<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM F-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------
ING GROEP N.V.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
THE NETHERLANDS 6311/6712 NOT APPLICABLE
(STATE OF JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
ING GROEP N.V. DAVID NICKELSON
STRAWINSKYLAAN 2631 CORPORATION SERVICE COMPANY
P.O. BOX 810, 1000 AV AMSTERDAM 80 STATE STREET, 6TH FLOOR
THE NETHERLANDS ALBANY, NEW YORK 12207
TELEPHONE: 31-20-541-54-11 TELEPHONE: 518-433-4740
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL NUMBER,
EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPIES TO:
<TABLE>
<S> <C>
B. SCOTT BURTON RICHARD R. CROWL, ESQ.
ING AMERICA INSURANCE HOLDINGS, INC. RELIASTAR FINANCIAL CORP.
5780 POWERS FERRY ROAD, NW 20 WASHINGTON AVENUE SOUTH
ATLANTA, GEORGIA 30058 MINNEAPOLIS, MINNESOTA 55401-1900
770-980-5637 612-372-5432
</TABLE>
<TABLE>
<S> <C> <C>
WILLIAM D. TORCHIANA, ESQ. ELLIOTT V. STEIN, ESQ. THOMAS G. MORGAN, ESQ.
STEPHEN M. KOTRAN, ESQ. WACHTELL, LIPTON, ROSEN & KATZ FAEGRE & BENSON LLP
SULLIVAN & CROMWELL 51 WEST 52ND STREET 90 SOUTH SEVENTH STREET
125 BROAD STREET NEW YORK, NEW YORK 10019-6150 MINNEAPOLIS, MINNESOTA 55402-3901
NEW YORK, NEW YORK 10004-2498 212-403-1000 612-336-3000
212-558-4000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective and the
consummation of the merger described herein.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ordinary shares, nominal value one
guilder per ordinary share, to be
offered in connection with the merger
described herein..................... (1) Not applicable $130,801,554(2) $34,532
-----------------------------------------------------------------------------------------------------------------------------
Bearer Depository Receipts........... (3) (3) (3) (3)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Such indeterminate number of ING Group N.V. ordinary shares to be offered in
connection with the merger described herein.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(f) under the Securities Act of 1933, as amended.
(3) Includes a like amount of Bearer Depositary Receipts in respect of Ordinary
Shares, for which no separate consideration will be received by ING Groep
N.V. American Depositary Shares evidenced by American Depositary Receipts
issuable upon deposit of such Bearer Depositary Receipts are registered
pursuant to a separate Registration Statement on Form F-6. Pursuant to Rule
457(i), no additional registration fee is required in connection with the
Bearer Depositary Receipts.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
[RELIASTAR LOGO]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
Dear Shareholder:
You are cordially invited to a special meeting of our shareholders to be
held on Thursday, July 27, 2000 at 10:00 a.m., Minneapolis time, at our
Minneapolis headquarters offices at 20 Washington Avenue South.
ReliaStar Financial Corp.'s board of directors has unanimously approved a
merger with ING Groep N.V., which requires the approval of our shareholders. If
the merger is completed, shareholders (other than the ReliaStar Success Sharing
Plan and ESOP) will receive a cash payment of $54.00 for each share of ReliaStar
common stock that they hold. Instead of the cash payment, each share of
ReliaStar common stock held by the ESOP will be converted into a number of
American Depositary Shares of ING Group equal to $54.00 divided by the average
closing price of the American Depositary Shares over the ten trading day period
ending on the last trading day prior to the completion of the merger. ING
Group's American Depositary Shares are listed on the New York Stock Exchange
under the symbol "ING."
ReliaStar will continue its operations under the name of ING ReliaStar as a
part of ING America. ING Group is a financial services company active in the
fields of insurance, banking, and asset management in more than 60 countries.
More information on the proposed merger and the special meeting is provided
in the attached prospectus/proxy statement, which you should read carefully.
RELIASTAR'S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER
IS ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, RELIASTAR AND ITS
SHAREHOLDERS AND, ACCORDINGLY, HAS UNANIMOUSLY APPROVED THE MERGER AND THE
MERGER AGREEMENT. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR ADOPTION OF THE MERGER AGREEMENT.
YOUR VOTE IS IMPORTANT. We encourage you to read the prospectus/proxy
statement and vote your shares as soon as possible. If you do not vote your
shares, the effect will be the same as a vote against the merger. A return
envelope for your proxy card is enclosed for convenience. Shareholders of record
also have the option of voting by telephone or via the Internet. Instructions
for voting by telephone or the Internet are included on the enclosed proxy card.
Sincerely,
[JOHN G. TURNER]
JOHN G. TURNER
Chairman and CEO
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE ING GROUP AMERICAN DEPOSITARY
SHARES TO BE ISSUED IN THE MERGER OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
FOR A DISCUSSION OF SIGNIFICANT FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE ESOP BEFORE VOTING AT THE SPECIAL MEETING, SEE "RISK
FACTORS" ON PAGE 14.
This prospectus/proxy statement is dated June 27, 2000 and is first being
mailed to ReliaStar's shareholders on June 28, 2000.
<PAGE> 3
RELIASTAR FINANCIAL CORP.
-------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THURSDAY, JULY 27, 2000
10:00 A.M. MINNEAPOLIS TIME
AUDITORIUM
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
-------------------------
At our special meeting of shareholders, we will ask you to consider and
vote upon the following proposal:
To adopt the Agreement and Plan of Merger, dated as of April 30, 2000, as
amended June 27, 2000, among ING Groep N.V., ING America Insurance Holdings,
Inc., SHP Acquisition Corp., and ReliaStar Financial Corp. Under the merger
agreement, ReliaStar will become a wholly owned subsidiary of ING America
Insurance Holdings and ReliaStar shareholders (other than ReliaStar's Success
Sharing Plan and ESOP) will receive a cash payment of $54.00 for each share of
ReliaStar common stock that they hold. Instead of the cash payment, each share
of ReliaStar common stock held by the ESOP will be converted into a number of
American Depositary Shares of ING Group equal to $54.00 divided by the average
closing price of the American Depositary Shares over the ten trading day period
ending on the last trading day prior to the completion of the merger.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL.
If you were a shareholder of record at the close of business on June 16,
2000, you may vote at our special meeting or any adjournment of the meeting.
Whether or not you plan to attend the special meeting in person, please
complete, date, sign, and return the enclosed proxy card. A return envelope for
your proxy card is provided for convenience. Shareholders of record also have
the option of voting by telephone or via the Internet. Instructions for
telephonic or Internet voting are included on the proxy card. You may revoke
your proxy at any time before it is voted at the meeting.
On behalf of the Board of Directors,
/s/ RICHARD R. CROWL
RICHARD R. CROWL
Secretary
June 27, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Questions and Answers About the Merger...................... iv
Summary..................................................... 1
Comparative Per-Share Information........................... 6
Markets and Market Price.................................. 6
Historical and Pro Forma Per-Share Data................... 7
Market Value Of Securities................................ 8
Selected Historical Financial Data.......................... 9
ReliaStar................................................. 9
ING Group................................................. 11
Risk Factors................................................ 14
The Special Meeting......................................... 15
General Information....................................... 15
Date, Time, Place, and Purpose of the Meeting............. 15
Record Date and Outstanding Shares........................ 15
Quorum.................................................... 15
Vote Required............................................. 15
Abstentions; Broker Non-Votes............................. 15
Voting and Proxies........................................ 16
How to Revoke Your Proxy.................................. 16
Expenses of Proxy Solicitation............................ 16
The Merger.................................................. 17
Background of the Merger.................................. 17
ReliaStar's Reasons for the Merger........................ 20
Recommendation of ReliaStar's Board of Directors.......... 22
Opinion of Financial Adviser.............................. 22
Required Regulatory Approvals............................... 29
Material U.S. Federal Income Tax Consequences............... 30
ReliaStar Success Sharing Plan and ESOP................... 31
Accounting Treatment........................................ 31
Interests of Certain Persons in the Merger.................. 31
Litigation Challenging the Merger........................... 35
The Merger Agreement........................................ 36
The Merger................................................ 36
Completion of the Merger.................................. 36
Merger Consideration...................................... 36
Certificate of Incorporation, By-Laws, Directors and
Officers of the Surviving Corporation.................. 37
Representation and Warranties............................. 37
Covenants................................................. 38
Conditions................................................ 44
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C>
Termination and Termination Fee........................... 47
Miscellaneous and General................................. 49
The Stock Option Agreement.................................. 49
The Option................................................ 49
Exercise of the Option.................................... 49
Repurchase of Option/Shares............................... 50
Limitation on Profit...................................... 50
Registration.............................................. 50
Effect of Stock Option.................................... 51
Appraisal Rights............................................ 51
Comparison of Shareholder Rights............................ 52
Amendment of Constituent Documents........................ 52
Voting Rights............................................. 53
Shareholders' Meetings.................................... 54
Action by Written Consent of Shareholders................. 54
Shareholder Nominations................................... 54
Election and Removal of Directors; Filling of Vacancies... 55
Appraisal Rights.......................................... 56
Preemptive Rights......................................... 56
Dividends................................................. 57
Rights of Purchase and Acquisition........................ 58
Shareholder Votes on Certain Reorganizations.............. 58
Rights of Inspection...................................... 59
Limitation of Directors' Liability/Indemnification of
Officers and Directors................................. 59
Certain Provisions Relating to Business Combinations...... 60
Shareholder Suits......................................... 60
Conflict-of-Interest Transactions......................... 60
Transfer Restrictions..................................... 61
Shareholder Rights Agreement.............................. 61
Limitations on Enforceability of Civil Liabilities Under
U.S. Federal Securities Laws........................... 62
The Companies............................................... 63
ReliaStar Financial Corp.................................. 63
ING Group................................................. 64
Where You Can Find More Information......................... 67
Cautionary Note Regarding Forward-Looking Information....... 68
Currencies and Exchange Rates............................... 70
Experts..................................................... 70
Legal Matters............................................... 71
Shareholder Proposals....................................... 71
</TABLE>
ii
<PAGE> 6
Appendix A: Agreement and Plan of Merger, dated as of April 30, 2000, as
amended June 27, 2000, by and among ReliaStar Financial Corp., ING
Groep N.V., ING America Insurance Holdings, Inc. and SHP
Acquisition Corp.
Appendix B: Stock Option Agreement, dated April 30, 2000, as amended June 27,
2000, between ReliaStar Financial Corp. and ING America Insurance
Holdings, Inc.
Appendix C: Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Appendix D: Section 262 of the Delaware General Corporation Law
iii
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What will I receive in the
merger?....................... A: You will receive $54.00 in cash for each
share of ReliaStar common stock that you hold.
Instead of the cash payment, each share of
ReliaStar common stock held by the ReliaStar
Success Sharing Plan and ESOP will be converted
into a number of American Depositary Shares of
ING Group equal to $54.00 divided by the
average closing price of the American
Depositary Shares over the ten trading day
period ending on the last trading day prior to
the completion of the merger. ING Group's
American Depositary Shares are listed on the
New York Stock Exchange under the symbol "ING."
Q: What kind of premium to the
price of ReliaStar's stock is
implied by the merger
consideration?................ A: The merger consideration represents a
premium of approximately 75% over the last
closing price per share of ReliaStar common
stock on April 27, 2000, the last trading day
before the day on which ReliaStar publicly
confirmed that it was in discussions regarding
a potential merger, and a premium of 84.5% over
the 60-day average of ReliaStar's closing stock
price per share as of April 27, 2000.
Q: When do you expect the
merger to be completed?....... A: We expect to complete the merger late in the
third quarter of 2000. It is possible, however,
that the obtaining of regulatory consents could
require us to postpone the merger until a later
date.
Q: What are the U.S. federal
income tax consequences of the
merger to ReliaStar's
shareholders?................. A: ReliaStar shareholders, other than the ESOP,
will generally recognize a gain with respect to
the receipt of cash in exchange for their
shares of ReliaStar common stock.
Q: Who can vote?.............. A: Shareholders of record as of the close of
business on the record date of June 16, 2000
are entitled to vote at the meeting. Beneficial
owners as of the record date will receive
instructions from their bank, broker, or other
nominee describing how to vote their shares.
Q: How do I vote?............. A: All shareholders of record may vote by mail.
Shareholders of record may vote in person at
the meeting or vote by proxy card, by
telephone, or by Internet. Beneficial owners
will receive instructions from their bank,
broker, or other nominee describing how to vote
their shares. Such shareholders can vote by
telephone or via the Internet if these options
are offered by the bank, broker, or other
nominee.
- Voting by Mail. Shareholders of record may
sign, date, and mail their proxies in the
enclosed postage-paid envelope. If you sign,
date, and mail your proxy card
iv
<PAGE> 8
without indicating how you want to vote, your
proxy will be voted FOR the merger proposal.
- Voting by Telephone. Shareholders of record
may vote by using the toll-free number and
following the instructions listed on the proxy
card.
- Voting via the Internet. Shareholders of
record may vote via the Internet as instructed
on the proxy card.
Q: How are shares under the
ESOP voted?................... A: Separate voting cards are furnished to plan
participants under the ESOP. Voting cards
executed by plan participants will serve as
voting instructions to Northern Trust Company,
the trustee for this plan, for shares allocated
to that participant's account.
The trustee must vote all shares in the ESOP.
The trustee must vote any allocated shares for
which it does not receive instructions, as well
as unallocated shares, in the same proportion
as the shares for which instructions are
received. The trustee's obligation to follow
participants' voting instructions is subject to
the trustee's fiduciary duty under the Employee
Retirement Income Security Act of 1974 to
ensure that such obligation does not violate
ERISA.
Q: How may I change my
vote?......................... A: Whether you vote by mail, telephone, or the
Internet, you may revoke your proxy any time
before it is exercised at the meeting by (1)
notifying ReliaStar's Corporate Secretary in
writing, (2) voting in person at the meeting,
(3) returning a later-dated proxy, or (4)
voting again by telephone or the Internet at a
later time. If you hold your shares through a
bank, broker or other nominee, you should
contact such person to find out how to change
your vote. Participants in the ESOP will
receive instructions on how to change their
votes together with their voting cards.
Q: Should I send my stock
certificates now?............. A: No. You will receive instructions for
surrendering your stock certificates in
exchange for the cash payment in a separate
mailing after the special meeting.
Q: Whom should I call with
questions?.................... A: You should call ReliaStar Investor Relations
toll-free at (888) 757-5757 with any questions
about the merger. You may also obtain
additional information about each company from
the documents they each file with the
Securities and Exchange Commission by following
the instructions in the section "Where You Can
Find More Information" beginning on page 67.
If you have any questions, you may also
contact:
[GEORGESON SHAREHOLDER COMMUNICATIONS INC.
LOGO]
(800) 223-2064
v
<PAGE> 9
SUMMARY
The following is a summary of material information contained in this
prospectus/proxy statement. For more information, you should refer to the
information in the main body of this prospectus/proxy statement along with the
exhibits and the information incorporated by reference. A copy of the merger
agreement is attached as Appendix A to this prospectus/proxy statement and
incorporated by reference. You should refer to that agreement for a complete
statement of the terms of the merger.
THE COMPANIES (PAGE 63)
RELIASTAR FINANCIAL CORP.
20 Washington Avenue South
Minneapolis, Minnesota 55401
(612) 372-5432
ReliaStar Financial Corp. is a Minneapolis-based holding company whose
subsidiaries offer individuals and institutions life insurance and annuities,
employee benefits products and services, retirement plans, life and health
reinsurance, mutual funds, and bank and trust products. Based on revenues,
ReliaStar is one of the largest publicly held life insurance holding companies
in the United States and at March 31, 2000 had $38.4 billion in assets under
management. Shares of ReliaStar common stock are listed and principally traded
on the New York Stock Exchange under the symbol "RLR." When we refer to
"ReliaStar" in this prospectus/proxy statement, we are referring to ReliaStar
Financial Corp. and its subsidiaries as a whole, unless the context requires
otherwise.
ING GROEP N.V.
Strawinskylaan 2631
1077 ZZ Amsterdam
P.O. Box 810,
1000 AV Amsterdam
The Netherlands
31-20-541-54-11
ING AMERICA INSURANCE
HOLDINGS, INC.
5780 Powers Ferry Road, NW
Atlanta, Georgia 30327
(770) 980-3300
ING Groep N.V. (ING or ING Group) operates in more than 60 countries
worldwide, and is one of the world's largest integrated financial service
providers, offering a comprehensive range of life and non-life insurance,
commercial and investment banking, asset management and related products and
services. ING America Insurance Holdings, Inc. (ING America) is the primary
holding company for ING Group's insurance interests in the United States and is
a wholly owned subsidiary of ING Group.
SHP ACQUISITION CORP.
5780 Powers Ferry Road, NW
Atlanta, Georgia 30327
(770) 980-3300
SHP Acquisition Corp. (referred to as the Merger Sub) is a corporation
formed by ING America to effect the merger. Merger Sub does not have any
significant assets or liabilities and will not engage in any activities other
than those related to completing the merger.
THE SPECIAL MEETING (PAGE 15)
Date, Time, Place and Purpose of the Meeting (page 15)
ReliaStar will hold a special meeting of shareholders on Thursday, July 27,
2000 at 10:00 a.m., local time, in the auditorium at ReliaStar's Minneapolis
headquarters, 20 Washington Avenue South, Minneapolis, Minnesota 55401. At the
meeting, ReliaStar shareholders of record at the close of business on the record
date of June 16, 2000 will be asked to adopt the merger agreement. No other
business will be conducted at the meeting.
1
<PAGE> 10
Record Date and Outstanding Shares (page 15)
Only holders of record of ReliaStar common stock at the close of business
on the record date are entitled to vote at the meeting. As of that time, there
were approximately 90,192,960 shares of ReliaStar common stock outstanding and
entitled to vote which were held by approximately 20,898 record holders.
Quorum (page 15)
The required quorum for the transaction of business at the meeting is a
majority of the 90,192,960 shares of ReliaStar common stock outstanding on the
record date.
Vote Required (page 15)
The affirmative vote of a majority of the outstanding shares of ReliaStar
common stock is required to adopt the merger agreement. Each shareholder is
entitled to one vote per share. As of the record date, approximately 3.75% of
the outstanding shares entitled to vote were held by ReliaStar's directors,
executive officers, and their affiliates.
THE MERGER (PAGE 17)
What ReliaStar Shareholders Will Receive in the Merger (page 36)
ReliaStar shareholders, other than ReliaStar's Success Sharing Plan and
ESOP, will receive $54.00 in cash for each share of ReliaStar common stock that
they hold.
Instead of the cash payment, each share of ReliaStar common stock held by
the ESOP will be converted into a number of American Depositary Shares (also
known as ADSs) of ING Group equal to $54.00 divided by the average closing price
of the American Depositary Shares over the ten trading day period ending on the
last trading day prior to the completion of the merger.
Recommendation of the ReliaStar Board (page 22)
ReliaStar's board of directors has unanimously approved the merger and
merger agreement and recommends that you vote FOR the adoption of the merger
agreement.
Opinion of Financial Advisor (page 22)
In deciding to approve the merger, ReliaStar's board of directors
considered the April 29, 2000 oral opinion, which was confirmed in writing on
April 30, 2000, of its financial advisor, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, that, as of the date of the opinion, the consideration to be paid
by ING in the merger is fair to the shareholders of ReliaStar, from a financial
point of view.
A COPY OF THE MERRILL LYNCH OPINION IS ATTACHED AS APPENDIX C TO THIS
PROSPECTUS/ PROXY STATEMENT. YOU SHOULD READ THE OPINION IN ITS ENTIRETY FOR
INFORMATION ON THE ASSUMPTIONS MADE, AND MATTERS CONSIDERED, BY MERRILL LYNCH IN
RENDERING ITS OPINION.
Completion of the Merger (page 36)
The merger will become effective when a certificate of merger is filed with
the Delaware Secretary of State or at such later time as agreed to by ReliaStar
and ING.
Conditions That Must Be Satisfied or Waived for the Merger to Occur (page 44)
The completion of the merger depends on several conditions being satisfied
or waived, including, among others, the following:
- ReliaStar shareholders' adoption of the merger agreement,
- the expiration or termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 and applicable insurance laws,
- the receipt of all required governmental consents, registrations,
approvals, permits and authorizations required to be obtained, except, in
the case of jurisdictions other than the United States, the United
Kingdom and the Netherlands, for those that are not material,
- the absence of any legal prohibition against the merger, and
2
<PAGE> 11
- the material accuracy of the representations and warranties of the
parties contained in the merger agreement and the material compliance
with the obligations of the parties to be performed under the merger
agreement.
Termination of the Merger Agreement (page 47)
The parties to the merger agreement may agree to terminate the merger
agreement by mutual consent at any time before completing the merger, even after
ReliaStar's shareholders have adopted the merger agreement.
Either ING America or ReliaStar may terminate the merger agreement if
- the merger is not completed by March 31, 2001, which may be extended by
two months in limited circumstances,
- ReliaStar's shareholders do not approve the merger, or
- there is a legal prohibition against the merger.
In addition, ReliaStar may terminate the merger agreement if
- ING materially breaches any representation, warranty, covenant or
agreement contained in the merger agreement, or
- ReliaStar's board of directors determines that an unsolicited proposal
from another entity would result in a transaction more favorable to
ReliaStar's shareholders than the transactions contemplated by the merger
agreement with ING and enters into a definitive agreement containing the
terms of the more favorable proposal.
In addition, ING America may terminate the merger agreement if
- the board of directors of ReliaStar withdraws or adversely modifies its
adoption or recommendation of the merger agreement or approves or
recommends a more favorable acquisition proposal,
- ReliaStar materially breaches any representation, warranty, covenant or
agreement contained in the merger agreement, or
- any securities or assets are issued or delivered pursuant to ReliaStar's
rights agreement, which would only occur if a third party acquired 20% or
more of ReliaStar's outstanding shares.
Termination Fee (page 47)
ReliaStar has agreed to pay ING America a termination fee of $120 million
and ING's out-of-pocket expenses of up to $5 million, if
- ING America terminates the merger agreement because the board of
directors of ReliaStar withdraws or adversely modifies its adoption or
recommendation of the merger agreement or approves or recommends a more
favorable acquisition proposal, or
- ReliaStar's board of directors determines that an unsolicited proposal
from another entity would result in a transaction more favorable to
ReliaStar's shareholders than the transactions contemplated by the merger
agreement with ING and enters into a definitive agreement containing the
terms of the more favorable proposal.
ReliaStar also agreed to pay ING America,
- its out-of-pocket expenses of up to $5 million if ReliaStar or ING
terminates the merger agreement because ReliaStar's shareholders do not
approve the merger, plus
- a termination fee of $120 million if, before the ReliaStar's shareholders
meeting, another entity publicly announces its intention to make an
acquisition proposal to ReliaStar, and, within fifteen months from the
date ReliaStar or ING terminates the merger agreement because ReliaStar's
shareholders do not approve the merger, ReliaStar enters into a
definitive agreement with respect to an acquisition
3
<PAGE> 12
proposal or an acquisition proposal is consummated.
ReliaStar further agreed to pay ING America,
- its out-of-pocket expenses of up to $5 million if ING America terminates
the merger agreement because ReliaStar has materially breached any
representation, warranty, covenant or agreement contained in the merger
agreement that is not curable and that would cause the condition relating
to ReliaStar's representations, warranties or obligations pursuant to the
merger agreement not to be satisfied or to be incapable of being
satisfied, plus
- a termination fee of $120 million if ReliaStar's breach is deliberate
and, before the termination of the merger agreement, another entity makes
or publicly announces its intention to make an acquisition proposal to
ReliaStar, and, within fifteen months from the date of termination of the
merger agreement, ReliaStar enters into a definitive agreement with
respect to an acquisition proposal or an acquisition proposal is
consummated.
Interests of Certain Persons in the Merger (page 31)
When considering the recommendation of ReliaStar's board of directors, you
should be aware that certain ReliaStar officers and directors have interests in
the merger that are different from, or are in addition to, yours. These
interests include:
- change-of-control benefits, including management employment agreements
providing for lump-sum payments of up to three times the sum of the
individual's base salary and average annual bonus,
- accelerated vesting of stock options and restricted stock awards,
- accelerated payments under ReliaStar's Long-Term Incentive Plan,
- tentative agreements between ING and certain ReliaStar executives
providing for the employment of such executives by ING after the
completion of the merger, and
- the appointment of certain ReliaStar directors to the governing board of
ING Group and the board of directors of ING America.
Material U.S. Federal Income Tax Consequences (page 30)
ReliaStar shareholders, other than the ESOP, will generally recognize a
gain with respect to the receipt of cash in exchange for their shares of
ReliaStar common stock. The amount of your gain will be determined by the
difference between the cash you receive and your tax basis in your shares of
ReliaStar common stock. The ESOP will not recognize any gain or loss as a result
of the merger.
Required Regulatory Approvals (page 29)
Under United States federal antitrust law, the merger may not be completed
until ING and ReliaStar have made filings with the United States Federal Trade
Commission and the United States Department of Justice and the applicable
waiting periods have expired or been terminated. ING and ReliaStar expect to
file the requisite notification reports with the Federal Trade Commission and
the Department of Justice shortly after the date of this proxy
statement/prospectus. The applicable waiting period will expire 30 days after
those filings are made unless earlier terminated or extended by a request for
additional information or documentary materials.
The completion of the merger is subject to certain approvals of and/or
notices to, and the expiration of applicable waiting periods required by, the
insurance departments of Minnesota, New York and Washington. ING in the process
of filing applications for approval of the merger with those insurance
departments.
ReliaStar and ING conduct operations in a number of foreign countries where
regulatory
4
<PAGE> 13
filings or approvals may be required in connection with the consummation of the
merger.
ReliaStar operates both a federal savings bank and a national bank
exercising trust powers. Accordingly, the Office of Thrift Supervision and the
Office of the Comptroller of the Currency must each approve the merger.
While we believe that we will be able to obtain these regulatory approvals,
we cannot be certain whether approvals will be obtained within the period of
time contemplated by the merger agreement or on conditions that would not be
detrimental to the combined company or if at all.
Appraisal Rights (page 51)
Under Delaware law, you are entitled to object to the merger and to demand
payment for your shares of ReliaStar common stock in an amount that a Delaware
court determines is the fair value of your shares, if you comply with strict
statutory procedures. This amount may be higher or lower than $54.00 per share.
With respect to shares of ReliaStar common stock held by the ESOP, the plan
trustee has sole discretion to make the determination to assert appraisal rights
with respect to shares for which the trustee receives directions to vote against
adoption of the merger agreement. The trustee's decision regarding appraisal
rights is subject to its fiduciary duty under ERISA.
Accounting Treatment (page 31)
The merger will be accounted for under the "purchase" method of accounting.
This means that ING will record the excess of the purchase price of ReliaStar
over the fair market value of ReliaStar's assets as goodwill.
Comparison of Certain Shareholder's Rights (page 52)
At the completion of the merger, shares held by the ESOP will be converted
into American Depositary Shares of ING Group, with each American Depositary
Share representing one bearer receipt, which in turn represents one ordinary
share of ING. ING is a Dutch company and the rights of holders of American
Depositary Shares under the laws of the Netherlands vary materially from the
rights of holders of common stock under Delaware law.
THE STOCK OPTION (PAGE 49)
As an inducement to ING to enter into the merger agreement, ReliaStar
granted to ING America an option to purchase up to 9.9% of ReliaStar's
outstanding common stock at $54.00 per share. ING America would be able to
exercise the option if the merger agreement terminates and ING America becomes
entitled to receive the termination fee under the merger agreement. However, ING
America's total profit from the termination fee and from the option may not
exceed $130 million. The execution of the stock option agreement and/or the
issuance of the shares subject to the stock option agreement may delay or make
more difficult an acquisition of ReliaStar by a person other than ING. A copy of
the stock option agreement is attached to this prospectus/proxy statement as
Appendix B.
5
<PAGE> 14
COMPARATIVE PER-SHARE INFORMATION
MARKETS AND MARKET PRICE
Shares of ReliaStar common stock are listed and principally traded on the
New York Stock Exchange under the symbol "RLR." The ING ADSs are listed and
principally traded on the New York Stock Exchange under the symbol "ING."
The following table shows, for the calendar periods indicated, the reported
high and low sale prices per share on the New York Stock Exchange for ReliaStar
common stock and the ING ADSs. The table also shows historical dividend
information for the ReliaStar common stock.
<TABLE>
<CAPTION>
ING
RELIASTAR AMERICAN
COMMON STOCK DEPOSITARY SHARES
---------------------------- ------------------
HIGH LOW DIVIDEND HIGH LOW
------ ------ -------- ------- -------
<S> <C> <C> <C> <C> <C>
1998
First Quarter............................ $48.75 $39.75 $.155 $58.88 $42.06
Second Quarter........................... 49.94 41.75 .185 70.56 58.44
Third Quarter............................ 52.44 36.44 .185 76.25 43.88
Fourth Quarter........................... 48.44 29.00 .185 62.44 37.19
1999
First Quarter............................ $48.44 $39.56 $.185 $69.44 $52.88
Second Quarter........................... 43.94 34.88 .205 62.75 53.13
Third Quarter............................ 49.81 32.06 .205 57.00 47.81
Fourth Quarter........................... 49.50 31.69 .205 63.63 54.63
2000
First Quarter............................ $39.31 $23.75 $.205 $61.31 $47.06
Second Quarter (through June 22, 2000)... 52.38 28.00 .220 66.50 52.44
</TABLE>
ING Groep N.V. has declared and paid dividends each year since its
formation in 1991. Each year, a final dividend in respect of the prior year is
generally declared at and paid after the annual General Meeting of Shareholders,
which is generally held in May of each year. An interim dividend is generally
declared and paid in September, based upon the results for the first six months.
6
<PAGE> 15
The following table sets forth the total dividends paid per ING ordinary
share, bearer receipt and ADS for the period indicated.
<TABLE>
<CAPTION>
DIVIDENDS(1)
--------------------
(EUR)(2) (USD)(3)
-------- --------
<S> <C> <C>
1997
September 9, 1997......................................... E0.45 $0.49
May 19, 1998.............................................. 0.59 0.65
1998
September 8, 1998......................................... 0.59 0.65
May 15, 1999.............................................. 0.66 0.70
1999
September 8, 1999......................................... 0.63 0.67
May 26, 2000.............................................. 1.00 0.93
</TABLE>
-------------------------
(1) Per ordinary share. Dividends paid per ordinary share and bearer receipt and
ADS are the same.
(2) NLG dividends prior to 1999 are converted into euros at a rate of NLG2.20371
to EUR1.00.
(3) Historical dividend amounts per ordinary share have been translated into
dollars at the Noon Buying Rates on the respective dividend payment dates or
on the following business day if such date was not a business day in the
Netherlands or the United States. The amounts in U.S. dollars are
representative of the dividends that would have been paid on ADSs. The Noon
Buying Rate may differ from the rate that may be used by the depositary for
the ADSs to convert euros or Dutch guilders into U.S. dollars for purposes
of making payments to holders of ADSs and expenses incurred by the
depositary in connection with such exchange are payable by the holders of
ADSs.
Set forth below are the high, low and closing sale prices of the ReliaStar
common stock and the ING American Depositary Shares on April 27, 2000 and June
22, 2000. April 27, 2000 was the last full trading day prior to public
confirmation by ReliaStar that it was in discussions regarding a potential
merger, and June 22, 2000 was the last practicable trading day for which
information was available prior to the date of the first mailing of this
prospectus/proxy statement.
<TABLE>
<CAPTION>
RELIASTAR ING
COMMON STOCK AMERICAN DEPOSITARY SHARES
-------------------------- --------------------------
HIGH LOW CLOSE HIGH LOW CLOSE
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
April 27, 2000.................. $30.81 $29.31 $30.81 $55.44 $54.44 $55.19
June 22, 2000................... 52.31 52.13 52.25 63.13 62.06 62.31
</TABLE>
We urge you to obtain current market quotations for the ReliaStar common
stock and the ING American Depositary Shares.
HISTORICAL AND PRO FORMA PER-SHARE DATA
The following table sets forth certain historical comparative information
and certain unaudited pro forma information with respect to income per share,
book value per share and cash dividends per share for the ING ordinary shares
and the shares of ReliaStar common stock. The information that follows should be
read in conjunction with the audited and unaudited historical financial
statements and related notes of ING and ReliaStar incorporated by reference into
this prospectus/proxy statement. The combined pro forma per share data have been
included and incorporated for comparative purposes only and do not purport to be
indicative of the result from operations or financial position that actually
would have been obtained if the merger had occurred at the beginning
7
<PAGE> 16
of the period or as of the date indicated or of the result from operations or
financial position that may be obtained in the future.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999(1)
-----------------------------------------------
PRO FORMA EQUIVALENT PRO FORMA
HISTORICAL COMBINED RELIASTAR(2)
---------- --------- --------------------
<S> <C> <C> <C>
ING
Net income per ordinary share and ordinary
share equivalent(3)........................... $ 3.71 $ 3.81 --
Book value per ordinary share and ordinary
share equivalent(3)......................... 39.53 39.53 --
Cash dividends per ordinary share(3)(4)....... 1.56 1.63 --
RELIASTAR
Income per share.............................. $ 2.85 -- $ 3.21
Book value per share.......................... 21.89 -- 33.32
Cash dividends per share(4)................... 0.80 -- 1.37
</TABLE>
-------------------------
(1) All figures are in accordance with U.S. GAAP.
(2) Equivalent pro forma information is presented on a fully diluted equivalent
per share basis to reflect the effects of the exchange of ESOP shares for
ADSs based on an average price for each ADS of $64.06875 and using an
assumed exchange ratio of 0.8428 ING ADSs for each ReliaStar share. The
actual exchange ratio of ING ADSs for ReliaStar shares in the merger may
differ from this amount due to fluctuations in the market price for the
ADSs.
(3) One ADS represents one bearer receipt which in turn represents one ordinary
share. Dividends paid on ordinary shares are passed on to holders of ADSs
subject to certain fees with respect to the exchange of euros into dollars.
See ING's Annual Report on Form 20-F for the fiscal year ending December 31,
1999 for more information.
(4) Figures for ING and pro forma reflect dividends not reduced by applicable
withholding in the United States or the Netherlands. See ING's Annual Report
on Form 20-F for the fiscal year ending December 31, 1999 for more
information.
MARKET VALUE OF SECURITIES
<TABLE>
<CAPTION>
MARKET VALUE ON MARKET VALUE ON
APRIL 27, 2000(1) JUNE, 22, 2000(2)
----------------- -----------------
<S> <C> <C>
Market price per share (historical)....................... $30.81 $52.25
ReliaStar equivalent per share(3)......................... 54.00 54.00
Market price per ADS (historical)......................... 55.19 62.31
</TABLE>
-------------------------
(1) April 27, 2000 was the last trading day before the day on which ReliaStar
publicly confirmed that it was in discussions regarding a potential merger.
(2) June 22, 2000 was the last practicable trading day for which information was
available prior to the date of the first mailing of this prospectus/proxy
statement.
(3) The merger agreement provides that the ESOP will receive a number of ADSs
equal to $54.00 divided by the average closing price of the ADSs over the
ten trading day period ending on the last trading day prior to the
completion of the merger.
ING Bank is one of the principal market-makers for the bearer receipts on
the AEX Stock Exchange. Subsidiaries of ING Group will actively participate in
the secondary market for the bearer receipts and ADSs before, during and after
the merger.
8
<PAGE> 17
SELECTED HISTORICAL FINANCIAL DATA
RELIASTAR
ReliaStar's selected historical financial data presented below as of and
for the five fiscal years ended December 31, 1999 are derived from the financial
statements of ReliaStar Financial Corp. and its subsidiaries. Data as of and for
the three-month periods ended March 31, 2000 and 1999 have been derived from
unaudited financial statements of ReliaStar. Interim operating results are not
necessarily indicative of the results that may be achieved for the entire year.
The following selected financial data should be read in conjunction with
ReliaStar's Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which
are incorporated by reference in this prospectus/proxy statement.
RELIASTAR FINANCIAL CORP. AND SUBSIDIARIES
(in millions, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Premiums.............................. $ 301.9 $ 286.1 $ 1,192.8 $ 1,014.1 $ 887.9 $ 836.9 $ 851.5
Net Investment Income................. 285.6 277.3 1,115.9 1,116.9 1,006.3 929.6 884.3
Realized Investment Gains (Losses).... (0.8) 2.5 (1.3) 17.6 11.7 11.2 4.9
Policy and Contract Charges........... 103.9 91.2 454.5 427.6 332.9 245.9 218.5
Other Income.......................... 110.0 61.7 275.4 272.0 238.8 143.4 114.4
--------- --------- --------- --------- --------- --------- ---------
Total Revenues...................... 800.6 718.8 3,037.3 2,848.2 2,477.6 2,167.0 2,073.6
Benefits and Expenses................. 679.6 613.2 2,634.2 2,447.1 2,122.7 1,866.1 1,816.7
Income Tax Expense.................... 43.6 37.9 136.3 143.0 125.7 105.0 89.7
Dividends on Preferred Securities of
Subsidiaries, Net of Tax............ 3.3 3.3 13.2 13.2 10.4 5.0 --
--------- --------- --------- --------- --------- --------- ---------
Income from Continuing Operations..... 74.1 64.4 253.6 244.9 218.8 190.9 167.2
Income (Loss) from Discontinued
Operations, Net of Tax.............. -- -- -- (7.2) 3.2 2.1 (3.5)
--------- --------- --------- --------- --------- --------- ---------
Net Income.......................... $ 74.1 $ 64.4 $ 253.6 $ 237.7 $ 222.0 $ 193.0 $ 163.7
========= ========= ========= ========= ========= ========= =========
Net Income Available to Common
Shareholders...................... $ 74.1 $ 64.4 $ 253.6 $ 237.7 $ 222.0 $ 187.8 $ 155.4
========= ========= ========= ========= ========= ========= =========
EARNINGS PER COMMON SHARE:
Basic:
Income from Continuing Operations... $ 0.83 $ 0.73 $ 2.89 $ 2.69 $ 2.55 $ 2.51 $ 2.19
Income (Loss) from Discontinued
Operations........................ -- -- -- (0.08) 0.04 0.03 (0.05)
--------- --------- --------- --------- --------- --------- ---------
Net Income........................ $ 0.83 $ 0.73 $ 2.89 $ 2.61 $ 2.59 $ 2.54 $ 2.14
========= ========= ========= ========= ========= ========= =========
Diluted:
Income from Continuing Operations... $ 0.82 $ 0.71 $ 2.85 $ 2.64 $ 2.51 $ 2.35 $ 2.04
Income (Loss) from Discontinued
Operations........................ -- -- -- (0.08) 0.04 0.02 (0.05)
--------- --------- --------- --------- --------- --------- ---------
Net Income........................ $ 0.82 $ 0.71 $ 2.85 $ 2.56 $ 2.55 $ 2.37 $ 1.99
========= ========= ========= ========= ========= ========= =========
DIVIDENDS PAID PER COMMON SHARE:...... $ 0.205 $ 0.185 $ 0.800 $ 0.710 $ 0.605 $ 0.545 $ 0.488
</TABLE>
9
<PAGE> 18
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Invested Assets....................... $14,677.8 $14,790.3 $14,463.2 $14,909.1 $14,420.5 $11,996.3 $11,814.2
Other Assets.......................... 11,182.8 8,142.3 10,463.7 7,699.6 6,580.3 4,710.7 3,705.0
--------- --------- --------- --------- --------- --------- ---------
Total Assets........................ 25,860.6 22,932.6 24,926.9 22,608.7 21,000.8 16,707.0 15,519.2
Notes and Mortgages Payable........... 829.3 529.5 803.6 509.4 593.5 407.5 422.3
Other Liabilities..................... 22,810.8 20,108.9 21,935.0 19,736.8 18,154.4 14,760.9 13,676.8
--------- --------- --------- --------- --------- --------- ---------
Total Liabilities................... 23,640.1 20,638.4 22,738.6 20,246.2 18,747.9 15,168.4 14,099.1
Trust-Originated Preferred
Securities.......................... 242.7 242.4 242.6 242.3 241.9 120.9 --
Shareholders' Equity
Preferred........................... -- -- -- -- -- -- 68.7
Common.............................. 1,977.8 2,051.8 1,945.7 2,120.2 2,011.0 1,417.7 1,351.4
Book Value Per Common Share........... 22.10 23.12 21.89 23.86 22.24 17.71 17.44
</TABLE>
Note: Certain March 31, 1999 financial data have been reclassified to
conform to current period presentation. See ReliaStar's Quarterly Report on Form
10-Q for the three-month period ended March 31, 2000 for additional information.
10
<PAGE> 19
ING GROUP
The summary selected consolidated financial data for the years ended 1995
through 1999 set forth below are derived from ING Group's consolidated financial
statements and the related Notes set forth in ING's Annual Report on Form 20-F
for the fiscal year ended December 31, 1999. The consolidated financial
statements have been audited by Ernst & Young N.V., ING's independent auditors,
except for the financial statements of ING Bank N.V., a direct wholly owned
subsidiary, which were audited by KPMG Accountants N.V. and whose report, only
insofar as it relates to the 1999 and 1998 consolidated financial statements, is
based in part upon the reports of other auditors. The financial data for the
three-month periods ended March 31, 2000 and 1999 set forth below are derived
from unaudited financial statements of ING Group. The unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
which ING Group considers necessary for a fair presentation of the financial
position and results of operations for these periods. Operating results for the
three months ended March 31, 2000 are not necessarily indicative of the results
that may be expected for the entire year ending December 31, 2000.
These consolidated financial statements are presented in accordance with
generally accepted accounting principles in the Netherlands (Dutch GAAP), which
differ in certain significant respects from generally accepted accounting
principles in the United States (U.S. GAAP). Please refer to Note 6 of Notes to
the ING consolidated financial statements contained in ING's Annual Report on
Form 20-F for the fiscal year ended December 31, 1999 and incorporated by
reference into this prospectus/proxy statement for a description of the
significant differences between Dutch GAAP and U.S. GAAP and a reconciliation of
certain income statement and balance sheet items to U.S. GAAP.
ING presents its consolidated financial statements in euros (EUR), the
currency of the European Economic and Monetary Union, which was introduced on
January 4, 1999.
Prior to January 1, 1999, ING prepared its financial statements in Dutch
guilders. Subsequent to that date, ING's financial statements have been prepared
in euros. All Dutch guilder amounts appearing in or derived from ING's
consolidated financial statements have been translated into euros at the
official fixed conversion rate of EUR 1.00 = NLG 2.20371.
The information below should be read in conjunction with, and is qualified
by reference to, ING Group's consolidated financial statements and the related
Notes contained in the Annual Report on Form 20-F for the fiscal year ended
December 31, 1999, and other financial information included elsewhere in the
Annual Report and this prospectus/proxy statement.
11
<PAGE> 20
ING GROEP N.V. AND SUBSIDIARIES
(in millions, except amounts per share and ratios)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------------------------
2000 2000 1999 1999 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ------ ---------- ------ ------
(RESTATED)
USD(1) EUR EUR USD(1) EUR EUR EUR(8) EUR(9) EUR(9)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DUTCH GAAP CONSOLIDATED INCOME
STATEMENT DATA
Income from insurance operations:
Gross premiums written:
Life.............................. 5,745 6,001 4,149 18,097 18,902 16,863 10,810 7,776 6,736
Non-life.......................... 1,215 1,269 1,085 3,360 3,510 3,585 3,535 3,261 3,025
------ ------ ------ ------ ------ ------ ------ ------ ------
Total............................... 6,960 7,270 5,234 21,457 22,412 20,448 14,345 11,037 9,761
Investment income................... 3,030 3,165 2,380 10,732 11,209 8,370 6,544 5,025 4,359
Commission and other income......... 251 262 160 1,704 1,780 582 274 214 165
------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from insurance
operations........................ 10,241 10,697 7,774 33,893 35,401 29,400 21,163 16,276 14,285
Income from banking operations:
Interest income................... 5,405 5,646 4,682 17,768 18,559 18,649 10,641 9,191 8,336
Interest expense.................. 4,011 4,190 3,238 12,357 12,907 13,448 7,125 5,901 5,496
------ ------ ------ ------ ------ ------ ------ ------ ------
Net interest result................. 1,394 1,456 1,444 5,411 5,652 5,201 3,516 3,290 2,840
Commission.......................... 953 996 622 2,734 2,856 2,323 1,645 1,201 899
Other income........................ 570 595 295 1,751 1,829 1,162 1,225 825 689
------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from banking
operations........................ 2,917 3,047 2,361 9,896 10,337 8,686 6,386 5,316 4,428
TOTAL INCOME(2)....................... 13,157 13,742 10,132 43,778 45,726 38,071 27,531 21,578 18,697
====== ====== ====== ====== ====== ====== ====== ====== ======
EXPENSES FROM INSURANCE OPERATIONS:
LIFE.............................. 7,977 8,332 5,771 25,705 26,849 21,820 15,170 11,030 9,453
NON-LIFE.......................... 1,273 1,330 1,147 3,577 3,736 3,813 3,617 3,378 3,164
INSURANCE
OPERATIONS -- GENERAL(3)........ 360 376 345 1,134 1,184 1,339 733 734 712
------ ------ ------ ------ ------ ------ ------ ------ ------
Total expenses from insurance
operations........................ 9,610 10,038 7,263 30,416 31,769 26,972 19,520 15,142 13,329
Total expenses from banking
operations(4)....................... 2,150 2,246 1,847 7,559 7,895 7,610 5,030 4,349 3,633
TOTAL EXPENSES(2)..................... 11,759 12,282 9,107 37,963 39,652 34,567 24,532 19,476 16,946
====== ====== ====== ====== ====== ====== ====== ====== ======
RESULT BEFORE TAXATION FROM INSURANCE
OPERATIONS:
LIFE.............................. 312 326 270 1,202 1,256 1,075 652 548 498
NON-LIFE.......................... 60 63 37 174 182 157 300 198 154
INSURANCE
OPERATIONS -- GENERAL(3)........ 259 270 204 2,101 2,194 1,196 691 388 304
------ ------ ------ ------ ------ ------ ------ ------ ------
Total............................... 631 659 511 3,477 3,632 2,428 1,643 1,134 956
Result before taxation from banking
operations.......................... 767 801 514 2,338 2,442 1,076 1,356 968 795
------ ------ ------ ------ ------ ------ ------ ------ ------
Result before taxation and dividend on
own shares.......................... 1,398 1,460 1,025 5,815 6,074 3,504 2,999 2,102 1,751
Dividend on own shares................ (44) (33) (27)
------ ------ ------ ------ ------ ------ ------ ------ ------
Result before taxation................ 1,398 1,460 1,025 5,815 6,074 3,504 2,955 2,069 1,724
Taxation.............................. 388 405 231 1,014 1,059 788 714 546 516
Third-party interests................. 31 32 19 89 93 47 35 16 6
------ ------ ------ ------ ------ ------ ------ ------ ------
Net profit............................ 979 1,023 775 4,712 4,922 2,669 2,206 1,507 1,202
Dividend on Preference shares of ING
Groep N.V. ......................... 5 5 5 20 21 21 21 21 21
------ ------ ------ ------ ------ ------ ------ ------ ------
Net profit after deducting dividend on
Preference shares of ING Groep
N.V. ............................... 974 1,018 770 4,692 4,901 2,648 2,185 1,486 1,181
Dividend on ordinary shares........... 1,506 1,573 1,178 867 708 546
Addition to shareholders' equity...... 3,186 3,328 1,470 1,318 778 635
Net profit per ordinary share(5)...... 1.02 1.07 0.81 4.90 5.12 2.84 2.83 2.07 1.74
Net profit per ordinary share and
ordinary share equivalent(5)........ 1.01 1.05 0.80 4.83 5.04 2.79 2.75 1.99 1.69
Dividend per ordinary share........... 1.56 1.63 1.25 1.04 0.91 0.75
Dividend pay-out ratio................ 44.4% 44.4% 43.9% 36.9% 43.9% 43.2%
U.S. GAAP CONSOLIDATED INCOME
STATEMENT DATA
Net profit............................ 3,629 3,790 2,347 2,447 2,121 1,455
Net profit per ordinary share and
ordinary share equivalent(5)........ 3.71 3.88 2.45 3.05 2.81 2.06
</TABLE>
12
<PAGE> 21
ING GROEP N.V. AND SUBSIDIARIES
(in billions, except amounts per share and ratio)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ -----------------------------------------------------------
2000 2000 1999 1999 1999 1998 1997 1996 1995
------ ------ ------ ---------- ----- ------ ---------- ------- ------
(RESTATED)
USD(1) EUR EUR USD(1) EUR EUR EUR(8) EUR(9) EUR(9)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DUTCH GAAP CONSOLIDATED BALANCE
SHEET DATA
Total assets........................ 529.3 552.8 423.8 471.8 492.8 394.9 281.5 220.7(7) 179.8
Investments:
Insurance......................... 136.3 142.4 117.5 131.6 137.5 109.7 94.8 69.0 58.6
Banking........................... 54.9 57.3 41.2 57.0 59.5 41.2 17.8 18.8 12.8
Eliminations(6)................... (1.1) (1.1) (0.6) (1.1) (1.2) (1.1) (1.7) (2.3) (1.6)
------ ------ ------ ------ ----- ------ ------- ------- ------
Total investments................... 190.1 198.6 158.1 187.5 195.8 149.8 110.9 85.5 69.8
Lending............................. 223.6 233.6 167.1 193.2 201.8 153.7 113.8 92.8(7) 75.6
Insurance provisions:
Life.............................. 102.1 106.6 85.6 96.7 101.0 79.4 70.2 50.2 44.1
Non-life.......................... 6.7 7.0 5.8 6.2 6.5 5.2 5.3 4.9 4.4
------ ------ ------ ------ ----- ------ ------- ------- ------
Total............................... 108.8 113.6 91.4 102.9 107.5 84.6 75.5 55.1 48.5
Funds entrusted to and debt
securities of the banking
operations:
Savings accounts of the banking
operations...................... 45.4 47.4 43.5 45.0 47.0 42.5 30.1 30.3 26.2
Other deposits and bank funds..... 132.4 138.3 97.5 107.1 111.9 86.6 57.0 50.0 43.8
Debt securities of the banking
operations...................... 62.5 65.3 36.2 63.1 65.9 35.7 22.7 12.7 10.0
------ ------ ------ ------ ----- ------ ------- ------- ------
Total............................... 240.3 251.0 177.2 215.2 224.8 164.8 109.8 93.0 80.0
Due to banks........................ 95.4 99.6 81.3 72.1 75.3 76.0 43.0 32.9 23.6
Shareholders' equity................ 32.2 33.6 30.1 33.1 34.6 29.1 21.9 16.1(7) 10.8
Shareholders' equity per ordinary
share(5).......................... 33.50 35.00 31.30 34.28 35.81 30.42 26.59 21.25(7) 15.12
Shareholders' equity per ordinary
share and ordinary share
equivalent(5)..................... 33.00 34.48 30.75 33.79 35.29 29.85 25.87 20.43(7) 14.71
U.S. GAAP CONSOLIDATED BALANCE SHEET
DATA
Total assets........................ 488.0 509.7 417.4 295.3 230.4 187.5
Shareholders' equity................ 38.7 40.4 37.2 26.5 18.9 13.0
Shareholders' equity per ordinary
share and ordinary share
equivalent(5)..................... 39.53 41.29 38.29 31.31 24.18 17.77
</TABLE>
-------------------------
(1) Euro amounts have been translated into U.S. dollars at the exchange rate of
$0.9574 to EUR 1.00, the Noon Buying Rate in New York City on March 31, 2000
for cable transfers in euros as certified for customs purposes by the
Federal Reserve Bank of New York.
(2) After elimination of certain intercompany transactions between the insurance
operations and the banking operations. See Note 1.2. of Notes to the
consolidated financial statements contained in ING's Annual Report on Form
20-F for the fiscal year ended December 31, 1999.
(3) Insurance operations -- general includes the results of insurance holding
companies and non-insurance companies included within ING Insurance, as well
as income from investments allocated to the capital and surplus of ING
Group's insurance companies. See Note 3.6.4. of Notes to the consolidated
financial statements contained in ING's Annual Report on Form 20-F for the
fiscal year ended December 31, 1999.
(4) Includes all non-interest expenses, including additions to the provision for
loan losses. See Item 9, "Management's discussion and analysis of results of
operations and financial condition -- Liquidity and capital resources" in
ING's Annual Report on Form 20-F for the fiscal year ended December 31,
1999.
(5) Net profit per share amounts have been calculated based on the weighted
average number of ordinary shares outstanding and shareholders' equity per
share amounts have been calculated based on the number of ordinary shares
outstanding at the end of the respective periods. For purposes of this
calculation, for the years 1995, 1996, 1997 and 1999, ING Group shares held
by ING Group companies were deducted from the applicable number of
outstanding ordinary shares. All amounts are presented after giving effect
to all stock dividends and retroactive application of ING Group's 2.5 for 1
stock split, which was effective June 3, 1996.
(6) Consisting of investments in banking operations held by ING Group insurance
companies, investments in insurance operations held by ING Group banking
companies, and ING Group shares held by ING Group insurance companies.
(7) With effect from the 1997 financial year, a part of the hidden reserve has
been included in the new Fund for general banking risk, the remainder being
added to Shareholders' equity. In the balance sheet of 1996 the comparative
figures have been restated accordingly.
(8) See for explanation about restating the 1997 published figures Note 1.3. of
the Notes to the consolidated financial statements in ING Group's Annual
Report on Form 20-F for the fiscal year ended December 31, 1999.
(9) The 1996 and 1995 figures are not restated as it is not practicable to
obtain the information.
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<PAGE> 22
RISK FACTORS
In addition to the other information in this prospectus/proxy statement,
participants in the ESOP, which will receive ING ADSs in the merger, should
consider carefully the following factors in evaluating the merger:
HOLDERS OF ADSS WILL HAVE SUBSTANTIALLY DIFFERENT LEGAL RIGHTS THAN HOLDERS OF
RELIASTAR COMMON STOCK
As a result of the merger, shares of ReliaStar common stock held by the
ESOP will be exchanged for ING American Depositary Shares representing bearer
receipts, which in turn represent ordinary shares of ING. The legal rights of
holders of bearer receipts differ in material respects, and may, in some
regards, be more limited, than the legal rights of holders of ReliaStar common
stock.
For example, while holders of the bearer receipts represented by the ADSs
are entitled to attend and speak at General Meetings of Shareholders, they
generally have no voting rights, and the Stichting Administratiekantoor ING
Groep, the trust which holds the ING ordinary shares, will exercise the voting
rights attached to the ordinary shares for which bearer receipts have been
issued. In certain limited circumstances, an individual holder of bearer
receipts may obtain voting rights by proxy from the trust. However, because the
ESOP is not a natural person, shares held through the ESOP will not be able to
be voted in this manner. The trust is required to make use of the voting rights
attached to the ordinary shares in such a manner that (i) the interests of ING
Group and of the enterprises sustained by, or affiliated with, ING Group are
served; (ii) the interests of ING Group and those enterprises and all parties
concerned are safeguarded as well as possible; and (iii) influences which could
violate the independence, the continuity or the identity of ING Group and those
enterprises contrary to the aforementioned interests are barred to the greatest
extent possible. The trust may, but has no obligation to, consult with the
holders of bearer receipts or ADSs in exercising its voting rights in respect of
ordinary shares.
To learn more about the differences between the rights of holders of
ReliaStar common stock and holders of ADSs, see "Comparison of Shareholder
Rights" on page 52.
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<PAGE> 23
THE SPECIAL MEETING
GENERAL INFORMATION
ReliaStar is delivering this prospectus/proxy statement to you and other
ReliaStar shareholders in connection with the solicitation of proxies by
ReliaStar's board of directors for use at the special meeting of shareholders to
be held on Thursday, July 27, 2000, and at any adjournments or postponements of
that meeting. The special meeting has been called for the purpose of voting upon
a proposal to adopt the merger agreement. This prospectus/proxy statement also
constitutes the prospectus of ING with respect to the ING ADSs to be issued to
ESOP in the merger.
The merger will be accomplished by a merger of ReliaStar with a wholly
owned subsidiary of ING America Insurance Holdings, Inc. ReliaStar will be the
surviving corporation in the merger and will become a wholly owned subsidiary of
ING America.
DATE, TIME, PLACE, AND PURPOSE OF THE MEETING
The special meeting of ReliaStar's shareholders will be held at 10:00 a.m.,
local time, on Thursday, July 27, 2000 in the auditorium at ReliaStar's
Minneapolis headquarters, 20 Washington Avenue South, Minneapolis, Minnesota
55401. At the meeting, ReliaStar shareholders at the close of business on the
record date of June 16, 2000 will be asked to adopt the merger agreement. No
other business will be conducted at the meeting.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of ReliaStar common stock at the close of business
on the record date are entitled to vote at the meeting. As of that time, there
were approximately 90,192,960 shares of ReliaStar common stock outstanding and
entitled to vote, which were held by approximately 20,898 record holders.
QUORUM
The required quorum for the transaction of business at the meeting is a
majority of the approximately 90,192,960 shares of ReliaStar common stock
outstanding on the record date.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of ReliaStar
common stock is required to approve the merger agreement and the merger. Each
shareholder is entitled to one vote per share. As of the record date,
approximately 3.75% of the outstanding shares entitled to vote were held by
ReliaStar's directors, executive officers, and their affiliates.
ABSTENTIONS; BROKER NON-VOTES
For purposes of a quorum, shares are counted as present at the meeting if a
shareholder entitled to vote is present and votes in person at the meeting, has
submitted a properly signed proxy, or has properly voted by telephone or via the
Internet. Abstentions count toward a quorum. However, abstentions will be
treated as having voted against the adoption of the merger agreement.
Broker non-votes also count toward a quorum. A "broker non-vote" happens
when a nominee, such as a bank or a broker, that holds shares on behalf of a
beneficial owner has not received voting instructions from the beneficial owner
on a specific proposal and does not have discretionary voting authority to vote
on such proposal. Broker non-votes have the effect of votes against the adoption
of the merger agreement.
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<PAGE> 24
VOTING AND PROXIES
The proxy accompanying this prospectus/proxy statement is solicited on
behalf of the ReliaStar board of directors.
All shareholders of record may vote by mail. Shareholders of record may
vote in person at the meeting or vote by proxy card, by telephone, or by the
Internet. Beneficial owners will receive instructions from their bank, broker,
or other nominee describing how to vote their shares. Such shareholders can vote
by telephone or by Internet if these options are offered by the bank, broker, or
other nominee.
Voting by Mail. Shareholders of record may sign, date, and mail their
proxies in the enclosed postage paid envelope. If you sign, date, and mail
your proxy card without indicating how you want to vote, your proxy will be
voted FOR the merger proposal.
Voting by Telephone. Shareholders of record may vote by using the
toll-free number and following the instructions listed on the proxy card.
Voting via the Internet. Shareholders of record may vote via the Internet
as instructed on the proxy card.
Please note, however, that if your shares are held of record by a broker,
bank, or other nominee and you wish to vote at the meeting, you must bring to
the meeting a letter from the broker, bank, or other nominee confirming your
beneficial ownership of your shares.
Separate voting cards are furnished to plan participants under the ESOP.
Voting cards executed by plan participants will serve as voting instructions to
Northern Trust Company, the trustee for this plan, for shares allocated to that
participant's account.
The trustee must vote all shares in the ESOP. The trustee must vote any
allocated shares for which it does not receive instructions, as well as
unallocated shares, in the same proportion as the shares for which instructions
are received. The trustee's obligation to follow participants' voting
instructions is subject to the trustee's fiduciary duty under the Employee
Retirement Income Security Act of 1974, as amended, to ensure that such
obligation does not violate ERISA.
HOW TO REVOKE YOUR PROXY
Whether you vote by mail, telephone, or the Internet, you may revoke your
proxy at any time before it is exercised at the meeting, by taking any of the
following actions:
- notifying ReliaStar's Corporate Secretary in writing at 20 Washington
Avenue South, Minneapolis, Minnesota 55401;
- voting in person at the meeting;
- returning a later-dated proxy; or
- voting again by telephone or the Internet at a later time.
Participants in the ESOP will receive instructions on how to change their
votes together with their voting cards.
EXPENSES OF PROXY SOLICITATION
ReliaStar will pay the expenses of soliciting proxies to be voted at the
meeting. Following the original mailing of the proxies and other soliciting
materials, ReliaStar may also solicit proxies by mail, telephone, facsimile, or
in person. Georgeson Shareholder Communication, Inc. was hired by
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<PAGE> 25
ReliaStar to assist in the distribution of proxy materials and solicitation of
votes for a fee of $10,000 plus out-of-pocket expenses.
Following the original mailing of the proxies and other soliciting
materials, ReliaStar will request brokers, custodians, nominees, and other
record holders of common stock to forward copies of the proxy and other
soliciting materials to persons for whom they hold shares of common stock and to
request authority for the exercise of proxies. Upon the request of the record
holders, ReliaStar will reimburse them for their reasonable expenses.
THE MERGER
BACKGROUND OF THE MERGER
Over the years, ReliaStar has engaged in a rigorous planning process
whereby it establishes sales and earning objectives as well as budgets
investments for developmental expenditures in such areas as information systems
and branding. ReliaStar had been successful in meeting the 13% annual growth in
earnings objective established through this planning process, but in 1998
management became concerned regarding ReliaStar's ability to maintain a
competitive product cost structure and its ability to make required investments
in information systems and branding. In the spring of 1998 management appointed
a small group of ReliaStar executives to evaluate ReliaStar's overall operating
environment. In June 1998, this group reported to ReliaStar's management and
board of directors the following findings:
- The enactment of financial services deregulation legislation was
inevitable and would lead to increasing consolidation in the industry.
- Consolidation would place increasing pressure on ReliaStar's product cost
structure.
- Significant investments in information systems and branding would be
required to thrive in an increasingly competitive environment.
- ReliaStar should anticipate its eventual combination with a larger
financial services company and should review potential candidates.
Following this report, management considered a number of strategic
alternatives including mergers of equals with comparably sized insurers and
mergers with larger financial institutions. Beginning in late 1998, management
engaged in preliminary discussions with several such potential merger partners.
None of these discussions gave rise to indications of interest that were
acceptable to the ReliaStar board of directors. John G. Turner, ReliaStar's
Chairman and Chief Executive Officer, regularly briefed the board of directors
regarding these preliminary discussions.
During the third quarter of 1999, ReliaStar experienced volatility in its
reinsurance business, and the market value of its stock declined substantially.
In addition, the Gramm-Leach-Bliley Act, which, among other things, deregulated
financial service company affiliations, was enacted on November 12, 1999. In
response to these circumstances, ReliaStar decided to accelerate its search for
a partner and retained Merrill Lynch to assist in the identification and
evaluation of potential partners.
During this period, management and its advisors evaluated potential merger
partners, some of which were identified by management and some of which were
identified by Merrill Lynch, based upon a number of considerations including:
- the potential to provide the greatest shareholder value;
- opportunities to maximize cross-sales within the combined entity and thus
enhance value;
- opportunities to retain the value inherent in ReliaStar's distribution
capability;
17
<PAGE> 26
- opportunities to leverage ReliaStar's market position in both the retail
and worksite markets; and
- opportunities provided to ReliaStar's employees.
During this same period, ReliaStar engaged in high-level management
discussions with six companies, including ING, regarding the potential benefits
of a business combination transaction. Each of these companies executed a
customary confidentiality agreement, including in some instances standstill
restrictions prohibiting the other party from making an unsolicited offer for
ReliaStar, ranging in duration from 12 to 24 months, with ReliaStar.
Throughout this period, Mr. Turner provided detailed briefings to the board
of directors at its regularly scheduled meetings as well as through periodic
telephone conversations with individual directors. In January 2000, ReliaStar
retained McKinsey & Co. to assist in the identification and evaluation process
to review both financial services companies as well as companies outside of the
financial services industry as potential merger partners. Management held a
number of meetings with the McKinsey staff where potential candidates were
discussed.
During the first months of 2000, high-level management discussions
continued with several of the companies that had executed confidentiality
agreements. These discussions involved an evaluation of expense-savings
potential, a comparison of strategies and preliminary analysis of cross-sales
opportunities. Three of the companies chose to discontinue discussions without
providing any pricing indications.
On April 15, 2000 management gave a detailed presentation to the board of
directors regarding the research into, evaluation of, and discussions with,
potential merger partners. During this meeting management detailed the
evaluation process and summarized the discussions that had been held with
potential merger partners. Management also detailed the review process
undertaken by Merrill Lynch and McKinsey. A representative from Merrill Lynch
participated in the board of directors meeting by telephone.
Management reported that it had identified three potentially attractive
merger partners: a domestic insurance holding company, a domestic diversified
financial services company, and ING. Mr. Turner advised the board that the
preliminary pricing indication from the domestic insurer, which was
significantly below ING's final offer of $54.00 per share, was unacceptably low
and that this potential candidate had indicated that it would not raise its
price. Mr. Turner thus recommended that discussions with that company be
discontinued and the board of directors agreed. Mr. Turner further noted that
the preliminary pricing indications from the other two companies were within a
range which merited further discussion. Mr. Turner then gave a detailed review
of the comparative benefits of affiliation with each of the other two companies
and the implications of the synergies relative to the objective of maximizing
shareholder value. Mr. Turner indicated that it was management's recommendation
that it be authorized to engage in further discussions with each of these
companies in order to better evaluate the benefits of a combination. Mr. Turner
indicated that ReliaStar would provide both companies with detailed information
regarding potential incremental value that could be realized through increased
sales of the combined company's products and expense reductions. The board of
directors then directed management to continue negotiations with the two
remaining companies.
In the week following the April 15, 2000 board of directors meeting,
management met with representatives of each of the two companies and provided
detailed information regarding potential cross-sales and expense saving
opportunities. Management subsequently requested that each party submit a
non-binding indication of interest, including pricing information. On April 19,
2000, ReliaStar received these indications of interest from both parties. On
April 20, 2000, the board of directors met by teleconference to discuss the two
indications of interest, including ING's proposal for
18
<PAGE> 27
a cash transaction and the other company's proposal for a stock-for-stock
transaction. ING's proposal was for a cash acquisition at $52.00 per share,
whereas the other company proposed a stock merger with a fixed exchange ratio
having an implied value, as of April 20, 2000, of less than $52.00 per share.
The board of directors discussed the competing proposals, including the
certainty of valuation inherent in ING's cash proposal as compared with the
market risk inherent in the alternative proposal. After discussion, the board of
directors authorized management to enter into an exclusive due diligence and
negotiating arrangement with ING if ING would raise its cash bid to $54.00 per
share. Based upon ING's agreeing to increase its indication to $54.00 per share,
ReliaStar entered into a letter agreement dated April 25, 2000 granting ING a
six-day period of exclusive negotiation rights.
ING engaged in a comprehensive due diligence investigation of ReliaStar,
including both management briefings and document review during the week of April
24, 2000.
Counsel for ING delivered a draft merger agreement to ReliaStar and its
counsel on April 25, 2000. From April 25, 2000 to ReliaStar's April 29, 2000
board of directors meeting, the parties and their respective counsel negotiated
the terms of that agreement. During these negotiations, ReliaStar and ING agreed
that it was in their mutual interest, as well as in the best interests of the
ESOP participants, to have each share of ReliaStar held by the ESOP converted in
the merger into $54.00 worth of ING American Depositary Shares, rather than
$54.00 in cash.
The negotiated merger agreement was submitted in draft form to the board of
directors for its consideration in a special meeting of the board of directors
on April 29, 2000. During that meeting, management, with the assistance of its
legal counsel, reviewed the terms of the agreement and an associated stock
option agreement and the legal duties of the board of directors in acting on the
proposal. The board of directors also received a detailed financial presentation
from Merrill Lynch, which concluded with that firm's oral opinion (subsequently
confirmed in writing on April 30, 2000) that as of the date of the opinion the
consideration to be received by ReliaStar shareholders under the agreement was
fair from a financial point of view. After discussion, the board of directors
approved the merger agreement and the related stock option agreement and
resolved to recommend that ReliaStar shareholders vote for the adoption of the
merger agreement at a meeting of the ReliaStar shareholders to be held for that
purpose. On April 30, 2000 the merger agreement and the stock option agreement
were executed by all parties.
On June 27, 2000, in connection with an agreement in principle to settle
certain shareholder litigation related to the merger, ING and ReliaStar entered
into Amendment No. 1 to the merger and stock option agreements. See the section
entitled "Litigation Challenging the Merger" for additional discussion of this
settlement.
FINANCIAL PROJECTIONS
ReliaStar does not as a matter of course make public projections as to its
future earnings or financial position. However, in connection with the
discussions concerning the proposed merger, ReliaStar furnished to ING certain
financial projections for ReliaStar prepared by its management.
These projections included projections of consolidated financial
information for the 2000, 2001 and 2002 fiscal years. ReliaStar's operating
income was projected to be $326.8 million on a consolidated basis, $3.63 on a
basic per share basis and $3.56 on a diluted per share basis in 2000, $383.6
million on a consolidated basis, $4.19 on a basic per share basis and $4.10 on a
diluted per share basis in 2001, and $447.4 million on a consolidated basis,
$4.83 on a basic per share basis and $4.72 on a diluted per share basis in 2002.
ReliaStar's net realized investment losses were projected to be $14.6 million on
a consolidated basis and $0.16 on both a basic and a diluted per share basis in
2000, and $16.7 million on a consolidated basis and $0.18 on both a basic and a
diluted per share
19
<PAGE> 28
basis in each of 2001 and 2002. ReliaStar's net income was projected to be
$312.2 million on a consolidated basis, $3.47 on a basic per share basis and
$3.40 on a diluted per share basis in 2000, $366.9 million on a consolidated
basis, $4.01 on a basic per share basis and $3.92 on a diluted per share basis
in 2001, and $430.7 million on a consolidated basis, $4.65 on a basic per share
basis and $4.54 on a diluted per share basis in 2002.
The above projections were not prepared with a view to public disclosure
and are included in this prospectus/proxy statement only because this
information was made available to ING. The projections were not prepared with a
view to compliance with published guidelines of the SEC or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections or forecasts. Neither ReliaStar's independent auditors nor any other
independent accountants have compiled, examined, or performed any procedures
with respect to the projections. Although presented with numeric specificity,
the projections reflect numerous assumptions made by ReliaStar's management with
respect to industry performance, general business, economic, market and
financial conditions and other matters, including assumed effective interest
rates and effective tax rates consistent with historical levels for ReliaStar,
all of which are difficult to predict, many of which are beyond ReliaStar's
control and none of which were subject to approval by ING. Accordingly, there
can be no assurance that the assumptions made in preparing these projections
will prove accurate, and actual results may be materially greater or less than
those contained in the projections.
For these reasons, as well as the bases and assumptions on which the
projections were compiled, the inclusion of these projections in this
prospectus/proxy statement should not be regarded as an indication that
ReliaStar or ING or any of their respective affiliates or representatives
considers such information to be an accurate prediction of future events, and
the projections should not be relied on as such. Neither ReliaStar nor ING nor
any of their respective affiliates or representatives has made, or makes, any
representation to any person regarding the information contained in the
projections and none of them intends to update or otherwise revise the
projections to reflect circumstances existing after the date when made or to
reflect the occurrences of future events.
RELIASTAR'S REASONS FOR THE MERGER
The ReliaStar board of directors, in reaching its decision to approve the
merger agreement, consulted with its legal counsel and financial advisers as
well as with ReliaStar's management and considered many factors, including the
following material factors:
1. The per-share consideration of $54.00 to be received at closing by
all ReliaStar shareholders was the highest value offered by any of
the potential merger partners with which ReliaStar held
discussions. The $54.00 value represents a premium of 75% over the
closing price of ReliaStar stock on April 27, 2000, the last
trading day before the day on which ReliaStar publicly announced
that it was in merger negotiations, and a premium of 84.5% over the
60-day average of ReliaStar's closing stock price per share as of
April 27, 2000.
2. The cash merger consideration, although generally taxable, provides
certainty of value when compared to a stock merger having a fixed
exchange ratio.
3. Each share of ReliaStar common stock held by the ESOP will be
converted into a number of ADSs of ING Group equal to $54.00
divided by the average closing price of the American Depositary
Shares over the ten trading day period ending on the last trading
day prior to the completion of the merger. The exchange of the
ESOP's shares for ADSs will provide approximately the same value
for those shares as for those receiving cash consideration, while
ensuring that the ADSs retain the low tax basis of the ReliaStar
shares for which they are being exchanged. This will preserve the
availability of
20
<PAGE> 29
favorable capital gains tax treatment if an employee terminates
employment and receives ADSs from the ESOP as part of a lump-sum
distribution. The exchange of shares for ADSs also will provide
favorable accounting treatment for the combined entity.
4. Merrill Lynch's oral fairness opinion delivered to ReliaStar's board
of directors on April 29, 2000 (subsequently confirmed in writing on
April 30, 2000) to the effect that as of the date of the opinion, the
consideration to be received by ReliaStar shareholders under the
merger agreement was fair, from a financial point of view, to such
shareholders.
5. All of the reasons described above under "Background of the Merger"
including the following:
(a) the need to attain critical mass in ReliaStar's businesses in
order to maintain competitive product pricing;
(b) the current regulatory environment, in which ReliaStar would be
competing against companies with substantially more resources
than ReliaStar;
(c) the need to increase investments in information systems,
particularly Internet-based initiatives;
(d) the need to increase investments in branding;
(e) the need to better leverage ReliaStar's distribution capabilities
in both the retail and worksite marketplaces; and
(f) the shareholder value to be derived from the transaction with ING
relative to ReliaStar's prospects as a stand-alone entity and the
prospects of a business combination with a company other than
ING, in light of the fact that no other party submitted an offer
with a price superior to ING's.
6. The transaction with ING contained no financing condition, and
ReliaStar management's belief that the ING transaction would be
reasonably likely to receive the required regulatory approvals.
7. The terms and conditions of the merger agreement, including the
ReliaStar board of directors' right to terminate the merger agreement
with ING in response to a superior third-party acquisition offer,
should one be presented.
ReliaStar's board of directors also considered potential drawbacks or risks
relating to the merger, including the following:
1. The risk that the merger may not be consummated and the potential
effects the failure to consummate the merger may have on the
business, employees, and customers of ReliaStar.
2. The expenses expected to be incurred by ReliaStar in connection with
the merger.
3. The risk that the stock option agreement and the termination-fee
provisions of the merger agreement, each of which were required by
ING as a condition to its entering into the merger agreement, could
deter potential third-party bidders.
The lists provided above contain all of the material factors considered by
ReliaStar's board of directors. In view of the wide variety of factors
considered in connection with its evaluation of the merger, the ReliaStar board
of directors did not find it practicable to, and did not, quantify or assign any
relative or specific weights to the factors listed above. Individual directors
may have viewed different factors to be more significant than others. The
ReliaStar board of directors considered all of
21
<PAGE> 30
these factors as a whole, and concluded overall that the merger was attractive
to and in the best interests of ReliaStar's shareholders.
RECOMMENDATION OF RELIASTAR'S BOARD OF DIRECTORS
For the reasons discussed above, the ReliaStar board of directors approved
the merger and the merger agreement and determined that the merger is advisable
and fair to, and in the best interests of, ReliaStar and its shareholders.
Accordingly, the ReliaStar board of directors unanimously recommends that
ReliaStar shareholders vote "FOR" adoption of the merger agreement.
In considering the recommendation of ReliaStar's board of directors with
respect to the merger, you should be aware that certain officers and directors
of ReliaStar have certain interests in the merger that are different from, or
are in addition to, the interests of ReliaStar's shareholders generally.
ReliaStar's board of directors was aware of the nature of these interests before
considering the merger. Please see the section entitled "Interests of Certain
Persons in the Merger" for a discussion of these interests.
OPINION OF FINANCIAL ADVISER
On April 29, 2000, Merrill Lynch delivered to ReliaStar's board of
directors its oral opinion, which was subsequently confirmed in writing on April
30, to the effect that, as of the date of such opinion, and based upon and
subject to the factors and assumptions set forth in the opinion, the
consideration to be received by the holders of ReliaStar common stock, other
than the ESOP, pursuant to the merger was fair from a financial point of view to
those holders, and the consideration to be received by the ESOP pursuant to the
merger was fair from a financial point of view to the ESOP.
THE FULL TEXT OF MERRILL LYNCH'S FAIRNESS OPINION, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY MERRILL LYNCH, IS ATTACHED AS APPENDIX C AND IS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS/PROXY STATEMENT. THE SUMMARY OF
MERRILL LYNCH'S FAIRNESS OPINION SET FORTH IN THIS PROSPECTUS/PROXY STATEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF MERRILL LYNCH'S
FAIRNESS OPINION. RELIASTAR SHAREHOLDERS ARE URGED TO READ THE OPINION CAREFULLY
AND IN ITS ENTIRETY.
Merrill Lynch's fairness opinion was provided to ReliaStar's board of
directors for its information and is directed only to the fairness from a
financial point of view to the holders of ReliaStar common stock, other than the
ESOP, of the consideration to be received by those holders in the merger, and to
the fairness from a financial point of view to the ESOP of the consideration to
be received by the ESOP in the merger. Merrill Lynch's fairness opinion does not
address any other aspect of the merger, including the merits of the underlying
decision by ReliaStar to engage in the merger, and does not constitute a
recommendation to any ReliaStar shareholder as to how such shareholder should
vote on the proposed merger agreement or any related matter. Merrill Lynch is
not acting as financial advisor to the ESOP or the administrators of the ESOP,
and the Merrill Lynch opinion is not intended for the use or benefit of the ESOP
or the administrators of the ESOP in connection with any legal requirement
applicable to the ESOP or the administrators of the ESOP.
In arriving at its opinion, Merrill Lynch, among other things:
- reviewed publicly available business and financial information relating
to ReliaStar and ING that Merrill Lynch deemed to be relevant;
- reviewed information, including financial forecasts, relating to the
business, earnings, cash flow, assets, liabilities and prospects of
ReliaStar and ING furnished to Merrill Lynch by ReliaStar and ING,
respectively;
22
<PAGE> 31
- conducted discussions with members of senior management of ReliaStar and
ING concerning the above two matters, as well as ReliaStar's and ING's
respective businesses and prospects before and after giving effect to the
merger;
- reviewed the market prices and valuation multiples for ReliaStar common
stock and the ING ADSs and compared them with those of certain publicly
traded companies that Merrill Lynch deemed to be relevant;
- reviewed the results of operations of ReliaStar and ING and compared them
with those of certain publicly traded companies that Merrill Lynch deemed
to be relevant;
- compared the proposed financial terms of the merger with the financial
terms of other transactions that Merrill Lynch deemed to be relevant;
- participated in discussions and negotiations among representatives of
ReliaStar and ING and their financial and legal advisors;
- reviewed the potential pro forma impact of the merger;
- reviewed the merger agreement; and
- reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly
available, and Merrill Lynch has not assumed any responsibility for
independently verifying such information. Merrill Lynch has not undertaken an
independent evaluation or appraisal of any of the assets or liabilities of
ReliaStar or ING or been furnished with any such evaluation or appraisal. In
addition, Merrill Lynch has not assumed any obligation to conduct any physical
inspection of the properties or facilities of ReliaStar or ING. With respect to
the financial forecast information furnished to or discussed with Merrill Lynch
by ReliaStar or ING, Merrill Lynch assumed that it had been reasonably prepared
and reflected the best available estimates and judgment of ReliaStar's or ING's
management as to the expected future financial performance of ReliaStar or ING,
as the case may be. Merrill Lynch further assumed that, in connection with the
merger, ReliaStar, the ESOP, and the administrators of the ESOP complied with
all legal requirements applicable to the ESOP.
Merrill Lynch's fairness opinion is necessarily based on market, economic
and other conditions as they existed and could be evaluated on, and on the
information made available to Merrill Lynch as of, the date of the opinion.
Merrill Lynch did not express any opinion as to the prices at which
ReliaStar common stock or the ING ADSs (or related securities) will trade
following the announcement or consummation of the merger.
In preparing its opinion to ReliaStar's board of directors, Merrill Lynch
performed financial and comparative analyses, including those described below.
The summary of analyses set forth in this prospectus/proxy statement does not
purport to be a complete description of the analyses underlying Merrill Lynch's
fairness opinion or the presentation made by Merrill Lynch to ReliaStar's board
of directors. The preparation of a fairness opinion is a complex analytic
process involving various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. No company, business or
transaction used in such analyses as a comparison is identical to ReliaStar, ING
or the merger, nor is an
23
<PAGE> 32
evaluation of the results of such analyses entirely mathematical, rather it
involves complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
being analyzed.
In arriving at its opinion, Merrill Lynch did not attribute any particular
weight to any analysis or factor considered by it, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, Merrill Lynch believes that its analyses must be considered as a
whole and that selecting portions of its analyses, without considering all
analyses, would create an incomplete view of the process underlying its opinion.
In performing these analyses, numerous assumptions were made with respect
to industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Merrill
Lynch, ReliaStar, or ING. The estimates contained in the analyses performed by
Merrill Lynch and the ranges of valuations resulting from any particular
analysis are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than those
suggested by such analyses. Additionally, estimates of the value of businesses
or securities do not purport to be appraisals or to reflect the prices at which
such businesses or securities might actually be sold. Accordingly, such analyses
and estimates are inherently subject to substantial uncertainty. In addition, as
described above, Merrill Lynch's fairness opinion was among several factors
taken into consideration by ReliaStar's board of directors in making its
determination to approve the merger agreement and the merger. Consequently, the
Merrill Lynch analyses described below should not be viewed as determinative of
the decision of ReliaStar's board of directors or ReliaStar's management with
respect to the fairness of the consideration paid in connection with the merger.
The following is a summary of the material financial and comparative
analyses performed by Merrill Lynch in arriving at its opinion and presented to
ReliaStar's board of directors. The Merrill Lynch opinion is based upon Merrill
Lynch's consideration of the collective results of all such analyses, together
with the other factors referred to in its opinion letter.
Market Premiums
In the merger, each outstanding share of ReliaStar common stock, other than
shares held by the ESOP, will be converted into $54.00 cash. Instead of the cash
payment, each share of ReliaStar common stock held by the ESOP will be converted
into a number of American Depositary Shares of ING Group equal to $54.00 divided
by the average closing price of the American Depositary Shares over the ten
trading day period ending on the last trading day prior to the completion of the
merger. Merrill Lynch compared a price of $54.00 per share of ReliaStar common
stock to certain historical and average closing prices of ReliaStar common stock
over a range of time periods, as set forth below, calculating in each case the
premium represented by $54.00.
24
<PAGE> 33
<TABLE>
<CAPTION>
RELIASTAR COMMON PREMIUM OF
PERIOD STOCK PRICE $54.00 TO PRICE
------ ---------------- ---------------
<S> <C> <C>
Closing price (4/27/00).................................. $30.81 75.3%
5 trading day average closing price through 4/27/00...... $29.77 81.4%
10 trading day average closing price through 4/27/00..... $29.41 83.6%
15 trading day average closing price through 4/27/00..... $29.74 81.5%
20 trading day average closing price through 4/27/00..... $29.81 81.2%
30 trading day average closing price through 4/27/00..... $30.52 76.9%
60 trading day average closing price through 4/27/00..... $29.26 84.5%
90 trading day average closing price through 4/27/00..... $30.12 79.3%
360 trading day average closing price through 4/27/00.... $38.36 40.8%
52 Week High (7/16/99)................................... $49.25 9.6%
</TABLE>
Publicly Traded Comparable Company Analysis
Merrill Lynch compared publicly available financial, operating and stock
market information, and forecasted financial information for ReliaStar and
selected other publicly traded companies in the United States life insurance
sector considered by Merrill Lynch to be reasonably comparable to ReliaStar for
the purposes of this analysis. These selected comparable companies were:
- AXA Financial, Inc.
- American General Corporation
- AFLAC Incorporated
- Hartford Life, Inc.
- Jefferson-Pilot Corporation
- Lincoln National Corporation
- Nationwide Financial Services, Inc.
- Torchmark Corporation
- Allmerica Financial Corporation
- Conseco, Inc.
- UnumProvident Corporation
- Protective Life Corporation
For ReliaStar and the selected comparable companies Merrill Lynch derived and
compared, among other things:
- the multiple of each company's closing common share price on April 27,
2000, to (1) 1999 earnings per share (which is referred to as EPS), (2)
estimated 2000 EPS, and (3) estimated 2001 EPS; and
- the ratio of each company's closing common share price on April 27, 2000,
to its per-share book value as of December 31, 1999.
Merrill Lynch performed the calculations described above based upon closing
common share prices on April 27, 2000, which for ReliaStar common stock was
$30.81. In addition, for ReliaStar, Merrill Lynch performed the calculations
based on a value of $54.00 per share. Forecasted
25
<PAGE> 34
information for the comparable companies was based on information published by
First Call Corporation, which compiles summaries of financial forecasts made by
various investment banking firms. For ReliaStar, Merrill Lynch used a per-share
Book Value (ex-115) as of December 31, 1999 of $23.10, and First Call
Corporation estimates of EPS for 2000 and 2001 of $3.46 and $3.88, respectively.
Book value information excluded adjustments required by Financial Accounting
Standards Board Statement 115, which requires securities classified as
available-for-sale to be reported at fair value, with unrealized gains and
losses reported in a separate component of shareholders equity. Book value
information excluding such adjustments is referred to in this summary as Book
Value (ex-115). All per share calculations were based on the number of fully
diluted shares outstanding.
The following table sets forth the results of these analyses:
<TABLE>
<CAPTION>
COMPARABLE COMPANIES AT
APRIL 27, 2000 CLOSING PRICE
RANGE MEAN MEDIAN
<S> <C> <C> <C>
THE RATIO OF CLOSING COMMON
SHARE PRICE TO:
1999 EPS 2.2x - 24.3x 11.4x 10.6x
2000 estimated EPS 2.8x - 20.9x 10.1x 9.0x
2001 estimated EPS 2.3x - 17.7x 8.9x 8.1x
THE RATIO OF CLOSING COMMON
SHARE PRICE TO:
Per-share Book Value
(ex-115) as of December 31,
1999 0.48x - 4.54x 1.82x 1.5x
<CAPTION>
RELIASTAR
AT APRIL 27, AT MERGER
2000 CLOSING PRICE OF
PRICE ($30.81) $54.00
<S> <C> <C>
THE RATIO OF CLOSING COMMON
SHARE PRICE TO:
1999 EPS 10.8x 18.9x
2000 estimated EPS 8.9x 15.6x
2001 estimated EPS 7.9x 13.9x
THE RATIO OF CLOSING COMMON
SHARE PRICE TO:
Per-share Book Value
(ex-115) as of December 31,
1999 1.33x 2.34x
</TABLE>
Merrill Lynch noted in particular that using $54.00 per share, the
multiples of common share price to EPS and the ratio of common share price to
Book Value (ex-115) derived for ReliaStar, in each case, were higher than the
mean and median for the comparable companies.
Merrill Lynch also derived implied equity values for the common stock of
ReliaStar based on the median and mean of the ratios derived for the comparable
companies. The following table sets forth the results of these analyses:
<TABLE>
<CAPTION>
COMPARABLE RELIASTAR COMPANIES' RELIASTAR
COMPANIES' IMPLIED COMPARABLE IMPLIED
RATIO OF CLOSING COMMON SHARE PRICE TO: MEDIAN VALUE MEAN VALUE
<S> <C> <C> <C> <C>
2000 estimated EPS 9.0x $31.14 10.1x $34.97
2001 estimated EPS 8.1x $31.36 8.9x $34.51
Per-share Book Value (ex-115) as of
December 31, 1999 1.5x $34.56 1.82x $42.07
</TABLE>
Using the above analyses, Merrill Lynch derived a range of the implied
equity value of ReliaStar common stock of $31.14 to $42.07. Merrill Lynch noted
that $54.00 exceeded the upper limit of this range.
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<PAGE> 35
Acquisition Comparable Analysis
Merrill Lynch reviewed certain available information relating to eleven
merger and acquisition transactions in the United States life insurance sector
announced since August 1996. The transactions selected by Merrill Lynch were the
following (in each case, the acquiror's name is listed first and the acquired
company's name is listed second): (1) AmerUs Life Holdings, Inc./Indianapolis
Life; (2) Jefferson-Pilot Corporation/The Guarantee Life Companies Inc; (3)
Aegon N.V./Transamerica Corporation; (4) Lincoln National
Corporation/Aetna -- U.S. Life; (5) Metropolitan Life Insurance Company/Security
First Group; (6) Lincoln National Corporation/CIGNA Life & Annuity; (7)
ING/Equitable of Iowa Companies; (8) Jefferson-Pilot Corporation/Chubb Life
Insurance Company of America; (9) ReliaStar/Security-Connecticut Corporation;
(10) American General Corporation/USLIFE Corporation; and (11) General Electric
Capital Corporation/First Colony Corporation. With respect to certain financial
information for the acquired companies involved in the selected acquisition
transactions, Merrill Lynch relied on information available in public documents,
equity research reports published by certain investment banks, and First Call
Corporation estimates.
With respect to each selected transaction, Merrill Lynch derived the
following:
- the ratio of the price per common share paid in the transaction to the
EPS of the acquired company for the last twelve-month period prior to the
announcement of the transaction for which financial results were
available; and
- the ratio of the price per common share paid in the transaction to the
per-share Book Value (incl-115 or ex-115, as appropriate) of the acquired
company as of the last completed fiscal quarter prior to the announcement
of the transaction.
For ReliaStar, Merrill Lynch used EPS for the last twelve-month period as
of December 31, 1999 and March 31, 2000 of $2.86 and $2.99, respectively, and
per-share Book Value (incl-115) and per-share Book Value (ex-115), each as of
December 31, 1999, of $21.89 and $23.10, respectively.
Merrill Lynch compared the results of these analyses to similar analyses
with respect to ReliaStar using a $54.00 price per share for ReliaStar common
stock. All per-share calculations were based on the number of fully-diluted
shares outstanding.
The following table sets forth the results of these analyses:
<TABLE>
<CAPTION>
COMPARABLE TRANSACTIONS
RANGE MEAN MEDIAN RATIO OF $54.00 TO:
<S> <C> <C> <C> <C> <C>
<CAPTION>
RELIASTAR EPS RELIASTAR EPS
RATIO OF PRICE PER COMMON SHARE AS OF DECEMBER 31, AS OF MARCH 31,
PAID IN TRANSACTION TO: 1999: 2000:
<S> <C> <C> <C> <C> <C>
Acquired company's EPS for
the last twelve-month period
prior to announcement 11.6x - 27.7x 18.9x 19.4x 18.9x 18.1x
<CAPTION>
RELIASTAR BOOK RELIASTAR BOOK
VALUE (INCL-115): VALUE (EX-115):
<S> <C> <C> <C> <C> <C>
Acquired company's per
share-Book Value (incl-115 or
ex-115, as appropriate) as of
the last completed quarter
prior to announcement 0.91x - 3.00x 1.84x 1.53x 2.47x 2.34x
</TABLE>
27
<PAGE> 36
Merrill Lynch noted that the ratios derived for ReliaStar were in each case
within the range of the ratios derived for the selected transactions. Merrill
Lynch further noted that the ratios derived with respect to ReliaStar's
per-share book value exceeded the comparable mean and median ratios derived for
the selected transactions.
Merrill Lynch also derived implied equity values for the common stock of
ReliaStar based on the median and mean of the ratios derived for the selected
transactions. The following table sets forth the results of these analyses:
<TABLE>
<CAPTION>
ACQUIRED RELIASTAR ACQUIRED RELIASTAR
RATIO OF PRICE PER COMMON SHARE COMPANIES' IMPLIED COMPANIES' IMPLIED
PAID IN TRANSACTION TO: MEDIAN VALUE MEAN VALUE
<S> <C> <C> <C> <C>
Last twelve month EPS, as of
December 31, 1999 19.4x $55.48 18.9x $53.98
Last twelve month EPS, as of
March 31, 2000 $58.01 $56.44
Per-share Book Value (incl-115)
as of December 31, 1999 1.53x $33.49 1.84x $40.26
Per-share Book Value (ex-115) as
of December 31, 1999 $35.34 $42.48
</TABLE>
Using the above analyses, Merrill Lynch derived a range of the implied
equity value of ReliaStar common stock of $33.49 to $58.01. Merrill Lynch noted
that $54.00 was within the valuation range, and approaching the upper limit of
the range.
Review of ING
In the course of preparing its opinion, Merrill Lynch also reviewed and
considered information and data relating to ING, including the following:
- public documents, equity research reports published by certain investment
banks, and current First Call Corporation and management estimates;
- historical market prices for ING ADSs and ING Group's ordinary shares;
and
- selected financial ratios and operating results for ING.
* * *
Pursuant to the terms of the engagement letter between Merrill Lynch and
ReliaStar, ReliaStar has agreed to pay the following fees to Merrill Lynch for
its financial advisory services in connection with the merger:
(1) a fee of $250,000 which became payable upon execution of the
engagement letter;
(2) an additional fee of $6,000,000 which became payable upon the
execution of the merger agreement; and
(3) if during the period Merrill Lynch is retained by ReliaStar or
within one year thereafter a business combination is consummated or
ReliaStar enters into an agreement which subsequently results in a business
combination, an additional fee in an amount equal to 0.36% of the aggregate
purchase price paid in the business combination, less any fees previously
paid pursuant to clauses (1) and (2) above.
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<PAGE> 37
ReliaStar also has agreed to reimburse Merrill Lynch for all reasonable
out-of-pocket expenses incurred by Merrill Lynch in performing its services,
including the fees and expenses for legal counsel, and to indemnify Merrill
Lynch and related persons and entities against liabilities under federal or
state law arising out of Merrill Lynch's engagement.
ReliaStar engaged Merrill Lynch based upon its experience and expertise in
the financial services industry generally, and as financial advisor in merger
and acquisitions transactions, specifically. Based upon prior engagements,
Merrill Lynch was well known to ReliaStar and was very familiar with ReliaStar
and its business.. Merrill Lynch is an internationally recognized investment
banking business and is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes.
Merrill Lynch and its affiliates are currently engaged by ING as financial
advisor in connection with another proposed acquisition transaction. Merrill
Lynch and it affiliates have, in the past, provided financial advisory and
financing services to ReliaStar, ING and their respective affiliates and may
continue to do so, and have received and may receive, fees for the rendering of
such services. Investment banking fees paid to Merrill Lynch by ING in the
12-month period ended June 23, 2000 did not exceed $6 million.
In the ordinary course of business, Merrill Lynch and its affiliates may
actively trade in securities of ReliaStar and ING for their own accounts and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
REQUIRED REGULATORY APPROVALS
The merger is subject to a number of regulatory approvals that are
described below. While we believe that we will be able to obtain these
regulatory approvals, we cannot be certain whether approvals will be obtained
within the period of time contemplated by the merger agreement or on conditions
that would not be detrimental to the combined company or if at all.
Antitrust. Transactions such as the merger are reviewed by the United
States Department of Justice and the United States Federal Trade Commission to
determine whether they comply with applicable antitrust laws. Under the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder. The merger may
not be completed until applicable waiting-period requirements have been
satisfied. ING and ReliaStar expect to file their respective notification
reports with the Department of Justice and Federal Trade Commission under the
HSR Act shortly after the date of this proxy statement. The waiting period under
the HSR Act will expire 30 days after those filings are made, unless earlier
terminated or extended by a request for additional information or documentary
materials.
The Department of Justice and the Federal Trade Commission frequently
scrutinize the legality under the antitrust laws of transactions such as the
merger. At any time before or after the merger, the Department of Justice or the
Federal Trade Commission could take such action under the antitrust laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the merger or seeking divestiture of substantial assets of ING or ReliaStar or
their subsidiaries. Private parties and state attorneys general may also bring
an action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the merger on antitrust grounds will not be made
or, if such a challenge is made, of the result.
Insurance. The insurance laws and regulations of all U.S. jurisdictions
generally require that, prior to the acquisition of control of an insurance
company doing business in such jurisdiction through the acquisition of or merger
with the holding company of such insurance company, the surviving
29
<PAGE> 38
company obtain the prior approval of, or file notification with and meet waiting
period requirements imposed by, such jurisdictions.
The completion of the merger is subject to certain approvals of and/or
notices to, and the expiration of applicable waiting periods required by, the
insurance departments of Minnesota, New York and Washington. ING is in the
process of filing applications for approval with those insurance departments. A
hearing on an application for approval of the merger is mandatory in Washington.
In addition, ING has made notice filings in certain other jurisdictions,
including insurance departments in numerous states where ING Group's
subsidiaries and ReliaStar's subsidiaries together have sufficiently large
market shares in particular insurance lines to require a notification prior to a
merger. Approval of the merger is not required in these states, but the
insurance departments could determine to take action to impose conditions on the
merger that could prevent its consummation.
Foreign Approvals. ING and ReliaStar conduct operations in a number of
foreign countries where regulatory filings or approvals may be required in
connection with the consummation of the merger.
Banking Regulation. ReliaStar operates both a federal savings bank and a
national bank exercising trust powers. Accordingly, the Office of Thrift
Supervision and the Office of the Comptroller of the Currency must each approve
the merger.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material U.S. federal income tax
consequences of the merger to holders of ReliaStar common stock and to ING
America Insurance Holdings, SHP Acquisition Corp., and ReliaStar. The discussion
is based on the current provisions of the Internal Revenue Code of 1986,
existing and proposed Treasury Regulations, interpretive rulings of the Internal
Revenue Service, and court decisions, all of which are subject to change at any
time, possibly with retroactive effect. Any such change could affect the
continuing validity of this summary.
Holders of ReliaStar common stock should be aware that this discussion does
not deal with all federal income tax considerations that may be relevant to all
shareholders in light of their particular circumstances or to shareholders who
are subject to special treatment under the Internal Revenue Code; thus, for
example, the discussion may not be applicable to insurance companies, tax-exempt
organizations, financial institutions, nonresident alien individuals, or foreign
entities. Other holders with special considerations include those who are
subject to the alternative minimum tax provisions of the Internal Revenue Code,
who do not hold their shares of ReliaStar common stock as a capital asset, who
acquired their shares in connection with stock option plans or in other
compensatory transactions, or who hold shares in a hedging transaction or as
part of a straddle or conversion transaction. In addition, the following
discussion does not address the tax consequences of the merger under foreign,
state, or local tax laws or the tax consequences of transactions effectuated
before or after, or concurrently with, the merger. Nor does this discussion
address the tax consequences of payments by ReliaStar to the holders of
ReliaStar stock options or other stock-based awards.
Neither ING nor ReliaStar will request a ruling from the Internal Revenue
Service in connection with the merger.
ACCORDINGLY, HOLDERS OF RELIASTAR COMMON STOCK OR STOCK OPTIONS ARE URGED
TO CONSULT THEIR OWN TAX ADVISERS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES
OF THE MERGER IN THEIR PARTICULAR CIRCUMSTANCES.
Receipt of cash for shares of ReliaStar common stock in the merger will be
a taxable transaction for U.S. federal income tax purposes. Consequently,
subject to the limitations and qualifications
30
<PAGE> 39
referred to in this section, the merger will generally result in the following
U.S. federal income tax consequences to the holders of ReliaStar common stock
who hold that stock as a capital asset and to ING America, SHP Acquisition
Corp., and ReliaStar:
1. A holder of ReliaStar common stock who receives cash for his or her
common stock in the merger will generally recognize capital gain or loss in
an amount equal to the excess of the cash received by the holder over the
holder's tax basis in his or her ReliaStar common stock.
2. The capital gain or loss will generally be long term capital gain
or loss if the holder has held his or her ReliaStar common stock for more
than one year.
3. A holder of ReliaStar common stock who exercises appraisal rights
and receives a cash payment for his or her stock generally will recognize
capital gain or loss measured by the difference between the holder's tax
basis in the stock and the amount of cash received.
4. Certain noncorporate holders of ReliaStar common stock may be
subject to backup withholding at a 31% rate on cash payments received in
exchange for ReliaStar common stock, or received upon the exercise of
appraisal rights by such holders. Backup withholding generally will not
apply, however, to a holder who furnishes a correct taxpayer identification
number and certifies under penalties of perjury that such number is correct
and that he or she is not subject to backup withholding on the substitute
Form W-9 included in the letter of transmittal, or is otherwise exempt from
backup withholding.
5. Gain or loss will generally not be recognized by ING America, SHP
Acquisition Corp, or ReliaStar as a result of the merger.
THE PRECEDING DISCUSSION IS NOT A COMPLETE ANALYSIS OR DISCUSSION OF ALL
POTENTIAL TAX EFFECTS RELEVANT TO THE MERGER. HOLDERS OF RELIASTAR COMMON STOCK
ARE URGED TO CONSULT THEIR OWN TAX ADVISERS AS TO THE SPECIFIC TAX CONSEQUENCES
OF THE MERGER TO THEM, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE
APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
EFFECTS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
RELIASTAR SUCCESS SHARING PLAN AND ESOP
The exchange of shares of ReliaStar common stock now held by the ESOP for
ING ADSs will not result in recognition of taxable gain or loss by the ESOP or
any participant in the ESOP for U.S. federal income tax purposes. The ADSs will
retain the tax basis of the ReliaStar shares for which they shall have been
exchanged. Under the U.S.-Netherlands tax treaty, dividends paid on the ING ADSs
owned by the ESOP will not be subject to Dutch withholding tax.
ACCOUNTING TREATMENT
The merger will be accounted for under the "purchase" method of accounting.
This means that ING will record the excess of the purchase price of ReliaStar
over the fair market value of ReliaStar's assets as goodwill.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
You should be aware of the interests of ReliaStar's directors and executive
officers in the merger that may be different from, or in addition to, yours.
ReliaStar's board of directors was fully informed of the following interests
before approving the merger agreement.
Change-of-Control Benefits. Commencing in 1991, ReliaStar put in place
various agreements and provisions that would provide directors, executive
officers, and other employees of ReliaStar
31
<PAGE> 40
certain benefits in the event of a "change of control" of ReliaStar. The
execution of the merger agreement with ING is a change of control for purposes
of these agreements and provisions, which include the following:
- Management Employment Agreements. ReliaStar has management employment
agreements with each of its executive officers. These agreements entitle
each executive to lump-sum payments if his employment is terminated
either involuntarily or constructively (other than for cause, death,
disability, or retirement) after a change of control of ReliaStar if the
executive is less than 65 years old. The agreements provide lump-sum
payment for executives aged 61 or less equal to three times the sum of
(1) the base annual salary plus (2) the average annual bonus payable for
the shorter of the last three years of employment or actual years of
employment (for executives aged 62 to 64, these amounts are reduced
proportionately). These amounts are reduced by any severance payments
otherwise payable to the executive under other ReliaStar policies or
agreements. Under the agreements, each executive also would be entitled
to a lump-sum cash payment of additional qualified and nonqualified
retirement benefits calculated as if the executive's period of service
continued to the earlier of the third anniversary of the change of
control or age 65, and to receive certain insurance benefits for three
years following termination, or until age 65, if earlier. Certain legal
expenses that may be incurred by an executive terminated under the
circumstances described above are also covered by the agreements.
-- We do not know whether the employment of any of ReliaStar's executive
officers will terminate under circumstances that would entitle the
executive to payments under his management agreement. If such
termination of employment were to occur, we estimate that the pre-tax
cash severance amounts that the executive officers would be entitled to
receive pursuant to their agreements are approximately:
<TABLE>
<CAPTION>
PAYMENT
----------
<S> <C>
John G. Turner...................................... $3,683,678
Robert C. Salipante................................. $1,886,888
Wayne R. Huneke..................................... $1,624,014
Michael J. Dubes.................................... $1,520,894
Ken U. Kuk.......................................... $1,514,270
All other executive officers as a group (3
individuals)...................................... $3,619,655
</TABLE>
-- The factors that provide the basis for calculating these payments vary
over time, and consequently we can only determine the actual amounts
paid as of the date they are payable. The employment agreements also
provide, subject to limitations, an additional amount to cover the
excise tax, if any, payable by the executives for amounts received as a
result of the merger.
- Stock Options. All unvested stock options held by ReliaStar's directors,
executive officers or employees became vested at the time of the
execution of the merger agreement. The merger agreement provides for each
holder of an option to be paid, in cash, the difference between $54.00
and the exercise price of each option.
-- The aggregate number of shares underlying options held by nonemployee
directors that became exercisable as a result of the execution of the
merger agreement is 73,779, with an aggregate pre-tax value of $995,466
(calculated as described in the previous paragraph).
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<PAGE> 41
-- The number of shares underlying options held by each director that
became exercisable as a result of the execution of the merger agreement
is:
<TABLE>
<CAPTION>
NUMBER OF
UNDERLYING SHARES
-----------------
<S> <C>
Carolyn Baldwin................................. 6,521
David Cox....................................... 9,874
Richard De Schutter............................. 5,031
John Flittle.................................... 3,354
Luella Goldberg................................. 6,521
William Hodder.................................. 6,520
James Howard.................................... 9,874
Randy James..................................... 6,521
Richard Knowlton................................ 6,521
David Koch...................................... 6,521
James Renier.................................... 6,521
Robert C. Salipante............................. 117,818
John G. Turner.................................. 559,227
</TABLE>
-- The aggregate number of shares underlying options that vested as a
result of the execution of the merger agreement and the pre-tax value
of such shares to the executives are approximately:
<TABLE>
<CAPTION>
NUMBER OF
UNDERLYING SHARES VALUE
----------------- ----------
<S> <C> <C>
John G. Turner..................... 559,227 $4,240,265
Robert C. Salipante................ 117,818 $2,831,974
Wayne R. Huneke.................... 78,786 $1,223,106
Michael J. Dubes................... 50,339 $ 808,694
Ken U. Kuk......................... 57,476 $ 964,649
All other executive officers as a
group (3 individuals)............ 140,225 $1,901,088
</TABLE>
-- Such amounts do not include any amounts payable for options that had
vested prior to May 1, 2000.
- Restricted Shares. ReliaStar's directors and executive officers hold
shares of restricted ReliaStar common stock. Upon the execution of the
merger agreement, the restricted stock became fully vested and all
restrictions on the stock lapsed. The merger agreement provides for each
holder of shares of unrestricted stock to be paid $54.00 per share in
cash.
-- The aggregate number of restricted shares held by non-employee
directors, as a group, for which restrictions lapsed as a result of
execution of the merger agreement is 41,532, with a pre-tax value of
$2,242,728.
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<PAGE> 42
-- The aggregate number of restricted shares for which restrictions lapsed
as a result of the execution of the merger agreement and the pre-tax
value of the restricted shares to the executives are approximately:
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- --------
<S> <C> <C>
John G. Turner............................. 6,837 $369,198
Robert C. Salipante........................ 2,473 $133,542
Wayne R. Huneke............................ 2,134 $115,236
Michael J. Dubes........................... 1,975 $106,650
Ken U. Kuk................................. 2,033 $109,782
All other executive officers as a group (3
individuals)............................. 6,456 $348,624
</TABLE>
-- These amounts do not include any amounts payable for shares of
ReliaStar common stock owned without restrictions as of May 1, 2000.
- Incentive Plans. Participants in ReliaStar's long-term incentive plan
became entitled to accelerated cash payments, at the performance level
actually achieved or the "par" level, whichever is greater, as a result
of the execution of the merger agreement. The amounts payable to
ReliaStar's named executive officers under the long-term incentive plan
as a result of the execution of the merger agreement are approximately:
<TABLE>
<CAPTION>
PAYMENT
--------
<S> <C>
John G. Turner........................................ $411,675
Robert C. Salipante................................... $368,005
Wayne R. Huneke....................................... $286,004
Michael J. Dubes...................................... $246,670
Ken U. Kuk............................................ $232,003
All other executive officers as a group (3
individuals)........................................ $408,049
</TABLE>
- Supplemental Executive Retirement Plans. The execution of the merger
agreement caused benefits under ReliaStar's supplemental executive
retirement plans to vest for all participants.
Future Employment. ING intends that ReliaStar's business unit executives
will continue in their current or similar roles following completion of the
merger. John G. Turner, ReliaStar's Chairman and Chief Executive Officer, will
be Vice Chairman, a member of the three-person Executive Committee and General
Manager of Mutual Funds for ING America Insurance Holdings, Inc. Robert C.
Salipante, President and Chief Operating Officer of ReliaStar, will serve as
President and Chief Executive Officer of the ING U.S. Life Group. Wayne R.
Huneke, ReliaStar's Senior Executive Vice President, will become Executive Vice
President and Chief Administrative Officer for ING's U.S. Financial Services
operations.
Mr. Huneke, Mr. Salipante and Mr. Turner have each agreed with ING to
certain terms concerning their future employment. Each of these executives has
agreed to two-year employment arrangements following the completion of the
merger. The annual base salary will be $400,000 for Mr. Huneke, $500,000 for Mr.
Salipante and $760,000 for Mr. Turner. Commencing January 1, 2001, these
executives will participate in the ING Short-Term Incentive Plan and the ING
Americas Restricted Performance Unit program at levels consistent with similarly
situated ING executives. In addition, Mr. Huneke, Mr. Salipante and Mr. Turner
have each agreed to terminate his current management employment agreement in
consideration of ING's payment of an amount approximately
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<PAGE> 43
equal to the present value of the amounts which would otherwise be payable under
such current agreement in the event his employment was terminated. As a result
of this arrangement, ING will credit a deferred compensation account in the
amount of $1.5 million for Mr. Huneke and $2 million for Mr. Salipante, and Mr.
Turner will receive $2.64 million in cash and ING stock options with a value of
$1.36 million at the time of grant computed using the Black-Scholes method of
valuation. Mr. Salipante and Mr. Huneke will also receive a restricted grant of
ING ADR units equal to three times Mr. Salipante's base salary and
one-and-one-half times Mr. Huneke's base salary, respectively. One third of
these grants vest on each of the third, fourth and fifth anniversaries of the
completion of the merger. Fifty percent of any unvested units would vest
immediately upon Mr. Salipante's or Mr. Huneke's termination without cause. Mr.
Huneke will also receive an additional $600,000 contribution to his deferred
compensation account in lieu of a six-year age-and-service credit under
ReliaStar's supplemental executive retirement plan.
Directorships. After consummation of the merger, ING has agreed to take
reasonable actions to seek an invitation by the supervisory board of ING to
Luella G. Goldberg, a current director of ReliaStar, to join the supervisory
board of ING as a full member, subject to Dutch law, which mandates that the
supervisory board is responsible for appointing its own members and any
appointments are subject to objection by the Works Council and ING's
shareholders.
ING has also agreed to appoint to the board of directors of ING America
Insurance Holdings, Inc. four of the current directors of ReliaStar.
Indemnification. Under the merger agreement, ReliaStar's directors have
customary rights to continued indemnification against certain liabilities. The
merger agreement provides that from the completion of the merger, ING will
indemnify and hold harmless each present and former director and officer of
ReliaStar against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation arising out of matters existing
or occurring at or before the completion of the merger, to the fullest extent
that ReliaStar would have been permitted under Delaware law and its certificate
of incorporation or by-laws in effect on the date of the merger agreement to
indemnify such person.
The surviving corporation is obligated either to maintain ReliaStar's
existing directors' and officers' liability insurance or to obtain directors'
and officers' liability insurance that is substantially comparable to
ReliaStar's existing insurance for a period of six years after the completion of
the merger, so long as the annual premium for such insurance would not be in
excess of 175% of the last annual premium paid for the insurance before the date
of the merger agreement. However, if the existing directors' and officers'
insurance or substantially comparable insurance cannot be acquired during the
six-year period for not in excess of 175% of the last annual premium paid for
the insurance before the date of the merger agreement, then the surviving
corporation will obtain as much directors' and officers' insurance as can be
obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of 175% of the last annual premium paid for the insurance
before the date of the merger agreement.
LITIGATION CHALLENGING THE MERGER
ReliaStar and its directors are named as defendants in a purported class
action entitled Hausser et al. v. Reliastar Financial Corp., Court File No.
MC-00-005684, filed in the Fourth Judicial District, District Court, County of
Hennepin, State of Minnesota. The complaint in the Hausser action alleges, among
other things, that the defendants breached their fiduciary duties to
shareholders of ReliaStar in connection with the negotiation and agreement of
the merger, and in particular that the consideration to be received by
shareholders in the merger is unfair and that the
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<PAGE> 44
board did not fully inform itself concerning the alleged true value of ReliaStar
and of the alternatives available to it. As relief, the complaint seeks, among
other things, an injunction against completion of the merger, damages in an
unspecified amount, rescission of the merger in the event it is completed,
attorneys fees and other relief.
Pursuant to an agreement in principle, counsel for plaintiffs in the
Hausser action have agreed to settle the action in exchange for ReliaStar's
agreement to amend the merger agreement to reduce from $140 million to $120
million the termination fee, which is payable by ReliaStar to ING America upon
the occurrence of specified events, and to amend the stock option agreement to
reduce from $150 million to $130 million the maximum profit that can be realized
by ING America from the option and the termination fee. See the sections
entitled "The Merger Agreement -- Termination and Termination Fee" and "The
Stock Option Agreement -- Limitation on Profit." As part of the proposed
settlement, ReliaStar also agreed to make certain additional disclosures in this
prospectus/ proxy statement concerning various matters. In the event the
settlement is approved by the court, all claims related to the merger will be
released and class members such as the public shareholders of Reliastar will be
barred from asserting such claims in the future. Plaintiffs' counsel expect to
apply to the court for an award of fees to be paid by ReliaStar. Details of the
proposed settlement, including the time and place of a hearing by the court,
will be disseminated to shareholders at a future time.
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the merger
agreement. Because this summary is not a complete description of the merger
agreement, we qualify it by reference to the merger agreement and urge you to
read the merger agreement in its entirety for a complete description of the
terms and conditions of the merger. We attach a copy of the merger agreement to
this prospectus/proxy statement as Appendix A and incorporate it by reference in
this prospectus/proxy statement.
THE MERGER
The merger agreement provides that a wholly owned subsidiary of ING America
will merge with and into ReliaStar. At the time of the merger, the Merger Sub
will cease to exist and ReliaStar will become the surviving corporation in the
merger.
COMPLETION OF THE MERGER
Unless the parties to the merger agreement agree otherwise, the closing of
the merger will take place after all of the conditions to the merger are
fulfilled or waived. The merger will become effective upon filing a certificate
of merger with the Secretary of State of Delaware. ReliaStar and ING have agreed
to have the merger certificate filed as soon as practicable after the closing.
MERGER CONSIDERATION
When the merger is completed,
- each outstanding share of ReliaStar, excluding shares (i) owned by ING or
ReliaStar, or by any of their respective subsidiaries, (ii) held by the
ESOP, or (iii) owned by shareholders exercising appraisal rights, will be
converted into the right to receive $54.00 in cash,
- each outstanding share of ReliaStar held by the ESOP will be converted
into the number of American Depositary Shares, also known as ADSs, each
representing an interest in one ordinary share of ING, equal to the
number derived by dividing
-- $54.00 by
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<PAGE> 45
-- the average of the closing prices for the ADSs for the ten trading days
prior to the closing date as reported on the New York Stock Exchange,
Inc. composite transactions reporting system,
- each outstanding share of ReliaStar owned by ING or ReliaStar, or by any
of their respective subsidiaries, will be canceled and retired without
any payment, and
- each outstanding share of common stock of Merger Sub will be converted
into one share of common stock of the surviving corporation.
CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION
When the merger is completed,
- the certificate of incorporation of Merger Sub will become the
certificate of incorporation of the surviving corporation,
- the by-laws of the Merger Sub will become the by-laws of the surviving
corporation,
- the directors of the Merger Sub will become the directors of the
surviving corporation, and
- the officers of ReliaStar will remain officers of the surviving
corporation.
REPRESENTATION AND WARRANTIES
The merger agreement contains various customary representations and
warranties by ReliaStar, relating to, among other matters:
- it and its subsidiaries' organization, good standing and qualification;
- its capital structure;
- its corporate power and authority to execute, deliver and perform its
obligations under the merger agreement and the stock option agreement and
to consummate the merger and the validity and enforceability of the
merger agreement;
- its board of directors' approval of the merger;
- governmental and regulatory filings and approvals required for the
merger;
- non-violation of its governing instruments, agreements, permits or
licenses by the execution, delivery and performance of the merger
agreement and the stock option agreement and by the consummation of the
merger;
- it and its subsidiaries' reports and financial statements;
- absence of certain changes since December 31, 1999;
- absence of undisclosed litigation and liabilities;
- it and its subsidiaries' employee benefits plans;
- compliance with laws, regulations and permits;
- inapplicability of any takeover statute or any anti-takeover provision of
its certificate of incorporation and by-laws to the merger;
- environmental matters;
- taxes;
- labor matters;
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<PAGE> 46
- insurance;
- intellectual property;
- amendment of its rights agreement;
- fees of brokers and finders;
- its insurance business;
- its liabilities and reserves;
- its separate accounts;
- it and its subsidiaries' material contracts;
- its subsidiaries' investment management, advisory and sub-advisory
contracts, investment company and advisory clients;
- its broker/dealer operations; and
- bank regulatory matters.
The merger agreement also contains various representations and warranties
by ING, ING America and Merger Sub, relating to, among other matters:
- capitalization of ING and Merger Sub;
- their organization, good standing and qualification;
- their corporate power and authority to execute, deliver and perform their
obligations under the merger agreement and to consummate the merger and
the validity and enforceability of the merger agreement;
- the governmental and regulatory filings and approvals required for the
merger;
- non-violation of their governing instruments, agreements, permits or
licenses by the execution, delivery and performance of the merger
agreement and by the consummation of the merger;
- ING Group's reports and financial statements;
- absence of certain changes with ING America since December 31, 1999; and
- availability of adequate funds for ING America to perform its obligations
under the merger agreement.
COVENANTS
Interim Operation of Business. ReliaStar has agreed that, unless it has
received ING's approval (which ING has agreed not to unreasonably withhold),
prior to the completion of the merger:
- it and its subsidiaries' business will be conducted in the ordinary
course of business consistent with prior practice, and it will use all
reasonable efforts to
-- preserve its business organization and maintain its relations with
customers, suppliers, regulators, creditors, employees and others,
-- maintain material properties and assets in good condition, and
-- maintain in effect all existing governmental permits;
- it will not
-- dispose of or encumber any capital stock it or its subsidiaries own,
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<PAGE> 47
-- amend its governing instruments,
-- split, combine or reclassify its outstanding shares of capital stock,
-- declare, set aside or pay any dividend other than from its wholly owned
subsidiaries and other than regular quarterly cash dividends not in
excess of $0.22 per share, or
-- acquire any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock other than in
connection with its stock plans;
- neither it nor its subsidiaries will
-- issue, dispose of or encumber any shares of, or securities convertible
into or exercisable for, or any agreements to acquire, any shares of
its capital stock or any voting debt or any other property or assets,
-- other than in the ordinary course, dispose of or encumber any other
property or assets or incur or modify any material liability,
-- incur any indebtedness with a maturity of one year or more,
-- commit to any capital expenditures in excess of five million dollars in
the aggregate above those contemplated by its year 2000 financial
plans, or
-- other than portfolio investments made in the ordinary course, make any
investment in any entity;
- neither it nor its subsidiaries will
-- except as required by law or contractual obligations, change any grants
or award under any benefit plan, or modify any benefit plan, or
-- except in the ordinary course, increase any compensation of any
employee;
- neither it not its subsidiaries will
-- settle or compromise certain specified litigation or settle or
compromise any other claims or litigation for an amount in excess of
two million dollars individually,
-- except in the ordinary course, discharge any material liabilities or
obligations, or
-- except in the ordinary course, enter into, modify or terminate any
material contract or waive, release or assign any material rights or
claims;
- it will not make any tax election or permit any insurance policy naming
it as a beneficiary to be terminated except in the ordinary course;
- neither it nor its subsidiaries will agree to materially limit their
ability
-- to sell any product or service, engage in any line of business, or
-- to compete with or to obtain products or services from any person;
- neither it nor its subsidiaries will enter into or materially amend or
cancel any agreement that is material to them on a consolidated basis;
- neither it nor its subsidiaries will make any significant change in
accounting methods or controls except to conform to changes in generally
accepted accounting principles or regulatory requirements;
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<PAGE> 48
- other than consistent with their investment guidelines, neither it nor
its subsidiaries will intentionally and materially alter the mix of its
investment assets or the duration or credit quality of the assets;
- other than consistent with past practices, neither it nor its
subsidiaries will intentionally and materially alter the profile of the
insurance liabilities or the pricing practices of its life insurance
subsidiaries;
- it will not materially amend, modify or terminate the merger agreement
with Lexington Global Asset Managers, Inc. or waive any material
provision under that agreement;
- neither it nor its subsidiaries will cause any of its representations and
warranties to become materially untrue; and
- neither it nor its subsidiaries will agree to do any of the above.
No Solicitation of Acquisition Proposals. ReliaStar has agreed that
neither it nor its subsidiaries nor its or its subsidiaries' officers or
directors will, and that it will direct and use its best efforts to cause it and
its subsidiaries' employees, agents and representatives not to,
- initiate, solicit or encourage any inquiries or the making of any
proposal or offer with respect to,
- engage in any negotiations concerning,
- provide any confidential information or data to, or have any discussions
with, any person relating to, or
- otherwise facilitate any effort or attempt to make or implement
a merger, reorganization, share exchange or similar transaction, or a purchase
of 10% or more of the assets or any equity securities of, it or any of its
subsidiaries (which is defined in the merger agreement as an "acquisition
proposal").
However, ReliaStar or its board of directors may
1. provide information in response to a request by a person who has made an
unsolicited bona fide written acquisition proposal if
- the ReliaStar board of directors receives from the person so requesting
such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the confidentiality
agreement between ING and ReliaStar, and
- the ReliaStar board of directors determines in good faith after
consultation with outside legal counsel that such action is necessary in
order for its directors to comply with their respective fiduciary duties
under applicable law,
2. engage in any negotiations or discussions with any person who has made
an unsolicited bona fide written acquisition proposal, or recommend such an
acquisition proposal to the shareholders of ReliaStar if and only to the extent
that
- the ReliaStar board of directors determines in good faith after
consultation with outside legal counsel that such action is necessary in
order for its directors to comply with their respective fiduciary duties
under applicable law, and
- the ReliaStar board of directors also determines in good faith (after
consultation with its financial advisor) that such an acquisition
proposal, if accepted, is reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the proposal
and the person making the proposal, and would, if consummated, result in
a transaction more
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<PAGE> 49
favorable to ReliaStar's shareholders from a financial point of view than
the merger (any such more favorable acquisition proposal is defined in
the merger agreement as a "superior proposal"), and
3. comply with Rules 14d-9 and 14e-2 (relating to the obligation of the
board of directors to respond to a tender offer) promulgated under the
Securities Exchange Act of 1934 with regard to an acquisition proposal.
In addition, ReliaStar has agreed to notify ING immediately if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its representatives, and thereafter will
keep ING informed, on a current basis, of the status of any such proposals or
offers and the status of any such discussions or negotiations.
ReliaStar has agreed to cease and cause to be terminated any existing
activities, discussions or negotiations with any party with respect to any
acquisition proposal conducted before entering into the merger agreement.
As discussed below, ReliaStar may terminate the merger agreement if it
receives and accepts a superior proposal.
Accuracy of Prospectus/Proxy Statement. ING, ING America and ReliaStar
each agreed that none of the information supplied by it for inclusion or
incorporation by reference in
- the registration statement of which this prospectus/proxy statement forms
a part, to be filed in connection with the merger, at the time of
effectiveness, or
- this prospectus/proxy statement, at the time of mailing to shareholders
and at the time of the meeting of shareholders,
will contain any untrue statement of 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 them also agreed that the registration statement will
materially comply with the U.S. securities laws and regulations.
Shareholders Meeting. ReliaStar agreed to convene a meeting of
shareholders to vote upon the approval of the merger agreement as promptly as
reasonably practicable after the execution of the merger agreement. It further
agreed that, subject to its board of directors' fiduciary obligations, the board
will recommend and solicit the approval of the merger agreement.
Filings, Other Actions, Notification. ING, ING America and ReliaStar,
agreed that
- each of them will use their best reasonable efforts to promptly
-- prepare and file the registration statement and the prospectus/proxy
statement,
-- have the registration statement declared effective,
-- after the registration statement is declared effective, mail the
prospectus/proxy statement to the shareholders, and
-- obtain before the effective date of the registration statement all
state securities laws, state insurance laws or "blue sky" permits and
approvals required in connection with the merger;
- they will cooperate with each other and use their respective best
reasonable efforts to consummate and make effective the merger, except
that ING or ING America are not required, in connection with the receipt
of any regulatory approval, to offer to, or agree to
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<PAGE> 50
-- sell or hold separate and agree to sell, divest or to discontinue to or
limit, any assets, businesses, or interest in any assets or businesses
of ING, ING America or ReliaStar or any of their respective affiliates
(or to consent to any sale, or agreement to sell, or discontinuance or
limitation by ING, ING America or ReliaStar, as the case may be, of any
of its assets or businesses) or
-- agree to any conditions relating to, or changes or restriction in, the
operations of any such asset or businesses which, in either case, is
reasonably likely to have a material adverse effect on the financial
condition, properties, business or annual results of operations of
ReliaStar and its subsidiaries, taken as a whole, or a material adverse
effect on the financial condition, properties, business or annual
results of operations of ING and its subsidiaries, taken as a whole;
- each of them will furnish the other with all information necessary for
any governmental or regulatory filing made in connection with the merger;
- each of them will promptly provide the other with copies of all filings
or communications with any governmental entity made in connection with
the merger and ReliaStar will notify ING of any change that is reasonably
likely to have a material adverse effect on ReliaStar; and
- each of them will cooperate and use their best reasonable efforts to
defend against any proceeding questioning the validity or legality of the
merger agreement, the stock option agreement or the merger.
Access. Subject to applicable laws and some other limitations, ReliaStar
agreed to allow ING America's representatives reasonable access prior to the
completion of the merger to its properties, books, contracts and records.
Stock Exchange. ING and ING America agreed to use their reasonable best
efforts to list the ADSs to be issued under the merger agreement on the NYSE.
ReliaStar agreed to use its best efforts to de-list from the NYSE and
de-register under the Exchange Act all the shares of its common stock after the
completion of the merger.
Publicity. Subject to applicable law, each party to the merger agreement
agreed not to make any public announcement or any filings with any third party
with respect to the merger without consulting with, and obtaining the prior
consent of, the other parties.
Benefits, Options. ReliaStar agreed that, immediately before completion of
the merger, it will use its reasonable best efforts to
- convert its stock options into the right to receive cash in an amount
equal to the excess of $54.00 over the exercise price of such options,
multiplied by the number of shares subject to options; and
- convert rights to receive its stock under its benefit plans, other than
the ESOP and its stock option plans, into the right to receive cash in an
amount equal the total number of shares subject to such right multiplied
by $54.00.
ING America agreed that after the merger and until December 31 of the year
in which the merger is completed, all ReliaStar employees will continue to be
provided with benefits substantially comparable to those currently provided to
those employees by ReliaStar.
ING America agreed that after completion of the merger,
- it will generally take into account the service of ReliaStar employees
under ING America's plans for which ReliaStar employees will be eligible
to participate;
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<PAGE> 51
- ReliaStar employees will be immediately eligible to participate in new
benefit plans, to the extent coverage under a new plan replaces coverage
under a comparable benefit plan in which the employee participated
immediately prior to the completion of the merger, and to cause
pre-existing condition exclusions and actively-at-work requirements of
such new benefit plans to be waived and to have any eligible payments
made by an employee before the completion of the merger count toward
deductible, co-pay and maximum out of pocket expenses, where applicable;
and
- each bonus payable after the merger under ReliaStar's executives' current
incentive programs will be paid in cash.
Expenses. The parties agreed that each will pay its own expenses in
connection with the merger, except that expenses incurred in connection with
filing, printing and mailing of the registration statement and the
prospectus/proxy statement will be shared equally by ReliaStar and ING America.
Indemnification. The merger agreement provides that from the completion of
the merger, ING will indemnify and hold harmless each present and former
director and officer of ReliaStar against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or investigation
arising out of matters existing or occurring at or before the completion of the
merger, to the fullest extent that ReliaStar would have been permitted under
Delaware law and its certificate of incorporation or by-laws in effect on the
date of the merger agreement to indemnify such person.
The surviving corporation is obligated either to maintain ReliaStar's
existing directors' and officers' liability insurance or to obtain directors'
and officers' liability insurance that is substantially comparable to
ReliaStar's existing insurance for a period of six years after the completion of
the merger, so long as the annual premium for such insurance would not be in
excess of 175% of the last annual premium paid for the insurance before the date
of the merger agreement. However, if the existing directors' and officers'
insurance or substantially comparable insurance cannot be acquired during the
six-year period for not in excess of 175% of the last annual premium paid for
the insurance before the date of the merger agreement, then the surviving
corporation will obtain as much directors' and officers' insurance as can be
obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of 175% of the last annual premium paid for the insurance
before the date of the merger agreement.
Compliance with Investment Company Act of 1940 Act Section 15. ReliaStar
has agreed that before the closing of the merger, it will use reasonable best
efforts to ensure compliance with Section 15(f) of the Investment Company Act of
1940, as amended, so that the merger will comply with Section 15(f) immediately
after the closing, including to ensure that at the time of closing at least 75%
of the board of directors or trustees of each mutual fund are not "interested
persons" under the Investment Company Act of the surviving corporation or
ReliaStar.
ING America has agreed to use reasonable best efforts to ensure compliance
with Section 15(f) and for three years after the closing, will, insofar as is
under its control, ensure that the board of directors or trustees of each mutual
fund will be not "interested persons" under the Investment Company Act and the
merger will not impose an "unfair burden" within the meaning of the Investment
Company Act.
Mutual Fund Contracts, Distribution Plans and Boards. ReliaStar agreed to
use reasonable best efforts
- to cause the consideration and approval by the board of directors of each
mutual fund and, if required, by that mutual fund's securityholders of
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-- a new investment contract with the same advisory entity to become
effective upon the merger, on the same material terms as are in effect
in the investment contract existing before the merger is completed, and
-- an amended Rule 12b-1 distribution plan, on the same material terms as
are in effect in the Rule 12b-1 distribution plan existing before the
merger is completed;
- to encourage the board of directors of each mutual fund
-- to nominate, so as to constitute a majority of the independent
directors of the board, individuals who are currently serving as
independent directors of the investment companies that are advised by
an affiliate of ING America, and
-- to nominate one interested director that is selected by ING America.
Non-Mutual Fund Advisory Contracts. ReliaStar agreed to notify each
advisory client of the merger and use reasonable best efforts to obtain all
necessary consents of each advisory client to the assignment of its advisory
contract.
Qualification of the Mutual Funds; Mutual Fund Boards. Subject to its
fiduciary duties, ReliaStar agreed to use reasonable best efforts to cause the
mutual funds to take no action that would prevent any mutual fund from
qualifying as a regulated investment company or that would be inconsistent with
any mutual fund's prospectus or other materials.
Other Actions by ReliaStar and ING America. The parties also agreed that
- ReliaStar's board of directors will take all necessary action to
terminate the outstanding preferred stock purchase rights under
ReliaStar's rights agreement immediately before the completion of the
merger; and
- if any takeover law becomes applicable to the merger, the parties will
act to eliminate or minimize the effects of such law.
Board Appointments. ING and ING America agreed that, after the completion
of the merger,
- ING will take reasonable actions to seek an invitation by the supervisory
board of ING to Luella G. Goldberg, a current director of ReliaStar, to
join the supervisory board of ING as a full member, subject to Dutch law,
which mandates that the supervisory board is responsible for appointing
its own members and any appointments require approval of ING's
shareholder and Works Council, and
- ING America will cause to be elected to its board of directors four
current directors of ReliaStar.
CONDITIONS
Conditions to Each Party's Obligation to Effect the Merger. The respective
obligations of each party are subject to the satisfaction or waiver of each of
the following conditions at or before the completion of the merger:
- ReliaStar shareholders will adopt the merger agreement;
- the waiting period applicable to the consummation of the merger under the
HSR Act and applicable insurance laws expires or terminates and all
notices, reports and other filings required to be made before the
completion of the merger with, and all consents, registrations,
approvals, permits and authorizations required to be obtained before the
completion of the merger from, any governmental entity in connection with
the merger are made or obtained (as the case may be), other than (in the
case of jurisdictions other than the United States, the
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United Kingdom and the Netherlands) those the failure of which to make or
obtain are not, individually or in the aggregate, reasonably likely
-- to be material to ReliaStar and its subsidiaries, or ING and its
subsidiaries, taken as a whole,
-- to materially and adversely impact the reasonably anticipated economic
and business benefits to ING and its subsidiaries of the merger,
-- to result in criminal liability or a more than insignificant civil fine
or other penalty against ING or ReliaStar, or any of their respective
subsidiaries or affiliates, or
-- to result in ING and its subsidiaries being prohibited from conducting,
or materially limited in their ability to conduct, business in any
jurisdiction;
- no governmental entity
-- restrains, enjoins or otherwise prohibits the consummation of the
merger, or
-- institutes or threatens to institutes any proceeding that seeks to
restrict the merger;
- the ADSs issuable under the merger agreement are authorized for listing
on the NYSE upon official notice of issuance;
- the registration statement of which this prospectus/proxy statement forms
a part becomes effective; and
- ING and ING America receives all state securities law, insurance
securities law and blue sky permits and approvals necessary for the
merger.
Conditions to Obligations of ING America and ING Merger Subsidiary. The
obligations of ING America and Merger Sub to effect the merger are also subject
to the satisfaction or waiver of each of the following conditions at or before
the completion of the merger:
- the representations and warranties of ReliaStar in the merger agreement
which are qualified by the term "company material adverse effect" are
each true and correct as so qualified as of the date of the merger
agreement and as of the closing date as though made on and as of the
closing date (except to the extent any of representation or warranty
expressly speaks as of an earlier date),
- the representations and warranties of ReliaStar in the merger agreement
dealing with organization, good standing and qualification, capital
structure, authority, approval and fairness, takeover statutes and
shareholder rights plan that are not qualified by the term "company
material adverse effect" are each true and correct in all material
respects as of the date of the merger agreement and as of the closing
date as though made on and as of the closing date (except to the extent
any such representation or warranty expressly speaks as of an earlier
date), and
- the representations and warranties of ReliaStar in the merger agreement
not described in the preceding two paragraphs (without giving effect to
any qualifications as to materiality or other similar qualifications) are
true and correct as of the date of the merger agreement and as of the
closing date as though made on and as of the closing date (except to the
extent any such representation or warranty expressly speaks as of an
earlier date), except where the failure of such representations and
warranties to be true and correct (without giving effect to any
qualifications as to materiality or other similar qualifications) would
not be, individually or in the aggregate, reasonably likely to have a
"company material adverse effect."
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As used in the merger agreement, the term "company material adverse
effect" means a material adverse effect on the financial condition,
properties, business or annual results of operations of ReliaStar and its
subsidiaries taken as a whole, except to the extent that such adverse
effect results from (i) general economic conditions or changes therein,
(ii) financial market fluctuations or conditions, (iii) adverse economic
or regulatory changes or effects in or affecting the financial services
industry, insurance industry or asset management industry generally or
(iv) the announcement of the merger;
- ReliaStar performs in all material respects its obligations under the
merger agreement and stock option agreement;
- ReliaStar obtains all necessary consents and approvals, except for those
the failure of which to obtain are not likely to have a "company material
adverse effect" or prevent, materially delay or materially impair the
consummation of the merger, and no governmental approval requires ING or
ING America to
-- sell or hold separate and agree to sell, divest or to discontinue to or
limit, before or after the completion of the merger, any assets,
businesses, or interest in any assets or businesses of ING, ING America
or ReliaStar or any of their respective affiliates (or to consent to
any sale, or agreement to sell, or discontinuance or limitation by ING,
ING America or ReliaStar, as the case may be, of any of its assets or
businesses) or
-- agree to any conditions relating to, or changes or restriction in, the
operations of any such asset or businesses which, in either case, is
reasonably likely to have a material adverse effect on the financial
condition, properties, business or annual results of operations of
ReliaStar and its subsidiaries, taken as a whole, or a material adverse
effect on the financial condition, properties, business or annual
results of operations of ING and its subsidiaries, taken as a whole;
and
- the approvals relating to new investment contracts and amended Rule 12b-1
distribution plans for each mutual fund are obtained for mutual funds
representing at least 75% of the total assets under management, as
measured by the aggregate of the net assets of the open-end and
closed-end mutual funds, as adjusted to eliminate increases or decreases
attributable exclusively to positive or negative changes in the market
value of portfolio assets as of the date of the merger agreement.
Conditions to Obligations of ReliaStar. The obligations of ReliaStar to
effect the merger are also subject to the satisfaction or waiver of each of the
following conditions at or before the completion of the merger:
- the representations and warranties of ING, ING America and Merger Sub in
the merger agreement which are qualified by the term "parent material
adverse effect" are each true and correct as so qualified as of the date
of the merger agreement and as of the closing date as though made on and
as of the closing date (except to the extent any of representation or
warranty expressly speaks as of an earlier date),
- the representations and warranties of ING, ING America and Merger Sub in
the merger agreement dealing with capitalization, organization, good
standing and qualification and corporate authority which are not
qualified by the term "parent material adverse effect" are each true and
correct in all material respects as of the date of the merger agreement
and as of the closing date as though made on and as of the closing date
(except to the extent any such representation or warranty expressly
speaks as of an earlier date), and
- the representations and warranties of ING, ING America and Merger Sub in
the merger agreement not described in the preceding two paragraphs
(without giving effect to any
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qualifications as to materiality or other similar qualifications) are
true and correct as of the date of the merger agreement and as of the
closing date as though made on and as of the closing date (except to the
extent any such representation or warranty expressly speaks as of an
earlier date), except where the failure of such representations and
warranties to be true and correct (without giving effect to any
qualifications as to materiality or other similar qualifications) would
not be, individually or in the aggregate, reasonably likely to have what
is referred to in the merger agreement as a "parent material adverse
effect."
As used in the merger agreement, the term "parent material adverse
effect" means a material adverse effect on the financial condition,
properties, business or annual results of operations of ING and its
subsidiaries taken as a whole, except to the extent that such adverse
effect results from (i) general economic conditions or changes therein,
(ii) financial market fluctuations or conditions, (iii) adverse economic
or regulatory changes or effects in or affecting the financial services
industry, banking industry, insurance industry or asset management
industry generally or (iv) the announcement of the merger, or any effect
which prevents, materially delays or materially impairs the consummation
of the merger;
- each of ING, ING America and Merger Sub performs in all material respects
its obligations under the merger agreement; and
- ING obtains all necessary consents and approvals.
TERMINATION AND TERMINATION FEE
The merger agreement may be terminated and the merger abandoned at any time
before the completion of the merger
- by mutual consent of ReliaStar and ING America;
- by either ING America or ReliaStar if
-- the merger is not completed by March 31, 2001, subject to a two-month
extension in limited circumstances if regulatory approvals are not
obtained, except that a party may not terminate the agreement if it has
materially breached an obligation under the merger agreement which has
proximately contributed to the failure of the merger to be consummated
by that date,
-- the approval of ReliaStar's shareholders of the merger is not obtained
at a meeting duly called for that purpose or at an adjournment or
postponement of that meeting,
-- any order of a governmental entity permanently restraining consummation
of the merger becomes final and non-appealable, or
-- any law is in effect or adopted or issued which prohibits the merger;
- by ReliaStar if
-- ING America or Merger Sub materially breaches any representation,
warranty, covenant or agreement contained in the merger agreement that
is not curable and that would cause the condition relating to ING
America's or Merger Sub's representations, warranties or obligations
pursuant to the merger agreement not to be satisfied or to be incapable
of being satisfied, or
-- at any time before obtaining the approval of the merger by ReliaStar's
shareholders, ReliaStar's board of directors determines in good faith,
on the basis of the advice of its financial advisors and outside
counsel, in response to a superior proposal, but if, and only if,
ReliaStar substantially concurrently with such termination enters into
a definitive
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agreement containing the terms of a superior proposal, and provided,
however, that ReliaStar may not so terminate the merger agreement
unless ReliaStar complies with (1) its obligations under the merger
agreement regarding acquisition proposals and (2) all applicable
requirements of the merger agreement, including the payment of the
termination fee, and provided further that ReliaStar may not exercise
this right to terminate the merger agreement pursuant to the foregoing
until after five business days following ING America's receipt of
written notice advising ING America that ReliaStar's board of directors
has received a superior proposal and that the board of directors will
cause ReliaStar to accept such superior proposal, specifying the
material terms and conditions of, and identifying the person making,
the superior proposal;
- by ING America if
-- the board of directors of ReliaStar withdraws or adversely modifies its
adoption or recommendation of the merger agreement or approves or
recommends a proposal of another company,
-- ReliaStar materially breaches any representation, warranty, covenant or
agreement contained in the merger agreement that is not curable that
would cause the condition relating to ReliaStar's representations,
warranties or obligations pursuant to the merger agreement not to be
satisfied or to be incapable of being satisfied, or
-- any securities or assets are issued or delivered pursuant to
ReliaStar's rights agreement.
ReliaStar agreed that it will pay ING America a termination fee of $120
million and ING's out-of-pocket expenses of up to $5 million, if
- ING America terminates the merger agreement because the board of
directors of ReliaStar withdraws or adversely modifies its adoption or
recommendation of the merger agreement or approves or recommends a
proposal of another company, or
- subject to the conditions described above, ReliaStar's board of directors
determines in good faith, on the basis of the advice of its financial
advisors and outside counsel, in response to an acquisition proposal that
was unsolicited and that did not otherwise result from a breach of
ReliaStar's obligations under the merger agreement, that such proposal is
a superior proposal, but if, and only if, ReliaStar substantially
concurrently with such termination enters into a definitive agreement
containing the terms of a superior proposal.
ReliaStar has also agreed to pay ING,
- its out-of-pocket expenses of up to $5 million if ReliaStar terminates
the merger agreement because the approval of ReliaStar's shareholders of
the merger has not been obtained at a meeting duly called for that
purpose or at an adjournment or postponement of that meeting, plus
- $120 million if, before the ReliaStar's shareholders meeting, another
entity's acquisition proposal became public or another entity publicly
disclosed its intention to make an acquisition proposal, and, within
fifteen months from the date of termination of the merger agreement,
ReliaStar enters into an agreement with respect to an acquisition
proposal or an acquisition involving ReliaStar is consummated.
ReliaStar further agreed to pay ING
- its out-of-pocket expenses of up to $5 million if ING America terminates
the merger agreement because ReliaStar materially breaches any
representation, warranty, covenant or agreement contained in the merger
agreement that is not curable and that would cause the
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condition relating to ReliaStar's representations, warranties or obligations
pursuant to the merger agreement not to be satisfied or to be incapable of being
satisfied, plus
- $120 million if ReliaStar's breach is deliberate and, before the
termination of the merger agreement, another entity's acquisition
proposal was made to ReliaStar or became public, and, within fifteen
months from the date of termination of the merger agreement, ReliaStar
enters into an agreement with respect to an acquisition proposal or an
acquisition involving ReliaStar is consummated.
MISCELLANEOUS AND GENERAL
The merger agreement also provides that
- some portions of the merger agreement will survive the termination,
- the parties may amend the merger agreement only by a written agreement,
- the conditions to each party's obligations to consummate the merger may
be waived only by that party,
- the merger agreement is to be governed by the Delaware law, and the
parties submit to the jurisdiction of the federal courts located in
Delaware with respect to the controversies arising out of the merger and
waive their rights to jury trial, and
- the merger agreement is not assignable.
THE STOCK OPTION AGREEMENT
The following is a brief summary of the material provisions of the stock
option agreement. Because this summary is not a complete description of the
stock option agreement, we qualify it by reference to the stock option agreement
and urge you to read the stock option agreement in its entirety for a complete
description of the terms and conditions of the option. We attach a copy of the
stock option agreement to this prospectus/proxy statement as Appendix B and
incorporate it by reference in this prospectus/proxy statement.
THE OPTION
As an inducement to ING to enter into the merger agreement, ReliaStar
granted to ING America an option to purchase up to 8,873,630 shares of
ReliaStar's common stock at $54.00 per share.
If any additional shares of ReliaStar's common stock become outstanding
after the date of the stock option agreement, the number of shares purchasable
upon exercise of the option would be automatically increased to equal 9.9% of
ReliaStar's outstanding common stock. Also, the number of shares purchasable
upon exercise of the option is limited to 9.9% of ReliaStar's outstanding common
stock without giving effect to the shares issued or issuable under the option.
EXERCISE OF THE OPTION
The option will become exercisable if the merger agreement terminates and
ING America becomes entitled to receive the termination fee of $120 million
under the merger agreement.
Once the option is exercisable, the holder of the option may exercise the
option by delivering to ReliaStar a written notice.
The right to purchase ReliaStar shares under the option terminates upon
either
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- the completion of the merger, or
- the close of business on the earlier of
-- the day 180 days after the date that ING America becomes entitled to
receive the termination fee under the merger agreement, which may be
extended if there is a legal impediment to exercise the option, and
-- the date that ING America is no longer potentially entitled to receive
the termination fee under the merger agreement for a reason other than
that it has already received the termination fee.
The stock option agreement provides for the procedure that the parties must
follow if the option becomes exercisable.
REPURCHASE OF OPTION/SHARES
ReliaStar agreed that after the option becomes exercisable and at the
request of an option holder delivered within a time period specified in the
stock option agreement, it will repurchase
- the option, in whole or in part, at a price equal to the number of shares
purchasable upon exercise of the option (or a lesser number specified in
the notice) multiplied by the amount derived by subtracting $54.00 from
the "market/offer price," and
- any shares that have been issued pursuant to the option at a price equal
to the number of shares specified multiplied by the "market/offer" price.
The "market/offer price" means the highest of (1) the highest price per
share at which an acquisition proposal has been made, (2) the price per share to
be paid pursuant to an agreement relating to an acquisition proposal with
ReliaStar and (3) the highest trading price for the shares on the NYSE within
the previous 120 days.
ING America agreed that, at ReliaStar's request made after the tenth day
following a closing of the sale of shares pursuant to the option and not later
than 120 days after the termination of the option, ReliaStar may repurchase from
ING America all the shares issued under the option at a price equal to the
greater of the "market/offer" price or $54.00.
LIMITATION ON PROFIT
ING America agreed that in no event will its total profit from the option
(including amounts payable under its repurchase rights), taken together with the
termination fee payable under the merger agreement, exceed $130 million.
The stock option agreement provides for the procedure to be followed by the
parties to avoid the situation in which ING America's total profit would exceed
$130 million.
REGISTRATION
After the option becomes exercisable and at the request of ING America,
ReliaStar will prepare, file and keep current a shelf registration statement
covering all shares issued or issuable under the option, and ReliaStar will then
use its best efforts to cause the registration statement to become effective and
to remain effective for one year or until ING America sells all the option
shares.
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EFFECT OF STOCK OPTION
The execution of the stock option agreement and/or the issuance of the
shares subject to the stock option agreement may delay or make more difficult an
acquisition of ReliaStar by a person other than ING.
APPRAISAL RIGHTS
Holders of shares of ReliaStar common stock receiving the cash payment of
$54.00 per share have the right to have their shares of ReliaStar common stock
appraised by the Delaware Court of Chancery in order to receive the appraised
value of such ReliaStar common stock.
With respect to shares of ReliaStar common stock held by the ESOP, the
participants in the plan are not the record holders of the stock and are thus
not eligible to exercise appraisal rights under Delaware law. The ESOP trustee
has sole discretion to make the determination to assert appraisal rights with
respect to shares for which the trustee receives directions to vote against
adoption of the merger agreement. The trustee's decision regarding appraisal
rights is subject to its fiduciary duty under ERISA.
A holder seeking to exercise his or her right of appraisal must comply with
Section 262 of the Delaware General Corporation Law in order to have this right.
THE STATUTORY RIGHT OF APPRAISAL GRANTED BY SECTION 262 REQUIRES STRICT
COMPLIANCE WITH THE PROCEDURES SET FORTH IN THAT STATUTE. FAILURE TO FOLLOW ANY
OF THOSE PROCEDURES MAY RESULT IN A TERMINATION OR WAIVER OF THE APPRAISAL
RIGHTS. The full text of Section 262 is attached to this prospectus/proxy
statement as Appendix D.
If you elect to exercise appraisal rights under Section 262, you must
strictly comply with the requirements of that statute, including the following:
- delivery of a written demand for appraisal to ReliaStar before the vote
on the adoption of the merger agreement;
- holding the shares until after the completion of the merger;
- not voting in favor of adopting the merger agreement;
- not exchanging your shares; and
- filing a petition with the Delaware Court of Chancery.
If you wish to seek appraisal of your shares, you should initiate all
necessary action with respect to your appraisal rights within the time periods
and in the manner prescribed in Section 262. The written demand called for by
Section 262 should be delivered to ReliaStar Financial Corp., 20 Washington
Avenue South, Minneapolis, Minnesota 55401, Attention: Corporate Secretary.
If you are considering seeking appraisal, you should be aware that the fair
value of your shares of ReliaStar common stock determined under Section 262
could be more than, the same as, or less than the value of the consideration to
be received under the merger agreement.
IN VIEW OF THE COMPLEXITY OF THESE PROVISIONS OF DELAWARE LAW, IF YOU ARE
CONSIDERING EXERCISING YOUR APPRAISAL RIGHTS YOU SHOULD CONSULT YOUR LEGAL
ADVISER.
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COMPARISON OF SHAREHOLDER RIGHTS
At the completion of the merger, shares of ReliaStar common stock held by
the ESOP will be converted into ING ADSs representing bearer receipts, each of
which represents one ordinary share of ING.
Bearer receipts, which are negotiable instruments under Netherlands law,
are issuable by the Stichting Administratiekantoor ING Groep, which we refer to
as the trust, pursuant to the terms of the trust's articles of association
(Statuten) and the related conditions of administration
(Administratievoorwaarden) (which, when read together, are the trust agreement).
The trust agreement governs the rights of the holders of bearer receipts
relative to the trust. Each bearer receipt represents an interest in one ING
ordinary share, nominal value one guilder, held by the trust. As of December 31,
1999, the trust held approximately 966,541,306 ordinary shares of ING, which
represents 99.9% of the ING ordinary shares outstanding. The bearer receipts are
traded on the AEX Stock Exchange in the Netherlands. There are no limitations
under Netherlands law on the rights of non-residents or non-citizens to hold or
vote the bearer receipts of ordinary shares, other than the general limitations
described below.
Each ADS represents one bearer receipt. The ADSs are listed on the New York
Stock Exchange under the symbol "ING," and are the principal form in which the
bearer receipts are traded in the United States. The bearer receipts represented
by the ADSs are held by Morgan Guaranty Trust Company of New York, as the
depositary, pursuant to the terms of a deposit agreement.
The rights of holders of bearer receipts are governed by ING Group's
articles, the trust agreement and Netherlands law, each of which differ in
material respects from ReliaStar's certificate of incorporation, ReliaStar's
by-laws and Delaware law. The following is a summary of certain material
differences between the rights of holders of shares of ReliaStar common stock
and holders of bearer receipts and ordinary shares. Because holders of ADSs have
substantially the same rights as holders of bearer receipts, this section
generally refers to the rights of holders of bearer receipts (without separately
discussing the rights of ADS holders as such).
The description of the ING articles, the trust agreement, the deposit
agreement and applicable provisions of Netherlands law set forth below does not
purport to be complete and is qualified in its entirety by reference to the ING
articles, the trust agreement, the deposit agreement and the applicable
provisions of Netherlands law referred to in such description. The ING articles
and the trust agreement are incorporated by reference in the registration
statement of which this prospectus/proxy statement forms a part.
AMENDMENT OF CONSTITUENT DOCUMENTS
Under Delaware law, amendments to a corporation's certificate of
incorporation require a recommendation by the board of directors, followed by
the approval of a majority of the votes entitled to be cast and a majority of
the outstanding stock of each class entitled to vote thereon as a class.
ReliaStar's certificate of incorporation requires a 75% shareholder vote to
alter, amend or repeal, or adopt any provisions inconsistent with: (i) Article
Fourth, which relates to the capital stock of ReliaStar; (ii) Sections 2, 4, 7,
8, 9, 10, 11 and 12 of Article Sixth, which relate to the board of directors;
(iii) Article Seventh, which relates to certain business combinations; and (iv)
Article Tenth, which relates to the alteration, amendment or repeal of
ReliaStar's certificate of incorporation. If, however, the Board of Directors
recommends such alteration, amendment, repeal or adoption, and a majority of the
Board members are eligible to serve as "continuing directors," as defined in
ReliaStar's certificate of incorporation, such 75% shareholder vote is not
necessary.
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In the case of ING, only the management board of the trust may amend the
trust's articles of association. A resolution of the trust's management board to
amend the trust's articles of association must be adopted in a meeting of the
management board in which all members of the management board are present or
represented. In addition, the prior approval of the Executive Board of ING Group
and the AEX Stock Exchange is required. The trust's management board may only
adopt such a resolution if there are no vacancies on the management board.
Resolutions to amend the ING articles may only be adopted upon a proposal
by the Executive Board that is approved by the Supervisory Board and voted on at
a general meeting of the shareholders. Such resolution must generally be
approved by at least two-thirds of the votes cast at a general meeting of
shareholders at which at least two-thirds of the issued share capital is
represented.
VOTING RIGHTS
Under Delaware law and ReliaStar's certificate of incorporation, each
holder of shares is entitled to one vote per share.
Under Netherlands law, ordinary shares have one vote per share. Holders of
bearer receipts are entitled to attend and speak at general meetings of
shareholders of ING, but, except as described below, are not entitled to
exercise any voting rights with respect to the ordinary shares that underlie the
bearer receipts which are owned by the trust. However, whenever the trust deems
necessary or desirable, the trust may consult holders of bearer receipts to the
degree and subject to such terms and conditions it considers appropriate. The
trust reserves the right to decide its vote of the ordinary shares without
consulting the holders of bearer receipts.
The trust is required, under the terms of the trust agreement, to make use
of the voting rights associated with the ordinary shares of ING in such a manner
that:
- the interests of ING and of the enterprises sustained by ING and the
companies affiliated as a group with ING are served;
- the interests of ING and of those enterprises and all parties concerned
are safeguarded as well as possible; and
- influences which could violate the independence, the continuity or the
identity of ING and those enterprises contrary to the aforementioned
interests are barred to the greatest extent possible.
However, the trust will, at the request of a holder of bearer receipts,
grant a proxy permitting such holder to vote the number of its ordinary shares
that corresponds to the number of bearer receipts held by such holder if the
following conditions are met:
- the holder of bearer receipts must be a natural person;
- the relevant holder of bearer receipts must have deposited his or her
bearer receipts with the trust no later than on the second stock exchange
day before the day of the general meeting of shareholders observing the
provisions laid down in ING's articles;
- the number of ordinary shares to which the voting proxy relates will not
exceed one percent of the total issued ordinary share capital of ING.
This percentage will be reduced by the percentage of the ordinary share
capital of ING that is held by such holder of bearer receipts himself or
herself in the form of registered ordinary shares as opposed to bearer
receipts;
- the relevant holder of bearer receipts may not delegate the powers
conferred upon him or her by means of the voting proxy;
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- the voting proxy will be valid for one specific general meeting of
shareholders that has been designated in the voting proxy and will expire
at the end of that meeting.
Because the ESOP is not a natural person, participants in the ESOP will not
be able to use the proxy mechanism described above with respect to shares held
through the ESOP.
In order to vote at a general meeting of shareholders, holders of ordinary
shares (including those voting by proxy) must notify ING in writing of their
intention to attend the meeting no later than the fourth AEX Stock Exchange day
before the day of the meeting.
SHAREHOLDERS' MEETINGS
Under Delaware law, unless directors are elected by written consent, an
annual meeting of shareholders must be held in a manner provided in the by-laws
and may be ordered by the Court of Chancery, upon the application of any
shareholder or director, if an annual meeting is not held within thirty days
after the date designated for such meeting, or if no date has been designated
for a period of thirteen months after the latest to occur of the last annual
meeting or the last action by written consent to elect directors in lieu of an
annual meeting. ReliaStar's by-laws provide that the annual meeting shall be
held on such date and at such time as the board of directors shall designate
from time to time. Pursuant to ReliaStar's by-laws, only the Chairman, the
President or the Secretary or any officer who has been requested in writing by a
majority of the board of directors or a majority of the Executive Committee, may
call a special meeting.
Under Netherlands law, a public company with limited liability must hold at
least one annual general meeting of shareholders, to be held not later than six
months after the end of the fiscal year unless the articles of association
provide for a shorter term (which is not done by the ING articles). Pursuant to
the ING articles, general meetings of shareholders may also be held as often as
the Executive Board or the Supervisory Board deems desirable. In addition,
shareholders or holders of bearer receipts representing at least one-tenth of
the issued share capital may request the Executive Board in writing to convene a
general meeting of shareholders. If the Executive Board or the Supervisory Board
has not taken measures so that the meeting can be held within six weeks after
such request has been made, the persons who have made the request are authorized
to convene such a meeting in accordance with requirements of Netherlands law.
The ING articles specify the places where general meetings of shareholder may be
held, all of which are located in the Netherlands.
ACTION BY WRITTEN CONSENT OF SHAREHOLDERS
ReliaStar's certificate of incorporation specifically denies shareholders
the power to act by written consent.
Under Netherlands law, resolutions may be adopted by shareholders in
writing without holding a meeting of shareholders, provided the articles of
association expressly so allow and provided no bearer shares or, with the
cooperation of the company, depositary receipts for shares, are issued. Because
the ING articles do not contain such express provision, and because ING has
issued bearer shares and depositary receipts for shares that have been issued
with ING's cooperation, shareholders of ING may not adopt resolutions without a
meeting of shareholders.
SHAREHOLDER NOMINATIONS
ReliaStar's by-laws provide that shareholders may nominate individuals for
election to the board of directors at a meeting of ReliaStar's shareholders
entitled to vote for the election of directors. In order to nominate an
individual, a shareholder must deliver written notice to the Secretary of
ReliaStar not less than sixty days prior to the date fixed for the meeting. If,
however, less than seventy-five days prior public disclosure of the date of the
meeting is given, the shareholder may
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deliver the written notice by the close of business on the fifteenth day
following the day on which such public disclosure was made.
The ING articles provide that the members of the Executive Board are
appointed to the Executive Board by the Supervisory Board. The Supervisory
Board's authority to appoint members of the Executive Board may not be limited
by a binding nomination. The Supervisory Board generally appoints its own
members.
ELECTION AND REMOVAL OF DIRECTORS; FILLING OF VACANCIES
ReliaStar's certificate of incorporation provides that the Board of
Directors shall consist of not less than six nor more than eighteen persons. The
Board is classified into three classes, each elected for three-year terms.
Directors are removable only for cause by 75% of the votes then entitled to vote
for directors. Shareholders are not entitled to cumulate their votes in the
election of directors. ReliaStar's by-laws provide that all vacancies are filled
by the majority vote of the remaining directors, but that a director so elected
to fill a vacancy may continue in office only until the next election of
directors by shareholders.
The governance of ING differs substantially from that of ReliaStar.
Pursuant to the terms of its articles of association, the trust is administered
by a management board which consists of seven members. Two members of the
management board (which are each referred to as a "Managing Director -- A") are
appointed by ING Group's Supervisory Board from among its members. The other
five members of the management board (which are each referred to as a "Managing
Director -- B") are appointed by the management board itself, subject to the
approval of the Executive Board of ING Group. The managing directors are
appointed for terms of three years. Valid resolutions may be passed only if at
least one Managing Director -- B is present or represented and all managing
directors have been duly notified, except that in a case where there is no such
notification, valid resolutions may nevertheless be passed by unanimous consent
at a meeting at which all managing directors are present or represented. A
managing director may only be represented by a fellow managing director who is
authorized in writing. All resolutions of the management board require a
favorable vote of a majority of the managing directors.
The ING articles provide that each of ING Group's Supervisory Board and
Executive Board consists of at least three members, with the number to be
determined by the Supervisory Board. Under the ING articles, the Supervisory
Board appoints the members of the Executive Board and determines the terms of
employment of such members. The Executive Board is responsible for the
management of ING Group and as such, has responsibility for the policy and
central management of ING Group under the supervision of the Supervisory Board.
The Supervisory Board advises the Executive Board and is responsible for
supervising the policy of the Executive Board and the general course of business
within ING. In addition, certain resolutions by the Executive Board are subject
to approval by the Supervisory Board. In the performance of their duties, the
members of the Supervisory Board must serve the interests of ING. The members of
the Executive Board are employees of ING.
The Supervisory Board, subject to certain limitations, appoints its own
members. The Executive Board, the General Meeting of Shareholders acting as a
corporate body and the General Works Council may recommend candidates for
membership on the Supervisory Board. The General Meeting and the General Works
Council have certain limited rights to object to candidates for membership on
the Supervisory Board. The latter two also have a right to object to candidates
proposed for appointment by the Supervisory Board. No employee of ING is
eligible for appointment to the Supervisory Board. Members of the Supervisory
Board are appointed for a maximum term of four years and may be reappointed.
However, members are required to retire at the end of the annual general meeting
of shareholders in the year in which they reach the age of 70, unless an
exemption is
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granted by the Supervisory Board, in which case, the Supervisory Director
concerned must resign at the end of the annual general meeting of shareholders
in the year in which he or she reaches the age of 72.
Under Netherlands law and the ING articles, the Supervisory Board has the
authority to suspend or remove members of the Executive Board. A member of the
Executive Board can be removed by the Supervisory Board only after having
consulted with the General Meeting on the intended dismissal. Removal without
cause is possible but may be contrary to the principles of reasonableness and
fairness which are imposed under Netherlands law. Any removal without cause
therefore could be declared null and void. Members of the Supervisory Board may
be removed by the court upon petition by ING for such purpose as determined by
the Supervisory Board or the General Meeting.
APPRAISAL RIGHTS
Delaware law provides for appraisal rights for shares of stock that are
listed on a national securities exchange in connection with mergers and
consolidations; provided, however, that the terms of the agreement of merger or
consolidation require the shareholders to accept anything except: (i) shares of
stock of the corporation surviving or resulting from such merger or
consolidation, or depositary receipts in respect thereof; (ii) shares of stock
of any other corporation, or depositary receipts in respect thereof, which will
be either listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or held of record by more than 2,000
holders; (iii) cash in lieu of fractional shares or fractional depositary
receipts; or (iv) any combination of (i), (ii) and (iii) above. ReliaStar's
certificate of incorporation and by-laws contain no provisions relating to
appraisal rights.
None of the ING articles, the trust agreement and Netherlands law recognize
the concept of appraisal rights and, accordingly, holders of ordinary shares, as
well as holders of bearer receipts, have no appraisal rights.
PREEMPTIVE RIGHTS
Under ReliaStar's certificate of incorporation, shareholders of ReliaStar
have no preemptive rights to subscribe for, purchase or otherwise acquire any
additional security or obligation convertible into, or any warrant, option or
right to subscribe for, purchase or otherwise acquire, shares of any class or
series of capital stock of ReliaStar.
Under Netherlands law, holders of shares in a public company with limited
liability have preemptive rights with respect to newly issued shares in
proportion to the aggregate nominal value of their shareholdings (with the
exception of shares to be issued to employees of the company or any other
company that is a member of the same group under Netherlands law). Such
preemptive rights in respect of newly issued ordinary shares (the ADSs being
paid as Stock Consideration are being issued in respect of ordinary shares held
in treasury) may be limited or excluded by the General Meeting or another
corporate body designated for this purpose by the general meeting of
shareholders or the articles of association for a maximum term of five years.
Unless the articles of association state otherwise (which the ING articles do
not), holders of preference shares have no preemptive rights and shareholders
have no preemptive rights with respect to newly issued preference shares or
shares issued for a contribution other than cash.
The ING articles provide that upon the issue of ordinary shares, holders of
ordinary shares have a preemptive right subject to the exceptions provided by
Netherlands law. A resolution of the General Meeting to limit or exclude the
preemptive right or to designate another corporate body requires a simple
majority of the votes cast if more than half, or a majority of at least
two-thirds of the votes cast if less than half, of the issued share capital of
ING is represented at the relevant general meeting
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of shareholders. At the annual general meeting of shareholders on May 2, 2000,
the General Meeting designated the Executive Board as being authorized for a
period ending on November 2, 2001, to limit or exclude preemptive rights for the
issuance of 194,000,000 ordinary shares.
If ING offers or causes to be offered to the holders of ordinary shares the
right to subscribe for additional ING shares, the trust, subject to applicable
law, will offer to each holder of bearer receipts the right to instruct the
trust to subscribe for such holder's proportionate share of such additional
shares, subject to such holder providing the trust with the funds necessary to
subscribe for such additional ING shares. If such an offer is made and if a
holder of bearer receipts provides the trust with the necessary funds, the trust
will subscribe for the corresponding number of ING shares, which will be placed
in the trust, and deliver additional bearer receipts in respect of such shares,
to each such holder of bearer receipts or adopt such method as it may deem
equitable and practicable to permit such subscription. The trust will offer such
rights to a holder of bearer receipts only if such offer is legal and valid
under the provisions of the laws of the country of residence of such holder of
bearer receipts.
DIVIDENDS
Under Delaware law, a Delaware corporation may make a distribution, subject
to restrictions in the certificate of incorporation, out of either its surplus
or if there is no such surplus, its net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. If, however, the capital
of the corporation shall have been diminished by depreciation in the value of
its property, or by losses or otherwise, to an amount less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, no distribution may
be made. ReliaStar's certificate of incorporation and by-laws provide that the
Board of Directors may declare dividends at its discretion.
Holders of bearer receipts are entitled to receive the economic benefits
corresponding to the ordinary shares underlying such bearer receipts within one
week of the time when the trust receives the corresponding dividends or other
distributions to shareholders. The trust will distribute cash dividends and
other cash distributions received by it in respect of the ordinary shares held
by the trust to the holders of the bearer receipts in proportion to their
respective holdings, in each case in the same currency in which they were
received. Cash dividends and other cash distributions in respect of bearer
receipts for which ADSs have been issued will be distributed in U.S. dollars in
accordance with the Deposit Agreement.
If ING declares a dividend in, or free distribution of, ordinary shares or
preference shares, such ordinary shares or preference shares will be held by the
trust, and the trust will distribute to the holders of the outstanding bearer
receipts, in proportion to their holdings, additional bearer receipts issued for
the ordinary shares or preference shares received by the trust as such dividend
or distribution. In the event the trust receives any distribution with respect
to ordinary shares held by the trust other than in the form of cash or
additional ING shares, the trust will adopt such method as it may deem legal,
equitable and practicable to effect such distribution.
If the trust has the option to receive such distribution either in cash or
ING shares, the trust will give notice of such option by advertisement and give
holders of bearer receipts the opportunity to choose between cash and ING shares
until the fourth day before the day on which the trust must have made such
choice. Holders of bearer receipts may receive an equal nominal amount in
ordinary shares, provided that they are natural persons and do not hold more
than 1% of the issued share capital of ING Group in the form of ordinary shares.
Dividends, whether in cash or shares, may be payable out of the annual
profits of ING, as reflected in the annual accounts adopted by the Supervisory
Board and approved by the General
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Meeting. At its discretion, but subject to statutory provisions, the Executive
Board may, with the prior approval of the Supervisory Board, distribute one or
more interim dividends, whether in cash, or shares, or one or more classes of
shares before the annual accounts for any financial year have been adopted by
the Supervisory Board and approved by the General Meeting. The Executive Board,
with the approval of the Supervisory Board, may decide that all or part of ING
Group's profits after the distribution of dividends to the holders of preference
shares should be retained and not be made available for distribution to holders
of ordinary shares. Those profits that are not retained may be distributed to
shareholders pursuant to a resolution of the General Meeting, provided that the
distribution does not reduce shareholders' equity below the issued share capital
increased by the amount of reserves required by Netherlands law. The Executive
Board determines, with the approval of the Supervisory Board, whether the
dividends on ordinary shares are payable in cash, in shares, or at the option of
the holders of ordinary shares, in cash or in shares. Existing reserves that are
distributable in accordance with Netherlands law may be made available to the
General Meeting for distribution upon proposal by the Executive Board, subject
to prior approval by the Supervisory Board. See ING Group's Annual Report on
Form 20-F for the fiscal year ended December 31, 1999 which is incorporated by
reference into this prospectus/proxy statement for additional discussion of the
dividend rights of holders of ordinary shares. The Executive Board may also
decide, with the approval of the Supervisory Board, to declare dividends in the
currency of the country other than the Netherlands in which the bearer receipts
are trading.
RIGHTS OF PURCHASE AND ACQUISITION
Under Delaware law, a corporation may make its stock subject to redemption
by the corporation at its option, at the option of the shareholders of such
stock or upon the occurrence of a specified event; provided, however, that
immediately following such redemption, the corporation shall have outstanding
one or more shares of one or more classes or series of stock, which share, or
shares together, shall have full voting powers.
Under Netherlands law, a public company with limited liability may not
subscribe for newly issued shares in its own capital. Such company may, subject
to certain restrictions of Netherlands law and its articles of association,
acquire shares and/or depositary receipts for shares in its own capital. ING may
acquire its own shares and/or bearer receipts for consideration if (i)
shareholders' equity less the payment required to make the acquisition is not
less than the sum of called and paid-up capital and any reserve required by
Netherlands law and the ING articles and (ii) ING and its subsidiaries would not
thereafter hold or hold as a pledgee shares and/or bearer receipts with an
aggregate nominal value exceeding one-tenth of the nominal value of ING Group's
issued share capital. Shares in its own capital held by ING or by a subsidiary
of ING and shares in its own capital for which ING or a subsidiary of ING holds
bearer receipts may not be voted or counted for quorum purposes. For any such
acquisitions the Executive Board requires authorization of the General Meeting,
which authorization may apply for a maximum period of eighteen months, and
approval of the Supervisory Board.
SHAREHOLDER VOTES ON CERTAIN REORGANIZATIONS
Under Delaware law, the vote of a majority of the outstanding shares of
capital stock entitled to vote thereon generally is necessary to approve a
merger, such as ReliaStar's merger with ING, or consolidation.
Under Delaware law, no vote of the shareholders of a surviving corporation
to a merger is needed, however, if (i) the plan of merger does not amend the
articles of incorporation of the surviving corporation; (ii) the shares of the
stock of the surviving corporation are not changed in the merger; and (iii)
either the number of shares of common stock of the surviving corporation into
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which any other shares, securities or obligations to be issued in the merger or
the authorized unissued share of the treasury shares of common stock of the
surviving corporation to be issued in the merger plus those initially issuable
upon conversion of any other shares, securities or obligations to be issued in
the merger do not exceed 20% of the surviving corporation's common shares
outstanding immediately prior to the effective date of the merger. In addition,
shareholders may not be entitled to vote in certain mergers with other
corporations that own 90% or more of the outstanding shares of each class of
stock of such corporation.
The ING articles do not expressly require the approval of the General
Meeting for reorganizations or mergers in which ING would not be the surviving
entity, but by virtue of the application of Netherlands statutory law, a legal
merger involving ING and in which ING would not be the surviving entity is
subject to the approval of the General Meeting. A resolution to effect a legal
merger in which ING would not be the surviving entity may be passed upon the
motion of the Executive Board approved by the Supervisory Board and approved by
at least two-thirds of the votes cast at a general meeting of shareholders at
which at least two-thirds of the issued share capital is represented.
RIGHTS OF INSPECTION
Under Delaware law, any shareholder may inspect for any proper purpose the
corporation's stock ledger, a list of its shareholders and its other books and
records, during the corporation's usual hours for business.
Under Netherlands law, the shareholders' register is available for
inspection by the shareholders. Holders of the bearer receipts, however, will
have no such rights. Members of the Supervisory Board are authorized to inspect
the books and records of ING and are permitted access to the buildings and
premises of ING.
LIMITATION OF DIRECTORS' LIABILITY/INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware law permits a corporation to include in its articles of
incorporation a provision eliminating or limiting a director or officer's
personal liability to the corporation or its shareholders for monetary damages
for breaches of fiduciary duty. However, Delaware law expressly provides that
the liability of a director or officer may not be eliminated or limited for (i)
breaches of the director's duty of loyalty to the corporation or its
shareholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) any transaction from
which the director derived an improper personal benefit; or (iv) the unlawful
purchase or redemption of stock or unlawful payment of dividends. ReliaStar's
certificate of incorporation contains a provision eliminating director liability
to the fullest extent permitted by Delaware law.
Generally, Delaware law permits a corporation to indemnify certain persons
made a party to any action, suit or proceeding by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation. To the extent that a present or former director or officer of the
corporation has been successful in any such matter, that person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person. In the case of an action by or in the right of the
corporation, no indemnification may be made in respect of any matter as to which
that person was adjudged liable to the corporation unless and only to the extent
that the court in which the action was brought determines that despite the
adjudication of liability, that person is fairly and reasonably entitled to
indemnity for proper expenses.
The concept of indemnification of directors of a company for liabilities
arising from their actions as members of the executive or supervisory boards is,
in principle, accepted in the Netherlands,
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provided such directors have duly performed their duties, and sometimes is
provided for in a company's articles of association. Although neither the laws
of the Netherlands nor the ING articles contain any specific provisions in this
respect, ING has contractually agreed to indemnify members of the ING Executive
and Supervisory Boards and officers of ING to the extent permitted under
Netherlands law.
In addition, under ING Group's articles, approval of ING Group's annual
accounts by the General Meeting of Shareholders discharges the members of the
Executive Board and the Supervisory Board from liability in respect of the
exercise of their duties during the financial year concerned, unless an explicit
reservation is made by the General Meeting of Shareholders, subject to certain
provisions of Netherlands law, including provisions relating to liability of
members of supervisory boards and executive boards upon bankruptcy of a company.
CERTAIN PROVISIONS RELATING TO BUSINESS COMBINATIONS
Delaware law generally prevents a corporation from entering into certain
business combinations with an "interested stockholder" (defined generally to
include any person or entity that is the beneficial owner of at least 15% of a
corporation's outstanding voting stock or certain of its affiliates) within a
three-year period immediately following the time that such shareholder became an
interested stockholder, unless (i) the business combination or the transaction
which resulted in the shareholder becoming an interested stockholder is approved
by the board of directors of the corporation, prior to such time as the
shareholder became an interested shareholder; (ii) the interested stockholder
acquired at least 85% of the corporation's voting stock in the same transaction
in which it became an interested stockholder; or (iii) at or subsequent to such
time in which the shareholder became an interested shareholder, the business
combination is approved by the board of directors and authorized at an annual or
special meeting of shareholders, and not by written consent, by a vote of
66 2/3% of the outstanding voting stock not owned by the interested stockholder.
ReliaStar's certificate of incorporation requires the approval of business
combinations involving an "interested shareholder" (defined generally to include
any person or entity that is the beneficial owner of at least 20% of a
corporation's outstanding voting stock or certain of its affiliates) by a vote
of the holders of 75% of ReliaStar's outstanding capital stock entitled to vote,
unless the transaction either is approved by a majority of the "continuing
directors" or meets specified fair price and procedural requirements.
Neither Netherlands law nor the ING articles specifically prevents or
imposes special restrictions with respect to business combinations with
interested shareholders.
SHAREHOLDER SUITS
Under Delaware law, a shareholder may bring a derivative action on behalf
of the corporation to enforce the rights of the corporation. A person may
institute and maintain such a suit only if such person was a shareholder at the
time of the transaction (or became a shareholder through transfer of operation
of law from one who was a shareholder at that time) which is the subject of the
suit, and also through the duration of the derivative suit. Delaware law also
requires that the derivative plaintiff make a demand on the directors of the
corporation to assert the corporate claim before the suit may be prosecuted by
the derivative plaintiff, unless such demand would be futile.
Netherlands law does not provide for derivative suits or class actions.
CONFLICT-OF-INTEREST TRANSACTIONS
Delaware law generally permits transactions involving a Delaware
corporation and an interested director or officer of that corporation if (i) the
material facts as to such director or officer's
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relationship or interest are disclosed and a majority of disinterested directors
consents; (ii) the material facts as to such director or officer's relationship
or interest are disclosed to the shareholders entitled to vote thereon, and the
transaction is specifically approved in good faith by a vote of the
shareholders; or (iii) the transaction is fair to the corporation at the time it
is authorized by the board of directors, a committee or the shareholders.
Under Netherlands law, unless the articles of association of a company
provide otherwise, the company will be represented by its supervisory board in
case of a conflict of interest between such company and one or more of its
executive board members. The ING articles provide that if any member of the
Executive Board has an interest which conflicts with that of ING, such member
shall be entitled, like every other member of the Executive Board, to represent
ING, unless he has a conflicting interest in a personal capacity, in which case
the chairman of the Supervisory Board or another supervisory director designated
by the Supervisory Board shall be authorized to represent ING.
TRANSFER RESTRICTIONS
ReliaStar's by-laws provide that transfers of stock shall be made on the
books of ReliaStar only by the person named in the certificate or by such
person's attorney.
Under the ING articles, only natural persons may hold ordinary shares and
preference shares, and the issuance or transfer of ordinary shares and
preference shares is not permitted if and to the extent that the acquiror or
transferee alone or, pursuant to a mutual cooperation arrangement, together with
one or more natural or legal persons, directly or (other than as a depositary
receipt holder) indirectly (i) holds a nominal amount of ordinary shares or
preference shares equal to or exceeding 1% of the total issued ordinary share
capital or the total issued preference share capital or (ii) would acquire by
such a transfer more than 1% of the total issued ordinary share capital or the
total issued preference share capital, respectively.
SHAREHOLDER RIGHTS AGREEMENT
ReliaStar's board of directors adopted a Rights Agreement, as amended,
dated February 11, 1999. Under the Rights Agreement, each share of ReliaStar's
common stock has attached one preferred-share-purchase right. Each right
entitles the registered holder to purchase from ReliaStar one-twentieth of a
share of Series A Junior Participating Preferred Stock of ReliaStar for $100,
subject to adjustment to prevent dilution.
Initially, the rights attach to all certificates representing ReliaStar's
common stock and no separate rights certificates are distributed. The rights
will separate from the common stock and a distribution date for the rights will
occur, however, upon the earlier of the following events: (i) the close of
business on the fifteenth day following a public announcement that a person or
group of affiliated or associated persons has become an "acquiring person,"
defined as the beneficial owner of 20% or more of ReliaStar's outstanding common
stock or (ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange offer, if the
consummation of the offer would result in a person or group becoming the
beneficial owner of 20% or more of ReliaStar's outstanding common stock. If,
after the distribution date or within 15 days before that date, ReliaStar is
acquired or 50% or more of its assets or earning power is sold, then each holder
of a right, other than rights beneficially owned by the acquiring person, will
have the right to receive a number of common shares of the acquiring company
having a market value of two times the exercise price of the right. The
foregoing does not apply, however, to a transaction for at least the same
per-share consideration with a person who acquired ReliaStar's common stock
through a tender offer or exchange offer for all outstanding shares approved by
the Board.
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The rights expire on September 8, 2004, unless extended or earlier redeemed
or exchanged by ReliaStar. The rights are redeemable at a price of $.005 per
Right at any time before the close of business on the twentieth day after a
public announcement that a person or group of affiliated or associated persons
has become an acquiring person.
As required by the merger agreement, ReliaStar's board of directors amended
the Rights Agreement effective April 30, 2000. The effects of the amendment are
that: (i) the Rights Agreement is inapplicable to the merger and the related
transactions and (ii) all of the outstanding rights will terminate immediately
prior to the completion of the merger.
There is no comparable right attached to either ordinary shares or bearer
receipts. Ownership of ordinary shares, however, is subject to the limitation
described above under "-- Transfer Restrictions."
LIMITATIONS ON ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. FEDERAL SECURITIES
LAWS
ING Group is incorporated under the laws of the Netherlands, and all of the
members of its Supervisory Board and Executive Board and certain of the experts
named herein are non-residents of the United States. A substantial portion of
the assets of ING Group and its direct and indirect subsidiaries and such
non-resident persons are located outside the United States. As a result, it may
not be possible for investors to effect service of process within the United
States upon such persons or to enforce in United States courts judgments against
such persons and judgments of such courts predicated upon the civil liability
provisions of the U.S. Federal securities laws. ING Group has been advised by
its Dutch legal counsel that the United States and the Netherlands do not
currently have a treaty providing for reciprocal recognition and enforcement of
judgments (other than arbitration awards) in civil and commercial matters.
Therefore, a final judgment for the payment of money rendered by any Federal or
State court in the United States based on civil liability, whether or not
predicated solely upon the Federal securities laws of the United States, would
not be directly enforceable in the Netherlands. However, if the party in whose
favor such final judgment is rendered brings a new suit in a competent court in
the Netherlands, such party may submit to the Netherlands court the final
judgment that has been rendered in the United States. If the Netherlands court
finds that the jurisdiction of the Federal or State court in the United States
has been based on grounds that are internationally acceptable and that proper
legal procedures have been observed, the court in the Netherlands would, in
principle, give binding effect to the final judgment that has been rendered in
the United States unless such judgment contravenes the Netherlands' public
policy.
State insurance holding company statutes in the United States applicable to
ING Group's U.S. insurance subsidiaries generally provide that no person may
acquire control of ING Group, and thus indirect control of its U.S. insurance
subsidiaries, without the prior approval of the appropriate insurance
regulators. Generally, any person who acquires beneficial ownership of 10% or
more of the outstanding ordinary shares or voting power of ING Group (including
through ADSs) would be presumed to have acquired such control unless the
appropriate insurance regulators upon application determine otherwise.
The United Kingdom's Insurance Companies Act 1982 requires the prior
approval by the Department of Trade and Industry of anyone proposing to become a
"controller" of an insurance company regulated under such Act. Any company or
individual that directly or indirectly exercises 15% or more of the voting power
at a general meeting of a regulated insurance company is considered a
"controller." A purchaser of more than 15% of the outstanding ordinary shares
will be a controller of ING Group's U.K. insurance subsidiaries.
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THE COMPANIES
RELIASTAR FINANCIAL CORP.
ReliaStar is a Minneapolis-based holding company whose subsidiaries offer
individuals and institutions life insurance and annuities, employee benefits
products and services, retirement plans, life and health reinsurance, mutual
funds, and bank and trust products. Based on revenues, ReliaStar is one of the
largest publicly held life insurance holding companies in the United States and
at March 31, 2000 had $38.4 billion in assets under management.
ReliaStar's strategy is to offer, principally through education-based
marketing, a wide variety of products and services designed to address
customers' need for financial security. In the first quarter of 2000, ReliaStar
combined its Personal Financial Services and Tax-Sheltered and Fixed Annuities
business segments into one segment, now referred to as "ReliaStar Life and
Annuities." In addition to this combination, given the increase in ReliaStar's
mutual fund business after the completion of the acquisition of Pilgrim Capital
Corporation in the fourth quarter of 1999, ReliaStar began in the first quarter
of 2000 reporting its mutual fund operations as a new business segment.
ReliaStar's other two business segments are Worksite Financial Services and
Reinsurance.
ReliaStar Life and Annuities (RLA). RLA serves customers who prefer to
purchase insurance and investment products from a personal financial adviser.
This segment principally targets middle-and upper-income families. Through
ReliaStar's subsidiary, Northern Life Insurance Company, RLA also focuses on the
retirement security needs of K-12 public and private school teachers through the
sale of tax-sheltered 403(b) fixed and variable annuities. In addition to
tax-qualified annuities, RLA provides a wide variety of other products,
including term life, universal life, second-to-die universal life, variable
universal life, as well as non-qualified fixed and variable annuities. RLA's
products are sold through a nationwide network of independent agents and other
financial professionals. Washington Square Securities, Inc., one of ReliaStar's
broker-dealer subsidiaries, provides services to many of these distributors. RLA
has plans to supplement existing distribution channels through several
Internet-based strategies, which will also provide access to educational
materials and financial-planning tools. The first of these initiatives
"ihatefinancialplanning.com" commenced operations in April 2000.
Worksite Financial Services. This segment targets the sale of
employee-benefits and financial-service products to medium-to-large corporate
employers and affinity groups. Building on these relationships, Worksite
Financial Services also focuses on the sale of individual and payroll-deduction
insurance products to employees of our corporate clients. Principal products
include individual life insurance, non-medical group insurance products and
401(k) retirement plans.
Reinsurance. The Reinsurance segment provides specialized life and health
reinsurance, including group and special-risk reinsurance products, in the
United States and internationally. Target customers of the Reinsurance segment
are medium and large life insurance and selected non-life insurance companies
such as worker's compensation insurers and managed care and healthcare provider
organizations. This segment also offers specialty group insurance products on a
direct basis and value-added services, like catastrophic medical case
management. The Reinsurance segment's international offices are located in
Amsterdam, Copenhagen, London, Mexico City, and Toronto.
Mutual Funds. Through Pilgrim Capital Corporation and its subsidiaries,
ReliaStar is active in the management of 28 equity and fixed-income mutual
funds, eight funds underlying insurance products, and one closed-end fund with
$16.7 billion of aggregate assets under management as of March 31, 2000.
ReliaStar's pending acquisition of Lexington Global Asset Managers, Inc. will
add 17 mutual funds to this segment, as well as institutional and fee-based
private clients, contributing, in aggregate, an additional $3.6 billion of
assets under management (as of March 31, 2000). Through a
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<PAGE> 72
dedicated sales force, Pilgrim sells its mutual funds through unaffiliated
broker-dealers throughout the United States. ReliaStar also has incorporated
Pilgrim's mutual funds into ReliaStar's equity based products, including
variable life insurance, variable annuities and 401(k) plans. Pilgrim funds also
are sold as stand-alone products through ReliaStar's broker-dealers, in the
worksite, and through ReliaStar's bank marketing operations.
Supplementing these four business segments are other business units
including Washington Square Securities, Inc., a broker/dealer; PrimeVest
Financial Services, Inc, the Financial Northeastern Companies, and Split Rock
Financial Services, Inc., broker/dealers that target the sale of financial
products and services through or to unaffiliated banks; ReliaStar Bank, a
national bank, which offers a variety of consumer credit and deposit products;
and ReliaStar National Trust Company, a federally chartered bank, which offers
personal trust services on a nationwide basis.
ING GROUP
ING Group operates in more than 60 countries worldwide, and is one of the
world's largest integrated financial services providers, offering a
comprehensive range of life and non-life insurance, commercial and investment
banking, asset management and related products and services. ING Group is a
market leader in integrated financial services in the Benelux countries and has
considerable market positions in the rest of Western, Central and Eastern
Europe, North America, South America, Asia and Australia. ING Group's products
and services are marketed under a variety of well-recognized and strong brand
names, including Nationale-Nederlanden, ING Bank, ING Barings and ING Direct
worldwide, Postbank in the Netherlands, Bank Brussel Lambert in Belgium,
BHF-BANK in Germany and Mercantile Mutual in Australia. At the same time, ING
Group's subsidiaries, particularly outside the Benelux-countries, now
increasingly choose to include the letters 'ING' and the orange lion in their
name and logo. Virtually all ING companies in North America have adjusted their
name and logo during the past year (e.g. ING Halifax, ING Commerce Group and ING
Belair in Canada; and ING Security Life, ING Life of Georgia, ING Equitable and
ING Furman Selz in the U.S.) in this manner.
In 1999, ING had gross written premiums of EUR 22,412 million making it the
largest insurer in the Netherlands. ING's management believes that at December
31, 1997, ING was the 17th largest insurer in Europe, based on gross written
premiums. At the end of 1999, ING Bank had tier one capital of EUR14 billion,
making it the third largest bank in the Netherlands. ING's management believes
that at December 31, 1998, ING Bank was the 11th largest bank in Europe and the
26th largest bank in the world based on tier one capital. For the year ended
December 31, 1999, ING Group's total income was EUR 45,726 million and its net
profit was EUR 4,922 million.
ING is a market leader in integrated financial services in the
Benelux-countries. In the Netherlands, ING is the largest life and pension
insurer and the second largest non-life insurer, based on gross premiums written
(1997). ING Bank has the leading position in the Dutch payments transfer system.
ING Group, through its banking and insurance operations, has a financial
relationship with approximately 75% of households in the Netherlands. In
Belgium, ING is the third largest bank in terms of tier one capital (December
31, 1998) and the 6th largest insurer in terms of gross premiums written (1997).
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The following table sets forth ING Group's income by geographic area for
the years indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
------ ------ -------------
(RESTATED)(1)
(EUR MILLIONS)
<S> <C> <C> <C>
The Netherlands.................................. 18,266 14,876 13,343
Belgium.......................................... 3,255 3,268 778
Rest of Europe................................... 3,686 2,246 2,129
North America.................................... 14,832 13,360 7,350
South America.................................... 567 445 376
Asia............................................. 1,747 1,386 1,374
Australia........................................ 3,406 2,484 2,166
Other............................................ 153 183 159
------ ------ ------
45,912 38,248 27,675
Revenue between geographic areas................. (186) (177) (144)
------ ------ ------
45,726 38,071 27,531
====== ====== ======
</TABLE>
-------------------------
(1) See Note 1.3. of the Notes to the consolidated financial statements
contained in ING Group's Annual Report on Form 20-F for the fiscal year
ended December 31, 1999 for a discussion of the restatement of 1997 results.
Outside the Benelux-countries, ING Group's international insurance
operations concentrate primarily on servicing individuals and small and
medium-sized enterprises in regional and national markets. ING currently has
insurance activities in 26 countries outside the Benelux-countries. ING occupies
a prominent position in life insurance in several developed markets (including
the U.S. and Australia) and has successfully utilized the establishment of
greenfield life insurance operations as a key to its strategy for international
expansion in emerging markets in Central Europe and Asia. ING's international
market position in non-life insurance is particularly prominent in Canada where
it has a number two position. The international banking operations of ING Group
outside the Benelux-countries consist of a prominent network of over 350 offices
in approximately 60 countries dedicated to the delivery of banking products and
services in the field of corporate and investment banking, private banking and
commercial banking. Particularly in the emerging markets, ING's corporate and
investment banking operations have a prominent reputation. Moreover, ING has a
significant presence in international trade and commodity finance.
ING has an active expansion strategy and in recent years has rapidly
expanded its asset management and investment banking activities, most notably as
a result of the acquisition of the principal assets and liabilities of the U.K.
merchant bank Barings in March 1995 and the acquisition of the U.S. investment
bank Furman Selz in August 1997. In addition, ING significantly expanded its
U.S. life insurance and annuity businesses through the acquisition of Equitable
of Iowa in October 1997 and its proposed acquisition of ReliaStar in 2000 and is
actively reviewing further potential acquisition opportunities in the United
States life insurance and annuity market.
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<PAGE> 74
The following table shows the relative contributions of ING Group's
insurance and banking operations to the consolidated result before taxation in
1999, 1998 and 1997 restated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1999 1998 1997 RESTATED
------------ ------------ --------------
(EUR MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Insurance operations............... 3,632 60% 2,428 69% 1,643 55%
Banking operations................. 2,442 40% 1,076 31% 1,356 45%
----- --- ----- --- ----- ---
Total.................... 6,074 100% 3,504 100% 2,999 100%
===== === ===== === ===== ===
</TABLE>
Recent Developments Regarding ING Group
On March 1, 2000, ING confirmed that it had previously submitted a letter
expressing the Group's desire to initiate discussions concerning an acquisition
of Aetna Inc. The letter was submitted with WellPoint Health Networks, Inc.,
which confirmed its interest in acquiring Aetna's healthcare business.
Subsequently, on May 31, 2000, ING and Aetna each confirmed that they had
entered into negotiations for the potential acquisition by ING of Aetna's
financial services and international businesses. On June 18, 2000, ING confirmed
that, after conducting due diligence, it had made an acquisition proposal to
Aetna, which it believed fully valued the businesses and was fair to Aetna's
stockholders, policyholders, employees and the Hartford community. ING further
confirmed that Aetna had terminated exclusive acquisition discussions with ING
based on the inability of the two parties to agree on a value for Aetna's
financial services and international businesses.
While ING is continuing its discussions with Aetna, ING will also continue
to pursue other opportunities for expanding its presence in the U.S. and
internationally. There can be no assurances as to when or whether an agreement
with Aetna may be reached, or, if any agreement is reached, the terms thereof.
On June 7, 2000, S&P placed ING and all entities in the ING insurance group on
CreditWatch with negative implications, as a result of the consecutive timing of
the potential Aetna transaction following the ReliaStar transaction and the
potential strain on ING's capital raising abilities. The ratings of ING Bank
N.V. and related entities were not affected.
For the purpose of financing the acquisition of ReliaStar, ING sold its
6.6% stake in Aegon N.V., on June 20, 2000 and realized proceeds of
approximately EUR 3.3 billion ($3.2 billion).
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<PAGE> 75
WHERE YOU CAN FIND MORE INFORMATION
Both ING and ReliaStar file periodic reports, proxy statements, and other
information with the Securities and Exchange Commission. You may read and copy
any document that either company files with the SEC at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of its public
reference room. ReliaStar's SEC filings are also available to the public over
the Internet at the SEC's web site (www.sec.gov).
Both ING and ReliaStar "incorporate by reference" into this
prospectus/proxy statement the information in documents they file with the SEC,
which means that they can disclose important business and financial information
about themselves to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus/proxy
statement, and information that the companies file subsequently with the SEC
will automatically update this prospectus/proxy statement and may modify or
supersede earlier information that is incorporated by reference. The companies
incorporate by reference the documents listed below and any filings they make
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 after the filing of this prospectus/proxy statement and
before the meeting of ReliaStar's shareholders.
FOR RELIASTAR:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999,
including information incorporated by reference into that report from
ReliaStar's 1999 Annual Report to Shareholders and portions of its
definitive proxy statement for ReliaStar's 2000 Annual Meeting of
Shareholders;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
- Current Reports on Form 8-K filed February 2, February 8, April 28, and
May 2, 2000; and
- the description of ReliaStar's common stock and related rights to
purchase preferred stock contained in ReliaStar's amendment on Form 8-K/A
dated May 20, 1993 to its Current Report on Form 8-K dated January 17,
1989 and its Registration Statement on Form 8-A/A dated February 26,
1999, as amended on Form 8-A/A on May 3, 2000.
FOR ING:
- Annual Report on Form 20-F for the fiscal year ended December 31, 1999;
- Current Report on 6-K, received by the SEC February 7, 2000;
- Current Report on 6-K, received by the SEC February 14, 2000;
- Current Report on 6-K, received by the SEC February 16, 2000;
- Current Report on 6-K, received by the SEC March 6, 2000;
- Current Report on 6-K, received by the SEC March 17, 2000;
- Current Report on 6-K, received by the SEC March 24, 2000;
- Current Report on 6-K, received by the SEC April 12, 2000;
- Current Report on 6-K, received by the SEC May 1, 2000;
- Current Report on 6-K, received by the SEC May 26, 2000;
- Current Report on 6-K, received by the SEC June 7, 2000; and
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<PAGE> 76
- the description of the ING American Depositary Shares contained in ING's
Form 8-A dated May 20, 1997.
Each company supplied all information contained or incorporated by
reference in this prospectus/proxy statement relating to that company and its
subsidiaries. You may request a copy of any of these filings, other than an
exhibit to a filing unless the exhibit is specifically incorporated by reference
into the filing, at no cost by contacting the appropriate company orally or in
writing at:
Corporate Secretary
ReliaStar Financial Corp.
20 Washington Avenue South
Minneapolis, Minnesota 55401
(612) 372-5432
Corporate Secretary
ING America
5780 Powers Ferry Road, NW
Atlanta, Georgia 30327
(770) 980-3300
In order to obtain timely delivery, you must request copies of ING or
ReliaStar's SEC filings no later than July 20, 2000.
You should rely only on the information delivered with, or stated or
incorporated by reference in, this prospectus/proxy statement. Neither ING nor
ReliaStar has authorized anyone else to provide you with different information.
You should not assume that the information in this prospectus/proxy statement is
accurate as of any date other than the date on the front of this
prospectus/proxy statement.
If you have questions about the merger, you may also contact:
LOGO
(800) 223-2064
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus/proxy statement contains forward-looking information. The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as such
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the information.
Forward-looking information is indicated by the use of such words as
"anticipates," "expects," "believes," "should," "could," "intends," "estimates,"
and "may," or other comparable language. ING and ReliaStar identify the
following important factors that could cause ING's or ReliaStar's actual results
to differ materially from any results that might be projected by ING or
ReliaStar in forward-looking information. All of these factors are difficult to
predict, and many are beyond the control of the companies. Accordingly, although
ING and ReliaStar believe that the assumptions underlying the forward-looking
information are reasonable, there can be no assurance that those assumptions
will approximate actual experience.
The important factors include, among others, the following:
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<PAGE> 77
- general economic conditions, including prevailing interest rates and the
performance of financial markets, which may affect the companies' ability
to sell their products, including in particular economic conditions in
the Netherlands or the United States;
- the market value of the companies' investments;
- the lapse rate and profitability of the insurance policies issued by the
companies;
- the frequency and surety of insured loss events;
- changes affecting persistency levels;
- mortality and morbidity factors in the companies insurance businesses
(including the effect of reinsurance and retrocession risk-management
programs);
- the companies', and the combined company's, ability to achieve
anticipated cost savings and efficiencies;
- changes in federal tax laws, which could adversely affect the tax
advantages of certain of the companies' products;
- changes in the policies of central banks and/or governments;
- legislative or regulatory changes affecting financial institutions,
including those affecting bank sales of insurance products and regulation
of the sale, underwriting, and pricing of insurance products;
- changes in laws and regulations, including monetary convergence and the
European Monetary Union;
- industry consolidation and competition;
- changes affecting the banking industry generally and ING Group's banking
operations specifically, including asset quality;
- increasing levels of competition in the Netherlands and emerging markets
and general competitive factors, locally, nationally, regionally and
globally;
- changes in currency exchange rates, including the exchange rate for the
euro into U.S. dollars;
- the integration of the combined company's sales and distribution channels
in a timely manner; and
- retention of key employees.
You should also consider other risks and uncertainties discussed in
documents filed by ING and ReliaStar with the SEC, including ING's most recent
Annual Report on Form 20-F for the fiscal year ended December 31, 1999 and
ReliaStar's most recent Annual Report on Form 10-K, that are incorporated by
reference into this prospectus/proxy statement. Neither ING nor ReliaStar has
any obligation to update forward-looking information.
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<PAGE> 78
CURRENCIES AND EXCHANGE RATES
Unless otherwise specified or the context otherwise requires, references to
"$," "US$," "USD," "Dollars" or "U.S. Dollars" in this prospectus/proxy
statement are to United States dollars, references to "NLG" or "guilders" are to
Dutch guilders and references to "E" or "EUR" are to euros.
The following table sets forth, for the periods and dates indicated,
certain information concerning the exchange rate for U.S. dollars into euros
based on the Noon Buying Rate. Effective January 1, 1999, the Dutch guilder
became a component of the euro. As such, the Noon Buying Rate for the years
prior to 1999 are the Noon Buying rates for the Dutch guilder, converted into
euros at a rate of NLG 2.20371 to EUR1.00.
<TABLE>
<CAPTION>
U.S. DOLLARS PER EURO
-------------------------------------
PERIOD AVERAGE
CALENDAR PERIOD END(1) RATE(2) HIGH LOW
--------------- ------ ------- ------ ------
<S> <C> <C> <C> <C>
1995............................................... 1.3743 1.3798 1.4506 1.2597
1996............................................... 1.2760 1.3048 1.3709 1.2550
1997............................................... 1.0867 1.1252 1.2738 1.0406
1998............................................... 1.1741 1.1113 1.2147 1.0549
1999............................................... 1.0070 1.0666 1.1812 1.0016
Three months ended March 31, 2000.................. 0.9574 0.9866 1.0324 0.9524
</TABLE>
-------------------------
(1) The Noon Buying Rate at such dates differed from the rates used in the
preparation of ING's consolidated financial statements as of such date. See
Note 1.6.1.4 of Notes to the consolidated financial statements in ING's
Annual Report on Form 20-F for the fiscal year ended December 31, 1999.
(2) The average of the Noon Buying Rates on the last business day of each full
calendar month during the period.
The Noon Buying Rate on June 22, 2000, the last practicable day for which
information was available prior to the printing of this prospectus/proxy
statement, was $0.9398 per EUR1.00.
EXPERTS
The consolidated financial statements and schedules of ING Group at
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999 incorporated by reference in this prospectus/proxy statement
have been audited by Ernst & Young N.V., independent auditors, which is based in
part on the report of KPMG Accountants N.V., independent auditors. The financial
statements referred to above are included in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
The consolidated financial statements of ReliaStar and the related
consolidated financial statement schedules incorporated in this prospectus/proxy
statement by reference from ReliaStar's Annual Report on Form 10-K for the year
ended December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are incorporated herein by reference
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
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LEGAL MATTERS
The validity of the bearer receipts and the ordinary shares will be passed
upon by Diederik van Wassenaer, General Counsel of ING Group.
SHAREHOLDER PROPOSALS
If the merger is approved, you will no longer own shares of ReliaStar, and
ReliaStar will not solicit proxies for an annual meeting in 2001. If the merger
is not approved, ReliaStar will hold an annual meeting in 2001. If you want to
have a shareholder proposal considered for inclusion in the proxy statement for
that meeting, you must submit the proposal in writing by November 27, 2000, to
Corporate Secretary, ReliaStar Financial Corp., 20 Washington Avenue South,
Minneapolis, Minnesota 55401. You must include a brief description of the
proposal, your name and address, the number of shares of ReliaStar common stock
you own, and any interest you have in the proposal. If instead you want to
present a shareholder proposal from the floor at the 2001 annual meeting, you
must submit your proposal in writing to the Corporate Secretary not less than 60
days before the 2001 annual meeting. If you fail to notify ReliaStar of your
shareholder proposal at least 60 days before the 2001 annual meeting date, the
proposal will be considered untimely.
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APPENDIX A
COMPOSITE COPY
AGREEMENT AND PLAN OF MERGER
AMONG
ING GROEP N.V.,
ING AMERICA INSURANCE HOLDINGS, INC.,
SHP ACQUISITION CORP.
AND
RELIASTAR FINANCIAL CORP.
DATED AS OF APRIL 30, 2000,
AS AMENDED JUNE 27, 2000
A-1
<PAGE> 81
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
RECITALS
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger....................................................... A-10
1.2 Closing.......................................................... A-10
1.3 Effective Time................................................... A-10
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1 The Certificate of Incorporation................................. A-11
2.2 The By-Laws...................................................... A-11
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1 Directors........................................................ A-11
3.2 Officers......................................................... A-11
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock.......................................... A-11
(a) Merger Consideration........................................ A-11
(b) Cancellation of Shares...................................... A-12
(c) Merger Sub.................................................. A-12
4.2 Exchange of Cash for Shares...................................... A-12
(a) Paying Agent................................................ A-12
(b) Payment Procedures.......................................... A-12
(c) Transfers................................................... A-13
(d) Termination of Payment Fund................................. A-13
(e) Lost, Stolen or Destroyed Certificates...................... A-13
(f) Withholding of Tax.......................................... A-13
4.3 Dissenters' Rights............................................... A-13
4.4 Adjustments to Prevent Dilution.................................. A-14
4.5 ESOP Shares...................................................... A-14
</TABLE>
A-2
<PAGE> 82
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company.................... A-14
(a) Organization, Good Standing and Qualification............... A-15
(b) Capital Structure........................................... A-16
(c) Corporate Authority; Approval and Fairness.................. A-16
(d) Governmental Filings; No Violations......................... A-17
(e) Statutory Reports; Company Reports; Financial Statements.... A-17
(f) Absence of Certain Changes.................................. A-19
(g) Litigation and Liabilities.................................. A-19
(h) Employee Benefits........................................... A-20
(i) Compliance with Laws; Permits............................... A-22
(j) Takeover Statutes........................................... A-23
(k) Environmental Matters....................................... A-23
(l) Taxes....................................................... A-24
(m) Labor Matters............................................... A-26
(n) Insurance................................................... A-26
(o) Intellectual Property....................................... A-26
(p) Rights Plan................................................. A-27
(q) Brokers and Finders......................................... A-27
(r) Insurance Business.......................................... A-27
(s) Liabilities and Reserves.................................... A-28
(t) Separate Accounts; Investment Advisor....................... A-28
(u) Material Contracts.......................................... A-29
(v) Investment Contracts, Fund Clients and Advisory Clients..... A-29
(w) Company Broker/Dealers...................................... A-31
(x) Bank Regulatory Matters..................................... A-31
5.2 Representations and Warranties of ING, Parent and Merger Sub..... A-32
(a) Capitalization.............................................. A-32
(b) Organization, Good Standing and Qualification............... A-32
(c) Corporate Authority......................................... A-33
(d) Governmental Filings; No Violations......................... A-33
(e) ING Reports................................................. A-33
(f) Absence of Certain Changes.................................. A-34
(g) Adequate Funds.............................................. A-34
ARTICLE VI
COVENANTS
6.1 Interim Operations; Operation of Businesses...................... A-34
6.2 Acquisition Proposals............................................ A-36
</TABLE>
A-3
<PAGE> 83
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
6.3 Accuracy of Prospectus/Proxy Statement........................... A-37
6.4 Shareholders Meeting............................................. A-37
6.5 Filings; Other Actions; Notification............................. A-38
6.6 Access........................................................... A-39
6.7 Stock Exchange................................................... A-39
6.8 Publicity........................................................ A-39
6.9 Benefits; Company Options........................................ A-40
6.10 Expenses......................................................... A-41
6.11 Indemnification; Directors' and Officers' Insurance.............. A-41
6.12 Compliance with 1940 Act Section 15.............................. A-42
6.13 Fund Client Contracts, Distribution Plans and Boards............. A-43
6.14 Non-Fund Advisory Contracts...................................... A-43
6.15 Qualification of the Fund Clients; Fund Client Boards............ A-43
6.16 Other Actions by the Company and Parent.......................... A-43
(a) Rights...................................................... A-43
(b) Takeover Statute............................................ A-43
6.17 Appointments..................................................... A-43
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger....... A-44
(a) Shareholder Approval........................................ A-44
(b) Regulatory Consents......................................... A-44
(c) Litigation.................................................. A-44
(d) ADS Listing................................................. A-44
(e) F-4 Registration Statement.................................. A-44
(f) Blue Sky.................................................... A-44
7.2 Conditions to Obligations of Parent and Merger Sub............... A-45
(a) Representations and Warranties.............................. A-45
(b) Performance of Obligations of the Company................... A-45
(c) Consents Under Agreements................................... A-45
(d) Client Approvals............................................ A-45
7.3 Conditions to Obligation of the Company.......................... A-46
(a) Representations and Warranties.............................. A-46
(b) Performance of Obligations of ING, Parent and Merger Sub.... A-46
(c) Consents Under Agreements................................... A-46
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent.................................... A-46
8.2 Termination by Either Parent or the Company...................... A-46
</TABLE>
A-4
<PAGE> 84
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
8.3 Termination by the Company....................................... A-47
8.4 Termination by Parent............................................ A-47
8.5 Effect of Termination and Abandonment............................ A-47
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Survival......................................................... A-48
9.2 Modification or Amendment........................................ A-48
9.3 Waiver of Conditions............................................. A-48
9.4 Counterparts..................................................... A-49
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.................... A-49
9.6 Notices.......................................................... A-50
9.7 Entire Agreement; NO OTHER REPRESENTATIONS....................... A-51
9.8 No Third Party Beneficiaries..................................... A-51
9.9 Obligations of Parent and of the Company......................... A-51
9.10 Transfer Taxes................................................... A-51
9.11 Severability..................................................... A-51
9.12 Interpretation................................................... A-51
9.13 Assignment....................................................... A-52
</TABLE>
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
-----------
<S> <C>
1940 Act.................................................... 5.1(d)(i)
1999 10-K................................................... 5.1(e)(ii)
1999 20-F................................................... 5.2(e)(i)
A Shares.................................................... 5.2(a)(i)
Acquisition Proposal........................................ 6.2(a)
ADSs........................................................ 4.5(a)
Advisers Act................................................ 5.1(d)(i)
Advisory Client............................................. 5.1(v)(iii)
Advisory Entities........................................... 5.1(v)(iii)
Advisory Entity............................................. 5.1(v)(iii)
Affiliates.................................................. 5.1(c)(ii)
Agent....................................................... 5.1(r)(ii)
Agreement................................................... Recitals
Audit Date.................................................. 5.1(e)(ii)
Average Closing Price....................................... 4.5(a)
B Shares.................................................... 5.2(a)(i)
Banking Authorities......................................... 5.1(d)(i)
Bankruptcy and Equity Exception............................. 5.1(c)(i)
Bearer Receipt.............................................. 4.5(a)
By-Laws..................................................... 2.2
Certificate................................................. 4.1(a)
Certificate of Merger....................................... 1.3
Charter..................................................... 2.1
Client...................................................... 5.1(v)(i)
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ 4.2(f)
Common Stock................................................ 4.1(a)
Company..................................................... Recitals
Company Actuarial Analyses.................................. 5.1(r)(iv)
Company Broker/Dealers...................................... 5.1(w)(i)
Company Disclosure Letter................................... 5.1
Company Employees........................................... 6.9(c)
Company Life Insurance Companies............................ 5.1(a)(ii)
Company Life Insurance Contracts............................ 5.1(r)(i)
Company Life SAP Statements................................. 5.1(e)(i)
Company Material Adverse Effect............................. 5.1(a)(i)
Company Option.............................................. 5.1(b)
</TABLE>
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<TABLE>
<CAPTION>
SECTION
-----------
<S> <C>
Company Reports............................................. 5.1(e)(ii)
Company Requisite Vote...................................... 5.1(c)(i)
Company Separate Accounts................................... 5.1(t)(i)
Compensation and Benefit Plans.............................. 5.1(h)(i)
Confidentiality Agreement................................... 9.7
Constituent Corporations.................................... Recitals
Contracts................................................... 5.1(d)(ii)
Costs....................................................... 6.11(a)
Cumulative Preference Shares................................ 5.2(a)(i)
Current Premium............................................. 6.11(c)
D&O Insurance............................................... 6.11(c)
DGCL........................................................ 1.1
Dissenting Shares........................................... 4.1(a)
Dissenting Stockholders..................................... 4.1(a)
Effective Time.............................................. 1.3
Environmental Law........................................... 5.1(k)(i)
ERISA....................................................... 5.1(h)(i)
ERISA Affiliate............................................. 5.1(h)(iii)
ERISA Affiliate Plan........................................ 5.1(h)(iii)
ESOP Consideration.......................................... 4.5(a)
ESOP Plan................................................... 4.1(a)
ESOP Shares................................................. 4.1(a)
Exchange Act................................................ 5.1(a)(i)
Excluded Share.............................................. 4.1(a)
Excluded Shares............................................. 4.1(a)
Extended Date............................................... 8.2(i)
F-4 Registration Statement.................................. 6.3
Fund Client................................................. 5.1(v)(i)
GAAP........................................................ 5.1(e)(iii)
Governmental Consents....................................... 7.1(b)(i)
Governmental Entity......................................... 5.1(d)(i)
HSR Act..................................................... 5.1(b)
Indemnified Parties......................................... 6.11(a)
ING......................................................... Recitals
ING Companies............................................... 4.1(a)
ING Reports................................................. 5.2(e)(i)
ING Shares.................................................. 4.5(a)
Insurance Authorities....................................... 5.1(d)(i)
Insurance Laws.............................................. 5.1(i)(i)
Intellectual Property....................................... 5.1(o)(i)
</TABLE>
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<TABLE>
<CAPTION>
SECTION
-----------
<S> <C>
Investment Contract......................................... 5.1(v)(i)
IRS......................................................... 5.1(h)(ii)
Laws........................................................ 5.1(i)(ii)
Lexington Agreement......................................... 4.4
MEC......................................................... 5.1(l)(ii)
Merger...................................................... Recitals
Merger Consideration........................................ 4.1(a)
Merger Sub.................................................. Recitals
NASD........................................................ 5.1(d)(i)
New Plans................................................... 6.9(c)
Notice of Superior Proposal................................. 6.2(b)
NYSE........................................................ 4.5(a)
Old Plans................................................... 6.9(d)
open taxable years.......................................... 5.1(l)(iii)
Order....................................................... 7.1(c)(i)
Out-of-Pocket Expenses...................................... 8.5(b)
Parent...................................................... Recitals
Parent Material Adverse Effect.............................. 5.2(b)
Paying Agent................................................ 4.2(a)
Payment Fund................................................ 4.2(a)
PBGC........................................................ 5.1(h)(iii)
Pension Plan................................................ 5.1(h)(ii)
Person...................................................... 4.2(b)
Preference Shares........................................... 5.2(a)(i)
Preferred Shares............................................ 5.1(b)
Prospectus/Proxy Statement.................................. 6.3
Qualified Plan.............................................. 5.1(h)(ii)
Representatives............................................. 6.6
Right....................................................... 4.1(a)
Rights Agreement............................................ 4.1(a)
SEC......................................................... 5.1
Securities Act.............................................. 5.1(e)(ii)
Series A Preferred Stock.................................... 4.1(a)
Share....................................................... 4.1(a)
Shareholders Meeting........................................ 6.4
Shares...................................................... 4.1(a)
Significant Subsidiaries.................................... 5.1(a)(i)
Stock Based Plans........................................... 6.9(d)
Stock Option Agreement...................................... Recitals
Stock Plans................................................. 5.1(b)
</TABLE>
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<TABLE>
<CAPTION>
SECTION
-----------
<S> <C>
Subsidiary.................................................. 5.1(a)(i)
Superior Proposal........................................... 6.2(a)
Surviving Corporation....................................... 1.1
Takeover Statute............................................ 5.1(j)
Tax......................................................... 5.1(l)(i)
Tax Authority............................................... 5.1(l)(i)
Tax Return.................................................. 5.1(l)(i)
Tax Sharing Agreement....................................... 5.1(l)(i)
Taxable..................................................... 5.1(l)(i)
Taxes....................................................... 5.1(l)(i)
Termination Date............................................ 8.2
Termination Fee............................................. 8.5(b)
Total assets under management............................... 7.2(d)
Voting Debt................................................. 5.1(b)
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of April 30, 2000, as amended June 27, 2000, among RELIASTAR FINANCIAL CORP.,
a Delaware corporation (the "Company"), ING GROEP N.V., a corporation organized
under the laws of the Netherlands ("ING"), ING AMERICA INSURANCE HOLDINGS, INC.,
a Delaware corporation ("Parent"), and SHP ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub," the Company
and Merger Sub sometimes being hereinafter collectively referred to as the
"Constituent Corporations").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to ING's, Parent's and Merger Sub's
willingness to enter into this Agreement, the Company is entering into a stock
option agreement with Parent (the "Stock Option Agreement"), pursuant to which
the Company has granted to Parent an option to purchase Shares (as defined in
Section 4.1(a)) under the terms and conditions set forth in the Stock Option
Agreement; and
WHEREAS, the Company, ING, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of the Company with all its
rights, privileges, powers and franchises shall continue unaffected by the
Merger, except as set forth in Article II. The Merger shall have the effects
specified in the Delaware General Corporation Law, as amended (the "DGCL").
1.2 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
at 9:00 A.M. on the second business day on which the last to be fulfilled or
waived of the conditions set forth in Article VII (other than those conditions
that by their nature are to be fulfilled at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be fulfilled or waived in
accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3 Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Certificate of
Merger") to be executed, acknowledged and filed with the Secretary of State of
Delaware as provided in Section 251 of the DGCL. The Merger
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shall become effective at the time when the Certificate of Merger has been duly
filed with the Secretary of State of Delaware (the "Effective Time").
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1 The Certificate of Incorporation. 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 (the "Charter"),
provided that the Charter shall be amended to change the name of the Surviving
Corporation to the name of the Company, and as so amended, shall be the
certificate of incorporation of the Surviving Corporation until duly amended as
provided therein or by applicable law.
2.2 The By-Laws. The by-laws of Merger Sub in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1 Directors. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
3.2 Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each share of the Common Stock, par value $0.01
per share, of the Company (the "Common Stock"), including the associated right
to purchase one-twentieth of a share of Series A Preferred Stock, par value
$0.01 per share ("Series A Preferred Stock"), of the Company (each a "Right"
and, together with the Common Stock, a "Share" or, collectively, the "Shares")
issued pursuant to the Amended and Restated Rights Agreement, dated as of
February 11, 1999, between the Company and Norwest Bank Minnesota, National
Association, as Rights Agent (the "Rights Agreement"), issued and outstanding
immediately prior to the Effective Time (other than (i) Shares owned by ING,
Parent, Merger Sub or any other Subsidiary (as defined in Section 5.1(a)(i)) of
ING (collectively, the "ING Companies") or Shares that are owned by the Company
or any Subsidiary of the Company and in each case not held on behalf of third
parties, or (ii) Shares ("ESOP Shares") held by the Reliastar Financial Corp.
Success Sharing Plan and ESOP (the "ESOP Plan") or (iii) Shares ("Dissenting
Shares") that are owned by stockholders
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("Dissenting Stockholders") exercising appraisal rights pursuant to Section 262
of the DGCL (each, an "Excluded Share" and collectively, "Excluded Shares"))
shall be converted into the right to receive $54.00 in cash (the "Merger
Consideration"). At the Effective Time, all Shares issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding and shall
be canceled and retired and shall cease to exist, and each certificate (a
"Certificate") formerly representing any of such Shares (other than Excluded
Shares) shall thereafter represent only the right to the Merger Consideration.
(b) Cancellation of Shares. Each Share issued and outstanding immediately
prior to the Effective Time and owned by any of the ING Companies or owned by
the Company or any Subsidiary of the Company (in each case other than Shares
that are held on behalf of third parties) shall, by virtue of the Merger and
without any action on the part of the holder thereof, no longer be outstanding
and shall be canceled and retired without payment of any consideration therefor
and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
4.2 Exchange of Cash for Shares.
(a) Paying Agent. At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a paying agent selected by Parent
with the Company's prior approval, which shall not be unreasonably withheld (the
"Paying Agent"), for the benefit of the holders of Shares, cash sufficient to
pay the aggregate Merger Consideration in exchange for Shares outstanding
immediately prior to the Effective Time (other than Excluded Shares) upon due
surrender of the Certificates (or affidavits of loss in lieu thereof) pursuant
to the provisions of this Article IV (such cash being hereinafter referred to as
the "Payment Fund").
The funds deposited with the Paying Agent shall be invested by the Paying
Agent as Parent shall reasonably direct, and any net profit resulting from, or
interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs.
(b) Payment Procedures. Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record of
Shares (other than holders of Excluded Shares) (i) a letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or affidavits
of loss in lieu thereof) to the Paying Agent, such letter of transmittal to be
in such form and have such other provisions as Parent and the Company may
reasonably agree, and (ii) instructions for use in effecting the surrender of
the Certificates (and affidavits of loss in lieu thereof) in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation (or due
submission of an affidavit of loss in lieu thereof) to the Paying Agent together
with such letter of transmittal, duly executed, the holder of such Certificate
(or submitter of such affidavit, as the case may be) shall be entitled to
receive in exchange therefor, a check in the amount (after giving effect to any
required tax withholdings) of the number of Shares represented by such
Certificate (or affidavit of loss in lieu thereof) multiplied by the Merger
Consideration, and the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on any amount payable upon due surrender of
the Certificates. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, a check for any cash to be
paid upon due surrender of the Certificate may be paid to such a transferee if
the Certificate formerly representing such Shares is presented to the Paying
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been paid
or are not applicable.
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For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or Parent for transfer, they shall be canceled and exchanged for a
check in the proper amount pursuant to this Article IV.
(d) Termination of Payment Fund. Any portion of the Payment Fund
(including the profit, interest or income from any investments thereof) that
remains unclaimed by the holders of Shares (other than Excluded Shares) for one
year after the Effective Time shall be returned to Parent or as directed by
Parent. Any holders of Shares (other than Excluded Shares) who have not
theretofore complied with this Article IV shall thereafter look only to Parent
for payment of (after giving effect to any required tax withholdings) the Merger
Consideration upon due surrender of their Certificates (or affidavits of loss in
lieu thereof), without any interest thereon. Notwithstanding the foregoing, none
of Parent, the Surviving Corporation, the Paying Agent or any other Person shall
be liable to any former holder of Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(e) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate a check in the amount (after giving effect
to any required tax withholdings) of the number of Shares represented by such
lost, stolen or destroyed Certificate multiplied by the Merger Consideration
upon due surrender of and deliverable in respect of the Shares represented by
such Certificate pursuant to this Agreement.
(f) Withholding of Tax. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
former holder of Shares such amounts as Parent (or any affiliate thereof) is
required to deduct and withhold with respect to the making of such payment under
the U.S. Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code") or any provision of state, local
or foreign tax Law (as defined in Section 5.1(i)(ii)). Such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holders of Shares in respect of which such deduction and withholding was
made.
4.3 Dissenters' Rights. Any Person who otherwise would be deemed a
Dissenting Stockholder shall not be entitled to receive the Merger Consideration
(or, if eligible under applicable law, the ESOP Consideration) with respect to
the Shares owned by such Person unless and until such Person shall have failed
to perfect or shall have effectively withdrawn or lost such holder's right to
dissent from the Merger under the DGCL. Each Dissenting Stockholder shall be
entitled to receive only the payment provided by Section 262 of the DGCL with
respect to Shares owned by such Dissenting Stockholder. The Company shall give
Parent (i) prompt notice of any written demands for appraisal, attempted
withdrawals of such demands, and any other instruments served pursuant to
applicable Law received by the Company relating to stockholders' rights of
appraisal and (ii) the opportunity to direct all negotiations and proceedings
with respect to demand for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
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with respect to any demands for appraisals of Dissenting Shares, offer to settle
or settle any such demands or approve any withdrawal of any such demands.
4.4 Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), stock
dividend or distribution, recapitalization, merger (other than with respect to
the Company's pending acquisition of Lexington Global Asset Managers, Inc.
pursuant to the existing terms of the Agreement and Plan of Merger, dated
February 28, 2000, between the Company, Pilgrim Capital Corporation and
Lexington Global Asset Managers, Inc. (the "Lexington Agreement")), subdivision,
issuer tender or exchange offer, or other similar transaction, the Merger
Consideration and the ESOP Consideration shall be equitably adjusted to reflect
such change.
4.5 ESOP Shares
(a) At the Effective Time, each ESOP Share issued and outstanding
immediately prior to the Effective Time shall be cancelled and converted into
that number of American Depositary Shares ("ADSs"), evidenced by American
Depositary Receipts (with each ADS representing one Bearer Depositary Receipt
("Bearer Receipt"), each of which in turn represents an interest in one Ordinary
Share, nominal value NLG1.00 per Ordinary Share ("ING Shares")), of ING equal to
the number derived by dividing (x) $54.00 by (y) the average of the closing
prices for the ADSs (the "Average Closing Price") as reported on the New York
Stock Exchange, Inc. (the "NYSE") composite transactions reporting system (as
reported in the New York City edition of The Wall Street Journal or, if not
reported thereby, another authoritative source) for the ten trading days ending
on the last trading day prior to the Closing Date (the "ESOP Consideration").
(b) As of the Effective Time, ING shall, upon delivery to the Surviving
Corporation or its designee of the Certificates(s) (or affidavits of loss in
lieu thereof) representing the ESOP Shares for cancellation, together with any
documentation to effect such transfer as may reasonably be requested by ING,
issue to the ESOP Plan the ESOP Consideration to be issued pursuant to Section
4.5(a) and a check for any cash to be paid pursuant to Section 4.5(d), together
with any dividends or other distributions payable with respect thereto.
(c) No Person holding a Certificate representing ESOP Shares will be
entitled after the Effective Time to receive any dividend or distribution that
may be declared or paid in respect of ADSs receivable by such Person upon
conversion of ESOP Shares represented by such Certificate in the Merger until
such Certificate is surrendered in exchange for the ESOP Consideration as
provided herein, at which time any dividends with a record date after the
Effective Time with respect to ADSs shall, subject to applicable Law, be paid
without interest to such Person as though it had been a record holder of such
ADSs at the time of such record date.
(d) Notwithstanding any other provision of this Agreement, no fractional
ADS will be issued and any holder of ESOP Shares entitled to receive a
fractional ADS but for this Section 4.5(d) shall be entitled to receive a cash
payment in lieu thereof, which payment shall represent such holder's
proportionate interest in an ADS based on the Average Closing Price.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company. Except as disclosed in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999,
filed with the Securities and Exchange Commission (the "SEC") on March 20, 2000,
the Company's Annual Proxy Statement on Schedule 14A, filed with the SEC on
March 28, 2000, or as set forth in the corresponding sections or
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subsections of the disclosure letter, dated the date hereof, delivered to Parent
by the Company on or prior to entering into this Agreement (the "Company
Disclosure Letter"), the Company hereby represents and warrants to Parent and
Merger Sub that:
(a)(i) Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is an entity duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing in each jurisdiction where the
ownership or operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so organized,
qualified or in good standing, or to have such power or authority is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect (as defined below). The Company has made available to Parent
complete and correct copies of the certificate of incorporation and by-laws or
other comparable governing instruments of the Company and each of its
"Significant Subsidiaries" (as defined in Rule 1.02(w) of Regulation S-X
promulgated pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), each as amended. The Company's and its Significant
Subsidiaries' certificates of incorporation and by-laws or other comparable
governing instruments so delivered are in full force and effect. Section
5.1(a)(i) of the Company Disclosure Letter contains a correct and complete list
of each jurisdiction where the Company and each of its Subsidiaries is
organized.
As used in this Agreement, the term (i) "Subsidiary" means, with respect to
the Company, Parent or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries and (ii) "Company Material Adverse Effect" means a
material adverse effect on the financial condition, properties, business or
annual results of operations of the Company and its Subsidiaries taken as a
whole, except to the extent that such adverse effect results from (i) general
economic conditions or changes therein, (ii) financial market fluctuations or
conditions, (iii) adverse economic or regulatory changes or effects in or
affecting the financial services industry, insurance industry or asset
management industry generally or (iv) the announcement of the transactions
contemplated herein.
(ii) The Company conducts its insurance and reinsurance operations
exclusively through Reliastar Life Insurance Company, Northern Life Insurance
Company, Security-Connecticut Life Insurance Company, Reliastar Life Insurance
Company of New York, Reliastar Reinsurance Group (UK) Ltd., Arrowhead Ltd. and
The New Providence Insurance Company, Limited (collectively, the "Company Life
Insurance Companies"). Section 5.1(a)(ii) of the Company Disclosure Letter sets
forth the jurisdictions where the Company Life Insurance Companies are domiciled
or "commercially domiciled" and licensed to do an insurance or reinsurance
business for insurance regulatory purposes. Each of the Company Life Insurance
Companies is (A) duly licensed or authorized as an insurance company or, where
applicable, a reinsurer in its jurisdiction of incorporation, (B) duly licensed
or authorized as an insurance company or, where applicable, a reinsurer in each
other jurisdiction where it is required to be so licensed or authorized, and (C)
duly authorized in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business reported as being written in the
Company Life SAP Statements (as defined in Section 5.1(e)), except, in each
case, where the failure to be so licensed or authorized is not reasonably likely
to have a Company Material Adverse Effect. The Company and each of the Company
Life Insurance Companies have made all required filings under applicable
Insurance Laws (as defined in Section 5.1(i)) except where the failure to file
is not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
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<PAGE> 95
(b) Capital Structure. The authorized capital stock of the Company
consists of 200,000,000 Shares, of which 89,632,632 Shares were outstanding as
of the close of business on April 28, 2000, and 7,000,000 shares of Preferred
Stock, par value $0.01 per share (the "Preferred Shares"), of which no shares
were outstanding as of the close of business on April 28, 2000. All of the
outstanding Shares have been duly authorized and are validly issued, fully paid
and nonassessable. Other than 8,873,630 Shares reserved for issuance under the
Stock Option Agreement, the Company has no Shares or Preferred Shares reserved
for issuance, except that, as of April 28, 2000, there were 8,429,530 Shares
reserved for issuance pursuant to those plans identified as "Stock Plans" in
Section 5.1(b) of the Company Disclosure Letter (collectively, the "Stock
Plans"), and 6,000,000 Series A Preferred Shares reserved for issuance pursuant
to the Rights Agreement. The Company has provided to Parent a correct and
complete list of each outstanding option to purchase Shares under the Stock
Plans (each a "Company Option"), including the holder, date of grant, exercise
price and number of Shares subject thereto. Section 5.1(b) of the Company
Disclosure Letter contains a correct and complete list of each Subsidiary of the
Company. Each of the outstanding shares of capital stock or other securities of
each of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and owned by the Company or a direct or indirect
wholly-owned subsidiary of the Company, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set forth above, there
are no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements, calls, commitments or rights of any kind that obligate
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock or other securities of the Company or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of the
Company or any of its Subsidiaries, and no securities or obligations evidencing
such rights are authorized, issued or outstanding. The Shares issuable pursuant
to the Stock Option Agreement have been duly reserved for issuance by the
Company, and upon any issuance of such Shares in accordance with the terms of
the Stock Option Agreement, such Shares will be duly authorized, validly issued,
fully paid and nonassessable and free and clear of any lien, pledge, security
interest, claim or other encumbrance. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter ("Voting
Debt"). Section 5.1(b) of the Company Disclosure Letter contains a true and
complete list of each person in which the Company owns, directly or indirectly,
any voting interest that may require a filing by Parent under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). No
joint ventures between the Company and another Person or Persons, are,
individually or in the aggregate, material to the business of the Company and
its Subsidiaries, taken as a whole.
(c) Corporate Authority; Approval and Fairness. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate, subject only to
approval of this Agreement by the holders of a majority of the outstanding
Shares (the "Company Requisite Vote"), the Merger. This Agreement is a valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception").
(ii) The board of directors of the Company (A) has unanimously approved
this Agreement and the Stock Option Agreement and the Merger and the other
transactions contemplated hereby and thereby (B) has declared that this
Agreement and the Stock Option Agreement and the Merger and the other
transactions contemplated hereby and thereby, taken as a whole, are fair to,
advisable and
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in the best interests of the holders of Shares and (C) has received the opinion
of its financial advisors, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
to the effect that the consideration to be received by the holders of the Shares
in the Merger is fair from a financial point of view to such holders (other than
Parent and its "Affiliates" (as defined in Rule 12b-2 under the Exchange Act)).
(d) Governmental Filings; No Violations. (i) Other than the reports,
filings, registrations, consents, approvals, permits, authorizations,
applications and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act,
(C) under any foreign competition laws, (D) under the Exchange Act, (E) under
the Investment Company Act of 1940, as amended (the "1940 Act"), (F) under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), (G) with the
NYSE, (H) with the National Association of Securities Dealers, Inc. (the
"NASD"), (I) with foreign, federal and state regulatory authorities governing
banking (including the Office of Thrift Supervision and the Office of the
Comptroller of the Currency), insurance premium finance, commercial collections,
leasing, consumer finance, commercial finance and mortgage lending or servicing
(the "Banking Authorities"), (J) with applicable foreign, federal and state
regulatory authorities governing insurance (including the Commissioners of
Insurance of Arizona, Connecticut, Minnesota, New York, Washington, and the
insurance regulatory authorities and other applicable regulatory authorities in
the United Kingdom, Mexico, Denmark, Canada, Japan, Puerto Rico, Guam, the
Netherlands and the Cayman Islands) (the "Insurance Authorities") and (K) as
otherwise set forth in Section 5.1(d) of the Company Disclosure Letter, no
notices, reports or other filings are required to be made by the Company or any
of its Subsidiaries with, nor are any consents, registrations, approvals,
permits, applications or authorizations required to be obtained by the Company
or any of its Subsidiaries from, any U.S. or non-U.S. governmental or regulatory
authority, agency, commission, tribunal, body or other governmental,
quasi-governmental or self-regulatory entity ("Governmental Entity"), in
connection with the execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
Merger and the other transactions contemplated hereby and thereby, except those
that the failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
transactions contemplated by this Agreement and the Stock Option Agreement.
(ii) The execution, delivery and performance of this Agreement and the
Stock Option Agreement by the Company do not, and the consummation by the
Company of the Merger and the other transactions contemplated hereby and thereby
will not, constitute or result in (A) a breach or violation of, or a default
under, the certificate or by-laws of the Company or the comparable governing
instruments of any of its Subsidiaries, (B) a breach or violation of, or a
default under, the acceleration of any rights or obligations or the creation of
a lien, pledge, security interest, claim or other encumbrance on the assets of
the Company or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any agreement, lease, license, contract, note, mortgage,
indenture, franchise, permit, concession, arrangement or other obligation
("Contracts") binding upon the Company or any of its Subsidiaries or any Law (as
defined in Section 5.1(i)) or governmental or non-governmental permit or license
to which the Company or any of its Subsidiaries is subject or (C) any change in
the rights or obligations of any party under any of the Contracts, except, in
the case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement and the Stock Option Agreement.
(e) Statutory Reports; Company Reports; Financial Statements. (i) Since
January 1, 1997, each of the Company Life Insurance Companies has filed all
annual or quarterly statements, together with all exhibits, interrogatories,
notes, actuarial opinions, affirmations, certifications, schedules or other
supporting documents in connection therewith, required to be filed with or
submitted to the
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appropriate regulatory authorities of the jurisdiction in which it is domiciled
or "commercially domiciled" on forms prescribed or permitted by such authority
(collectively, the "Company Life SAP Statements"). The Company has delivered to
Parent all Company Life SAP Statements for each Company Life Insurance Company
for the five-year period ended December 31, 1999 each in the form (including
exhibits, annexes and any amendments thereto) filed with the applicable state
insurance regulatory agency. Since January 1, 1997, the financial statements
included in the Company Life SAP Statements and purported to be prepared on a
statutory basis, including the notes thereto, have been prepared in accordance
with statutory accounting practices prescribed or permitted by applicable
regulatory authorities in effect as of the date of the respective statements,
and such accounting practices have been applied on a substantially consistent
basis throughout the periods involved, except as expressly set forth in the
notes or schedules thereto. Such financial statements present fairly in all
material respects the respective statutory financial positions and results of
operations of each of the Company Life Insurance Companies as of their
respective dates and for the respective periods presented therein. The Company
Life SAP Statements complied in all material respects with all applicable laws,
rules and regulations when filed, and no material deficiency has been asserted
with respect to any Company Life SAP Statements by the applicable insurance
regulatory body or any other governmental agency or body. Except as indicated
therein, all assets that are reflected on the Company Life SAP Statements comply
with all applicable Insurance Laws (as defined in Section 5.1(i)) with respect
to admitted assets and are in an amount at least equal to the minimum amounts
required by applicable Insurance Laws. The statutory balance sheets and income
statements included in the Company Life SAP Statements for 1999 have been
audited by Deloitte & Touche LLP and the Company has delivered or made available
to Parent true and complete copies of all audit opinions related thereto. The
Company has delivered to Parent true and complete copies of all examination and
market conduct reports of insurance departments and any insurance regulatory
agencies since January 1, 1998 relating to the Company Life Insurance Companies.
(ii) The Company has filed with the SEC each registration statement,
report, proxy statement or information statement required to be filed by it
since January 1, 1997, including the Company's Annual Report on Form 10-K for
the year ended December 31, 1999 (the "Audit Date", and such report on Form
10-K, the "1999 10-K"), each in the form (including exhibits, annexes and any
amendments thereto) promulgated by the SEC under the Securities Act of 1933, as
amended (the "Securities Act") or the Exchange Act (collectively, with any other
filings made with the SEC since January 1, 1997, and including any such
registration statements, reports, proxy statements and information statements
filed subsequent to the date hereof and as amended, the "Company Reports"). As
of their respective dates, (or, if amended, as of the date of such amendment)
the Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
in which they were made, not misleading.
(iii) Each of the consolidated balance sheets included in the Company
Reports (including the related notes and schedules) fairly presents in all
material respects, or will fairly present in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of income and of changes in
financial position included in the Company Reports (including any related notes
and schedules) fairly presents in all material respects, or will fairly present
in all material respects, the results of operations, retained earnings and
changes in financial position, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with U.S.
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted therein.
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(f) Absence of Certain Changes. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date, the Company and
its Subsidiaries have conducted their respective businesses only in, and have
not engaged in any material transaction other than according to, the ordinary
course of such businesses consistent with prior practice and there has not been
(i) any Company Material Adverse Effect or any development or combination of
developments of which the Company has knowledge that has had or is reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect; (ii) any damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by the Company or any
of its Subsidiaries, whether or not covered by insurance, which is reasonably
likely to have a Company Material Adverse Effect; (iii) any change by the
Company or any of its Subsidiaries in accounting principles, practices or
methods, except as may be appropriate to conform to changes in statutory or
regulatory accounting rules or generally accepted accounting principles or
regulatory requirements with respect thereto; (iv) any declaration, setting
aside or payment of any dividend or other distribution in respect of the capital
stock of the Company, except for dividends or other distributions on its capital
stock publicly announced prior to the date hereof and except as expressly
permitted hereby; (v) any material addition, or any development involving a
prospective material addition, to the Company's consolidated reserves for future
insurance policy benefits or other insurance policy claims and benefits other
than as a result of new business produced in the ordinary course of business
since the Audit Date; (vi) any material change in the actuarial, investment,
reserving, underwriting or claims administration policies, practices or
principles of any Company Life Insurance Company, except as may be appropriate
to conform to changes in statutory or regulatory accounting rules or generally
accepted accounting principles or regulatory requirements with respect thereto;
(vii) any amendment of any of the Compensation and Benefit Plans (as defined in
Section 5.1(h)) other than amendments in the ordinary course of business
consistent with prior practice; (viii) any granting by the Company or any of its
Subsidiaries to any executive officer of the Company or any of its Subsidiaries
of any increase in compensation, except (A) for increases in the ordinary course
of business consistent with prior practice, (B) as was required under employment
agreements in effect as of the Audit Date or (C) in connection with a promotion;
(ix) any granting by the Company or any of its Subsidiaries to any such
executive officer of any increase in severance or termination pay, except (A)
for obligations which have been satisfied prior to the date hereof, (B) for
increases in the ordinary course of business consistent with prior practice in
any one case not in excess of $100,000, (C) as was required under any
employment, severance or termination agreement in effect as of the Audit Date or
(D) in connection with a promotion; or (x) any entry by the Company or any of
its Subsidiaries into any new severance or termination agreement with any such
executive officer, except (A) for obligations which have been satisfied prior to
the date hereof, (B) new severance or termination obligations in the ordinary
course of business consistent with prior practice in any one case not in excess
of $100,000, (C) in connection with a promotion or (D) any new severance or
termination agreement entered into at Parent's request or with Parent's consent.
(g) Litigation and Liabilities. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or any of their respective properties or assets except
for those that are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement. Set forth in
Section 5.1(g) of the Company Disclosure Letter is a complete list of all civil,
criminal or administrative actions, suits, claims (other than individual
customer complaints which are received in the ordinary course of business,
consistent with past practice, and as to which no suit, action or arbitration
has been commenced), hearings, investigations or proceedings, pending or, to the
knowledge of the Company, threatened against the Company or any of its
Affiliates or any of their
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respective properties or assets as of the date hereof. The Company has delivered
to Parent a true and complete copy of its customer complaint log which is
maintained in the ordinary course of business. Except for those obligations and
liabilities that are fully reflected or reserved against on the consolidated
balance sheet of the Company included in the 1999 10-K, and for obligations and
liabilities incurred in the ordinary course of business consistent with prior
practice since December 31, 1999, neither the Company nor any of its
Subsidiaries has incurred any obligations or liabilities of any nature
whatsoever, whether absolute, accrued, contingent, known, unknown or otherwise
and whether or not required to be disclosed on a balance sheet prepared in
accordance with GAAP or statutory accounting principles, including those
relating to matters involving any Environmental Law (as defined in Section
5.1(k)), or any other facts or circumstances of which the Company has knowledge
that could result in any claims against, or obligations or liabilities of, the
Company or any of its Affiliates, except for those that are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement. As used in the Agreement, the phrase "knowledge of the Company" means
the actual knowledge of those people set forth on Section 5.1(g) of the Company
Disclosure Letter.
(h) Employee Benefits.
(i) A true and complete copy of each material employment benefit and
compensation plan, contract, policy or arrangement, including each "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), bonus, incentive, deferred
compensation, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, stock appreciation rights, stock based, termination and
severance plan, agreement, policy or arrangement (whether oral or in writing)
that covers employees, directors, consultants, former employees or former
directors of the Company and its Subsidiaries (the "Compensation and Benefit
Plans") and any trust agreement or insurance contract forming a part of such
Compensation and Benefit Plans has been made available to Parent prior to the
date hereof. The Compensation and Benefit Plans are listed in Section 5.1(h) of
the Company Disclosure Letter and any "change of control" or similar provisions
therein are specifically identified in Section 5.1(h) of the Company Disclosure
Letter. Neither the Company nor any of its Subsidiaries has any commitment, oral
or written, to create any additional material Compensation and Benefit Plan or
to modify or change any existing Compensation and Benefit Plan in a material
respect.
(ii) All Compensation and Benefit Plans are in substantial compliance with
all applicable law, including the Code and ERISA, and all required filings and
disclosures with respect to any Compensation and Benefit Plan have been timely
made. More specifically, the Company and the Compensation and Benefit Plans have
at all times complied with Section 407 of ERISA with respect to the holding and
acquiring of "employer securities" and "qualifying employer securities" as
defined under ERISA. Each Compensation and Benefit Plan that is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension
Plan") and that is intended to be qualified under Section 401(a) of the Code
(each, a "Qualified Plan"), has received a favorable determination letter
(including a determination that the related trust under such Compensation and
Benefit Plan is exempt from tax under Section 501(a) of the Code) from the
Internal Revenue Service (the "IRS") with respect to "TRA" (as defined in
Section 1 of Revenue Procedure 93-39), and the Company is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no material pending or, to the knowledge of the Company,
threatened legal action, suit, claim or governmental investigation relating to
any of the Compensation and Benefit Plans, other than routine claims for
benefits. Neither the Company nor any of its Subsidiaries has engaged in a
transaction, or omitted to take any action, with respect to any Compensation and
Benefit Plan that, assuming the taxable period of such transaction expired as of
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the date hereof, could subject the Company or any of its Subsidiaries to a
material tax or penalty imposed by either Section 4975 of the Code or Section
502 of ERISA.
(iii) There is no material liability under Subtitle C or D of Title IV of
ERISA that has been incurred which has not been satisfied and no such material
liability is expected to be incurred by the Company or any Subsidiary with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(such entity an "ERISA Affiliate" and such plan an "ERISA Affiliate Plan"). The
Company and its Subsidiaries have not incurred any material withdrawal liability
that has not been satisfied and the Company does not expect that they will incur
any such material withdrawal liability with respect to any multiemployer plan
under Subtitle E to Title IV of ERISA. Neither the Company, its Subsidiaries nor
any ERISA Affiliate has contributed, or been obligated to contribute, to a
"multiemployer plan" within the meaning of Section 3(37) of ERISA at any time
since September 26, 1980. No notice of a "reportable event", within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or any ERISA
Affiliate Plan within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement and the Stock Option Agreement. The Pension Benefit Guaranty
Corporation (the "PBGC") has not instituted proceedings to terminate any Pension
Plan or ERISA Affiliate Plan, and, to the knowledge of the Company, no condition
exists that presents a material risk that such proceedings will be instituted.
(iv) All material contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan as of the date hereof have
been timely made or have been reflected on the most recent consolidated balance
sheet filed or incorporated by reference in the Company Reports prior to the
date hereof. Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA, and no ERISA Affiliate has an
outstanding funding waiver. Neither the Company nor its Subsidiaries or ERISA
Affiliates (x) has provided, or is required to provide, security to any Pension
Plan or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code
or (y) has taken any action, or omitted to take any action, that has resulted,
or is reasonably likely to result, in the imposition of a lien under Section
412(a) of the Code or pursuant to ERISA.
(v) Under each Pension Plan which is a single-employer plan and ERISA
Affiliate Plan, as of the last day of the most recent plan year ended prior to
the date hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the Pension Plan's most
recent actuarial valuation), did not exceed the then current value of the assets
of such Plan, and as of the date hereof, there has been no material adverse
change in the financial condition of such Plan nor any amendment or other change
to such Plan that would materially increase the amount of benefits thereunder
which reasonably could be expected to change such result.
(vi) Except as required by applicable law or pursuant to individual
agreements, neither the Company nor any of its Subsidiaries or ERISA Affiliates
have any obligations for retiree health and life benefits under any Compensation
and Benefit Plan. No action taken by the Company or its Subsidiaries alters the
Company's or its Subsidiaries' ability to amend or terminate any retiree health
or life plan in accordance with the written terms of such plan.
(vii) The consummation of the Merger and the other transactions
contemplated by this Agreement or the Stock Option Agreement will not (w)
entitle any employee, consultant or director of the Company or any of its
Subsidiaries to any payment (including severance pay or similar
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compensation) or any increase in compensation, (x) accelerate the time of
payment or vesting or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Compensation and Benefit Plans, (y) result in any breach or
violation of, or a default under, any of the Compensation and Benefit Plans or
(z) result in any payments by the Company or the Surviving Corporation being
non-deductible as an "excess parachute payment" pursuant to Section 280G of the
Code.
(viii) With respect to each Compensation and Benefit Plan, if applicable,
the Company has provided or made available to Parent true and complete copies of
(i) the two most recent Forms 5500 filed with the IRS; (ii) the most recent
actuarial report and financial statement; (iii) the most recent summary plan
description; (iv) the forms filed with the PBGC (other than for premium
payments); (v) the most recent determination letter issued by the IRS; (vi) any
Form 5310 or Form 5330 filed with the IRS; and (vii) the most recent
nondiscrimination tests performed under ERISA and the Code (including 401(k) and
401(m) tests).
(ix) The disallowance of a deduction under Section 162(m) of the Code for
employee remuneration does not apply to any amount payable to a "covered
individual" with respect to the Company.
(i) Compliance with Laws; Permits. (i) The business and operations of the
Company and its Subsidiaries have been conducted in compliance with all
applicable foreign, federal, state and local statutes and regulations regulating
the business and products of insurance and reinsurance and all applicable orders
and directives of insurance regulatory authorities (including federal
authorities with respect to health maintenance organization and other health and
workmen's compensation products and variable insurance and annuity products) and
market conduct recommendations resulting from market conduct examinations of
insurance regulatory authorities (including federal authorities with respect to
health maintenance organization and other health and workmen's compensation
products and variable insurance and annuity products) (collectively, "Insurance
Laws"), except where the failure to so conduct such business and operations is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. Without limiting the generality of the preceding
sentence, except where the failure to do so is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, each of
the Company and its Subsidiaries and, to the knowledge of the Company as of the
date hereof, its Agents (as defined in Section 5.1(r)(ii)) have marketed, sold
and issued insurance, reinsurance and annuity products and guaranteed investment
contracts in compliance with all applicable Insurance Laws, including (A) all
applicable prohibitions against withdrawal of business lines and "redlining",
(B) all applicable requirements relating to the disclosure of the nature of
insurance products as policies of insurance, (C) all applicable requirements
relating to insurance product projections and illustrations and (D) all
applicable requirements relating to the advertising, sales and marketing of
insurance and annuity products and guaranteed investment contracts. In addition,
(X) there is no pending or, to the knowledge of the Company, threatened charge
by any insurance regulatory authority that any of the Company or any of its
Subsidiaries has violated, nor any pending or, to the knowledge of the Company,
threatened investigation by any insurance regulatory authority with respect to
possible violations of, any applicable Insurance Laws where such violations are,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect; (Y) none of the Company or any of its Subsidiaries is subject to
any order or decree of any insurance regulatory authority relating specifically
to such Person (as opposed to insurance companies generally) which is
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect; and (Z) the Company and its Subsidiaries have filed all reports
required to be filed with any insurance regulatory authority as to which the
failure to file such reports is, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
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(ii) In addition to Insurance Laws, except as set forth in the Company
Reports filed prior to the date hereof, the businesses of each of the Company
and its Subsidiaries have not been, and are not being, conducted in violation of
any applicable federal, state, local or foreign law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity (collectively,
"Laws"), except for violations or possible violations that are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse Effect
or prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement. No investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries which would be reasonably likely to have
a Company Material Adverse Effect is pending or, to the knowledge of the
Company, threatened, nor has any Governmental Entity indicated an intention to
conduct the same. To the knowledge of the Company, no change is required in the
Company's or any of its Subsidiaries' processes, properties or procedures in
connection with any such Laws, and the Company has not received any notice or
communication of any noncompliance with any such Laws that has not been cured as
of the date hereof other than any such failure to make changes or non-compliance
which is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. The Company and its Subsidiaries each has all
permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted except those the absence of which are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the ability of
the Company to consummate the Merger and the other transactions contemplated by
this Agreement and the Stock Option Agreement. None of the Company's
Subsidiaries which is a registered broker-dealer has entered into or is subject
to a restrictions letter agreement with the NASD as of the date hereof.
(j) Takeover Statutes. No restrictive provision of any "fair price,"
"moratorium," "control share acquisition," "interested stockholder" or other
similar anti-takeover statute or regulation (each a "Takeover Statute") or any
restrictive provision of any anti-takeover provision in the Company's
certificate of incorporation and by-laws is, or at or following the Effective
Time will be, applicable to the Company, the Shares, the Merger or the other
transactions contemplated by this Agreement or the Stock Option Agreement.
Without limiting the generality of the foregoing, the board of directors of the
Company has taken all action so that Parent will not be prohibited from, or
require any subsequent approval or consent in connection with, entering into or
consummating a "business combination" with the Company as an "interested
stockholder" or "interested shareholder" (in each case as such terms are used in
Section 203 of the DGCL and Article SEVENTH of the Company's certificate of
incorporation) as a result of the execution of this Agreement the Stock Option
Agreement, or the consummation of the transactions contemplated hereby or
thereby.
(k) Environmental Matters. Except as would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i) the Company and its Subsidiaries have at all times been in compliance
with all Orders of any Governmental Entity and all Laws, in each case related to
human health or the environment ("Environmental Law");
(ii) there are not any past or present conditions or circumstances at, or
arising out of, any current or former business, assets or properties of Company
or any of its Subsidiaries, including but not limited to on-site or off-site
disposal presence or release of or exposure to any chemical substance, product
or waste or any other condition or circumstance which has resulted in or could
have resulted in or could reasonably be expected to give rise to: (a)
liabilities, fines, penalties, costs, capital expenditures or obligations for
any violation, noncompliance, cleanup, remediation, disposal or
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corrective action under any Environmental Law or (b) claims arising for personal
injury, property damage, or damage to natural resources; and
(iii) neither the Company nor any of its Subsidiaries has (a) received any
notice of noncompliance with, violation of, or liability or potential liability
relating to any Environmental Law or (b) entered into any consent decree,
agreement or order or is subject to any order of any court or governmental
authority or tribunal or any indemnity with any third party relating to any
Environmental Law or relating to the cleanup of any hazardous materials
contamination.
(l) Taxes.
(i) Except as would not have a Company Material Adverse Effect, the
Company and each of its Subsidiaries (A) have duly and timely filed (taking into
account any extension of time (to the extent validly received) within which to
file) all Tax Returns (as defined below) required to be filed by any of them and
all such filed Tax Returns are complete and accurate; (B) all Taxes (as defined
below) owed (whether or not shown on any Tax Return) have been paid, including
any Taxes that the Company or any of its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith; and (C) have not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. As of the date hereof, there are not
pending or threatened any audits, examinations, investigations or other
proceedings in respect of Taxes or Tax matters. There are not any unresolved
questions or claims concerning the Company's or any of its Subsidiaries' Tax
liability that are reasonably likely to have a Company Material Adverse Effect.
There are no Tax liens against the Company or any of its Subsidiaries or liens
for Taxes not yet due or Taxes being contested in good faith. The Company has
made available to Parent true and correct copies of the United States federal
income Tax Returns filed by the Company and its Subsidiaries for each of the
fiscal years ended December 31, 1996, 1997 and 1998.
As used in this Agreement, (y) "Tax" (including, with correlative meaning,
the terms "Taxes", and "Taxable") means (i) all federal, state, local and
foreign income, profits, franchise, premium, gross receipts, environmental,
customs duty, capital stock, severances, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions and (ii) any liability for the payment of any amount of the type
described in clause (i) as a result of being or having been before the Closing
Date a member of an affiliated, consolidated, combined or unitary group, or a
party to any agreement or arrangement, as a result of which liability of the
Company and each of its subsidiaries to a Tax Authority is determined or taken
into account with reference to the liability of any other Person (including,
e.g., liability under Treasury Regulation 1.1502-6 or similar liability under
any other Law), and (iii) any liability for the payment of any amount as a
result of being party to any Tax Sharing Agreement or with respect to the
payment of any amount of the type described in (i) or (ii) as a result of any
existing express or implied obligation (including, but not limited to, an
indemnification obligation). "Tax Return" means all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax Authority relating to
Taxes.
"Tax Sharing Agreement" means all existing agreements or arrangements
(whether or not written) binding the Company or any of its Subsidiaries that
provide for the allocation, apportionment, sharing or assignment of any Tax
liability or benefit, or the transfer or assignment of income, revenues,
receipts, or gains for the principal purpose of determining any Person's Tax
liability.
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"Tax Authority" means the Internal Revenue Service and any other domestic
or foreign Governmental Entity or Person responsible for the administration of
any taxes.
(ii) Except for situations which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, (A)
the Tax treatment under the Code of all Company Life Insurance Contracts (as
defined in Section 5.1(r)(i)) is and at all times has been in all material
respects the same or more favorable to the purchaser, policyholder or intended
beneficiaries thereof as the Tax treatment under the Code for which such Company
Life Insurance Contracts qualified or purported to qualify at the time of their
issuance or purchase, except for changes resulting from changes to the Code
which do not affect such Company Life Insurance Contracts due to the effective
date thereof, (B) each hardware, software and firmware product used by the
Company Life Insurance Companies to maintain such Company Life Insurance
Contracts' qualification for the Tax treatment under the Code for which such
Company Life Insurance Contracts qualified or purported to qualify at the time
of their issuance or purchase is and at all relevant times has been properly
designed and implemented to maintain such qualification, (C) each annuity
contract issued by the Company Life Insurance Companies qualifies as an annuity
contract under Section 72 of the Code, (D) each life insurance policy issued by
the Company Life Insurance Companies qualifies as a life insurance contract for
federal income Tax purposes and any such policy which is a modified endowment
contract under Section 7702A of the Code (each, a "MEC") has been marketed as
such at all relevant times or the policyholder otherwise has consented to such
MEC status and (e) each of the Company Life Insurance Companies is and at all
times has been the owner for federal income Tax purposes of the assets in any
segregated asset account underlying or supporting each variable annuity contract
and each variable insurance policy issued by it. For purposes of this Section,
the provisions of the Code relating to the Tax treatment of such contracts shall
include Sections 72, 79, 101, 104, 105, 106, 125, 130, 264, 401, 403, 404, 408,
408A, 412, 415, 419, 419A, 457, 501, 505, 817, 818, 1035, 7702, 7702A and 7702B.
(iii) Except for situations which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, each
Fund Client (as defined in Section 5.1(v)(i)) has elected to qualify and, for
all taxable years that an Advisory Entity (as defined in Section 5.1(v)(iii))
served as investment adviser and with respect to which the applicable statute of
limitations (including any extensions) has not expired ("open taxable years"),
has continuously qualified to be treated as a "regulated investment company"
under Subchapter M of the Code and has continuously been eligible to compute,
and has for each such taxable year computed, its federal income tax under
Section 852 of the Code and has no earnings and profits accumulated in any
taxable year. At the Closing Date, all Tax Returns with respect to any taxable
period for which the applicable statute of limitations (including any
extensions) has not expired and during which an Advisory Entity has served as
investment adviser that were or are required to be filed on or before such date
by or on behalf of a Fund Client were or shall have been filed and were or shall
be complete and correct and all federal and other Taxes, shown or required to be
shown as due on such returns, shall have been paid or provided for. No such Tax
Return or other filing is currently under audit, no assessment has been asserted
with respect to such Tax Returns or other filings, and no requests for waivers
of the time to make any such assessment are pending. None of the Fund Clients is
delinquent in the payment of any material Tax assessment or governmental charge.
(iv) In providing recordkeeping and administrative services in the
ordinary course of business consistent with prior practice with respect to
customers' insurance products, whether individual or group retirement or
deferred compensation plans or arrangements, and with respect to any life
insurance or annuity contracts issued, assumed, modified, exchanged or sold by a
Company Life Insurance Company as of the Closing Date, each Company Life
Insurance Company is in compliance with the applicable administrative
requirements of the Code and the rules and regulations thereunder, and, to the
extent applicable, the requirements of Parts 2, 3 and 4 of Title I of ERISA,
except for
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those failure to comply that are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect.
(v) The merger of IB Holdings, Inc. into IB Holdings LLC qualifies as a
liquidation for purposes of Section 332 of the Code.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of any material proceeding
asserting that the Company or any of its Subsidiaries has committed an unfair
labor practice or seeking to compel it to bargain with any labor union or labor
organization nor is there pending or, to the knowledge of the Company,
threatened, nor has there been for the past five years, any labor strike,
dispute, walk-out, work stoppage, slow-down or lockout involving the Company or
any of its Subsidiaries.
(n) Insurance. All material fire and casualty, general liability,
directors' and officers', errors and omissions and product liability insurance
policies maintained by the Company or any of its Subsidiaries are with reputable
insurance carriers and provide insurance coverage reasonably customary or
adequate for the operation of their respective businesses, except for any such
failures to maintain insurance policies that are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect. The
Company and its Subsidiaries have given notice to insurance carriers of all
material claims that may be covered, and the Company and its Subsidiaries have
not received any refusal of coverage or any notice that a defense will be
afforded with reservation of rights or any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(o) Intellectual Property.
(i) The Company and each of its Subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all material patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, trade secrets, computer software programs or
applications, and tangible or intangible proprietary information or materials
("Intellectual Property") that is used in the business of the Company and its
Subsidiaries as currently conducted, except for any such failures to own, be
licensed or possess that are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, and to the knowledge of the
Company all material patents, trademarks, trade names, service marks and
copyrights held by the Company and its Subsidiaries are valid and subsisting.
(ii) Except as is not reasonably likely to have a Company Material Adverse
Effect:
(A) the Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any licenses, sublicenses and other agreements
as to which the Company is a party and pursuant to which the Company is
authorized to use any third-party Intellectual Property;
(B) the Company has not received any notice of any bona fide claims
(I) to the effect that the Company or any of its Subsidiaries is infringing
on any copyright, patent, trademark, trade name, service mark or trade
secret; (II) against the use by the Company or any of its Subsidiaries, of
any Intellectual Property used in the business of the Company or any of its
Subsidiaries as currently conducted or as proposed to be conducted or (III)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company;
and
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(C) to the knowledge of the Company, there is no infringement of any
of the Company Intellectual Property Rights by any third party, including
any employee or former employee of the Company or any of its Subsidiaries.
(p) Rights Plan. (i) The board of directors of the Company has taken all
necessary action to render the Rights Agreement inapplicable to the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement.
(ii) The Company has taken all necessary action with respect to all of the
outstanding Rights so that, as of immediately prior to the Effective Time, (A)
neither the Company nor Parent will have any obligations under the Rights or the
Rights Agreement and (B) the holders of the Rights will have no rights under the
Rights or the Rights Agreement.
(q) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement or the
Stock Option Agreement except that the Company has employed Merrill Lynch & Co.
and Lehman Brothers Inc. as its financial advisors, the arrangements with which
have been disclosed to Parent prior to the date hereof.
(r) Insurance Business. (i) Except as otherwise is not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect,
all policies, binders, slips, certificates, guaranteed investment contracts,
annuity contracts and participation agreements and other agreements of insurance
and reinsurance, whether individual or group, in effect as of the date hereof
(including all applications, supplements, endorsements, riders and ancillary
agreements in connection therewith) that are issued by the Company Life
Insurance Companies (the "Company Life Insurance Contracts") and any and all
marketing materials, are, to the extent required under applicable Law, on forms
approved by applicable insurance regulatory authorities or which have been filed
and not objected to by such authorities within the period provided for
objection, and such forms comply in all material respects with the insurance
statutes, regulations and rules applicable thereto. Premium rates established by
the Company Life Insurance Companies that are required to be filed with or
approved by insurance regulatory authorities have been so filed or approved, the
premiums charged conform thereto in all material respects, and such premiums
comply in all material respects with the insurance statutes, regulations and
rules applicable thereto, except where the failure to be so filed or approved,
or to so conform or comply, is not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
(ii) To the knowledge of the Company as of the date hereof, each insurance
agent, third party administrator, manager, marketer, underwriter, broker,
reinsurance intermediary and distributor (each an "Agent"), at the time such
Agent wrote, sold, produced or managed business for any Company Life Insurance
Company was duly licensed (for the type of business written, sold, produced or
managed) and no such Agent violated (or with or without notice or lapse of time
or both, would have violated) any term or provision of any Law applicable to the
writing, sale, production or management of business for any Company Life
Insurance Company, except for such failures to be licensed or such violations
which have been cured, which have been resolved or settled through agreements
with applicable Governmental Entities or which are barred by an applicable
statute of limitations, or that have not had or are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(iii) Prior to the date hereof, the Company has delivered to Parent a true
and correct summary of each material Contract between any Company Life Insurance
Company and any reinsurance intermediary and of each material pooling agreement
to which a Company Life Insurance Company
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is a party, including all agreements relating to or arising out of or in
connection with the Unicover pool.
(iv) Prior to the date hereof, the Company has delivered to Parent a true
and complete copy of any actuarial reports prepared by independent actuaries
with respect to reserve adequacy of any Company Life Insurance Company since
December 31, 1997, and all attachments, addenda, supplements and modifications
thereto (the "Company Actuarial Analyses"). To the knowledge of the Company, the
information and data furnished by the Company or any Company Life Insurance
Company to its independent actuaries in connection with the preparation of the
Company Actuarial Analyses were accurate in all material respects.
(v) To the knowledge of the Company as of the date hereof, all amounts
recoverable under reinsurance, coinsurance or other similar Contracts to which
any Company Life Insurance Company is a party (including, but not limited to,
amounts based on paid and unpaid losses) are fully collectible.
(vi) As of the date hereof, none of Standard & Poor's Corporation, Moody's
Investors Service, Inc. or A.M. Best Company has told the Company that any
rating presently held by the Company Life Insurance Companies is likely to be
modified, qualified, lowered or placed under such surveillance or review for any
reason.
(s) Liabilities and Reserves. (i) The reserves carried on the Company
Life SAP Statements of each Company Life Insurance Company for the year ended
December 31, 1999 for future insurance policy benefits, losses, claims and
similar purposes are in compliance in all material respects with the
requirements for reserves established by the insurance departments of the
jurisdiction of domicile of such Company Life Insurance Company, were determined
in all material respects in accordance with generally accepted actuarial
standards consistently applied and are fairly stated in all material respects in
accordance with sound actuarial principles utilizing actuarial assumptions in
accordance with or more conservative than called for in relevant policy and
contract provisions. The Company has delivered to Parent true, correct and
complete copies of the actuarial valuation reports delivered to the insurance
department of the domiciliary jurisdiction of each Company Life Insurance
Company for the years ended December 31, 1999 and 1998.
(ii) Except for regular periodic assessments in the ordinary course of
business consistent with prior practice or assessments based on developments
which are publicly known within the insurance industry, to the knowledge of the
Company, no claim or assessment is pending or threatened against any Company
Life Insurance Company which is peculiar or unique to such Company Life
Insurance Company by any state insurance guaranty associations in connection
with such association's fund relating to insolvent insurers which if determined
adversely, is, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
(t) Separate Accounts; Investment Advisor. (i) Except as otherwise is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect, each separate account maintained by a Company Life
Insurance Company (collectively, the "Company Separate Accounts") is duly and
validly established and maintained under the laws of its state of formation and
is either excluded from the definition of an investment company pursuant to
Section 3(c)(11) of the 1940 Act or is duly registered as an investment company
under the 1940 Act. Except as otherwise is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, each
such Company Separate Account, if registered, is operated in compliance with the
1940 Act, has filed all reports and amendments of its registration statement
required to be filed, and has been granted all exemptive relief necessary for
its operations as presently conducted. Except as otherwise is not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect, the Company Life Insurance Contracts under which the Company Separate
Accounts assets are held
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are duly and validly issued and are binding obligations of the Company Life
Insurance Companies and are either exempt from registration under the Securities
Act pursuant to Section 3(a)(2) of the Securities Act or were sold pursuant to
an effective registration statement under the Securities Act, and any such
registration statement is currently in effect to the extent necessary to allow
the appropriate Company Life Insurance Company to receive contributions under
such Company Life Insurance Contracts.
(ii) The assets of each Company Separate Account are adequately
diversified within the meaning of, and to the extent required by, Section 817(h)
of the Code.
(iii) Each of the Company Life Insurance Companies is treated for federal
tax purposes as the owner of the assets underlying the respective life insurance
policies and annuity contracts issued, entered into or sold by it.
(u) Material Contracts. All of the material Contracts of the Company and
its Subsidiaries that are required to be described in the Company Reports or to
be filed as exhibits thereto are described in the Company Reports or filed as
exhibits thereto, respectively, and are in full force and effect. True and
complete copies of all such material Contracts have been delivered or made
available by the Company to Parent. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other party is in breach
of or in default under any such Contract except for such breaches and defaults
as are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. Except as are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, neither
the Company nor any of its Subsidiaries is party to any Contract containing any
provision or covenant limiting in any material respect the ability of the
Company or any of its Subsidiaries or, except as specifically identified in
Section 5.1(u) of the Company Disclosure Letter, assuming the consummation of
the transactions contemplated by this Agreement, Parent or any of its
Subsidiaries to (A) sell any products or services of or to any other person, (B)
engage in any line of business or (C) compete with or to obtain products or
services from any person or limiting the ability of any person to provide
products or services to the Company or any of its Subsidiaries.
(v) Investment Contracts, Fund Clients and Advisory Clients.
(i) Certain of the Company's Subsidiaries provide investment management,
investment advisory, sub-advisory, administration, distribution or certain other
services (each Contract for such services being referred to as an "Investment
Contract", each other party thereto being referred to as a "Client", and each
Client which is registered as an investment company under the 1940 Act being
referred to as a "Fund Client") to the Clients, a complete list of which has
previously been made available by the Company to Parent. Each of the Fund
Clients (or the company or trust of which it is a series) is duly organized,
validly existing and in good standing under the Laws of its respective
jurisdiction of organization. The Boards of Trustees or Directors of the Fund
Clients operate in all material respects in conformity with the requirements and
restrictions of Sections 9, 10 and 16 of the 1940 Act.
(ii) Except as would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect, each of the Fund Clients is in
compliance with all applicable Laws of the SEC, the NASD, the IRS and any other
governmental agency or self-regulatory body having jurisdiction over such Fund
Client or its distributor or investment adviser and of any state in which such
Fund Client is registered, qualified or sold and with its prospectus and
statement of additional information. Except as would not be, individually or in
the aggregate, reasonably likely to have a Company Material Adverse Effect, each
Fund Client has elected to be treated as, and has continuously qualified as, a
"regulated investment company" under subchapter M of Chapter 1 of Subtitle A of
the Code. Except as would not be, individually or in the aggregate, reasonably
likely to
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have a Company Material Adverse Effect, each Fund Client that is intended to be
a tax-exempt municipal bond fund has satisfied the requirements of Section
852(b)(5) of the Code and is qualified to pay exempt interest dividends as
defined therein.
(iii) Each of the Company's Subsidiaries (each an "Advisory Entity" and,
collectively "Advisory Entities"), a complete list of which has previously been
made available by the Company to the Parent, that provides investment
management, investment advisory or sub-advisory services to any Fund Client or
any other Person (each such other Person, an "Advisory Client") is duly
registered with the SEC as an investment adviser and is not subject to state
regulation. The Company is not an Advisory Entity. No Advisory Client relies
upon the exemptions from registration provided by Sections 3(c)(1), 3(c)(7) or
(except Company Separate Accounts) 3(c)(11) of the 1940 Act.
(iv) Each Fund Client and Advisory Entity has operated and is currently
operating in compliance with all Laws, and with the investment objectives,
policies and restrictions, that are applicable to it or its business except for
such noncompliance as would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect. Each Advisory Entity has been
and is in compliance with each Investment Contract to which it is a party,
except as would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect.
(v) The accounts of each Advisory Client subject to ERISA have been
managed by the applicable Company Subsidiary in compliance in all material
respects with the applicable requirements of ERISA.
(vi) All issued and outstanding shares of common stock and shares or units
of beneficial interest of each Fund Client (collectively, "shares") are, and at
the Effective Time will be, and all of the authorized but unissued shares of
each Fund Client when issued for the consideration described in the current
registration statement relating to that Fund Client will be, duly and legally
issued and outstanding, fully paid, and non-assessable by the Fund Client. No
Fund Client has outstanding any options, warrants, or other rights to subscribe
for or purchase any of its shares, nor is there outstanding any security
convertible into shares of any Fund Client.
(vii) The current prospectus and related registration statement, including
the current statement of additional information, for each of the Fund Clients
(copies of which have been delivered to Parent) conform in all material respects
to the applicable requirements of the Securities Act, the 1940 Act, and the
rules and regulations of the SEC thereunder, as well as the applicable
requirements of the various state securities Laws, and do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(viii) Each Fund Client has filed with the SEC all material contracts,
including all agreements and arrangements for the distribution of shares, to
which a Fund Client is a party or by which a Fund Client or its property is
bound, other than contracts for the purchase or sale of portfolio securities
entered into in the ordinary course of business consistent with prior practice,
that are required to be filed with the SEC. Each contract subject to Section
12(b) or 15 of the 1940 Act has been duly approved at all times in compliance in
all material respects with Section 12(b) or 15 of the 1940 Act and all other
applicable Laws. Each such contract is currently in full force and effect and
has been performed by the relevant entity in accordance with the 1940 Act and
all other applicable Laws. No material default or condition or event that, after
notice or lapse of time or both, would constitute a material default on the part
of the Company or any of its Subsidiaries or, to the knowledge of the Company,
on the part of the other parties to such advisory and sub-advisory agreements,
exists under any of those material contracts.
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(ix) All proxy statements to be prepared for use by the Fund Clients in
connection with the transactions contemplated by this Agreement will, with
respect to information provided by the Company, any of its Subsidiaries, or a
Fund Client, not contain any untrue statement of a material fact, or omit to
state any material fact required to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(w) Company Broker/Dealers.
(i) The Company operates its broker/dealer operations exclusively through
Washington Square Securities, Inc., Pilgrim Securities Inc., Granite Investment
Services, Inc., Split Rock Financial, Inc., Bancwest Investment Services, Inc.,
Financial Northeastern Securities, Inc. and PrimeVest Financial Services, Inc.
(collectively, the "Company Broker/Dealers"). Each Company Broker/Dealer that is
required to be registered as a broker-dealer with the SEC or under applicable
state Laws, is so registered and is registered with each other Governmental
Entity with which it is required to register in order to conduct its business as
now conducted, and is and has been since January 1, 1997 in full compliance with
all applicable Laws thereunder, except for any failures to register or comply
which are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. Each Company Broker/Dealer is a member
organization in good standing of the NASD and such other organizations in which
its membership is required in order to conduct its business as now conducted
except such failures to be in good standing or such memberships the failure to
have or maintain which are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
(ii) Except as are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, no Company Broker/Dealer is,
nor is any "associated person" of it, subject to a "statutory disqualification"
(as such terms are defined in the Exchange Act) or subject to a disqualification
that would be a basis for censure, limitations on the activities, functions or
operations of, or suspension or revocation of the registration of the Company as
broker-dealer, municipal securities dealer, government securities broker or
government securities dealer under Section 15, Section 15B or Section 15C of the
Exchange Act and, to the Company's knowledge, there are no proceedings or
investigations pending by any Governmental Entity or self-regulatory
organization that is reasonably likely to result in any such censure,
limitations, suspension or revocation.
(iii) Except as are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, since its inception, each
Company Broker/Dealer has had net capital (as such term is defined in Rule
15c3-1 under the Exchange Act) that satisfies the minimum net capital
requirements of the Exchange Act and of the laws of any jurisdiction in which
such company conducts business.
(x) Bank Regulatory Matters. (i) Neither the Company nor any of its
Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or
extraordinary supervisory letter from, any Banking Authority.
(ii) Neither the Company nor any of its Subsidiaries has been advised by
any Banking Authority that such Banking Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, supervisory letter
or similar submission.
(iii) At its most recent Community Reinvestment Act examination, Reliastar
Bank received at least a "satisfactory" rating.
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5.2 Representations and Warranties of ING, Parent and Merger Sub. ING,
Parent and Merger Sub each hereby represent and warrant to the Company that:
(a) Capitalization. (i) The authorized capital stock of ING consists of
1,500,000,000 ING Shares, of which 966,975,000 ING Shares were issued and
outstanding as of the close of business on December 31, 1999, 100,000,000 A
preference shares, nominal value NLG 2.50 ("A Shares"), 200,000,000 B preference
shares, nominal value NLG 2.50 ("B Shares"), and 900,000,000 cumulative
preference shares, nominal value NLG 2.50 (the "Cumulative Preference Shares"),
of which 87,080,000 A Shares, no B Shares and no Cumulative Preferred Shares
were issued and outstanding as of the close of business on December 31, 1999.
The A Shares, B Shares and Cumulative Preference Shares are sometimes
collectively referred to as the "Preference Shares". All of the outstanding ING
Shares and A Shares have been duly authorized and are validly issued and fully
paid. As of December 31, 1999, 36,848,244 ADSs had been offered and sold in the
United States by or on behalf of ING. At December 31, 1999 ING had no options or
warrants to acquire ING Shares, other than 261,070,062 authorized Warrants A, of
which 47,016,271 were outstanding as of such date; 17,317,132 authorized
Warrants B, of which 17,119,828 were outstanding as of such date; and 23,085,476
options issued pursuant to employee stock option plans. At all times from the
date hereof through consummation of the Merger or termination of this Agreement
ING will have available a number of ING Shares which will be sufficient to
permit consummation of the Merger. Each such ING Share will be validly issued
and fully paid, and will not be subject to any preemptive rights. The ADSs which
will comprise the ESOP Consideration, the Bearer Receipts represented by such
ADSs, and the ING Shares represented by such Bearer Receipts will be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under any applicable "blue sky" or state securities Laws or
insurance securities Laws. Except as set forth above, as of December 31, 1999
there were no ING Shares authorized, reserved, issued or outstanding and no
outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued share capital or other ownership interest of ING.
(ii) The authorized capital stock of Merger Sub consists of 1,000 shares
of Common Stock, par value $0.01 per share, all of which are validly issued and
outstanding. All of the issued and outstanding capital stock of Merger Sub is,
and at the Effective Time will be, owned by Parent, and there are (i) no other
shares of capital stock or voting securities of Merger Sub, (ii) no securities
of Merger Sub convertible into or exchangeable for shares of capital stock or
voting securities of Merger Sub and (iii) no options or other rights to acquire
from Merger Sub, and no obligations of Merger Sub to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Merger Sub. Merger Sub has not conducted any
business prior to the date hereof and has no, and prior to the Effective Time
will have no, assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement and the Merger and the
other transactions contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of ING, Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its assets or properties
or conduct of its business requires such qualification, except where the failure
to be so organized, qualified or in such good standing, or to have such power or
authority when taken together with all other such failures, is not reasonably
likely to have a Parent Material Adverse Effect. As used herein, the term
"Parent Material Adverse Effect" means a material adverse effect on the
financial condition, properties, business or annual results of operations of ING
and its Subsidiaries taken as a whole, except to the extent that such adverse
effect results from (i) general economic conditions or changes therein, (ii)
financial market fluctuations or conditions,
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(iii) adverse economic or regulatory changes or effects in or affecting the
financial services industry, insurance industry, banking industry, or asset
management industry generally, (iv) the announcement of the transactions
contemplated herein, or any effect which would prevent, materially delay or
materially impair the ability of Parent to consummate the transactions
contemplated hereby.
(c) Corporate Authority. Each of ING, Parent and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger. This Agreement is a valid and binding
agreement of ING, Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(d) Governmental Filings; No Violations. (i) Other than the reports,
filings, registrations, consents, approvals, permits, authorizations,
applications and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act,
(C) under any foreign competition laws, (D) under the Exchange Act, (E) under
the 1940 Act, (F) under the Advisers Act, (G) with the NYSE, (H) with the NASD,
(I) with the Banking Authorities, (I) with the Insurance Authorities and (J)
with applicable Dutch regulatory authorities (notice filings), no notices,
reports or other filings are required to be made by ING, Parent or Merger Sub
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by ING, Parent or Merger Sub from, any Governmental
Entity, in connection with the execution and delivery of this Agreement by ING,
Parent and Merger Sub and the consummation by ING, Parent and Merger Sub of the
Merger and the other transactions contemplated hereby, except those that the
failure to make or obtain are not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement by ING,
Parent and Merger Sub do not, and the consummation by ING, Parent and Merger Sub
of the Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
governing instruments of ING, Parent and Merger Sub, (B) a breach or violation
of, or a default under, the acceleration of any rights or obligations or the
creation of a lien, pledge, security interest, claim or other encumbrance on the
assets of ING or any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to, any Contracts binding upon ING or any of its Subsidiaries
or any Law or governmental or non-governmental permit or license to which ING or
any of its Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any of the Contracts, except, in the case of
clause (B) or (C) above, for breach, violation, default, acceleration, creation
or change that, individually or in the aggregate, is not reasonably likely to
have a Parent Material Adverse Effect.
(e) ING Reports. (i) ING has filed with the SEC each registration
statement, report, or information statement required to be filed by it since
June 30, 1997, including ING's Annual Report on Form 20-F for the year ended
December 31, 1999 (such report on Form 20-F, the "1999 20-F"), each in the form
(including exhibits, annexes and any amendments thereto) promulgated by the SEC
under the Securities Act or the Exchange Act (collectively, including any such
registration statements, reports, proxy statements and information statements
filed subsequent to the date hereof and as amended and any other filings made
with the SEC since June 30, 1997, the "ING Reports"). As of their respective
dates (or, if amended, as of the date of such amendment), the ING Reports did
not, and any ING Reports filed with the SEC under the Exchange Act subsequent to
the date hereof will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances in which they
were made, not misleading.
(ii) Each of the consolidated balance sheets included in the ING Reports
(including the related notes and schedules) fairly presents in all material
respects, or will fairly present in all material respects, the consolidated
financial position of ING and its Subsidiaries as of its date and
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each of the consolidated statements of income and of changes in financial
position included in the ING Reports (including any related notes and schedules)
fairly presents in all material respects, or will fairly present in all material
respects, the results of operations, retained earnings and changes in financial
position, as the case may be, of ING and its Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with accounting principles generally accepted in the
Netherlands consistently applied during the periods involved, except as may be
noted therein, together with any reconciliations therein to GAAP.
(f) Except as disclosed in the ING Reports filed prior to the date hereof,
since the Audit Date until the date hereof, there has not been any Parent
Material Adverse Effect or any development or combination of developments of
which ING has knowledge that has had or is reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(g) Adequate Funds. Parent has and will have at the Effective Time
sufficient funds for the payment of the Merger Consideration and to perform its
obligations under this Agreement.
ARTICLE VI
COVENANTS
6.1 Interim Operations; Operation of Businesses. The Company covenants
and agrees as to itself and its Subsidiaries that after the date hereof and
prior to the Effective Time (unless Parent shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except as set
forth in the corresponding section of the Company Disclosure Letter or as
otherwise expressly contemplated by this Agreement and the Stock Option
Agreement):
(a) its and its Subsidiaries' business shall be conducted in the ordinary
course of business consistent with prior practice and, to the extent consistent
therewith, it shall use all reasonable efforts to (i) preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, agents, regulators, creditors, lessors,
employees and business associates, (ii) maintain and keep material properties
and assets in good repair and condition, ordinary wear and tear excepted and
(iii) maintain in effect all existing governmental permits that are required for
the continued operation of the business of the Company and its Subsidiaries in
all material respects as they are currently conducted;
(b) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries; (ii) amend its certificate
of incorporation or by-laws or comparable governing instruments; (iii) split,
combine or reclassify its outstanding shares of capital stock; (iv) declare, set
aside or pay any dividend payable in cash, stock or property in respect of any
capital stock other than dividends from its direct or indirect wholly-owned
Subsidiaries and other than regular quarterly cash dividends not in excess of
$0.22 per Share; or (v) repurchase, redeem or otherwise acquire, except in
connection with the Stock Plans, or permit any of its Subsidiaries to purchase
or otherwise acquire, any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock;
(c) neither it nor its Subsidiaries shall (i) issue, sell, pledge, dispose
of or encumber any shares of, or securities convertible into or exchangeable or
exercisable for, or options, warrants, calls, commitments, rights or any
agreements of any kind to acquire, any shares of its capital stock of any class
or any Voting Debt or any other property or assets (other than Shares issuable
pursuant to options outstanding on the date hereof under the Stock Plans); (ii)
other than in the ordinary course of business consistent with prior practice,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness or other liability;
(iii) incur any
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indebtedness with a maturity of one year or more; or (iv) make or authorize or
commit for any capital expenditures in excess of five million dollars
($5,000,000) in the aggregate in excess of those set forth in or expressly
contemplated by the Company's financial plans furnished to Parent or, by any
means, make any acquisition of, or investment in, assets or stock of or other
interest in, any other Person or entity other than portfolio investments made in
the ordinary course of business consistent with past practice;
(d) neither it nor its Subsidiaries shall terminate, establish, adopt,
enter into, make any new, or accelerate the vesting or payment of any existing,
grants or awards under, amend or otherwise modify, any Compensation and Benefit
Plans, except as may be required by law or contractual obligations in effect as
of the date of this Agreement, or increase the salary, wage, bonus or other
compensation of any employees except increases occurring in the ordinary course
of business consistent with prior practice (which shall include normal periodic
performance reviews and related compensation and benefit increases);
(e) neither it nor its Subsidiaries shall (i) (x) settle or compromise the
litigation specified in Section 6.1(e) of the Company Disclosure Letter or (y)
settle or compromise any other claims or litigation for an amount in excess of
two million dollars ($2,000,000) individually with respect to each such other
claim or litigation, (ii) pay, discharge, settle or satisfy any material
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
liabilities and obligations in the ordinary course of business consistent with
prior practice and within the amounts reflected or reserved on the most recent
consolidated financial statements contained in the Company Reports prior to the
date hereof; or (iii) except in the ordinary course of business consistent with
prior practice, enter into, modify, amend or terminate any of its material
Contracts or waive, release or assign any material rights or claims;
(f) it shall not make any Tax election or permit any insurance policy
naming it as a beneficiary or loss-payable payee to be cancelled or terminated
except in the ordinary course of business consistent with prior practice;
(g) neither it nor any of its Subsidiaries shall enter into any agreement
containing any provision or covenant limiting in any material respect the
ability of the Company or any Subsidiary or Affiliate to (i) sell any products
or services of or to any other person, (ii) engage in any line of business or
(iii) compete with or to obtain products or services from any person or limiting
the ability of any person to provide products or services to the Company or any
of its Subsidiaries or Affiliates;
(h) neither it nor its Subsidiaries shall materially amend or cancel or
agree to the material amendment or cancellation of any agreement, treaty or
arrangement which is material to the Company and its Subsidiaries on a
consolidated basis, or enter into any new material agreement, treaty or
arrangement which is material to the Company and its Subsidiaries on a
consolidated basis or to the Company Life Insurance Companies on a consolidated
basis (other than the renewal of any existing agreements, treaties or
arrangements);
(i) neither it nor its Subsidiaries shall make any significant change in
any accounting methods or systems of internal accounting controls, except as may
be appropriate to conform to changes in statutory or regulatory accounting rules
or generally accepted accounting principles or regulatory requirements with
respect thereto;
(j) neither it nor its Subsidiaries shall, other than as would not be
inconsistent with the Company's or its Subsidiaries' respective investment
guidelines (or following consultation with Parent, consistent with industry
standards), intentionally and materially alter the mix of investment assets of
the Company or the duration or credit quality of such assets;
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(k) neither it nor its Subsidiaries shall, other than consistent with past
practices (or following consultation with Parent consistent with industry
standards), intentionally and materially alter the profile of the insurance
liabilities of the Company Life Insurance Companies or materially alter the
pricing practices or policies of the Company Life Insurance Companies;
(l) amend or modify in any material respect or terminate the Lexington
Agreement or waive any material provision thereof;
(m) neither it nor any of its Subsidiaries shall take any action or omit
to take any action that would cause any of the Company's representations and
warranties herein to become untrue in any material respect; and
(n) neither it nor any of its Subsidiaries shall authorize or enter into
an agreement to do any of the foregoing.
6.2 Acquisition Proposals. (a) The Company agrees that neither it nor any
of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit or encourage any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or 10% or more of the assets or any equity securities of,
it or any of its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company further agrees that
neither it nor any of its Subsidiaries nor any of the officers and directors of
it or its Subsidiaries shall, and that it shall direct and use its best efforts
to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
provided, however, that nothing contained in this Agreement shall prevent the
Company or its board of directors from (A) complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal; (B)
providing information in response to a request therefor by a Person who has made
an unsolicited bona fide written Acquisition Proposal if the board of directors
receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreement (as defined in Section 9.7), except that such
confidentiality agreement may provide that such Person shall not be prohibited
from submitting an Acquisition Proposal to the board of directors of the
Company; (C) engaging in any negotiations or discussions with any Person who has
made an unsolicited bona fide written Acquisition Proposal; or (D) recommending
such an Acquisition Proposal to the stockholders of the Company, if and only to
the extent that, (i) in each such case referred to in clause (B), (C) or (D)
above, the board of directors of the Company determines in good faith after
consultation with outside legal counsel that such action is necessary in order
for its directors to comply with their respective fiduciary duties under
applicable law and (ii) in each case referred to in clause (C) or (D) above, the
board of directors of the Company determines in good faith (after consultation
with its financial advisor) that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the Person making the proposal and
would, if consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal"). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition
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Proposal. The Company agrees that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 6.2. The Company agrees that it will
notify Parent immediately if any such inquiries, proposals or offers are
received by, any such in formation is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep Parent informed, on a current basis, on the status and
terms of any such proposals or offers and the status of any such discussions or
negotiations. The Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring it or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries.
(b) Notwithstanding anything in this Section 6.2 to the contrary, if, at
any time prior to obtaining the Company Requisite Vote, the Company s board of
directors determines in good faith, on the basis of the advice of its financial
advisors and outside counsel, in response to an Acquisition Proposal that was
unsolicited and that did not otherwise result from a breach of Section 6.2(a),
that such proposal is a Superior Proposal, the Company or its board of directors
may terminate this Agreement if, and only if, the Company shall substantially
concurrently with such termination enter into a definitive agreement containing
the terms of a Superior Proposal; provided, however, that the Company shall not
terminate this Agreement pursuant to this sentence, and any purported
termination pursuant to this sentence shall be void and of no force or effect,
unless the Company shall have complied with (i) all the provisions of this
Section 6.2, including the notification provisions in this Section 6.2, (ii) the
following proviso, and (iii) all applicable requirements of Section 8.3,
including the payment of the termination fee described in Section 8.5(b) prior
to or concurrently with such termination; and provided further, however, that
the Company shall not exercise its right to terminate this Agreement pursuant to
this Section 6.2 until after five business days following Parent's receipt of
written notice (a "Notice of Superior Proposal") advising Parent that the
Company's board of directors has received a Superior Proposal and that such
board of directors will, subject to any action taken by Parent pursuant to this
sentence, cause the Company to accept such Superior Proposal, specifying the
material terms and conditions of the Superior Proposal and identifying the
person making such Superior Proposal (it being understood and agreed that any
amendment to the price or any other material term of a Superior Proposal shall
require an additional Notice of Superior Proposal and a new five business day
period).
6.3 Accuracy of Prospectus/Proxy Statement. The Company, ING and Parent
each agrees that none of the information supplied or to be supplied by it or its
Subsidiaries or Affiliates for inclusion or incorporation by reference in (i)
the Registration Statement on Form F-4 to be filed with the SEC in connection
with the issuance of ADSs in the Merger (including the proxy statement and
prospectus (the "Prospectus/Proxy Statement") constituting a part thereof) (the
"F-4 Registration Statement") will, at the time the F-4 Registration Statement
becomes effective under the Securities Act or (ii) the Prospectus/Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to holders of Shares and at the time of the meeting of holders of Shares of the
Company to be held in connection with the Merger, in either such case 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. The Company, ING and Parent each agree that the Form F-4
Registration Statement will comply in all material respects with the applicable
provisions of the of Securities Act and the Exchange Act and the rules and
regulations thereunder.
6.4 Shareholders Meeting. The Company will take, in accordance with
applicable law and its certificate of incorporation and by-laws, all action
necessary to convene a meeting of holders of Shares (the "Shareholders Meeting")
as promptly as reasonably practicable after the execution of this
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Agreement to consider and vote upon the approval of this Agreement. Subject to
fiduciary obligations and the requirements of applicable Law, the Company's
board of directors shall recommend such approvals and shall take all lawful
action to solicit such approvals.
6.5 Filings; Other Actions; Notification. (a) ING, Parent and the
Company shall use their respective best reasonable efforts to promptly prepare
and file with the SEC the Prospectus/Proxy Statement as promptly as practicable
after the date hereof, and ING shall use its reasonable best efforts to prepare
and file with the SEC the F-4 Registration Statement as promptly as practicable
after the date hereof. ING, Parent and the Company each shall use its best
reasonable efforts to have the F-4 Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing, and
promptly thereafter mail the Prospectus/Proxy Statement to the holders of Shares
of the Company. The Company, ING and Parent shall promptly notify each other of
any request by the SEC for any amendment or supplement to the Proxy
Statement/Prospectus and the Form F-4 Registration Statement, respectively, and
shall provide each other copies of all correspondence between the Company, ING
or Parent and/or any of their respective representatives and the SEC. Each of
ING and Parent shall also use their best reasonable efforts to obtain prior to
the effective date of the F-4 Registration Statement all necessary state
securities Laws, insurance securities Laws or "blue sky" permits and approvals
required in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and the Stock Option Agreement.
(b) The Company, ING and Parent shall cooperate with each other and use
(and shall cause their respective subsidiaries to use) their respective best
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on its part under this
Agreement, the Stock Option Agreement and applicable Laws to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
notices, applications, petitions, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals, waivers,
licenses, permits, qualifications, orders and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement and the Stock Option Agreement; provided, however, that nothing
in this Section 6.5 shall require, or be construed to require, ING or Parent, in
connection with the receipt of any regulatory approval, to proffer to, or agree
to (i) sell or hold separate and agree to sell, divest or to discontinue to or
limit, before or after the Effective Time, any assets, businesses, or interest
in any assets or businesses of ING, Parent, the Company or any of their
respective affiliates (or to consent to any sale, or agreement to sell, or
discontinuance or limitation by ING or Parent or the Company, as the case may
be, of any of its assets or businesses) or (ii) agree to any conditions relating
to, or changes or restriction in, the operations of any such asset or businesses
which, in either case, is reasonably likely to have a material adverse effect on
the financial condition, properties, business or annual results of operations of
the Company and its Subsidiaries, taken as a whole, or a material adverse effect
on the financial condition, properties, business or annual results of operations
of ING and its Subsidiaries, taken as a whole. Subject to applicable Laws
relating to the exchange of information (including any obligations pursuant to
any listing agreement with or rules of any securities exchange), ING, Parent and
the Company shall have the right to review and approve (such approval not to be
unreasonably withheld or delayed) in advance, and to the extent practicable each
will consult the other on, all the information relating to ING, Parent or the
Company, as the case may be, and any of their respective Affiliates, that appear
in any filing made with, or written materials submitted to, any third party
and/or any Governmental Entity (including any securities exchange) in connection
with the Merger and the other transactions contemplated by this Agreement and
the Stock Option Agreement.
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(c) The Company, ING and Parent each shall, upon request by the other,
furnish the other with all true and accurate information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Prospectus/Proxy
Statement or Form F-4 Registration Statement or any other statement, filing,
notice or application made by or on behalf of ING, Parent or the Company or any
of their respective Subsidiaries to any third party and/or any Governmental
Entity in connection with the Merger and the transactions contemplated by this
Agreement and the Stock Option Agreement.
(d) The Company, ING and Parent each shall promptly provide the other
party with copies of all filings made by either the Company, ING or Parent with
any state or federal court, administrative agency, commission or other
Governmental Entity in connection with this Agreement and the Stock Option
Agreement and the transactions contemplated hereby. The Company, ING and Parent
each shall keep the other apprised of the status of matters relating to
completion of the transactions contemplated hereby and thereby, including
promptly furnishing the other with copies of any notices or other communications
received by ING, Parent or the Company, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Merger the other transactions contemplated by this Agreement and the
Stock Option Agreement. The Company shall give prompt notice to the Parent of
any change that is reasonably likely to result in a Company Material Adverse
Effect.
(e) In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person or other legal or
administrative proceeding is commenced that questions the validity or legality
of this Agreement, the Stock Option Agreement, the Merger or the other
transactions contemplated by this Agreement or claims damages in connection
therewith, the Company, ING and Parent each agree to cooperate and use their
best reasonable efforts to defend against and respond thereto.
6.6 Access. Upon reasonable notice, and subject to applicable law, the
Company shall (and shall cause its Subsidiaries and Fund Clients to) afford
Parent's officers, employees, counsel, accountants and other authorized
representatives ("Representatives") reasonable access, during normal business
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records and, during such period, shall (and shall cause its
Subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as may reasonably be requested, provided that
no investigation pursuant to this Section shall affect or be deemed to modify
any representation or warranty made by the Company, and provided further that
the foregoing shall not require the Company to permit any inspection, or to
disclose any information, that in the reasonable judgment of the Company would
result in the disclosure of any trade secrets of third parties or violate any of
its obligations with respect to confidentiality if the Company shall have used
best reasonable efforts to obtain the consent of such third party to such
inspection or disclosure. All requests for information made pursuant to this
Section shall be directed to an executive officer of the Company or such Person
as may be designated by its officers, as the case may be.
6.7 Stock Exchange. Each of ING and Parent shall use its reasonable best
efforts to cause the ADSs to be issued pursuant to Section 4.5 to be approved
for listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date. The Surviving Corporation shall use its best efforts to cause the
Shares to be de-listed from the NYSE and de-registered under the Exchange Act as
soon as practicable following the Effective Time.
6.8 Publicity. The initial press release with respect to the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement shall be a joint press release. Thereafter, neither the Company, ING
nor Parent shall (i) issue any press release or otherwise make any public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and the Stock Option Agreement or (ii) make any filings with
any third party and/or any
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Governmental Entity (including any securities exchange) with respect thereto, in
each case without consulting with, and obtaining the prior consent of, the other
party (which consent shall not be unreasonably withheld or delayed).
Notwithstanding the foregoing, a party may, without consulting with or obtaining
the consent of the other party, issue a press release or otherwise make a public
announcement as may be required by Law or under the applicable rules of any
securities exchange if it has used its best efforts to consult with the other
party and to obtain such party's consent but has been unable to do so in a
timely manner.
6.9 Benefits; Company Options.
(a) Prior to the Effective Time, the Company will use its reasonable best
efforts so that immediately prior to the Effective Time each Company Option,
whether or not then exercisable, shall be cancelled and only entitle the holder
thereof, as soon as reasonably practicable after surrender thereof, to receive
an amount in cash equal to the product of (x) the total number of Shares subject
to the Company Option and (y) the excess of the Merger Consideration over the
exercise price per Share under such Company Option. Such cash payment shall be
treated as compensation and shall be subject to any applicable federal or state
withholding tax.
(b) Prior to the Effective Time, the Company shall use its reasonable best
efforts so that (i) immediately prior to the Effective Time, each right of any
kind to acquire or receive Shares that may be held, awarded, outstanding,
payable or reserved for issuance under any stock-based Company plan, program or
arrangement (the "Stock Based Plans") and any other Compensation and Benefit
Plans, except with respect to Company Options and the ESOP Plan, shall entitle
the holder thereof to receive an amount in cash equal to the product of (x) the
total number of Shares subject to the right and (y) the Merger Consideration,
and such rights shall otherwise be subject to the terms and conditions
applicable to the rights under the relevant Stock Based Plan or Compensation and
Benefit Plan and (ii) awards under all Stock Based Plans and Compensation and
Benefit Plans (other than the ESOP Plan) providing for cash payments measured by
the value of Shares shall be valued at the Merger Consideration, and such cash
payments shall otherwise be made on the terms and conditions applicable under
the relevant Stock Based Plan or other Compensation and Benefit Plan. At or
prior to the Effective Time, the Company shall adopt appropriate amendments to
the Stock Based Plans and Compensation and Benefit Plans to effectuate the
provisions of this Section.
(c) Parent agrees that during the period commencing at the Effective Time
and ending on December 31st of the year during which the Effective Time occurs,
the individuals who are, as of the Effective Time, employees of the Company and
its Subsidiaries (the "Company Employees") will continue to be provided with
benefits under employee benefit plans which in the aggregate are substantially
comparable to those benefits currently provided to such Company Employees.
Thereafter, it is the intent of Parent that such benefits be integrated with
those benefits provided to other United States-based employees of Parent's
Subsidiaries. Parent will cause each employee benefit plan of Parent and its
Subsidiaries in which Company Employees are eligible to participate (the "New
Plans") to take into account for all purposes thereunder (except for benefit
accruals under any defined benefit pension plan) the service of such employees
with the Company and its Subsidiaries as if such service were with Parent and
its Subsidiaries, to the same extent that such service was credited under a
comparable plan of the Company and its Subsidiaries, except to the extent
duplicative benefits would result. Parent will, and will cause the Surviving
Corporation to, honor in accordance with their terms the Compensation and
Benefit Plans as in effect as of the Effective Time, subject to any amendment or
termination thereof that may be permitted by such terms.
(d) In addition, and without limiting the generality of the foregoing: (i)
each Company Employee shall be immediately eligible to participate without any
waiting time in each New Plan, to the extent coverage under such New Plan
replaces coverage under a comparable Compensation and
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Benefit Plan in which such Company Employee participated immediately before the
Effective Time (such plans, collectively, the "Old Plans"); and (ii) for
purposes of each New Plan providing medical, dental, pharmaceutical and/or
vision benefits to any Company Employee, Parent shall cause all pre-existing
condition exclusions and actively-at-work requirements of such New Plan (to the
extent such requirement was satisfied under the comparable Compensation and
Benefit Plans) to be waived for such employee and his or her covered dependents,
and Parent shall cause any eligible expenses incurred by such employee and his
or her covered dependents during the portion of the plan year of the Old Plan
ending on the date such employee's participation in the corresponding New Plan
begins to be taken into account under such New Plan for purposes of satisfying
all deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such New Plan.
(e) Each bonus payable after the Effective Time with respect to the
Company's Executives' Long-Term Incentive Compensation Program and the Company's
Executives' Annual Incentive Compensation Program and the Company's Annual
Incentive Bonus Plan for Designated Executive Officers to Company Employees
shall be paid entirely in cash.
6.10 Expenses. Except as otherwise provided in Section 8.5(b), whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Stock Option Agreement and the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement shall
be paid by the party incurring such expense, except that expenses incurred in
connection with the filing fee and printing and mailing the Form F-4
Registration Statement and Prospectus/Proxy Statement shall be shared equally by
Parent and the Company. The aggregate fees and expenses paid by the Company to
the financial advisors named in Section 5.1(q) hereof and to the Company's
outside legal counsel in connection with the transactions contemplated by this
Agreement and the Stock Option Agreement shall not exceed twenty-seven million
dollars ($27,000,000).
6.11 Indemnification; Directors' and Officers' Insurance. (a) From and
after the Effective Time, ING agrees that it will indemnify and hold harmless
each present and former director and officer of the Company (when acting in such
capacity), determined as of immediately prior to the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company would have been permitted under
Delaware law and its certificate of incorporation or by-laws or pursuant to
other agreements in effect on the date hereof to indemnify such Person (and ING
shall also advance expenses as incurred to the fullest extent permitted under
applicable law; provided the Person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Person is not entitled to indemnification); and provided further that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Delaware law and
the Company's certificate of incorporation and by-laws shall be made by
independent counsel selected by the Surviving Corporation.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.11, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify ING thereof. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) ING or the Surviving Corporation shall
have the right to assume the defense thereof and ING shall not be liable to such
Indemnified Parties for any legal
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expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if ING
or the Surviving Corporation elects not to assume such defense or counsel for
the Indemnified Parties advises that there are issues which raise conflicts of
interest between ING or the Surviving Corporation and the Indemnified Parties,
the Indemnified Parties may retain counsel satisfactory to them, and ING or the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received;
provided, however, that ING shall be obligated pursuant to this paragraph (b) to
pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any
such matter and (iii) ING shall not be liable for any settlement effected
without its prior written consent; and provided, further, that ING shall not
have any obligation hereunder to any Indemnified Party if and when a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
(c) ING shall cause the Surviving Corporation to either (i) maintain the
Company's existing officers' and directors' liability insurance for a period of
six years after the Effective Time or (ii) maintain a run-off or tail policy or
endorsement with respect to covering claims asserted within six years after the
Effective Time arising from facts or events that occurred at or before the
Effective Time (either, "D&O Insurance"), in each case so long as the annual
premium therefor is not in excess of 175% of the last annual premium paid prior
to the date hereof (the "Current Premium"); provided, however, that if the
existing D&O Insurance expires, is terminated or cancelled during such six-year
period, the Surviving Corporation will use its reasonable efforts to obtain as
much D&O Insurance as can be obtained for the remainder of such period for a
premium not in excess (on an annualized basis) of 175% of the Current Premium.
(d) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section.
(e) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs and
their representatives.
6.12 Compliance with 1940 Act Section 15. (a) Prior to the Closing, the
Company shall use reasonable best efforts to ensure compliance with Section
15(f) of the 1940 Act, so that the transactions contemplated by this Agreement
will be in compliance immediately after the Closing with Section 15(f) of the
1940 Act, including, to assure that at the time of the Closing at least 75% of
the Board of Directors or Trustees of each Fund Client are not "interested
persons" (as such term is defined in the 1940 Act) of the Surviving Corporation
or the Company.
(b) Parent will use reasonable best efforts to assure compliance with the
conditions of Section 15(f) of the 1940 Act as it applies to the transactions
contemplated by the Agreement. From and after the Closing, Parent shall conduct
the business of the Surviving Corporation, so as to assure that, insofar as
within the control of Parent: (i) for a period of three years after the Closing
Date, at least 75% of the members of the Board of Directors or Trustees of each
Fund Client which enters into a replacement Investment Contract with an Advisory
Entity that constitutes an investment advisory agreement are not (A) "interested
persons" of the Surviving Corporation, or (B) "interested persons" of the
Company; and (ii) there is not imposed on any Fund Client an "unfair burden"
(within the meaning of Section 15(f) of the 1940 Act) as a result of the
transactions contemplated by this Agreement, or any express or implied terms,
conditions or understandings applicable thereto.
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6.13 Fund Client Contracts, Distribution Plans and Boards. The Company
shall use its reasonable best efforts to cause (a) the consideration and due
approval by the Board of Directors of each Fund Client and (b) to the extent
required by the 1940 Act, the consideration and due approval by such Fund
Client's securityholders, of (X) a new Investment Contract (or, where permitted,
approval of continuation of the existing Investment Contract) with the same
Advisory Entity to become effective upon the Closing, in each case, on the same
material terms as in effect on the date hereof under such Investment Contract
for the performance by the relevant Advisory Entity of investment management,
investment advisory, investment subadvisory, distribution or administration
services and (Y) an amended Rule 12b-1 distribution plan, in each case, on the
same material terms as in effect on the date hereof. In addition, the Company
shall use its reasonable best efforts to encourage the Board of Directors of
each Fund Client (or, to the extent required by the 1940 Act, the independent
Directors thereof) (X) to select and nominate, so as to constitute a majority of
the independent Directors of such Board, individuals who are currently serving
as independent directors of investment companies that are advised by an
Affiliate of Parent, and (Y) to nominate one director (who shall not be an
independent director) that is selected by Parent.
6.14 Non-Fund Advisory Contracts. The Company or relevant Advisory Entity
shall notify each Advisory Client of the transactions contemplated by this
Agreement and use its reasonable best efforts to obtain, prior to the Closing,
any necessary consent of each Advisory Client to the "assignment" (as such term
is used in the Advisers Act) of its Investment Contract involving investment
advisory services as a result of the transactions contemplated hereby in a form
reasonably satisfactory to Parent. The Company and Advisory Entity shall consult
with Parent regarding all written communications with Advisory Clients
concerning the obtaining of such assignments.
6.15 Qualification of the Fund Clients; Fund Client Boards. Subject to
applicable fiduciary duties to the Fund Clients, the Company will use its
reasonable best efforts to cause the Fund Clients to take no action (i) that
would prevent any Fund Client from qualifying as a "regulated investment
company", within the meaning of Section 851 of the Code, or (ii) that would be
inconsistent with any Fund Client's prospectus and other offering, advertising
and marketing materials.
6.16 Other Actions by the Company and Parent.
(a) Rights. Prior to the Effective Time, the board of directors of the
Company shall take all necessary action to terminate all of the outstanding
Rights, effective immediately prior to the Effective Time.
(b) Takeover Statute. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement or the
Stock Option Agreement, ING, Parent and its board of directors and the Company
and its board of directors shall each grant such approvals and take such actions
as are necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Stock Option
Agreement, as the case may be, or by the Merger and otherwise act to eliminate
or minimize the effects of such statute or regulation on such transactions.
6.17 Appointments. Following the Effective Time, ING will take such
reasonable action as may be necessary or appropriate to seek an invitation by
the Supervisory Board of ING to the person named in Section 6.17 of the Company
Disclosure Letter to join such Supervisory Board at the next meeting of ING's
stockholders as a full member, recognizing that under Dutch law the Supervisory
Board is responsible for appointing its own members and that appointment to the
Supervisory Board requires approval of ING's stockholders and Works Council.
Following the Effective Time, Parent shall cause to be elected to the board of
directors of Parent four of the current directors of the Company reasonably
acceptable to Parent.
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ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly approved by
holders of Shares constituting the Company Requisite Vote in accordance with
applicable law and the certificate and by-laws of the Company.
(b) Regulatory Consents. (i) The waiting period applicable to the
consummation of the Merger under the HSR Act and applicable Insurance Laws shall
have expired or been terminated and (ii) other than the filing provided for in
Section 1.3, all notices, reports and other filings required to be made prior to
the Effective Time by the Company or Parent or any of their respective
Subsidiaries with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby by the
Company, Parent and Merger Sub shall have been made or obtained (as the case may
be), other than (in the case of jurisdictions other than the United States, the
United Kingdom and the Netherlands) those the failure of which to make or obtain
are not, individually or in the aggregate, reasonably likely (as compared to the
situation in which they are made or obtained and taking into account all
possible consequences to the Parent and its Subsidiaries and the Company and its
Subsidiaries of consummating the transactions contemplated by this Agreement
without making or obtaining them) (i) to be material to the Company and its
Subsidiaries, taken as a whole, (ii) to be material to the Parent and its
Subsidiaries, taken as a whole, (iii) to materially and adversely impact the
reasonably anticipated economic and business benefits to the Parent and its
Subsidiaries of the transactions contemplated hereby, (iv) to result in criminal
liability or a more than de minimis civil fine or other penalty against Parent
or any of its Subsidiaries, Affiliates or employees or against the Company or
any of its Subsidiaries, Affiliates or employees, or (v) to result in Parent and
its Subsidiaries being prohibited from conducting, or materially limited in
their ability to conduct, business in any jurisdiction (collectively,
"Governmental Consents").
(c) Litigation.
(i) No court or Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law (including any
Insurance Law) (whether temporary, preliminary or permanent) that is in effect
and restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order").
(ii) No Governmental Entity shall have instituted or threatened to
institute any proceeding that seeks an Order.
(d) ADS Listing. The ADSs issuable pursuant to Section 4.5 of this
Agreement shall have been authorized for listing on the NYSE upon official
notice of issuance.
(e) F-4 Registration Statement. The F-4 Registration Statement shall have
become effective under the Securities Act. No stop order suspending the
effectiveness of the F-4 Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or be threatened, by the
SEC.
(f) Blue Sky. ING and Parent shall have received all state securities
Law, insurance securities Law and "blue sky" permits and approvals necessary to
consummate the Merger.
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7.2 Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company set forth in this Agreement which are qualified by
"Company Material Adverse Effect" shall each be true and correct as so qualified
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent any such representation or
warranty expressly speaks as of an earlier date), (ii) the representations and
warranties of the Company set forth in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(j),
5.1(p) and 5.1(q) of this Agreement which are not qualified by "Company Material
Adverse Effect" shall each be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent any such representation or warranty
expressly speaks as of an earlier date) and (iii) the representations and
warranties of the Company set forth in this Agreement other than those
contemplated by clauses (i) and (ii) hereof (without giving effect to any
qualifications as to "materiality" or other similar qualifications) shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date), except where
the failure of such representations and warranties to be true and correct
(without giving effect to any qualifications as to "materiality" or other
similar qualifications) would not be, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect. Parent shall have
received a certificate signed on behalf of the Company by an executive officer
of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement and the Stock Option Agreement at or prior to the
Closing Date, and Parent shall have received a certificate signed on behalf of
the Company by an executive officer of the Company to such effect.
(c) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the transactions contemplated by this Agreement under any
Contract to which the Company or any of its Subsidiaries is a party, except
those for which the failure to obtain such consent or approval is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or is not reasonably likely to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement and no such consent or approval, and no
Governmental Consent shall require ING to (i) sell or hold separate and agree to
sell, divest or to discontinue to or limit, before or after the Effective Time,
any assets, businesses, or interest in any assets or businesses of Parent, the
Company or any of their respective Affiliates (or to consent to any sale, or
agreement to sell, or discontinuance or limitation by Parent or the Company, as
the case may be, of any of its assets or businesses) or (ii) agree to any
conditions relating to, or changes or restriction in, the operations of any such
asset or businesses which, in either case, is reasonably likely to have a
material adverse effect on the financial condition, properties, business or
annual results of operations of the Company and its Subsidiaries, taken as a
whole, or a material adverse effect on the financial condition, properties,
business or annual results of operations of ING and its Subsidiaries, taken as a
whole.
(d) Client Approvals. The approvals contemplated in Section 6.13 shall
have been obtained for Fund Clients representing at least 75% of the total
assets under management of Fund Clients as of the date hereof. "Total assets
under management" means the aggregate of the net assets of the open-end and
closed end Fund Clients, as adjusted to eliminate increases or decreases
attributable
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exclusively to positive or negative changes in the market value of portfolio
assets as of the date hereof.
7.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of ING, Parent and Merger Sub set forth in this Agreement which are
qualified by "Parent Material Adverse Effect" shall each be true and correct as
so qualified as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date), (ii) the
representations and warranties of ING, Parent and Merger Sub set forth in
Section 5.2(a), 5.2(b) and 5.2(c) of this Agreement which are not qualified by
"Parent Material Adverse Effect" shall each be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent any such representation
or warranty expressly speaks as of an earlier date), and (iii) the
representations and warranties of ING, Parent and Merger Sub set forth in this
Agreement other than those contemplated by clauses (i) and (ii) hereof (without
giving effect to any qualifications as to "materiality" or other similar
qualifications) shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except to
the extent any such representation or warranty expressly speaks as of an earlier
date), except where the failure of such representations and warranties to be
true and correct (without giving effect to any qualifications as to
"materiality" or other similar qualifications) would not be, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect.
(b) Performance of Obligations of ING, Parent and Merger Sub. Each of
ING, Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of ING, Parent and Merger Sub by authorized officers of ING and Parent to
such effect.
(c) Consents Under Agreements. ING shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any Contract to
which ING or any of its Subsidiaries is a party, except those for which failure
to obtain such consents and approvals, individually or in the aggregate, is not
reasonably likely to have a Parent Material Adverse Effect.
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by holders of Shares of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective boards of directors.
8.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either the Company or Parent (and
written notice to the other party) if (a) the Merger shall not have been
consummated by March 31, 2001 whether such date is before or after the date of
approval by the holders of Shares of the Company (the "Termination Date");
provided, however, that the Termination Date shall be automatically extended for
two (2) months (the "Extended Date"), if, on March 31, 2001: (i) any of the
Governmental Consents described in 7.1(b) have not been obtained or waived, (ii)
each of the other conditions to the consummation of the Merger set forth in
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Article VII has been satisfied or waived or remains capable of satisfaction, and
(iii) any Governmental Consent that has not yet been obtained is being pursued
diligently and in good faith; (b) the approval of the holders of Shares required
by Section 7.1(a) shall not have been obtained at a meeting duly convened
therefor or at any adjournment or postponement thereof; (c) any Order
permanently restraining, enjoining or otherwise prohibiting consummation of the
Merger shall become final and non-appealable (whether before or after the
approval by the stockholders of the Company); or (d) any Law is in effect or is
adopted or issued which has the effect of prohibiting the Merger; provided that
the right to terminate this Agreement pursuant to clause (a) above shall not be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the occurrence of the failure of the Merger to be consummated.
8.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval of the holders of Shares referred to in Section 7.1(a), by
action of the board of directors of the Company and written notice to Parent if:
(a) there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement that
is not curable and such breach would give rise to a failure of the condition set
forth in Section 7.3(a) or Section 7.3(b) or (b) in accordance with, and subject
to the terms and conditions of, Section 6.2(b).
8.4 Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
board of directors of Parent and written notice to the Company if: (a) the board
of directors of the Company shall have withdrawn or adversely modified its
adoption or recommendation of this Agreement or shall have approved or
recommended a Superior Proposal, or (b) there has been a material breach by the
Company of any representation, warranty, covenant or agreement contained in this
Agreement that is not curable and such breach would give rise to a failure of
the condition set forth in Section 7.2(a) or Section 7.2(b) or (c) Shares or
other securities or assets are issued or delivered pursuant to the terms of the
Rights Agreement upon or following the occurrence of a Section 13 Triggering
Event (as defined in the Rights Agreement) or an Acquiring Person (as defined in
the Rights Agreement) becoming such.
8.5 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, that no such termination
shall relieve any party hereto of any liability or damages resulting from any
deliberate breach of this Agreement occurring prior to such termination. The
parties further agree that if the Company is or becomes obligated to pay a
termination fee pursuant to Section 8.5(b), the right of Parent to receive such
termination fee shall be the sole remedy for damages of Parent with respect to
the facts and circumstances giving rise to such payment obligation except for
any deliberate breach of this Agreement. No party may assert a claim for damages
for any inaccuracy of any representation or warranty contained in this Agreement
(whether by direct claim or counterclaim) except in connection with the
termination of this Agreement.
(b) In the event that (i) this Agreement is terminated by Parent pursuant
to Section 8.4(a), or (ii) this Agreement is terminated by the Company pursuant
to Section 8.3(b), then the Company shall, promptly, but in no event later than
one business day after the date of such termination, pay Parent a termination
fee of one hundred and twenty million dollars ($120,000,000) (the "Termination
Fee") and shall promptly, but in no event later than one business day after
being notified of the amount of all documented out-of-pocket charges and
expenses incurred by Parent or Merger Sub in connection with this Agreement and
the transactions contemplated by this Agreement
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up to a maximum of five million dollars ($5,000,000) ("Out-of-Pocket Expenses"),
pay to Parent an amount equal to the Out-of-Pocket Expenses, in each case
payable by wire transfer of same day funds. In the event that (i) this Agreement
is terminated by Parent or the Company pursuant to Section 8.2(b) or (ii) this
Agreement is terminated by Parent pursuant to Section 8.4(b), then (A) the
Company shall promptly, but in no event later than one business day after being
notified of the Out-of-Pocket Expenses by Parent, pay to Parent an amount equal
to the Out-of-Pocket Expenses, payable by wire transfer of same day funds and
(B) if, in the case of clause (i), a bona fide Acquisition Proposal shall have
become public or any Person shall have publicly announced an intention (whether
or not conditional) to make a proposal or offer relating to an Acquisition
Proposal prior to the date of the Shareholders Meeting or if, in the case of
clause (ii), this Agreement is terminated by Parent pursuant to Section 8.4(b)
as a result of a deliberate breach by the Company and a bona fide Acquisition
Proposal shall have been made to the Company or become public or any Person
shall have announced to the Company or publicly announced an intention (whether
or not conditional) to make a proposal or offer relating to an Acquisition
Proposal prior to the date of termination, and in the case of each of clause (i)
and clause (ii), within fifteen (15) months from the date of termination, the
Company executes and delivers a definitive agreement with respect to any
Acquisition Proposal or an Acquisition Proposal is consummated (it being
understood that in the event the board of directors of the Company recommends
the acceptance by the shareholders of the Company of a third-party tender offer
or exchange offer for at least a majority of the outstanding Shares, such
recommendation shall be treated as though an agreement with respect to an
Acquisition Proposal had been executed), the Company shall promptly, but in no
event later than one business day after the date of such execution and delivery,
or consummation, as the case may be, pay Parent the Termination Fee. The Company
acknowledges that the agreements contained in this Section 8.5(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent and Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 8.5(b), and, in order to obtain such payment, Parent or
Merger Sub commences a suit which results in a judgment against the Company for
the fee set forth in this paragraph (b), the Company shall pay to Parent or
Merger Sub its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank N.A. in effect on the date such payment was required to be made.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Survival. This Article IX and the agreements of the Company, ING,
Parent and Merger Sub contained in Article IV, Sections 6.7 (Stock Exchange),
6.9 (Benefits; Company Options), 6.10 (Expenses) and 6.11 (Indemnification;
Directors' and Officers' Insurance) shall survive the consummation of the
Merger. This Article IX, the agreements of the Company, Parent and Merger Sub
contained in Section 6.10 (Expenses) and Section 8.5 (Effect of Termination and
Abandonment) shall survive the termination of this Agreement. All other
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement.
9.2 Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
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9.4 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties
hereby irrevocably submit to the jurisdiction of the Federal courts of the
United States of America located in the State of Delaware solely in respect of
the interpretation and enforcement of the provisions of this Agreement and the
Stock Option Agreement and of the documents referred to in this Agreement and
the Stock Option Agreement, and in respect of the transactions contemplated
hereby and thereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement and the Stock
Option Agreement or any such document may not be enforced in or by such courts,
and the parties hereto irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in such a Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE STOCK OPTION AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE STOCK OPTION AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE STOCK OPTION AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE STOCK OPTION AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
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9.6 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to ING, Parent or Merger Sub
ING America Insurance Holdings, Inc.
5780 Powers Ferry Road, NW
Atlanta, Georgia 30327-4390
Attention: Michael W. Cunningham,
Executive Vice President &
Chief Financial Officer
Fax: 770-980-3303
B. Scott Burton
Senior Vice President &
Chief Counsel
Fax: 770-850-7660
with copies to:
Strawinskylaan 2631, 1077 ZZ Amsterdam,
P.O. Box 810,
1000 Av. Amsterdam, the Netherlands
Attention: Fred Hubbell
Executive Board Member
Fax: +31-20-541-5402
Diederik van Wassenaer
General Counsel
Fax: +31-20-541-8723
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Stephen M. Kotran, Esq.,
William D. Torchiana, Esq.,
Fax: 212-558-3588
if to the Company
Reliastar Financial Corp.,
20 Washington Avenue South
Minneapolis, Minnesota 55401
Attention: Richard R. Crowl, Esq.
Fax: 612-342-3160
with copies to:
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10019
Attention: Elliott V. Stein, Esq.
Fax: 212-403-2000
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and
Faegre & Benson LLP
2200 Norwest Center
90 South 7th Street
Minneapolis, Minnesota 55402
Attention: Thomas G. Morgan, Esq.
Fax: 612-336-3026
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7 Entire Agreement; NO OTHER REPRESENTATIONS. This Agreement (including
any exhibits hereto), the Company Disclosure Letter, the Stock Option Agreement
and the Confidentiality Agreement, dated March 9, 2000 (the "Confidentiality
Agreement"), between Parent and the Company constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties, with respect to the
subject matter hereof.
9.8 No Third Party Beneficiaries. Except as provided in Section 6.11
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9 Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including penalties and interest)
incurred in connection with the Merger shall be paid by Parent and Merger Sub
when due, and Parent and Merger Sub will indemnify the Company against liability
for any such taxes.
9.11 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12 Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Unless the context otherwise requires, the use of the singular
shall include the plural, the use of the masculine shall include the feminine,
and vice versa. As used in this Agreement, the antecedent of any personal
pronoun shall be
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deemed to be only the next preceding proper noun or nouns, as appropriate for
such pronoun. As used in this Agreement, any reference to any law, rule or
regulation shall be deemed to include a reference to any amendments, revisions
or successor provisions to such law, rule or regulation.
9.13 Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Parent may designate, by written
notice to the Company, another wholly owned direct or indirect subsidiary to be
a Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other subsidiary, except
that all representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other subsidiary as of the date of such designation.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
RELIASTAR FINANCIAL CORP.
By: /s/ RICHARD R. CROWL
-----------------------------------
Name: Richard R. Crowl
Title: Senior Vice President and
Corporate Secretary
ING GROEP, N.V.
By: /s/ MICHAEL W. CUNNINGHAM
-----------------------------------
Name: Michael W. Cunningham
Title: Attorney-in-Fact
ING AMERICA INSURANCE
HOLDINGS, INC.
By: /s/ MICHAEL W. CUNNINGHAM
------------------------------------
Michael W. Cunningham
Executive Vice President and
Chief Financial Officer
SHP ACQUISITION CORP.
By: /s/ MICHAEL W. CUNNINGHAM
-----------------------------------
Michael W. Cunningham
Executive Vice President and
Chief Financial Officer
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APPENDIX B
COMPOSITE COPY
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of April 30, 2000, as amended June
27, 2000 (this "Agreement"), is between Reliastar Financial Corp., a Delaware
corporation ("Issuer") and ING America Insurance Holdings, Inc., a Delaware
corporation ("Grantee").
RECITALS
A. The Merger Agreement. Prior to the entry into this Agreement and prior
to the grant of the Option, Issuer, ING Groep N.V., Grantee, and SHP Acquisition
Corp., a wholly-owned subsidiary of Grantee ("Merger Sub") have entered into an
Agreement and Plan of Merger, dated as of the date of this Agreement (the
"Merger Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), pursuant to which Grantee and
Issuer intend to effect a merger of Merger Sub with and into Issuer (the
"Merger").
B. The Stock Option Agreement. As an inducement and condition to
Grantee's and Merger Sub's willingness to enter into the Merger Agreement, and
in consideration thereof, the board of directors of Issuer has approved the
grant to Grantee of the Option pursuant to this Agreement and the acquisition of
Shares by Grantee pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth in this Agreement and in the Merger Agreement, the
parties agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms of this
Agreement, up to 8,873,630 fully paid and nonassessable Shares at a price per
share in cash equal to $54.00 (the "Option Price"); provided, however, that in
no event shall the number of shares for which the Option is exercisable exceed
9.9% of the Shares issued and outstanding at the time of exercise (without
giving effect to the Shares issued or issuable under the Option) (the "Maximum
Applicable Percentage"). The number of Shares purchasable upon exercise of the
Option and the Option Price are subject to adjustment as set forth in this
Agreement.
(b) In the event that any additional Shares are issued or otherwise become
outstanding after the date of this Agreement (other than pursuant to an event
described in Section 7 of this Agreement), the aggregate number of Shares
purchasable upon exercise of the Option (inclusive of Shares, if any, previously
purchased upon exercise of the Option) shall automatically be increased (without
any further action on the part of Issuer or Grantee being necessary) so that,
after such issuance, it equals the Maximum Applicable Percentage. Any such
increase shall not affect the Option Price.
2. Exercise; Closing. (a) Conditions to Exercise; Termination. Grantee
or any other person that shall become a holder of all or a part of the Option in
accordance with the terms of this Agreement (each such person being referred to
in this Agreement as the "Holder") may exercise the Option, in whole or in part,
by delivering a written notice thereof as provided in Section 2(d) at any time
following the occurrence of a Triggering Event unless prior to such Triggering
Event the Effective Time shall have occurred. If no notice pursuant to the
preceding sentence has been delivered prior thereto, the Option shall terminate
upon either (I) the occurrence of the Effective Time or (ii) the close of
business on the earlier of (x) the day 180 days after the date that Grantee
becomes entitled to receive the Termination Fee under Section 8.5(b) of the
Merger Agreement (or if, at the expiration of such 180 days, the Option cannot
be exercised by reason of any applicable
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judgment, decree, order, law or regulation, 10 business days after such
impediment to exercise shall have been removed) and (y) the date that Grantee is
no longer potentially entitled to receive the Termination Fee under Section
8.5(b) of the Merger Agreement for a reason other than that Grantee has already
received the Termination Fee.
(b) Triggering Event. A "Triggering Event" shall have occurred if the
Merger Agreement is terminated and Grantee thereby becomes entitled to receive
the Termination Fee pursuant to Section 8.5(b) of the Merger Agreement.
(c) Notice of Triggering Event by Issuer. Issuer shall notify Grantee
promptly in writing of the occurrence of any Triggering Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of the Holder to exercise the Option.
(d) Notice of Exercise by Grantee. If a Holder shall be entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
date of which is referred to in this Agreement as the "Notice Date") specifying
(i) the total number of shares that the Holder will purchase pursuant to such
exercise and (ii) a place and date (a "Closing Date") not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase (a "Closing"); provided, that if a filing is required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or any other notice, report, filing or approval is required with
respect to any Governmental Entity in connection with such purchase, (x) the
Holder or Issuer, as required, promptly after the giving of such notice shall
file the required notice, report, filing or application for approval and shall
expeditiously process the same and (y) the period of time referred to in clause
(ii) above shall commence on the date on which the Holder furnishes to Issuer a
supplemental written notice setting forth the Closing Date, which notice shall
be furnished as promptly as practicable after all required notification,
reporting or filing periods shall have expired or been terminated, all required
approvals shall have been obtained and all requisite waiting periods shall have
passed. Each of the Holder and the Issuer agrees to use its reasonable best
efforts to cooperate with and provide information to Issuer or Holder, as the
case may be, for the purpose of any required notice, report, filing or
application for approval.
(e) Payment of Purchase Price. At each Closing, the Holder shall pay to
Issuer the aggregate purchase price for the Shares purchased pursuant to the
exercise of the Option in immediately available funds by a wire transfer to a
bank account designated by Issuer; provided, that failure or refusal of Issuer
to designate such a bank account shall not preclude the Holder from exercising
the Option, in whole or in part.
(f) Delivery of Common Stock. At such Closing, simultaneously with the
payment of the purchase price by the Holder, Issuer shall deliver to the Holder
a certificate or certificates representing the number of Shares purchased by the
Holder, which Shares shall be free and clear of all liens, charges, encumbrances
or security interests ("Liens") and, if the Option shall be exercised in part
only, a new Option evidencing the rights of the Holder to purchase the balance
(as adjusted pursuant to Section 1(b)) of the Shares then purchasable under this
Agreement.
(g) Restrictive Legend. Certificates for Shares delivered at a Closing
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for
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purposes of the Securities Act of 1933, as amended (the "Securities Act"). In
addition, such certificates shall bear any other legend as may be required by
applicable law.
(h) Ownership of Record; Tender of Purchase Price; Expenses. Upon the
giving by the Holder to Issuer of a written notice of exercise referred to in
Section 2(d) and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of Issuer shall then be closed or that certificates representing such
Shares shall not have been delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and covenants
in this Agreement, Issuer agrees:
(a) Shares Reserved for Issuance. It will maintain, free from
preemptive rights, sufficient authorized but unissued or treasury Shares to
issue the appropriate number of Shares pursuant to the terms of this
Agreement so that the Option may be fully exercised without additional
authorization of Shares after giving effect to all other options, warrants,
convertible securities and other rights of third parties to purchase Shares
from Issuer.
(b) No Avoidance. It will not avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed under this Agreement
by Issuer.
(c) Further Assurances. Promptly after the date of this Agreement it
will take all actions as may from time to time be required (including (i)
complying with all applicable premerger notification, reporting and waiting
period requirements under the HSR Act and (ii) in the event that prior
notice, report, filing or approval with respect to any Governmental Entity
is necessary under any applicable foreign or United States federal, state
or local law before the Option may be exercised, cooperating fully with the
Holder in preparing and processing the required applications or notices) in
order to permit each Holder to exercise the Option and purchase Shares
pursuant to such exercise and to take all action necessary to protect the
rights of the Holder against dilution.
(d) Stock Exchange Listing. It will use its reasonable best efforts
to cause the Shares to be issued pursuant to the Option to be approved for
listing (to the extent they are not already listed) on the New York Stock
Exchange ("NYSE") and on all other stock exchanges on which Shares of the
Issuer are then listed, subject to official notice of issuance.
4. Representations and Warranties of Issuer. Issuer represents and
warrants to Grantee as follows:
(a) Merger Agreement. Issuer hereby makes each of the
representations and warranties contained in Sections 5.1(a)(i), (b), (c)
(first sentence), (d)(i), (d)(ii), (j), (p) and (q) of the Merger Agreement
as they relate to Issuer and this Agreement, as if such representations
were set forth in this Agreement.
(b) Shares Reserved for Issuance; Capital Stock. Issuer has taken
all necessary corporate action to authorize and reserve, free from
preemptive rights, and permit it to issue, at all times from the date
hereof until the obligation to deliver Shares upon the exercise of the
Option terminates, sufficient authorized but unissued or treasury Shares so
that the Option may be fully exercised without additional authorization of
Shares after giving effect to all other options,
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warrants, convertible securities and other rights of third parties to
purchase Shares from Issuer, and all such Shares, upon issuance pursuant to
the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims, Liens
(other than those created by this Agreement) and not subject to any
preemptive rights.
5. Representations and Warranties of Grantee. Grantee represents and
warrants to Issuer that Grantee has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute, deliver and
perform its obligations under and to consummate the transactions contemplated by
this Agreement. This Agreement has been duly and validly executed and delivered
by Grantee and constitutes a valid and binding agreement of Grantee enforceable
against Grantee in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
6. Exchange; Replacement. This Agreement and the Option granted by this
Agreement are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of Shares
purchasable at such time under this Agreement, subject to corresponding
adjustments in the number of Shares purchasable upon exercise so that the
aggregate number of such Shares under all stock option agreements issued in
respect of this Agreement shall not exceed the Maximum Applicable Percentage.
Unless the context shall require otherwise, the terms "Agreement" and "Option"
as used in this Agreement include any stock option agreements and related
Options for which this Agreement (and the Option granted by this Agreement) may
be exchanged. Upon (i) receipt by Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction of this Agreement, or mutilation of this
Agreement, (ii) receipt by Issuer of reasonably satisfactory indemnification in
the case of loss, theft or destruction of this Agreement and (iii) surrender and
cancellation of this Agreement in the case of mutilation, Issuer will execute
and deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual obligation on
the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by any person other than the holder
of the new Agreement.
7. Adjustments. In addition to the adjustment to the total number of
Shares purchasable upon exercise of the Option pursuant to Section 1(b), the
total number of Shares purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as follows:
(a) In the event of any change in the outstanding shares of Common
Stock by reason of stock dividends, stock splits, split-ups, mergers,
recapitalizations, reclassifications, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of Shares
purchasable upon exercise of the Option shall be appropriately adjusted,
and proper provision shall be made in the agreements governing any such
transaction, so that (i) any Holder shall receive upon exercise of the
Option the number and class of shares, other securities, property or cash
that such Holder would have received in respect of the Shares purchasable
upon exercise of the Option if the Option had been exercised and such
Shares had been issued to such Holder immediately prior to such event or
the record date therefor, as applicable, and (ii) in the event any
additional Shares are to be issued or otherwise become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number of Shares purchasable upon exercise of the Option shall
be increased so that, after such issuance and together with Shares
previously issued pursuant to the exercise of the Option (as adjusted on
account of any of the foregoing changes in the Shares), the number of
Shares so purchasable equals the Maximum
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Applicable Percentage of the number of Shares issued and outstanding
immediately after the consummation of such change.
(b) Whenever the number of Shares purchasable upon exercise of the
Option is adjusted as provided in this Section 7, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of
which is equal to the number of Shares purchasable prior to the adjustment
and the denominator of which is equal to the number of Shares purchasable
after the adjustment.
8. Registration. (a) Upon the occurrence of a Triggering Event, Issuer
shall, at the request of Grantee delivered in the written notice of exercise of
the Option provided for in Section 2(d), as promptly as practicable prepare,
file and keep current a shelf registration statement under the Securities Act
covering any or all Shares issued and issuable pursuant to the Option and shall
use its best efforts to cause such registration statement to become effective
and remain current in order to permit the sale or other disposition of any
Shares issued upon total or partial exercise of the Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee; provided, however,
that Issuer may postpone filing a registration statement relating to a
registration request by Grantee under this Section 8 for a period of time (not
in excess of 30 days) if in its judgment such filing would require the
disclosure of material information that Issuer has a bona fide business purpose
for preserving as confidential. Issuer will use its best efforts to cause such
registration statement first to become effective as soon as practicable and then
to remain effective for one year from the day such registration statement first
becomes effective or until such earlier date as all Shares registered shall have
been sold by Grantee. In connection with any such registration, Issuer and
Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registrations. If
requested by Grantee in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such Shares, but
only to the extent of obligating Issuer in respect of representations,
warranties, indemnities, contribution and other agreements customarily made by
issuers in such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the sale or
other disposition of the Shares or other securities pursuant to a registration
statement filed pursuant to Section 8(a) shall occur substantially
simultaneously with the exercise of the Option. Any registration statement
prepared and filed under this Section 8, and any sale covered thereby, shall be
at Issuer's expense, except for underwriting discounts or commissions and
brokers fees.
9. Repurchase of Option and/or Shares. (a) Repurchase; Repurchase
Price. Upon the occurrence of a Triggering Event, (i) at the request of a
Holder, delivered in writing within 180 days of such occurrence (or such later
period as provided in Section 2(d) with respect to any required notice or
application or in Section 10), Issuer shall repurchase the Option from the
Holder, in whole or in part, at a price (the "Option Repurchase Price") equal to
the number of Shares then purchasable upon exercise of the Option (or such
lesser number of Shares as may be designated in the Repurchase Notice)
multiplied by the amount by which the market/offer price exceeds the Option
Price and (ii) at the request of a Holder or any person who has been a Holder
(for purposes of this Section 9 only, each such person being referred to as a
"Holder"), delivered in writing within 180 days of such occurrence (or such
later period as provided in Section 2(d) with respect to any required notice or
application or in Section 10), Issuer shall repurchase such number of Option
Shares from such Holder as the Holder shall designate in the Repurchase Notice
at a price (the "Option Share Repurchase Price") equal to the number of Shares
designated multiplied by the market/offer price. The term "market/offer price"
shall mean the highest of (x) the highest price per Share at which an
Acquisition Proposal for Shares has been made, (y) the price per Share to be
paid by any third party pursuant to an agreement relating to an Acquisition
Proposal with Issuer and
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(z) the highest trading price for Shares on the NYSE (or, if the Shares are not
then listed on the NYSE, any other national securities exchange or automated
quotation system on which the Shares are then listed or quoted) within the
120-day period immediately preceding the delivery of the Repurchase Notice. In
the event that an Acquisition Proposal is made for the Shares or an agreement is
entered into relating to an Acquisition Proposal involving consideration other
than cash, the value of the securities or other property issuable or deliverable
in exchange for the Shares shall (I) if such consideration is in securities and
such securities are listed on a national securities exchange, be determined to
be the highest trading price for such securities on such national securities
exchange within the 120-day period immediately preceding the delivery of the
Repurchase Notice or (II) if such consideration is not securities, or if in
securities and such securities are not traded on a national securities exchange,
be determined in good faith by a nationally recognized investment banking firm
selected by an investment banking firm designated by Grantee and an investment
banking firm designated by Issuer.
(b) Method of Repurchase. A Holder may exercise its right to require
Issuer to repurchase the Option, in whole or in part, and/or any Option Shares
then owned by such Holder pursuant to this Section 9 by surrendering for such
purpose to Issuer, at its principal office, this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices stating
that the Holder elects to require Issuer to repurchase the Option and/or such
Option Shares in accordance with the provisions of this Section 9 (each such
notice, a "Repurchase Notice"). As promptly as practicable, and in any event
within two business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of the Repurchase Notice relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the
applicable Option Repurchase Price and/or the Option Share Repurchase Price. Any
Holder shall have the right to require that the repurchase of Option Shares
shall occur immediately after the exercise of all or part of the Option. In the
event that the Repurchase Notice shall request the repurchase of the Option in
part, Issuer shall deliver with the Option Repurchase Price a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock purchasable pursuant to the Option at the time of delivery of
the Repurchase Notice minus the number of Shares represented by that portion of
the Option then being repurchased.
(c) Effect of Statutory or Regulatory Restraints on Repurchase. To the
extent that, upon or following the delivery of a Repurchase Notice, Issuer is
prohibited under applicable law or regulation from repurchasing the Option (or
portion thereof) and/or any Option Shares subject to such Repurchase Notice (and
Issuer will undertake to use its reasonable best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), Issuer shall immediately so
notify the Holder in writing and thereafter deliver or cause to be delivered,
from time to time, to the Holder the portion of the Option Repurchase Price and
the Option Share Repurchase Price that Issuer is no longer prohibited from
delivering, within two business days after the date on which it is no longer so
prohibited; provided, however, that upon notification by Issuer in writing of
such prohibition, the Holder may, within five days of receipt of such
notification from Issuer, revoke in writing its Repurchase Notice, whether in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder that portion of the Option Repurchase
Price and/or the Option Share Repurchase Price that Issuer is not prohibited
from delivering; and (ii) deliver to the Holder, as appropriate, (A) with
respect to the Option, a new stock option agreement evidencing the right of the
Holder to purchase that number of Shares for which the surrendered stock option
agreement was exercisable at the time of delivery of the Repurchase Notice less
the number of shares as to which the Option Repurchase Price has theretofore
been delivered to the Holder, and/or (B) with respect to Option Shares, a
certificate for the Option Shares as to which the Option Share Repurchase Price
has not theretofore been delivered to the Holder. Notwithstanding anything to
the contrary in this
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Agreement, including, without limitation, the time limitations on the exercise
of the Option, the Holder may give notice of exercise of the Option for 180 days
after a notice of revocation has been issued pursuant to this Section 9(c) and
thereafter exercise the Option in accordance with the applicable provisions of
this Agreement.
(d) Acquisition Transactions. In addition to any other restrictions or
covenants, Issuer agrees that, in the event that a Holder delivers a Repurchase
Notice, Issuer shall not enter or agree to enter into an agreement or series of
agreements relating to a merger with or into or the consolidation with any other
person or entity, the sale of all or substantially all of the assets of Issuer
or any similar disposition unless the other party or parties to such agreement
or agreements agree to assume in writing Issuer's obligations under Section 9(a)
and, notwithstanding any notice of revocation delivered pursuant to the proviso
to Section 9(c), a Holder may require such other party or parties to perform
Issuer's obligations under Section 9(a) unless such party or parties are
prohibited by law or regulation from such performance, in which case such party
or parties shall be subject to the obligations of the Issuer under Section 9(c).
(e) Repurchase at the Option of the Issuer. (i) To the extent the Grantee
shall not have previously exercised its rights under Section 9(a), at the
request of the Issuer made at any time after the tenth day following a Closing
pursuant to Section 2 hereof and for a period ending 120 days after the
termination of the Option in accordance with Section 2 hereof (the "Call
Period"), the Issuer may repurchase from the Grantee, and the Grantee shall
sell, or cause to be sold, to the Issuer, all (but not less than all) of the
Option Shares acquired by the Grantee pursuant hereto and with respect to which
the Grantee has ownership at the time of such repurchase at a price per Option
Share equal to the greater of (A) the market/offer price and (B) the Option
Price per share in respect of the Option Shares so acquired (such price per
Option Share multiplied by the number of Option Shares to be repurchased
pursuant to this Section 9(e) being herein called the "Call Consideration"). The
date on which the Issuer exercises its rights under this Section 9(e) is
referred to as the "Call Date."
(ii) If the Issuer exercises its rights under this Section 9(e), the
Issuer shall, within ten business days pay the Call Consideration in immediately
available funds, and the Grantee shall surrender to the Issuer certificates
evidencing the Option Shares purchased hereunder, and the Grantee shall warrant
to the Issuer that, immediately prior to the repurchase thereof pursuant to this
Section 9(e), the Grantee had sole record and beneficial ownership of such
Option Shares and that such shares were then held free and clear of all Liens.
(iii) To the extent that the Grantee shall exercise the Option, the
Grantee shall, unless the Grantee shall exercise its rights under Section 9(a)
or the Issuer shall exercise the Call Right, retain sole ownership of the Option
Shares so acquired through the end of the Call Period.
10. Extension of Exercise Periods. The 180-day periods for exercise of
certain rights under Sections 2 and 9 shall be extended in each such case at
there quest of the Holder to the extent necessary to avoid liability by the
Holder under Section 16(b) of the Securities Exchange Act of 1934, as amended,
by reason of such exercise.
11. Assignment. Neither party may assign any of its rights or obligations
under this Agreement or the Option to any other person without the express
written consent of the other party except that Grantee may, without the prior
written consent of Issuer assign the Option, in whole or in part, to any
affiliate of Grantee. Any attempted assignment in contravention of the preceding
sentence shall be null and void.
12. Filings; Other Actions. Issuer and Grantee each will use its best
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary for the consummation of the transactions
contemplated by this Agreement.
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13. Specific Performance. The parties acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party and that the
obligations of the parties shall be specifically enforceable through injunctive
or other equitable relief.
14. Severability. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 9, the full number of Shares
provided in Section 1(a) of this Agreement (as adjusted pursuant to Sections
1(b) and 7 of this Agreement), it is the express intention of Issuer to allow
the Holder to acquire or to require Issuer to repurchase such lesser number of
Shares as may be permissible, without any amendment or modification of this
Agreement.
15. Notices. Notices, requests, instructions, or other documents to be
given under this Agreement shall be in writing and shall be deemed given (i)
three business days following sending by registered or certified mail, postage
prepaid, (ii) when sent, if sent by facsimile, provided that a copy of the fax
is promptly sent by U.S. mail, (iii) when delivered, if delivered personally to
the intended recipient, and (iv) one business day later, if sent by overnight
delivery via a national courier service, in each case at the respective
addresses of the parties set forth in the Merger Agreement.
16. Expenses. Except as otherwise expressly provided in this Agreement or
in the Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expense, including fees and expenses of its own
financial consultants, investment bankers, accountants, and counsel.
17. Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties, with
respect to the subject matter of this Agreement. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. Nothing in this Agreement, is
intended to confer upon any person or entity, other than the parties to this
Agreement, and their respective successors and permitted assigns, any rights or
remedies under this Agreement.
18. Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in all respects shall
be interpreted, construed and governed by and in accordance with Delaware law
without regard to the conflict of law principles thereof. The parties
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States of America
located in Wilmington, Delaware (the "Delaware Courts") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
by this Agreement (and agree not to commence any litigation relating thereto
except in such Delaware Courts), waive any objection to the laying of venue of
any such litigation in the Delaware Courts and agree not to plead or claim in
any Delaware Court that such litigation brought therein has been brought in an
inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWL-
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EDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.
19. Captions. The Section and paragraph captions in this Agreement are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions of this
Agreement.
20. Limitation on Profit. (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as defined
herein)exceed in the aggregate $130 million (the "Maximum Amount") and, if it
otherwise would exceed such amount, the Grantee, at its sole election, shall
either: (i) reduce the number of Shares subject to this Option; (ii) deliver to
the Issuer for cancellation Option Shares previously purchased by Grantee; (iii)
pay cash to the Issuer; or (iv) any combination thereof, so that Grantee's
actually realized Total Profit shall not exceed the Maximum Amount taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined below) which would exceed the
Maximum Amount and, if exercise of the Option otherwise would result in the
Notional Total Profit exceeding such amount, Grantee, at its discretion, may (in
addition to any of the actions specified in Section 20(a) above) (i) reduce the
number of Shares subject to the Option or (ii) increase the Option Price for
that number of Shares set forth in the exercise notice so that the Notional
Total Profit shall not exceed the Maximum Profit; provided, that nothing in this
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date.
(c) As used in this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) (x) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
or any Option Shares pursuant to Section 9, less, in the case of any repurchase
of Option Shares, (y) the Grantee's purchase price for such Option Shares, as
the case may be plus (ii) (x) the net cash amounts received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party, less (y) the
Grantee's purchase price of such Option Shares plus (iii) any Termination Fee
paid by the Issuer and received by the Grantee pursuant to Section 8.5(b) of the
Merger Agreement minus (iv) (x) the amounts of any cash previously paid by
Grantee to Issuer pursuant to this Section 20 plus the value of the Option
Shares (or other securities) previously delivered by Grantee to Issuer for
cancellation pursuant to this Section 20.
(d) As used in this Agreement, the term "Notional Total Profit" with
respect to any number of Shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such proposal
assuming that this Option were exercised on such date for such number of Shares
and assuming that such Shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Shares as of the close of business on the preceding trading
day (less customary brokerage commissions).
(e) Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect the ability of Grantee to receive, nor relieve Issuer's
obligation to pay, any Termination Fee provided for in Section 8.5(b) of the
Merger Agreement; provided that if and to the extent the Total
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Profit received by Grantee would exceed the Maximum Profit following receipt of
such payment, Grantee shall be obligated to promptly comply with the terms of
Section 20(a).
(f) For purposes of Section 20(a) and clause (iv) of Section 20(c), the
value of any Option Shares delivered by Grantee to Issuer shall be the
market/offer price of such Option Shares.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
duly authorized officers of the parties as of the day and year first written
above.
RELIASTAR FINANCIAL CORP.
By: /s/ RICHARD R. CROWL
-------------------------------------
Name: Richard R. Crowl
Title: Senior Vice President and
Corporate Secretary
ING AMERICA INSURANCE HOLDINGS, INC.
By: /s/ MICHAEL W. CUNNINGHAM
-------------------------------------
Michael W. Cunningham
Executive Vice President and
Chief Financial Officer
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APPENDIX C
[LETTERHEAD OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED]
April 30, 2000
Board of Directors
ReliaStar Financial Corp.
20 Washington Avenue South
Minneapolis, Minnesota 55401
Members of the Board of Directors:
ReliaStar Financial Corp. (the "Company"), ING Groep N.V. ("ING"), ING
America Insurance Holdings, Inc., a subsidiary of ING (the "Parent"), and SHP
Acquisition Corp., a subsidiary of Parent (the "Merger Sub"), propose to enter
into an agreement and plan of merger (the "Agreement") pursuant to which Merger
Sub would be merged (the "Merger") with and into the Company. In connection with
the Merger (i) each share of the common stock, par value $0.01 per share, of the
Company (the "Company Shares"), other than certain Company Shares as described
in the Agreement and the ESOP Shares (as defined below), will be converted into
the right to receive $54.00 in cash (the "Cash Consideration") and (ii) each
Company Share (the "ESOP Shares") held by the Company's Success Sharing Plan and
ESOP (the "ESOP") will be converted into a number of ADSs (as defined in the
Agreement) equal to $54.00 divided by the average of the closing prices per ADS
as reported on the New York Stock Exchange, Inc. composite transactions
reporting system for the ten trading days ending on the last trading day prior
to the closing date of the Merger (the "Non-Cash Consideration"). The terms and
conditions of the Merger are more fully set forth in the Agreement.
You have asked us whether, in our opinion, the Cash Consideration to be
received by the holders of the Company Shares, other than the ESOP, pursuant to
the Merger is fair from a financial point of view to such holders and whether
the Non-Cash Consideration to be received by the ESOP pursuant to the Merger is
fair from a financial point of view to the ESOP.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to the Company and ING that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets, liabilities and
prospects of the Company and ING furnished to us by the Company and ING,
respectively;
(3) Conducted discussions with members of senior management of the
Company and ING concerning the matters described in clauses 1 and 2 above,
as well as their respective businesses and prospects before and after
giving effect to the Merger;
(4) Reviewed the market prices and valuation multiples for the Company
Shares and the ADSs and compared them with those of certain publicly traded
companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and ING and
compared them with those of certain publicly traded companies that we
deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the
financial terms of certain other transactions that we deemed to be
relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and ING and their financial and legal
advisors;
(8) Reviewed the potential pro forma impact of the Merger;
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(9) Reviewed the Agreement dated April 30, 2000; and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our assessment
of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or ING or been furnished with any such evaluation or
appraisal. In addition, we have not assumed any obligation to conduct any
physical inspection of the properties or facilities of the Company or ING. With
respect to the financial forecast information furnished to or discussed with us
by the Company or ING, we have assumed that they have been reasonably prepared
and reflect the best currently available estimates and judgment of the Company's
or ING's management as to the expected future financial performance of the
Company or ING, as the case may be. We have assumed that, in connection with the
Merger, the Company, the ESOP and the administrators of the ESOP have complied
with all legal requirements applicable to the ESOP.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof.
We are acting as financial advisor to the Company in connection with the
Merger and will receive a fee from the Company for our services, a significant
portion of which is contingent upon the consummation of the Merger. In addition,
the Company has agreed to indemnify us for certain liabilities arising out of
our engagement. We are currently engaged by ING as financial advisor in
connection with another proposed acquisition transaction and have, in the past,
provided financial advisory and financing services to the Company, ING and their
respective affiliates and may continue to do so and have received, and may
receive, fees for the rendering of such services. In addition, in the ordinary
course of our business, we may actively trade the Company Shares and other
securities of the Company, as well as securities of ING, for our own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Merger and does not constitute a recommendation to
any shareholder as to how such shareholder should vote on the proposed Merger or
any matter related thereto. We are not acting as financial advisor to the ESOP
or the administrators of the ESOP, and this opinion is not intended for the use
or benefit of the ESOP or the administrators of the ESOP in connection with any
legal requirement applicable to the ESOP or the administrators of the ESOP.
We are not expressing any opinion herein as to the prices at which the
Company Shares or the ADSs (or related securities) will trade following the
announcement or consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Cash Consideration to be received by the holders of
the Company Shares other than the ESOP pursuant to the Merger is fair from a
financial point of view to the holders of such shares, and the Non-Cash
Consideration to be received by the ESOP pursuant to the Merger is fair from a
financial point of view to the ESOP.
Very truly yours,
/s/ Merrill Lynch, Pierce, Fenner &
Smith Incorporated
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APPENDIX D
DELAWARE GENERAL CORPORATION LAW
SECTION 262.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to Section
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
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d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section
228 or Section 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series
D-2
<PAGE> 146
of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice
has been given shall, in the absence of fraud, be prima facie evidence of
the facts stated therein. For purposes of determining the stockholders
entitled to receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after
the effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the
D-3
<PAGE> 147
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
D-4
<PAGE> 148
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Association of ING contain no provisions under which any
member of the Supervisory Board or the Executive Board or officers are
indemnified in any manner against any liability which he may incur in his
capacity as such. However, Article 36 of the Articles of Association of the
Registrant provides: "In so far as the General Meeting of the Shareholders
approves the annual accounts without reservation, such approval shall serve to
discharge the members of the Executive Board from liability for their management
and to discharge the Supervisory directors from liability for their supervision
in the previous financial year, without prejudice to the provisions of articles
138 and 149 of Book 2 of the Civil Code". Under Netherlands law, this discharge
is not absolute and would not be effective as to any matters not disclosed to
the holders of the Registrant's Ordinary Shares, Bearer Receipts or ADSs.
Certain officers and members of the Supervisory Board and the Executive
Board of ING are, to a limited extent, insured under an insurance policy against
damages resulting from their conduct when acting in their capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
(2)(a) Agreement and Plan of Merger, dated as of April 30, 2000, as
amended June 27, 2000, by and among ING Groep N.V., ING
America Insurance Holdings, Inc., SHP Acquisition Corp., and
ReliaStar Financial Corp. (filed herewith as Appendix A to
the prospectus/proxy statement).
(2)(b) Stock Option Agreement, dated April 30, 2000, as amended
June 27, 2000, between ReliaStar Financial Corp. and ING
America Insurance Holdings, Inc. (filed herewith as Appendix
B to the prospectus/proxy statement).
(3)(a) Statuten (articles of association) of ING Groep N.V.,
(English translation).*
(3)(b) Statuten (articles of association) and
Administratievoorwaarden (conditions of administration)
(together, the trust agreement) of Stichting
Administratiekantoor ING Groep (the trust), (English
translations).**
(5) Opinion (including consent) of Diederik van Wassenaer,
General Counsel of ING Groep N.V., as to the validity of the
ordinary shares and the bearer depositary receipts.
(8) Opinion (including consent) of Sullivan & Cromwell as to
certain tax matters.
(23)(a) Consent of Diederik van Wassenaer, General Counsel of ING
Groep N.V. (set forth in Exhibit 5(a)).
(23)(b) Consent of Sullivan & Cromwell (set forth in Exhibit 8).
(23)(c) Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated
(23)(d) Consent of Ernst & Young Accountants, independent auditors
to ING Groep N.V.
(23)(e) Consent of KPMG Accountants N.V., independent auditors to
ING Bank N.V.
(23)(f) Consent of Deloitte & Touche LLP, independent auditors to
ReliaStar Financial Corp.
(24) Powers of Attorney (included in signature page).
</TABLE>
II-1
<PAGE> 149
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
(99)(a) Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated (filed herewith as Annex C to the
prospectus/proxy statement).
(99)(b) Form of proxy card for holders of ReliaStar Financial Corp.
Common Stock.
(99)(c) Form of voting instruction card for participants in
ReliaStar's Success Sharing Plan and ESOP.
</TABLE>
-------------------------
* Incorporated by reference from the Registration Statement on Form F-1 of ING
Groep N.V. (Registration Statement No. 333-6936).
** Incorporated by reference from the Annual Report on Form 20-F of ING Groep
N.V. for the fiscal year ended December 31, 1999.
(b) FINANCIAL DATA SCHEDULES
None
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
shall be deemed to be the initial bona fide offering.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other Items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
II-2
<PAGE> 150
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes: (i) to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means; and (ii) to arrange or provide for a facility in the
U.S. for the purpose of responding to such requests. The undertakings in
subparagraph (i) above include information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment, all information concerning a transaction and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ING Groep N.V.
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Amsterdam, the
Netherlands, on June 27, 2000.
ING GROEP N.V.
By: /s/ C. MAAS
------------------------------------
C. Maas
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below this constitutes and appoints C. Maas, Pieter van Lierop and B. Scott
Burton, and each of them, each with full power to act without the other, his
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, to
sign any abbreviated registration statement filed pursuant to Rule 462(b) of the
Securities Act of 1933 and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he or she might
or could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or amendment has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ EWALD KIST Chairman of Executive Board
--------------------------------------------------- (Principal Executive Officer)
Ewald Kist
/s/ C. MAAS Member of Executive Board
--------------------------------------------------- (Chief Financial Officer)
C. Maas
/s/ HANS VAN BARNEVELD Principal Accounting Officer
---------------------------------------------------
Hans van Barneveld
/s/ MICHEL TILMANT Vice-Chairman of Executive Board
---------------------------------------------------
Michel Tilmant
/s/ HESSEL LINDENBERGH Member of Executive Board
---------------------------------------------------
Hessel Lindenbergh
</TABLE>
II-4
<PAGE> 152
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ ALEXANDER RINNOOY KAN Member of Executive Board
---------------------------------------------------
Alexander Rinnooy Kan
/s/ FRED HUBBELL Member of Executive Board
---------------------------------------------------
Fred Hubbell
/s/ DAVID ROBBINS Member of Executive Board
---------------------------------------------------
David Robbins
</TABLE>
II-5
<PAGE> 153
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933,
the Authorized Representative has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, solely in its capacity
as the duly authorized representative of ING Groep N.V. in the United States, in
the City of Atlanta, State of Georgia, on the 27th day of June, 2000.
ING AMERICA INSURANCE
HOLDINGS, INC.
By: /s/ B. SCOTT BURTON
------------------------------------
Name: B. Scott Burton
Title: Assistant Secretary &
Counsel
II-6
<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Stichting
Administratiekantoor ING Groep, as the legal entity created for the issuance of
the Bearer Depositary Receipts, has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Amsterdam, the Netherlands, on June 27, 2000.
STICHTING ADMINISTRATIEKANTOOR
ING GROEP
By: /s/ J.W.M. SIMONS
------------------------------------
Name: J.W.M. Simons
By: /s/ H. DE KORVER
----------------------------------
Name: H. de Korver
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below this constitutes and appoints C. Maas, Pieter van Lierop and B. Scott
Burton, and each of them, each with full power to act without the other, his
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, to
sign any abbreviated registration statement filed pursuant to Rule 462(b) of the
Securities Act of 1933 and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he or she might
or could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or amendment has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ J.W.M. SIMONS Chairman of the Executive Board
---------------------------------------------------
J.W.M. Simons
/s/ H. DE KORVER Member of the Executive Board
---------------------------------------------------
H. de Korver
/s/ C.A.J. HERKSTROTER Member of the Executive Board
---------------------------------------------------
C.A.J. Herkstroter
</TABLE>
II-7
<PAGE> 155
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ M. VERTERS Member of the Executive Board
---------------------------------------------------
M. Verters
Member of the Executive Board
---------------------------------------------------
T. Regtuijt
/s/ H.J. BLAISSE Member of the Executive Board
---------------------------------------------------
H.J. Blaisse
</TABLE>
II-8
<PAGE> 156
EXHIBIT INDEX
<TABLE>
<S> <C>
(2)(a) Agreement and Plan of Merger, dated as of April 30, 2000, as
amended June 27, 2000, by and among ING Groep N.V., ING
America Insurance Holdings, Inc., SHP Acquisition Corp., and
ReliaStar Financial Corp. (filed herewith as Appendix A to
the prospectus/proxy statement).
(2)(b) Stock Option Agreement, dated April 30, 2000, as amended
June 27, 2000, between ReliaStar Financial Corp. and ING
America Insurance Holdings, Inc. (filed herewith as Appendix
B to the prospectus/proxy statement).
(3)(a) Statuten (articles of association) of ING Groep N.V.,
(English translation).*
(3)(b) Statuten (articles of association) and
Administratievoorwaarden (conditions of administration)
(together, the trust agreement) of Stichting
Administratiekantoor ING Groep (the trust), (English
translations).**
(5) Opinion (including consent) of Diederik van Wassenaer,
General Counsel of ING Groep N.V., as to the validity of the
ordinary shares and the bearer depositary receipts.
(8) Opinion (including consent) of Sullivan & Cromwell as to
certain tax matters.
(23)(a) Consent of Diederik van Wassenaer, General Counsel of ING
Groep N.V. (set forth in Exhibit 5(a)).
(23)(b) Consent of Sullivan & Cromwell (set forth in Exhibit 8).
(23)(c) Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated
(23)(d) Consent of Ernst & Young Accountants, independent auditors
to ING Groep N.V.
(23)(e) Consent of KPMG Accountants N.V., independent auditors to
ING Bank N.V.
(23)(f) Consent of Deloitte & Touche LLP, independent auditors to
ReliaStar Financial Corp.
(24) Powers of Attorney (included in signature page).
(99)(a) Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated (filed herewith as Annex C to the
prospectus/proxy statement).
(99)(b) Form of proxy card for holders of ReliaStar Financial Corp.
Common Stock.
(99)(c) Form of voting instruction card for participants in
ReliaStar's Success Sharing Plan and ESOP.
</TABLE>
-------------------------
* Incorporated by reference from the Registration Statement on Form F-1 of ING
Groep N.V. (Registration Statement No. 333-6936).
** Incorporated by reference from the Annual Report on Form 20-F of ING Groep
N.V. for the fiscal year ended December 31, 1999.
