion of such tender or exchange offer, as the
case may be), pay to American General Corporation in same day funds $48 million.
The Company acknowledges that the agreements contained in this Section 10.6(b)
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, American General Corporation would not enter
into this Agreement.
(c) In the event that (i) an Acquisition Proposal (as defined
in Section 7.2 but with respect to American General Corporation and the American
General Corporation Subsidiaries) shall have been made known to American General
Corporation or any of its subsidiaries or shall have been made known directly to
the shareholders of American General Corporation or any person shall have
publicly announced an intention (whether or not conditional) to make such
Acquisition Proposal, (ii) the Board of Directors of American General
Corporation shall have withdrawn or modified, or have proposed to withdraw or
modify, in a manner adverse to the Company the approval or recommendation by
such
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Board of Directors of the issuance of American General Corporation Common Stock
as Merger Consideration, or approved or recommended, or have proposed to approve
or recommend, any such Acquisition Proposal and (iii) thereafter this Agreement
is terminated by either the Company or American General Corporation pursuant to
Section 9.2(b), American General Corporation shall promptly, but not later than
two business days after the date of any such termination, pay to the Company in
same day funds $48 million. American General Corporation acknowledges that the
agreements contained in this Section 10.6(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
the Company would not enter into this Agreement.
Section 7. Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
Section 8. Waiver. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
Agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 9. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by all of the other parties hereto.
Section 10. Severability; Validity; Parties in Interest. If
any provision of this Agreement, or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Except as provided in Sections 7.6, 7.9, 7.10, 7.14 and
Exhibit D, nothing in this Agreement, express or implied, is intended to confer
upon any person not a party to this Agreement any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 11. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches
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of this Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
Section 12. Definition of "knowledge" of the Company and of
American General Corporation. As used herein, the term "knowledge of the
Company" shall mean the actual knowledge of the officers of the Company and its
subsidiaries set forth on Section 10.12 of the Company Disclosure Letter; and
the term "knowledge of American General Corporation" shall mean the actual
knowledge of any individual holding the title of "Senior Vice President" or
higher of American General Corporation.
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IN WITNESS WHEREOF, each of American General Corporation,
Merger Sub and the Company has caused this Agreement to be executed as of the
date first above written.
AMERICAN GENERAL CORPORATION
By: /s/ Robert M. Devlin
--------------------------------------
Name: Robert M. Devlin
Title: President & Chief Executive Officer
TEXAS STARS CORPORATION
By: /s/ Robert M. Devlin
--------------------------------------
Name: Robert M. Devlin
Title: President & Chief Executive Officer
USLIFE CORPORATION
By: /s/ Gordon E. Crosby, Jr.
--------------------------------------
Name: Gordon E. Crosby, Jr.
Title: Chairman of the Board
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EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
TEXAS STARS CORPORATION
-----------------------------------------
Under Section 402 of the Business
Corporation Law of the State of New York
------------------------------------------
The undersigned, being of the age of eighteen years or over,
for the purpose of forming a corporation pursuant to the provisions of the
Business Corporation Law of the State of New York do hereby certify:
(a) The name of the corporation shall be Texas Stars
Corporation (hereinafter sometimes called the "Corporation").
(b) The purposes for which it is formed are to engage in any
lawful act or activity for which corporations may be organized under the
Business Corporation Law provided that the corporation is not formed to engage
in any act or activity which requires the consent or approval of any state
official, department, board, agency or other body, without such consent or
approval first being obtained.
It is hereby expressly provided that the foregoing shall not
be held to limit or restrict in any manner the powers of this Corporation; and
that this Corporation may do all and everything necessary, suitable and
appropriate for the exercise of any of its general powers.
(c) The office of the Corporation in the State of New York
shall be located in the County of New York.
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(d) The aggregate number of shares which the Corporation shall
have authority to issue is 100 shares of Common Stock, each share having a par
value of one penny ($.01) The holders of the Common Stock shall have no
preemptive rights to subscribe for any shares of any class of stock of the
Corporation whether now or hereafter authorized.
(e) The Secretary of State of the State of New York is hereby
designated as the agent of the Corporation upon whom any process may in any
action or proceeding against it be served. The post office address to which the
Secretary of State shall mail a copy of any process in any action or proceeding
against the Corporation which may be served upon it is: 1633 Broadway, New York,
New York 10019; Attention: C T Corporation System.
(f) The corporation designated C T Corporation System, 1633
Broadway, New York, New York 10019 as its registered agent upon whom process
against it may be served within the State of New York.
(g) The following provisions are inserted for the management
of the business and the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the Corporation
and of its directors and stockholders:
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(b) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation.
(c) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written ballot
unless the By-Laws so provide.
(d) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless,
to the provisions of the Business Corporation Law, this Certificate of
Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws
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hereafter adopted by the stockholders shall invalidate any prior act of
the directors which would have been valid if such By-Laws had not been
adopted.
(e) Any member of the Board of Directors may be removed, with
or without cause, at any time prior to the expiration of his term by a
majority vote of the outstanding shares.
(h) The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by the provisions of
paragraph (b) of Section 402 of the Business Corporation Law of the State of New
York, as the same may be amended and supplemented.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that
the statements made herein are true under the penalties of perjury, this 10th
day of February, 1997.
/s/ Catherine D. Ledyard
-------------------------
Catherine D. Ledyard
Sole Incorporator
Address
-------
Skadden Arps, Slate,
Meagher & Flom (Delaware)
One Rodney Square
Wilmington, DE 19801
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EXHIBIT B
* * * * *
B Y - L A W S
* * * * *
OF
TEXAS STARS CORPORATION
ARTICLE I
OFFICES
Section 1. The office of the corporation shall be located in
the County of New York.
Section 2. The corporation may also have offices at such other
places both within and without the State of New York as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in the City of New York, State of New York, at such
place as may be fixed from time to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with
the year 1997, shall be held on the 1st day of May if not a legal holiday, and
if a legal holiday, then on the next secular day following, at 9:00 A.M., at
which they shall elect by a plurality vote, a board of directors, and transact
such other business as may properly be brought before the meeting.
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Section 3. Written or printed notice of the annual meeting
stating the place, date and hour of the meeting shall be delivered not less than
ten nor more than fifty days before the date of the meeting, either personally
or by mail, by or at the direction of the president, the secretary, or the
officer or persons calling the meeting, to each shareholder of record entitled
to vote at such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders may be held at
such time and place within or without the State of New York as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president, the board of
directors, or the holders of not less than 25% of all the shares entitled to
vote at the meeting.
Section 3. Written or printed notice of a special meeting
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be delivered not less than ten nor more than
fifty days before the date of the meeting, either personally or by mail, by, or
at the direction of, the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. The notice should also indicate that it is being issued by, or at the
direction of, the person calling the meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote, represented in person or by proxy,
shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a
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quorum shall be present or represented any business may be transacted that might
have been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders, unless the vote of a greater or lesser number of shares of
stock is required by law or the certificate of incorporation.
Section 3. Each outstanding share of stock having voting power
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the share holder or by his duly authorized attorney-in-fact.
Section 4. The board of directors in advance of any
shareholders' meeting may appoint one or more inspectors to act at the meeting
or any adjournment thereof. If inspectors are not so appointed, the person
presiding at a shareholders' meeting may, and, on the request of any shareholder
entitled to vote thereat, shall appoint one or more inspectors. In case any
person appointed as inspector fails to appear or act, the vacancy may be filled
by the board in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability.
Section 5. Whenever shareholders are required or permitted to
take any action by vote, such action may be taken without a meeting on written
consent, setting forth the action so taken, signed by the holders of all
outstanding shares entitled to vote thereon.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be two (2). Directors
shall be at least eighteen years of age and need not be residents of the State
of New York nor shareholders of the corporation. The directors, other than the
first board of directors, shall be elected at the annual meeting of the
shareholders, except as hereinafter provided, and each director elected shall
serve until the next succeeding annual meeting and until his successor shall
have been elected and qualified. The first board of directors shall hold office
until the first annual meeting of shareholders.
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Section 2. Any or all of the directors may be removed, with or
without cause, at any time by the vote of the shareholders at a special meeting
called for that purpose.
Section 3. Unless otherwise provided in the certificate of
incorporation, newly created directorships resulting from an increase in the
board of directors and all vacancies occurring in the board of directors,
including vacancies caused by removal without cause, may be filled by the
affirmative vote of a majority of the board of directors; however, if the number
of directors then in office is less than a quorum, then such newly created
directorships and vacancies may be filled by a vote of a majority of the
directors then in office. A director elected to fill a vacancy shall hold office
until the next meeting of shareholders at which election of directors is the
regular order of business, and until his successor shall have been elected and
qualified. A director elected to fill a newly created directorship shall serve
until the next succeeding annual meeting of shareholders and until his successor
shall have been elected and qualified.
Section 4. The business affairs of the corporation shall be
managed by its board of directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the shareholders.
Section 5. The directors may keep the books of the
corporation, except such as are required by law to be kept within the state,
outside of the State of New York, at such place or places as they may from time
to time determine.
Section 6. The board of directors, by the affirmative vote of
a majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETING OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or
special, may be held either within or without the State of New York.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly
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elected directors in order legally to constitute the meeting, provided a quorum
shall be present, or it may convene at such place and time as shall be fixed by
the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be
held upon such notice, or without notice, and at such time and at such place as
shall from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be
called by the president on three (3) days' notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of two directors.
Section 5. Notice of a meeting need not be given to any
director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 6. One of the directors shall constitute a quorum for
the transaction of business unless a greater or lesser number is required by law
or by the certificate of incorporation. The vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
board of directors, unless the vote of a greater number is required by law or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 7. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
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Section 8. Unless the certificate of incorporation provides
otherwise, any action required or permitted to be taken at a meeting of the
directors or a committee thereof may be taken without a meeting if a consent in
writing to the adoption of a resolution authorizing the action so taken, shall
be signed by all of the directors entitled to vote with respect to the subject
matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board or directors, by resolution adopted by a
majority of the entire board, may designate, from among its members, an
executive committee and other committees, each consisting of three or more
directors, and each of which, to the extent provided in the resolution, shall
have all the authority of the board, except as otherwise required by law.
Vacancies in the membership of the committee shall be filled by the board of
directors at a regular or special meeting of the board of directors. The
executive committee shall keep regular minutes of its proceedings and report the
same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these by-laws, notice is required to
be given to any director or shareholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or shareholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice of a meeting is required to be
given under the provisions of the statutes or under the provisions of the
certificate of incorporation or these by-laws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
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ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the board of directors and shall be a president, a vice-president, a secretary
and a treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after
each annual meeting of shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom needs to be a member
of the board.
Any two or more offices may be held by the same person, except
the offices of president and secretary. When all the issued and outstanding
stock of the corporation is owned by one person, such person may hold all or any
combination of offices.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the board of directors may be removed at any time by the affirmative vote of
a majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer
of the corporation, shall preside at all meetings of the shareholders and the
board of directors, shall have general and active management of the business of
the corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
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Section 7. He shall execute bonds, mortgages and other
contracts requiring a seal under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than
one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties and
exercise the powers of the president and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the
board of directors and all meetings of the shareholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and, when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
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THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented
by certificates or shall be uncertified. Certificates shall be signed by the
chairman or vice-chairman of the board or the president or a vice-president and
the secretary or an assistant secretary or the treasurer or an assistant
treasurer of the corporation and may be sealed with the seal of the corporation
of a facsimile thereof.
When the corporation is authorized to issue shares of more
than one class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation will
furnish to any shareholder upon request and without charge, a full statement of
the designation, relative rights, preferences, and
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limitations of the shares of each class authorized to be issued and, if the
corporation is authorized to issue any class of preferred shares in series, the
designation, relative rights, preferences and limitations of each such series so
far as the same have been fixed and the authority of the board of directors to
designate and fix the relative rights, preferences and limitations of other
series.
Within a reasonable time after the issuance or transfer of any
uncertificated shares there shall be sent to the registered owner thereof a
written notice containing the information required to be set forth or stated on
certificates pursuant to paragraphs (b) and (c) of Section 508 of the New York
Business Corporation Law.
Section 2. The signatures of the officers of the corporation
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation itself or
an employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.
Section 3. The board of directors may direct a new certificate
to be issued in place of any certificate theretofore issued by the corporation
alleged to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate shall be cancelled and the transaction shall be recorded
upon the books of the corporation.
Section 5. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the board of directors may fix, in advance, a date
as the record date for any such determination of shareholders.
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Such date shall not be more than fifty nor less than ten days before the date of
any meeting nor more than fifty days prior to any other action. When a
determination of shareholders of record entitled to notice of or to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, unless the board fixes a
new record date for the adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of New
York.
Section 7. A list of shareholders as of the record date,
certified by the corporate officer responsible for its preparation or by a
transfer agent, shall be produced at any meeting upon the request thereat or
prior thereto of any shareholder. If the right to vote at any meeting is
challenged, the inspectors of election, or person presiding thereat, shall
require such list of shareholders to be produced as evidence of the right of the
persons challenged to vote at such meeting and all persons who appear from such
list to be shareholders entitled to vote thereat may vote at such meeting.
ARTICLE XI
GENERAL PROVISIONS
Section 1. Subject to the provisions of the certificate of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in shares of the capital stock or in the corporation's bonds or
its property, including the shares or bonds of other corporations subject to any
provisions of law and of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
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Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 4. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 5. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, New York". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the vote of the holders of shares
entitled to vote in the election of any directors, provided notice of the
proposed alteration, amendment or repeal be contained in the notice of such
meeting. These by-laws may also be amended or repealed or new by-laws may be
adopted by the affirmative vote of a majority of the board of directors at any
regular or special meeting of the board. If any by-law regulating an impending
election of directors is adopted, amended or repealed by the board, there shall
be set forth in the notice of the next meeting of shareholders for the election
of directors the by-law so adopted, amended or repealed, together with precise
statement of the changes made. By-laws adopted by the board of directors may be
amended or repealed by the shareholders.
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EXHIBIT C-1
FORM OF COMPANY AFFILIATE AGREEMENT
February __ , 1997
American General Corporation
2929 Allen parkway
Houston, TX 77019
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of USLIFE Corporation, a New York corporation
(the "Company"), as the term "affiliate" is (i) 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"), or (ii) used in and for
purposes of Accounting Series, Releases Nos. 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of February , 1997 (the "Agreement"), by and among the Company, American
General Corporation, a Texas corporation ("American General Corporation"), and
Texas Stars Corporation, a New York corporation and a wholly-owned subsidiary of
American General Corporation ("Merger Sub"), Merger Sub will be merged with and
into the Company (the "Merger").
As a result of the Merger, I will receive shares of common
stock, par value $.50 per share, of American General Corporation (together with
the attached Series A Junior Participating Preferred Stock Purchase Rights,
issued in accordance with the Rights Agreement, dated as of July 27, 1989,
between American General Corporation and Texas Commerce Bank, as Rights Agent,
as amended by the First Amendment Rights Agreement, dated as of October 26,
1992, between American General Corporation and First Chicago Trust Company of
New York, as Rights Agent, as such agreement may be amended from time to time,
the "American General
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Corporation Stock"), in exchange for shares owned by me of common stock, par
value $1.00 per share of the Company (the "Company Common Stock").
I represent, warrant, and covenant to American General
Corporation that in the event I receive any American General Corporation Stock
as a result of the Merger:
1. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer, or otherwise dispose of
the American General Corporation Stock to the extent I considered
necessary, with my counsel or counsel for the Company.
2. I have been advised that the issuance of the American
General Corporation Stock 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, since at
the time the Merger was submitted for a vote of the stockholders of the
Company, I may be deemed to have been an affiliate of the Company and
the distribution by me of the American General Corporation Stock has
not been registered under the Act, I may not sell, transfer or
otherwise dispose of the American General Corporation Stock issued to
me in the Merger unless (i) such sale, transfer, or other disposition
has been registered under the Act, (ii) such sale, transfer, or other
disposition is made in conformity with Rule 145 promulgated by the
Commission under the Act, or (iii) in the opinion of counsel reasonably
acceptable to American General Corporation, or a "no action" letter
obtained by the undersigned from the staff of the Commission, such
sale, transfer, or other disposition is otherwise exempt from
registration under the Act.
3. I understand that American General Corporation is under no
obligation to register the sale, transfer, or other disposition of the
American General Corporation Stock by me or on my behalf under the Act.
4. I also understand that stop transfer instructions will be
given to American General Corporation's transfer agent with respect to
the American General Corporation Stock and that there will be placed on
the certificates for the American General Corporation Stock issued to
me, or any substitutions therefor, a legend stating in substance:
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"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 [ ]
BETWEEN THE REGISTERED HOLDER HEREOF AND AMERICAN GENERAL CORPORATION A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF AMERICAN
GENERAL CORPORATION."
5. I also understand that unless the transfer by me of my
American General Corporation Stock has been registered under the Act or
is a sale made in conformity with the provisions of Rule 145, American
General Corporation 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."
It is understood and agreed that the legends set forth in
paragraphs 4 and 5 above shall be removed by delivery of substitute certificates
without such legend if such legend is not required for purposes of the Act or
the Agreement, including sales under Rule 145(d). It is also understood and
agreed that such legends and the stop orders referred to above will be removed
if (i) two years shall have elapsed from the date the undersigned acquired the
American General Corporation Stock received in the Merger and the provisions of
Rule 145(d)(2) are then available to the undersigned, (ii) three years shall
have elapsed from the date the undersigned acquired the American General
Corporation Stock received in the Merger and the provisions of Rule 145(d)(3)
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are then available to the undersigned, or (iii) American General Corporation has
received either an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to American General Corporation, 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.
The undersigned further represents to and covenants with
American General Corporation as follows:
a. The undersigned has not sold, transferred or otherwise
disposed of any shares of Company Common Stock held by it, and will not
sell, transfer or otherwise dispose of such shares, at any time within
thirty (30) days prior to the Effective Time. The undersigned agrees
that the Company may issue stop transfer instructions to its transfer
agent with respect to the undersigned's shares of Company Common Stock
for so long as the undersigned is obligated not to sell, transfer, or
otherwise dispose of its shares of Company Common Stock under this
paragraph a.
b. The undersigned will not sell, transfer or otherwise
dispose of any shares of American General Corporation Stock received by
it in the Merger until after such time as results covering at least 30
days of combined operations of the Company and American General
Corporation (or such shorter period as shall be determined by American
General Corporation satisfies the requirements for pooling
transactions) have been published by American General Corporation, in
the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form
10-K, 10-Q or 8-K, or any other public filing or announcement which
includes such combined results of operations.
This Letter Agreement will terminate and will be of no further
force or effect upon any termination of the Merger Agreement before the
Effective Time.
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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 or 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.
Very truly yours,
Accepted this day of
February, 1997
AMERICAN GENERAL CORPORATION
By: _______________________
Name:
Title:
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<PAGE> 97
EXHIBIT C-2
FORM OF AMERICAN GENERAL CORPORATION
AFFILIATE AGREEMENT
February __, 1997
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of American General Corporation, a Texas
corporation ("American General Corporation"), as the term "affiliate" is (i)
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"), or (ii) used in and for purposes of Accounting Series, Releases Nos. 130
and 135, an amended, of the Commission. Pursuant to the terms of the Agreement
and Plan of Merger, dated as of February , 1997 (the "Agreement"), by and among
USLIFE Corporation, a New York corporation (the "Company"), American General
Corporation and Texas Stars Corporation, a New York corporation and a
wholly-owned subsidiary of American General Corporation ("Merger Sub"), Merger
Sub will be merged with and into the Company (the "Merger").
The undersigned is the owner of _____ shares of common stock,
par value $.50 per share of American General Corporation (together with the
attached Series A Junior Participating Preferred Stock Purchase Rights, issued
in accordance with the Rights Agreement, dated as of July 27, 1989, between
American General Corporation and Texas Commerce Bank, as Rights Agent, as
amended by the First Amendment Rights Agreement, dated as of October 26, 1992,
between American General Corporation and First Chicago Trust Company of New
York, as Rights Agent, as such agreement may be amended from time to time, the
"American General Corporation Stock").
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The undersigned represents to and covenants with American
General Corporation as follows:
a. The undersigned has not sold, transferred or otherwise
disposed of any shares of American General Corporation Stock held by
it, and will not sell, transfer or otherwise dispose of such shares, at
any time within thirty (30) days prior to the Effective Time. The
undersigned agrees that American General Corporation may issue stop
transfer instructions to its transfer agent with respect to the
undersigned's shares of American General Corporation Stock for so long
as the undersigned is obligated not to sell, transfer, or otherwise
dispose of its shares of American General Corporation Stock under this
paragraph a.
b. The undersigned will not sell, transfer or otherwise
dispose of any shares of American General Corporation Stock until after
such time as results covering at least 30 days of combined operations
of the Company and American General Corporation (or such shorter period
as shall be determined by American General Corporation satisfies the
requirements for pooling transactions) have been published by American
General Corporation, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to
the Commission on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations.
This Letter Agreement will terminate and will be of no further
force or effect upon any termination of the Merger Agreement before the
Effective Time.
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Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of American General Corporation as described
in the first paragraph of this letter or 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.
Very truly yours,
Accepted this day of
February, 1997
AMERICAN GENERAL CORPORATION
By: _______________________
Name:
Title:
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<PAGE> 100
EXHIBIT D
Employee Benefits Matters
1. Capitalized terms used herein and not otherwise defined
shall have the meanings given them in the Agreement and Plan of Merger dated as
of February 12, 1997, by and among American General Corporation, Texas Stars
Corporation and USLIFE Corporation.
2. From and after the Effective Time, American General
Corporation shall, or shall cause the Company, to honor and be bound by the
terms and conditions of each employee or executive benefit plan, program or
agreement sponsored or maintained by the Company or to which the Company is
party (a "Company Benefit Arrangement") and to administer and interpret any such
Company Benefit Arrangement in accordance with the practices of the Company as
in effect prior to the Effective Time. Nothing in the immediately preceding
sentence shall be construed to limit the right of American General Corporation
or the Company, as the case may be, following the Effective Time to amend,
modify or terminate any such Company Benefit Arrangement pursuant to the terms
and conditions thereof as in effect immediately prior to the Effective Time,
provided that (a) no such amendment, modification or termination shall reduce
any of the benefits or compensation payable thereunder which are accrued as of
the Effective Time (or as of the date of such action, whichever is greater) and
(b) in no event shall the severance and/or other termination benefits payable to
any employee whose employment terminates prior to the first anniversary of the
Effective Time be less than the amount that would have been payable to such
employee under the terms of any and all such Company Benefit Arrangements as in
effect immediately prior to such amendment, modification or termination.
3. Without limiting the generality of the foregoing, from and
after the Effective Time, American General Corporation shall, or shall cause the
Company and its subsidiaries to, make available to each person who is an
employee of the Company and its subsidiaries at the Effective Time (the "Company
Employees") employee benefit plans and programs which are either (a) the same as
are made available to the employees of American General Corporation, on terms
and conditions which are no less favorable to the Company Employees than the
terms and conditions generally applicable to the employees of American General
Corporation or (b) no less favorable to the Company Employees than the terms and
conditions of the Company Benefit Arrangements in which they were participating
immediately prior to the
D-1
<PAGE> 101
Effective Time. To the extent service is a factor in determining eligibility for
and vesting in the benefits provided thereunder (including, without limitation
eligibility for any early retirement benefits and similar benefit subsidies),
the plans and programs in which each Company Employee participates after the
Effective Time in accordance with the preceding sentence shall recognize service
with the Company and its subsidiaries (as taken into account for purposes of
administering the corresponding Company Benefit Arrangement immediately prior to
the Effective Time and as enhanced upon the Effective Time under the terms and
conditions of any such Company benefit Arrangement) as service with American
General Corporation (i) for purposes of determining each such Company Employee's
eligibility to participate in, and vest in the benefits provided under, such
plan or program and (ii) for purposes of determining the benefits accrued under
such plan or program to the extent required by applicable law. Notwithstanding
the foregoing, in no event shall any employee receive duplicate benefits with
respect to any period of prior service. To the extent any welfare benefit plan
in which any Company Employee participates after the Effective Time (x) imposes
any pre-existing condition limitation, such condition shall be waived or (y) has
a deductible or requires a co-payment by the Company Employee that is subject to
a maximum out-of-pocket limitation, there shall be credited against any such
deductible or limitation any costs incurred by such Company Employee during the
comparable period under the terms of the corresponding Company Benefit
Arrangement prior to the Effective Time.
4. For the avoidance of doubt, American General Corporation
agrees and acknowledges that upon the Effective Time a "change of control" shall
have occurred under the terms and conditions of any Company Benefit Arrangement.
5. At the Effective Time, each option to purchase Company
Common Stock ("Company Stock Options") which is outstanding and unexercised at
the Effective Time shall be converted automatically into an option to purchase
American General Corporation Shares (a "Substituted Option") in an amount and at
an exercise price determined as provided below (and otherwise subject to the
terms of the Company Stock Option Plans:
a. The number of American General Corporation Shares to be
subject to the Substituted Option shall be equal to the
product of the number of Shares subject to the corresponding
Company Stock Option and the Exchange Ratio, provided that any
fractional American General Corporation Shares resulting from
such multiplication shall be rounded down to the nearest share
and, except with respect to any options which are intended to
qualify as "incentive stock options" (as defined in
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<PAGE> 102
Section 422 of the Code ("ISOs")), American General
Corporation shall pay an amount in cash to the holder of such
Company Stock Option equal to the product of such fractional
interest multiplied by the Average American General Price; and
b. The exercise price per American General Corporation Share
under the Substituted Option shall be equal to the aggregate
exercise price of the corresponding Employee Stock Option
divided by the total number of full American General
Corporation Shares subject to the Substituted Option (as
determined under paragraph 1 immediately above), provided that
such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any ISOs shall be and is
intended to be effected in a manner that is consistent with section 424(a) of
the Code. To the extent required by law, the duration and other terms of the
Substituted Option shall be the same as that of the corresponding Company Stock
Option, except to the extent that the holder of such option shall have waived
the "reload" feature associated with such option, and except that all references
to the Company shall be deemed to be references to American General Corporation.
American General Corporation shall file with the SEC a registration statement on
Form S-8 (or other appropriate form) or a post-effective amendment to the
Registration Statement for purposes of registering all American General
Corporation Shares issuable after the Effective Time upon exercise of the
Company Stock Options, which shall be effective at the Effective Time, and shall
comply, to the extent applicable, with state securities or blue sky laws with
respect thereto at the Effective Time.
6. American General Corporation will adopt a procedure, in
consultation with the Company, whereby employees and directors of the Company
shall each have the right to exercise Substituted Options immediately upon the
occurrence of, and at any time following, the Effective Time, including without
limitation, through the use of the American General Corporation Shares to be
received in connection with the Merger, by delivering written notice (including
prior to the Effective Time) to a person designated by American General
Corporation at least 10 business days prior to the Effective Time. American
General Corporation will allow Substitute Options to be exercised by the same
means and methods as were permitted by the Company prior to the Effective Time
and by such other methods of exercise as are available to employees of American
General Corporation and its subsidiaries.
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<PAGE> 103
7. American General Corporation will take such action as shall
be necessary to cause each holder of a Substituted Option at the Effective Time
to have the right to exercise such Substituted Option for a period of not less
than 60 days following the Effective Time (the "Minimum Exercise Period"), it
being understood that continued employment of any employee holding such a
Substituted Option during the Minimum Exercise Period will satisfy this
requirement without any further action on the part of American General
Corporation and that the termination of any such holder's service with the
Company shall not shorten the Minimum Exercise Period. In the case of any
individual who enters into an agreement with American General Corporation or
with any other person at the request of American General Corporation which
limits the ability of such individual to sell American General Corporation
Shares until a date which is after the Effective Time (e.g., until after the
first publication of combined financial results of American General Corporation
and the Company), the Minimum Exercise Period shall not be less than 30 days
following the expiration of the period during which such individual is so
limited.
D-4
<PAGE> 1
EXHIBIT 4
AMENDMENT NO. 1 TO
AMENDED AND RESTATED RIGHTS AGREEMENT
This Amendment (the "Amendment"), dated as of February 13,
1997, is entered into by and between USLIFE Corporation, a New York corporation
(the "Company"), and The Chase Manhattan Bank, a Delaware corporation, as Rights
Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have entered into an
Amended and Restated Rights Agreement, dated as of June 24, 1986, as further
amended and restated heretofore (the "Agreement");
WHEREAS, the Company wishes to amend the Agreement; and
WHEREAS, Section 5.5 of the Agreement provides, among other
things, that prior to the close of business on the Flip-in Date the Company may
and the Rights Agent shall, if the Company so requests, supplement or amend
certain provision of the Agreement without the approval of any holders of
Rights.
NOW, THEREFORE, the Company and the Rights Agent hereby amend
the Agreement as follows:
1. Capitalized terms used in this Amendment without definition
shall have the meanings given to them in the Agreement.
2. Section 1.1(a) of the Agreement is amended to add the
following sentence to the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
neither American General Corporation ("American General") nor any
subsidiary of American General (any such subsidiary being referred to
herein as "Merger Sub") established to effect the Merger (as defined
herein) shall be deemed to be an Acquiring Person as a result of the
execution, delivery and performance under, or consummation of any one
or more transactions (each, a "Permitted Event" and collectively, the
"Permitted Events"), contemplated by the Agreement and Plan of Merger,
dated as of February 12, 1997, as the same may be amended from time to
time, by and among the American General, Texas Stars Corporation, a New
York corporation and a wholly-owned subsidiary of
<PAGE> 2
American General and the Company (the "Merger Agreement"), pursuant to
which Merger Sub will be merged (the "Merger") with and into the
Company."
3. Section 1.1(h) of the Agreement is amended by (a)
substituting a comma for the word "and" in the third line thereof, (b)
substituting the word "and" for the period at the end of the paragraph and (c)
adding the following clause to the end thereof:
"(iii) the time immediately prior to the Effective Time (as
such term is defined in the Merger Agreement), provided,
however, that if the Merger contemplated by the Merger
Agreement does not occur and the Merger Agreement is
terminated, the Rights will remain exercisable until the
earlier of (i) or (ii) above, and no Expiration Date shall be
deemed to have occurred as a result of clause (iii)."
4. Section 1.1(i) of the Agreement is amended to add the
following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
the acquisition of beneficial ownership of Common Stock of the Company
pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Flip-in Date."
5. Section 1.1(j) of the Agreement is amended to add the
following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
the acquisition of beneficial ownership of Common Stock of the Company
pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Flip-over Transaction or Event."
6. Section 1.1(s) of the Agreement is amended to add the
following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
the acquisition of beneficial ownership of Common Stock of the Company
pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Separation Date."
2
<PAGE> 3
7. Section 1.1 (t) is amended to add the following sentence at
the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
the acquisition of beneficial ownership of Common Stock of the Company
pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Stock Acquisition Date."
8. The term "Agreement" as used in the Agreement shall be
deemed to refer to the Agreement as amended hereby.
9. This Amendment shall be governed by and constructed in
accordance with the laws of the State of New York.
10. This Amendment shall be effective as of the date first
above written, and, except as set forth herein, the Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.
3
<PAGE> 4
11. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of this 13th day of February, 1997.
USLIFE CORPORATION
By: /s/ Gordon E. Crosby, Jr.
-----------------------------
Name: Gordon E. Crosby, Jr.
Title: Chairman of the Board
THE CHASE MANHATTAN BANK
By: /s/ Michael A. Nespoli
-----------------------------
Name: Michael A. Nespoli
Title: Vice President
4
<PAGE> 1
EXHIBIT 99
[Form of Press Release]
American General and USLIFE Corporation to Merge
Houston, February 13, 1997--American General Corporation
(NYSE: AGC) and USLIFE Corporation (NYSE: USH) today jointly announced the
signing of a definitive merger agreement. The combined companies have assets of
$74 billion and 1996 earnings of $757 million on revenues of $9 billion.
Under the agreement, USLIFE Corporation shareholders will
exchange each share of USLIFE common stock for $49.00 worth of American General
common stock. Based upon 36.1 million common equivalent shares of USLIFE
outstanding, USLIFE shareholders will receive aggregate value of $1.8 billion.
On a pro forma basis, market value of the combined entity would be in excess of
$10 billion.
In commenting on the transaction, Robert M. Devlin, president
and chief executive officer of American General, said, "This merger represents
the largest transaction in American General's history and is an outstanding
strategic fit which offers a unique opportunity to combine two of the premier
providers of life insurance and financial services in the nation. During Gordon
Crosby's 38-year career with USLIFE, it has grown to become one of the nation's
leading life insurance-based financial services organizations. The combination
of these two firms will create one of the nation's most formidable and
competitive providers of financial services. We are confident that the
shareholders and customers of both companies will benefit from the merger. Given
the consolidation savings, we expect this transaction to be non-dilutive from
its inception on a pro forma basis."
In commenting on the transaction, Gordon E. Crosby, Jr.,
chairman of the board and executive committee of USLIFE, said, "This is truly an
outstanding result for both organizations. American General and USLIFE
Corporation have an excellent cadre of officers and life insurance marketing
professionals which, when combined into a cohesive unit, will augur well for the
future of our shareholders, policyholders, distribution channels and employees."
The transaction, which is subject to approval by American
General and USLIFE shareholders, and requisite regulatory approvals, is expected
to close by the end of the second quarter of 1997. The transaction will be tax
free to USLIFE shareholders and will be accounted for under the pooling of
interests method.
<PAGE> 2
The exchange ratio for American General common stock will be
determined by dividing $49.00 by an average trading price of American General
common stock prior to closing. The exchange ratio is subject to a minimum of
1.09 shares and a maximum of 1.29 shares of American General common stock for
each USLIFE common share.
USLIFE Corporation is a life insurance-based holding company
with more than $168 billion of life insurance in force and nearly $8 billion in
assets. USLIFE Corporation operates nationwide through three ordinary life
insurance companies, a credit insurance group, and six other financial services
and support companies. USLIFE Corporation common stock is traded on the New
York, Pacific, and London stock exchanges.
Following the merger, American General Corporation will have
life insurance in force of over $300 billion and will serve the financial needs
of 10 million customers through a distribution network of 25,000 sales
representatives. USLIFE provides American General with financial products and
services that are complementary to those offered by its three business segments
- - retirement services, consumer loans, and life insurance.
The American General Corporation and USLIFE Corporation merger
will be discussed during USLIFE's regularly scheduled 1996 fourth quarter and
preliminary year-end results conference call later this morning. USLIFE
Corporation's conference call will be held on Thursday, February 13, 1997, at
10:00 a.m. (EST). The phone number is 800-553-2197; participants should plan to
dial into the call 10 minutes in advance to ensure smooth connection.
American General Corporation is one of the nation's largest
diversified financial services organizations with assets of $66 billion and
shareholders' equity of $5.6 billion. Headquartered in Houston, it is a leading
provider of retirement services, consumer loans, and life insurance to nine
million customers. American General common stock is listed on the New York,
Pacific, London, and Swiss stock exchanges.
Certain information included in this press release is forward
looking and involves risk and uncertainties, including general economic and
competitive conditions that could significantly impact expected results.
Investors are also directed to other risks and uncertainties discussed in
documents filed by the company with the Securities and Exchange Commission.
2
<PAGE> 3
CONTACT: Robert D. Mrlik, Vice President - Investor Relations, 713-831-1137, or
John E. Pluhowski, Director - Corporate Communications, 713-831-1149, both of
American General Corporation; or Richard G. Hohn, Senior Vice President -
Investor Relations of USLIFE Corp., 212-709-6415.
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