SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 7, 1997
____________________________
EQUITABLE OF IOWA COMPANIES
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Iowa
______________________________________________________________________________
(State or other jurisdiction or incorporation)
0-8590 42-1083593
__________________________________ _____________________________________
(Commission File Number) (IRS Employer Identification No.)
604 Locust Street, Des Moines, Iowa 50309
______________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(515) 245-6911
______________________________________________________________________________
(Registrant's Telephone Number, Including Area Code)
______________________________________________________________________________
(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS.
On July 7, 1997, Equitable of Iowa Companies (the "Company") entered into an
Agreement and Plan of Merger among ING Groep N.V. ("ING") and PFHI Holdings,
Inc. Under the terms of the Agreement, ING will pay $68 per share of Company
Common Stock and will assume approximately $400 million in debt. The
transaction is subject to customary conditions, including regulatory and
Company shareholder approval.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession.
Agreement and Plan of Merger among ING Groep N.V., PFHI Holdings,
Inc. and Equitable of Iowa Companies dated as of July 7, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITABLE OF IOWA COMPANIES
By: /S/ PAUL E. LARSON
___________________________________
Paul E. Larson, Executive
Vice President & Chief
Financial Officer
Date: July 11, 1997
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
Among
ING Groep N.V.,
PFHI Holdings, Inc.
and
Equitable of Iowa Companies
Dated as of July 7, 1997
Table of Contents
RECITALS
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger
1.2. Closing
1.3. Effective Time
ARTICLE II
Certificate of Incorporation and By-Laws
of the SurvivingCorporation
2.1. The Certificate of Incorporation
2.2. The By-Laws
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors
3.2. Officers
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock
(a) Merger Consideration
(b) Cancellation of Shares
(c) Merger Sub
4.2. Allocation of Merger Consideration; Election
Procedures
(a) Allocation
(b) Election Procedures
(c) Distributions with Respect to
Unexchanged Shares
(d) Transfers
(e) Fractional ADSs
(f) Termination of Exchange Fund
(g) Lost, Stolen or Destroyed Certificates
(h) Affiliates
4.3. Dissenters' Rights
4.4. Adjustments to Prevent Dilution
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company
(a) Organization, Good Standing and
Qualification
(b) Capital Structure
(c) Corporate Authority; Approval and
Fairness
(d) Governmental Filings; No Violations
(e) Company Reports; Financial Statements;
Statutory Statements
(f) Absence of Certain Changes
(g) Litigation and Liabilities
(h) Employee Benefits
(i) Compliance with Laws; Permits
(j) Takeover Statutes
(k) Environmental Matters
(l) Tax Matters
(m) Taxes
(n) Labor Matters
(o) Insurance
(p) Intellectual Property
(q) Brokers and Finders
(r) No Regulatory Disqualifications
(s) Assets
(t) Computer Technology
(u) Insurance Business
(v) Liabilities and Reserves
(w) Separate Accounts; Investment Advisor
(x) Rights Agreement
(y) Investigation by the Company
5.2. Representations and Warranties of Parent and
Merger Sub
(a) Capitalization of Merger Sub
(b) Organization, Good Standing and
Qualification
(c) Capital Structure
(d) Corporate Authority
(e) Governmental Filings; No Violations
(f) Parent Reports; Financial Statements;
Statutory Statements
(g) Absence of Certain Changes
(h) Litigation and Liabilities
(i) Compliance with Laws
(j) Tax Matters
(k) Brokers and Finders
(l) Available Funds
(m) Taxes and Tax Returns
(n) Collective Bargaining
(o) Parent Ownership of Company Common Stock
(p) Interim Operations of Merger Sub
(q) Investigation by Parent
(r) No Regulatory Disqualifications
ARTICLE VI
Covenants
6.1. Company Interim Operations
6.2. Parent Interim Operations
6.3. Acquisition Proposals
6.4. Information Supplied
6.5. Shareholders Meeting
6.6. Filings; Other Actions; Notification
6.7. Taxation
6.8. Access
6.9. Affiliates
6.10.Stock Exchange Listing and De-listing
6.11.Publicity
6.12.Stock Options; Performance Awards; Cash Awards
and Restricted Stock
6.13.Expenses
6.14.Indemnification; Directors' and Officers'
Insurance
6.15.Other Actions by the Company and Parent
(a) Takeover Statute
(b) Dividends
6.16.Directors
6.17.Benefit Plans
6.18.Pension Plan Stock Election
6.19.Parent Annual Report
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect
the Merger
(a) Shareholder Approval
(b) NYSE Listing
(c) Regulatory Consents
(d) Litigation
(e) F-4
(f) Blue Sky Approvals
7.2. Conditions to Obligations of Parent and Merger Sub
(a) Representations and Warranties
(b) Performance by the Company
(c) Consents Under Agreements
(d) Tax Opinion
(e) Affiliates Letters
(f) Accountant's Letter
(g) Rights Agreement
(h) Average Closing Price
7.3. Conditions to Obligation of the Company
(a) Representations and Warranties
(b) Performance of Obligations of Parent and
Merger Sub
(c) Consents Under Agreements
(d) Tax Opinion
(e) Legal Opinion
(f) Accountant's Letter
(g) Average Closing Price
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent
8.2. Termination by Either Parent or the Company
8.3. Termination by the Company
8.4. Termination by Parent
8.5. Effect of Termination and Abandonment
ARTICLE IX
Miscellaneous and General
9.1. Survival
9.2. Modification or Amendment
9.3. Waiver of Conditions
9.4. Counterparts
9.5. Governing Law and Venue; Waiver of Jury Trial
9.6. Notices
9.7. Entire Agreement; No Other Representations
9.8. No Third Party Beneficiaries
9.9. Obligations of Parent and of the Company
9.10. Severability
9.11. Interpretation
9.12. Assignment
Exhibit A - List of Executive Officers of the Company
Exhibit B - List of Executive Officers of Parent
Exhibit C - 7.3(d) Opinion
Exhibit D-1 - 7.3(e) Opinion
Exhibit D-2 - 7.3(e) Opinion
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called
this "AGREEMENT"), dated as of July 7, 1997, among
Equitable of Iowa Companies, an Iowa corporation (the
"COMPANY"), ING Groep N.V., a Netherlands corporation
("PARENT"), and PFHI Holdings, Inc., a Delaware corporation
and a direct 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
Merger Sub and the Company have approved this Agreement and
adopted the plan of merger set forth herein whereby the
Company will merge with and into Merger Sub upon the terms
and subject to the conditions set forth in this Agreement
(the "MERGER");
WHEREAS, it is intended that, for federal income
tax purposes, the Merger shall qualify as a reorganization
under the provisions of section 368(a) of the Internal
Revenue Code of 1986, as amended, and the rules and regula-
tions promulgated thereunder (collectively the "CODE"); and
WHEREAS, the Company, 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) the Company shall be merged
with and into Merger Sub and the separate corporate
existence of the Company shall thereupon cease. Merger Sub
shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "SURVIVING CORPORATION"), and
the separate corporate existence of Merger Sub with all its
rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. The Merger shall have
the effects specified in the Iowa Business Corporation Act,
as amended (the "BCA"), and the Delaware General Corporation
Law (the "DGCL").
1.2. CLOSING. The closing of the Merger (the
"CLOSING") shall take place (i) at the offices of Sullivan &
Cromwell, 1701 Pennsylvania Avenue, N.W., Washington, D.C.
20006 at 9:00 a.m., e.s.t., on the first 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 satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions)
shall be satisfied or waived in accordance with this Agree-
ment 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, Merger Sub will (i) deliver to the
Secretary of State of Iowa for filing pursuant to BCA Section
1105 articles of merger (the "ARTICLES OF MERGER") and (ii)
cause a Certificate of Merger (the "Delaware 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 shall become effective on the date on
which the later of the following actions shall have been
completed: (i) at the time when the Articles of Merger are
effective and (ii) the Delaware 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") except that the First Article thereof shall
be amended to change the name of Merger Sub to Equitable of
Iowa Companies, 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. Subject to
Section 4.2, each share of the Common Stock, no par value,
of the Company (a "SHARE" or, collectively, the "SHARES")
issued and outstanding immediately prior to the Effective
Time (other than Shares held directly by Parent or Shares
that are owned by the Company or any Subsidiary of the
Company (other than 112,000 Shares owned by Equitable Life
Insurance Company of Iowa in connection with the funding of
a phantom stock bonus arrangement and 600,000 shares owned
by the Equitable Life Insurance Company of Iowa Pension Plan
(collectively, "Benefit Shares")) and in each case not held
on behalf of third parties or Shares ("DISSENTING SHARES")
that are owned by shareholders ("DISSENTING SHAREHOLDERS")
exercising rights as dissenters pursuant to Division XIII of
the BCA (collectively, "EXCLUDED SHARES")) shall be
converted into, and become exchangeable for, at the election
of the holder thereof, either (i) $68 in cash (the "CASH
CONSIDERATION") or (ii) 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 NLG 1 per
Ordinary Share, of Parent ("PARENT SHARES")) (the "STOCK
CONSIDERATION") equal to the number (the "CONVERSION
NUMBER") derived by dividing $68 by the average closing
prices per ADS 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 (the "AVERAGING PERIOD")
ending on the last trading day prior to the Closing Date,
PROVIDED that (x) if the Average Closing Price is less than
$40.2864 the Conversion Number shall be 1.6879 and (y) if
the Average Closing Price is greater than $54.5052 the
Conversion Number shall be 1.2476. The Cash Consideration
and the Stock Consideration are sometimes hereinafter
collectively referred to as the "MERGER CONSIDERATION". At
the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall
cease to exist, and each certificate representing any of
such Shares (other than Excluded Shares) (a "CERTIFICATE")
shall thereafter represent only the right to receive the
Merger Consideration and the right, if any, to receive
pursuant to Section 4.2(e) cash in lieu of fractional ADSs
into which such Shares have been converted pursuant to this
Section 4.1(a) and any dividends or other distributions
pursuant to Section 4.2(c).
(b) CANCELLATION OF SHARES. Each Share issued
and outstanding immediately prior to the Effective Time and
owned directly by Parent or by the Company or any Subsidiary
of the Company (other than Benefit Shares or Shares that are
in each case held on behalf of third parties) shall, by
virtue of the Merger and without any action on the part of
the holder thereof, cease to be outstanding, 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 $1.00 per share, of Merger
Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding and each certificate
therefor shall continue to evidence one share of Common
Stock of the Surviving Corporation.
4.2. ALLOCATION OF MERGER CONSIDERATION; ELECTION
PROCEDURES.
(a) ALLOCATION. The maximum number of Shares to
be converted into the right to receive Cash Consideration in
the Merger (the "CASH ELECTION NUMBER") shall be less than
(i) 50 percent of the number of Shares issued and outstand-
ing immediately prior to the Effective Time less the number
of Shares to be canceled in accordance with Section 4.1(b)
less (ii) the number of Dissenting Shares, if any, that are
not to be treated as Non-Election Shares (as defined in
Section 4.2(b)(ii)) pursuant to Section 4.3 and the aggre-
gate number of shares which entitle the holders thereof to
receive cash in lieu of fractional ADSs, pursuant to Section
4.2(e). The maximum number of Shares to be converted into
the right to receive Stock Consideration in the Merger (the
"STOCK ELECTION NUMBER") shall be equal to 60 percent of the
number of Shares issued and outstanding immediately prior to
the Effective Time less the number of Shares to be canceled
in accordance with Section 4.1(b). In connection with the
foregoing percentages, any Shares owned directly by Parent
which are canceled in accordance with Section 4.1(b) shall
be considered Cash Election Shares (as hereinafter defined)
and, to the extent any Shares beneficially owned by Parent
are not canceled and are Stock Election Shares (as
hereinafter defined), the Stock Election Number shall be so
increased.
(b) ELECTION PROCEDURES.
(i) As of the Effective Time, Parent shall, with
the Company's prior approval, which shall not be
unreasonably withheld, appoint an agent to act as an
exchange agent (the "EXCHANGE AGENT") for the purpose of
issuing the Merger Consideration and any dividends or other
distributions with respect to the ADSs to be issued or paid
pursuant to Sections 4.1 and 4.2(c)(such cash and American
Depositary Receipts representing ADSs, together with the
amount of any dividends or other distributions payable with
respect thereto, being hereinafter referred to as the
"EXCHANGE FUND"). At or prior to the Effective Time, Parent
shall make available or cause to be made available to Morgan
Guaranty Trust Company of New York, as depositary under the
Amended and Restated Deposit Agreement, dated as of June 2,
1997 (the "DEPOSITARY"), the Bearer Receipts to be
represented by the ADSs referred to in Section 4.1(a) and
will cause such Depositary to make available ADSs to the
Exchange Agent. Promptly following the Effective Time,
Parent shall cause to be made available to the Surviving
Corporation all cash required for the Exchange Fund.
(ii) Subject to allocation and proration in accor-
dance with the provisions of this Section 4.2, each record
holder of Shares (other than Excluded Shares) issued and
outstanding immediately prior to the Election Deadline (as
defined below) shall be entitled (A) to elect to receive in
respect of each such Share (x) the Cash Consideration (a
"CASH ELECTION") or (y) the Stock Consideration (a "STOCK
ELECTION") or (B) to indicate that such record holder has no
preference as to the receipt of Cash Consideration or Stock
Consideration for such Shares (a "NON-ELECTION"). Shares in
respect of which a Non-Election is made (including Shares in
respect of which such an election is deemed to have been
made pursuant to this Section 4.2 and Section 4.3,
collectively, "NON-ELECTION SHARES") shall be deemed by
Parent, in its sole and absolute discretion, subject to
Sections 4.2(b)(v)-(vii), to be, in whole or in part, Shares
in respect of which Cash Elections or Stock Elections have
been made.
(iii) Elections pursuant to Section 4.2(b)(ii)
shall be made on a form and with such other provisions to be
reasonably agreed upon by the Company and Parent (a "FORM OF
ELECTION") to be provided by the Exchange Agent for that
purpose to holders of record of Shares (other than holders
of Excluded Shares), no later than 20 days before the
anticipated Closing Date. Elections shall be made by
mailing to the Exchange Agent a duly completed Form of
Election. To be effective, a Form of Election must be
(x) properly completed, signed and submitted to the Exchange
Agent at its designated office, by 5:00 p.m., e.s.t., on the
business day that is four trading days following the Closing
Date (which date shall be publicly announced by Parent on
the Closing Date) (the "ELECTION DEADLINE") and (y)
accompanied by the Certificate(s) representing the Shares as
to which the election is being made (or by an appropriate
guarantee of delivery of such Certificate(s) by a commercial
bank or trust company in the United States or a member of a
registered national security exchange or of the National
Association of Securities Dealers, Inc., PROVIDED that such
Certificates are in fact delivered to the Exchange Agent
within three trading days after the date of execution of
such guarantee of delivery). The Company shall use its best
efforts to make a Form of Election available to all Persons
(as defined below) who become holders of record of Shares
(other than Excluded Shares) between the date of mailing
described in the first sentence of this Section 4.2(b)(iii)
and the Election Deadline. Parent shall determine, in its
sole and absolute discretion, which authority it may
delegate in whole or in part to the Exchange Agent, whether
Forms of Election have been properly completed, signed and
submitted or revoked. The decision of Parent (or the
Exchange Agent, as the case may be) in such matters shall be
conclusive and binding. Neither Parent nor the Exchange
Agent will be under any obligation to notify any Person of
any defect in a Form of Election submitted to the Exchange
Agent. A holder of Shares that does not submit an effective
Form of Election prior to the Election Deadline shall be
deemed to have made a Non-Election.
As used in this Agreement, the term "PERSON" means
an individual, corporation, partnership, joint venture,
trust or unincorporated organization or a government or any
agency or political subdivision thereof.
(iv) An election may be revoked, but only by
written notice received by the Exchange Agent prior to the
Election Deadline. Any Certificate(s) representing Shares
that have been submitted to the Exchange Agent in connection
with an election shall be returned without charge to the
holder thereof in the event such election is revoked as
aforesaid and such holder requests in writing the return of
such Certificate(s). Upon any such revocation, unless a
duly completed Form of Election is thereafter submitted in
accordance with paragraph (b)(ii), such Shares shall be Non-
Election Shares. In the event that this Agreement is
terminated pursuant to the provisions hereof and any
Certificates have been transmitted to the Exchange Agent
pursuant to the provisions hereof, such Certificates shall
promptly be returned without charge to the Person submitting
the same.
(v) In the event that the aggregate number of
Shares in respect of which Cash Elections have been made
(collectively, the "CASH ELECTION SHARES") exceeds the Cash
Election Number, all shares in respect of which Stock
Elections have been made (the "STOCK ELECTION SHARES") and
all Non-Election Shares (which, in such event, shall be
deemed to be shares in respect of which Stock Elections have
been made) shall be converted into the right to receive the
Stock Consideration, and all Cash Election Shares shall be
converted into the right to receive the Stock Consideration
or the Cash Consideration in the following manner:
(A) Cash Election Shares shall be deemed
converted to Stock Election Shares, on a pro-rata
basis for each holder of record of Shares with respect to
those Shares, if any, of such holder of record that are
Cash Election Shares, so that the number of Cash
Election Shares remaining after such conversion shall
equal as closely as practicable the Cash Election
Number, and all such Cash Election Shares so converted
shall be converted into the right to receive the Stock
Consideration (and cash in lieu of fractional ADSs);
and
(B) the remaining Cash Election Shares shall be
converted into the right to receive the Cash
Consideration.
(vi) In the event that the aggregate number of
Stock Election Shares exceeds the Stock Election Number, all
Cash Election Shares and all Non-Election Shares (which, in
such event, shall be deemed to be Shares in respect of which
Cash Elections have been made) shall be converted into the
right to receive the Cash Consideration, and all Stock
Election Shares shall be converted into the right to receive
the Stock Consideration or the Cash Consideration in the
following manner:
(A) Stock Election Shares shall be deemed
converted into Cash Election Shares, on a pro-rata
basis for each record holder of Shares with respect to
those Shares, if any, of such record holder that are
Stock Election Shares, so that the number of Stock
Election Shares remaining after such conversion shall
equal as closely as practicable the Stock Election
Number, and all such Shares so converted shall be
converted into the right to receive the Cash
Consideration; and
(B) the remaining Stock Election Shares shall be
converted into the right to receive the Stock Consid-
eration (and cash in lieu of fractional ADSs).
(vii) In the event that neither clause (v) nor
clause (vi) of this Section 4.2(b) is applicable, Non-
Election Shares shall be deemed Cash Election Shares, on a
pro-rata basis for each record holder of Non-Election
Shares, so that the total Cash Election Shares equals as
closely as practicable the Cash Election Number and any
remaining Non-Election Shares shall be deemed Stock Election
Shares, and (x) all Stock Election Shares and all Non-
Election Shares in respect of which Stock Elections are
deemed to have been made shall be converted into the right
to receive the Stock Consideration (and cash in lieu of
fractional interests), and (y) all Cash Election Shares and
all Non-Election Shares in respect of which Cash Elections
are deemed to have been made shall be converted into the
right to receive the Cash Consideration.
(viii) The Exchange Agent, in consultation with
Parent and the Company, shall make all computations to give
effect to this Section 4.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES. No Person holding a Certificate 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 Shares
represented by such Certificate in the Merger until such
Certificate is surrendered in exchange for the Merger
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 he had been a
record holder of such ADSs at the time of such record date.
(d) 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.
(e) FRACTIONAL ADSs. Notwithstanding any other
provision of this Agreement, no fractional ADS will be
issued and any holder of Shares entitled to receive a
fractional ADS but for this Section 4.2(e) 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.
(f) TERMINATION OF EXCHANGE FUND. Any portion of
the Exchange Fund (including the proceeds of any investments
thereof and the ADSs made available to the Exchange Agent)
that remains unclaimed by the shareholders of the Company
for 180 days after the Effective Time shall be paid or, with
respect to the ADSs, delivered to Parent. Any shareholders
of the Company who have not theretofore complied with this
Article IV shall thereafter look only to Parent and
Surviving Corporation for payment of the Merger
Consideration and any cash, dividends and other
distributions in respect thereof payable and/or issuable
pursuant to Section 4.1 and Section 4.2(c) upon due
surrender of their Certificates (or affidavits of loss in
lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Exchange 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.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In
the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount as indemnity against
any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger
Consideration and any cash payable and any unpaid dividends
or other distributions in respect thereof pursuant to
Section 4.2(c) upon due surrender of and deliverable in
respect of the Shares represented by such Certificate
pursuant to this Agreement.
(h) AFFILIATES. Notwithstanding anything herein
to the contrary, Certificates surrendered for exchange by
any "affiliate" (as determined pursuant to Section 6.9) of
the Company shall not be exchanged until Parent has received
a written agreement from such Person as provided in
Section 6.9 hereof.
4.3. DISSENTERS' RIGHTS. No Dissenting
Shareholder shall be entitled to the Merger Consideration or
cash in lieu of fractional ADSs or any dividends or other
distributions pursuant to this Article IV unless and until
the holder thereof shall have failed to perfect or shall
have lost such holder's right to dissent from the Merger
under the BCA, and any Dissenting Stockholder shall be
entitled to receive only the payment provided by Sec-
tion 1302 of the BCA with respect to Shares owned by such
Dissenting Stockholder. If any Person who otherwise would
be deemed a Dissenting Shareholder shall have failed to
properly perfect or shall have effectively lost the right to
dissent with respect to any Shares, such Shares shall
thereupon be treated as Non-Election Shares. The Company
shall give Parent (i) prompt notice of any written demands
for fair value and any other instruments served pursuant to
applicable law received by the Company relating to
shareholders' rights of dissent and (ii) the opportunity to
direct all negotiations and proceedings with respect to
demands for fair value under the BCA. The Company shall
not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for
fair value of Dissenting Shares or offer to settle or settle
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, or Parent changes the number of ADSs or
securities convertible or exchangeable into or exercisable
for Parent Shares, issued and outstanding prior to the
Effective Time as a result of a reclassification, stock
split, share combination, stock dividend (other than a
regular interim or final stock dividend) or distribution,
recapitalization, merger, subdivision, issuer tender or
exchange offer, or other similar transaction, the Stock
Consideration shall be equitably adjusted.
ARTICLE V
Representations and Warranties
5.1. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. Except as set forth in the corresponding sections
or subsections of the disclosure letter 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 (the
words "to the Knowledge of the Company" or to "the Company's
Knowledge" and any words of similar import shall mean that
any one of the persons listed in Exhibit A has actual
knowledge of the matter; PROVIDED, HOWEVER, when such
representations and warranties are given as of the Closing
Date as conditions to Closing, such words shall mean to the
actual knowledge of such persons after inquiry):
(a) ORGANIZATION, GOOD STANDING AND QUALIFICA-
TION. (i) Each of the Company and its Subsidiaries 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 properties or conduct of its business
requires such qualification, except where the failure to be
so qualified or in good standing, when taken together with
all other such failures, is not reasonably likely to have a
Company Material Adverse Effect (as defined below). The
Company has made available to Parent a complete and correct
copy of the Company's and its Subsidiaries' articles of
incorporation and by-laws or other comparable governing
instruments, each as amended to date. The Company's and its
Subsidiaries' articles of incorporation and by-laws so
delivered are in full force and effect. Section 5.1(a) of
the Company Disclosure Letter contains a correct and
complete list of each jurisdiction where the Company and
each of its Subsidiaries is organized and qualified to do
business.
As used in this Agreement, the term
(x) "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 (y) "COMPANY MATERIAL ADVERSE EFFECT" means a material
adverse effect on the financial condition, prospects,
properties, business or results of operations of the Company
and its Subsidiaries taken as a whole (PROVIDED, HOWEVER,
that a material adverse effect on the prospects of the
Company shall be deemed to exist only to the extent a
development or combination of developments have occurred and
are reasonably likely to have a material adverse effect on
the financial condition, properties, business or results of
operations of the Company), excluding developments affecting
the insurance industry generally, or an effect which is
reasonably likely to prevent, materially delay or materially
impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
(ii) The Company conducts its insurance operations
through Equitable Life Insurance Company of Iowa, USG
Annuity & Life Company, Golden American Life Insurance
Company, First Golden American Life Insurance Company of New
York and Equitable American Insurance Company (collectively
with the Company, the "COMPANY INSURANCE COMPANIES"). The
Company Disclosure Letter sets forth the states where the
Company Insurance Companies are domiciled or "commercially
domiciled" for insurance regulatory purposes and such other
states where the transactions contemplated by this Agreement
will require Parent to obtain "change in control" approvals
from state insurance regulators. Each of the Company
Insurance Companies is (i) duly licensed or authorized as an
insurance company in its jurisdiction of incorporation, (ii)
duly licensed or authorized as an insurance company and,
where applicable, a reinsurer in each other jurisdiction
where it is required to be so licensed or authorized, and
(iii) 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 SAP
Statements (as hereinafter defined), except, in any such
case, where the failure to be so licensed or authorized is
not reasonably likely to result in a Company Material
Adverse Effect.
(iii) Except for the Company's Subsidiaries, the
Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or
other business association or entity that directly or
indirectly conducts any activity which is material to the
Company.
(b) CAPITAL STRUCTURE. The authorized capital
stock of the Company consists of 70,000,000 Shares, of which
32,165,436 Shares were outstanding as of the close of
business on July 7, 1997, and 2,500,000 shares of serial
Preferred Stock, no par value (the "PREFERRED SHARES"), of
which no shares were outstanding as of the date hereof. All
of the outstanding Shares have been duly authorized and are
validly issued, fully paid and nonassessable. Section
5.01(b) of the Company Disclosure Letter contains a correct
and complete list of all shares reserved for issuance and,
if applicable, each outstanding option or other right ((each
a "COMPANY OPTION"), including the holder, date of grant,
exercise price and number of Shares subject thereto) as of
the execution hereof to purchase Shares under (i) the
Company's 1982 Stock Incentive Plan, Restated and Amended
1992 Stock Incentive Plan, Non-Employee Directors' Stock
Option Plan and Discretionary Stock Bonus Plan (the "STOCK
PLANS") and (ii) the Company's Dividend Reinvestment and
Stock Purchase Plans and the Company's Stock Purchase Plan.
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 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 Shares authorized, reserved, issued or
outstanding and there are 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 the Company or any of its Subsidiaries. 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 shareholders of the Company on any
matter ("VOTING DEBT").
(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 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
adopted the plan of merger set forth herein and approved
this Agreement and the other transactions contemplated
hereby and (B) has received the opinion of its financial
advisors, J.P. Morgan Securities Inc., to the effect that
the consideration to be received by the holders of the
Shares in the Merger is fair to such holders from a
financial point of view, a copy of which opinion has been
delivered to Parent. It is agreed and understood that such
opinion is for the benefit of the Company's board of
directors and may not be relied on by Parent or Merger Sub.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") and the Securities Act of 1933, as amended (the
"SECURITIES ACT"), (C) to comply with state securities or
"blue-sky" laws, (D) required to be made with the NYSE and
(E) the filing of appropriate documents with, and the
approval of, the respective Commissioners of Insurance of
Iowa, Delaware, New York, Oklahoma, Florida, Michigan and
New Hampshire, and such consents as may be required under
the insurance laws of any state in which the Company, Parent
or any of their respective Subsidiaries is domiciled or does
business, no filings or notices are required to be made by
the Company with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained
by the Company from, any governmental or regulatory
authority, agency, commission, body or other governmental
entity ("GOVERNMENTAL ENTITY"), in connection with the
execution and delivery of this Agreement by the Company and
the consummation by the Company of the Merger and the other
transactions contemplated hereby, 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.
(ii) The execution, delivery and performance of
this Agreement by the Company do not, and the consummation
by the Company of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the articles of
incorporation or 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 obligations or the creation of a lien, pledge,
security interest or other encumbrance on the assets of the
Company or any of its Subsidiaries (with or without notice,
lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other
obligation, whether written or oral ("CONTRACTS" and
individually, a "CONTRACT"), binding upon the Company or any
of its Subsidiaries or any 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 Contract, except, in the case of clause
(B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to have a Company
Material Adverse Effect and except that the Company must
obtain (Y) the affirmative vote of the variable annuity
contract holders and variable life policyholders
(collectively, the "CONTRACT HOLDERS") where contracts and
policies are funded by investments in the Equi-Select Series
Trust ("ES TRUST") or the GCG Trust ("GCG TRUST")
(collectively the "TRUSTS") approving a new investment
advisory agreement between ES Trust and Equitable Investment
Services, Inc. ("EISI"), a new management agreement between
GCG Trust and Directed Services, Inc. ("DSI"), and new sub-
advisory agreements between ES Trust, EISI and the Sub-
Advisers, and new portfolio management agreements between
GCG Trust, DSI and the Portfolio Managers, (all as those
parties are defined in the currently effective prospectuses
of the Trusts), containing the same terms and conditions as
the current Investment Advisory Agreement, Management
Agreement, Sub-Advisory Agreements and Portfolio Management
Agreements (each such term as defined in the currently
effective prospectuses of the Trusts), respectively, except
for dates of execution, effectiveness and termination, and
(Z) the approval of a majority of the Board of Trustees of
ES Trust or the Board of Governors of GCG Trust, as
applicable, in each case who are not "interested persons"
under the Investment Company Act, of a new investment
advisory agreement, management agreement, sub-advisory
agreements, and portfolio management agreements, as
described above (the approvals referred to in clauses (Y)
and (Z) collectively, the "INVESTMENT COMPANY APPROVALS").
(e) COMPANY REPORTS; FINANCIAL STATEMENTS;
STATUTORY STATEMENTS. (i) The Company has delivered to
Parent each registration statement, report, proxy statement
or information statement prepared by it since December 31,
1996 (the "AUDIT DATE"), including (A) the Company's Annual
Report on Form 10-K for the year ended December 31, 1996
(the "1996 10-K") and (B) the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1997, each in the
form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission
(the "SEC") under the Securities Act or the Exchange Act
(collectively, including any such reports filed with the SEC
subsequent to the date hereof, the "COMPANY REPORTS"). As
of their respective dates, 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 light of the circumstances in which they were
made, not misleading. Each of the consolidated balance
sheets included in or incorporated by reference into the
Company Reports (including the related notes and schedules)
fairly presents, or will fairly present, 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 stockholders' equity included in or
incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents,
or will fairly present, 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 accounting principles generally accepted in the
United States ("U.S. GAAP") consistently applied during the
periods involved, except as may be noted therein.
(ii) Each of the Company Insurance Companies has
filed all annual or quarterly statements, together with all
exhibits and schedules thereto, required to be filed with or
submitted to the 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 SAP STATEMENTS").
Since January 1, 1995, the financial statements included in
the Company SAP Statements and prepared on a statutory
basis, including the notes thereto, have been prepared in
all material respects in accordance with 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
the respective statutory financial positions and results of
operations of each of the Company Insurance Companies as of
their respective dates and for the respective periods
presented therein.
(f) ABSENCE OF CERTAIN CHANGES. Except as dis-
closed in the Company Reports filed prior to the date
hereof, since the Audit Date the Company and its Subsidi-
aries have conducted their respective businesses only in,
and have not engaged in any material transaction other than
according to, the ordinary and usual course of such
businesses, and there has not been (i) any change in the
financial condition, properties, business or results of
operations of the Company and its Subsidiaries or any
development or combination of developments of which the
Company has Knowledge that, individually or in the
aggregate, has had or is reasonably likely to have 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 in
accounting principles, practices or methods; (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;
(v) any material addition, or any development involving a
prospective material addition, to the Company's consolidated
reserves for future policy benefits or other policy claims
and benefits; or (vi) any material change in the accounting,
actuarial, investment, reserving, underwriting or claims
administration policies, practices or principles of any
Company Insurance Company. Since the Audit Date, except as
provided for herein or as disclosed in the Company Reports
filed prior to the date hereof, there has not been any
increase in the compensation payable or that could become
payable by the Company or any of its Subsidiaries to
officers or key employees or any amendment of any of the
Compensation and Benefit Plans (as defined in Section
5.1(h)) other than increases or amendments in the ordinary
course.
(g) LITIGATION AND LIABILITIES. Except as dis-
closed in the Company Reports filed prior to the date
hereof, there are no (i) 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 Affiliates or
(ii) obligations or liabilities, whether or not accrued,
contingent or otherwise and whether or not required to be
disclosed, including those relating to matters involving any
Environmental Law (as defined in Section 5.1(k)) and
occupational safety and health matters, 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.
As used in this Agreement, "AFFILIATE" means, with
respect to any Person, any other Person that, directly or
indirectly, controls or is controlled by or is under common
control with such first Person. As used in this definition
of "Affiliate", the term "CONTROL" and any derivatives
thereof mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.
(h) EMPLOYEE BENEFITS. (i) A copy of each bonus,
incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, medical,
health, welfare, fringe benefits or other 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)(i) of the Company Disclosure Letter and
any "change of control" or similar provisions therein are
specifically identified in Section 5.1(h)(i) 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 the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and any regulations and rules
promulgated thereunder, and all required filings and
disclosures with respect to any Compensation and Benefit
Plan have been timely made. More specifically, the Company
has at all times complied with Section 407 of ERISA with
respect to the holding and acquiring of "qualified 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 has received all required
favorable determination letters (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"), and the
Company is not aware of any circumstances likely to result
in revocation of any such favorable determination letter.
There is no 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. 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 the date hereof, would 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) As of the date hereof, no liability (other
than for payment of premiums to the Pension Benefit Guaranty
Corporation ("PBGC")) under Subtitle C or D of Title IV of
ERISA has been or 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 (an
"ERISA AFFILIATE PLAN"). The Company and its Subsidiaries
have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under
Subtitle E to Title IV of ERISA. The Company and its Subsid-
iaries have not contributed, or been obligated to
contribute, to a multiemployer plan under Subtitle E of
Title IV 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. 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 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 Company's financial
statements. 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 all required payments
to the PBGC with respect to each Pension Plan or ERISA
Affiliate Plan have been made on or before their due dates.
Neither the Company nor its Subsidiaries (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 would reasonably be
expected to result, in the imposition of a lien under
section 412(n) of the Code or pursuant to ERISA.
(v) Under each Pension 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 Pension Plan and, to the
Knowledge of the Company, since such date there has been
neither an adverse change in the financial condition of such
Pension Plan or ERISA Affiliate Plan nor any amendment or
other change to such Pension Plan or ERISA Affiliate Plan
that would increase the amount of benefits thereunder which
reasonably could be expected to change such result.
(vi) Neither the Company nor any of its
Subsidiaries have any obligations for retiree health and
life benefits under any Compensation and Benefit Plan. The
Company or its Subsidiaries may amend or terminate any such
plan under the terms of such retiree health and life plan at
any time without incurring any material liability
thereunder. To the Knowledge of the Company, there has been
no communication to employees by the Company or any of its
Subsidiaries that would reasonably be expected to promise or
guarantee such employees retiree health or life insurance or
other retiree death benefits on a permanent basis.
(vii) The consummation of the Merger and the other
transactions contemplated by this 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 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) Neither the Company nor any Subsidiary
maintains any Compensation and Benefit Plan covering
employees working outside the United States.
(ix) With respect to each Compensation and Benefit
Plan, if applicable, the Company has provided, made
available, or will make available upon request, to Parent,
true and complete copies of existing: (i) Compensation and
Benefit Plan documents and amendments thereto; (ii) trust
instruments and insurance contracts; (iii) the two most
recent Forms 5500 filed with the IRS; (iv) the most recent
actuarial report and financial statement; (v) the most
recent summary plan description; (vi) the forms filed with
the PBGC (other than for premium payments); (vii) the most
recent determination letter issued by the IRS; (viii) any
Form 5310 or Form 5330 filed with the IRS; and (ix) the most
recent nondiscrimination tests performed under ERISA and the
Code (including 401(k) and 401(m) tests).
(x) The disallowance of a deduction under section
162(m) of the Code for employee remuneration does not apply
to any amount payable by the Company or any of its
Subsidiaries.
(i) COMPLIANCE WITH LAWS; PERMITS. (i) The
business and operations of the Company Insurance Companies
have been conducted in compliance with all applicable
federal, state and local statutes and regulations regulating
the business and products of insurance and all applicable
orders and directives of insurance regulatory authorities
(including federal authorities with respect to variable
insurance and annuity products) and market conduct
recommendations resulting from market conduct examinations
of insurance regulatory authorities (including federal
authorities with respect to variable insurance and annuity
products) (collectively, "INSURANCE LAWS"), except where the
failure to so conduct such business and operations would
not, individually or in the aggregate, be reasonably likely
to have a Company Material Adverse Effect. Notwithstanding
the generality of the foregoing, except where the failure to
do so would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect,
each Company Insurance Company and its agents have marketed,
sold and issued insurance products in compliance, in all
material respects, with all Insurance Laws applicable to the
business of such Company Insurance Company and in the
respective jurisdictions in which such products have been
sold, including, without limitation, in compliance with (A)
all applicable prohibitions against "redlining", (B) all
applicable requirements relating to the disclosure of the
nature of insurance products as policies of insurance and
(C) all applicable requirements relating to insurance
product projections and illustrations. 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 Insurance Companies 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 would, individually or in the
aggregate, be reasonably likely to have a Company Material
Adverse Effect; (Y) none of the Company Insurance Companies
is subject to any order or decree of any insurance
regulatory authority relating specifically to such Company
Insurance Company (as opposed to insurance companies
generally) which would, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect;
and (Z) the Company Insurance Companies have filed all
reports required to be filed with any insurance regulatory
authority on or before the date hereof as to which the
failure to file such reports would individually or in the
aggregate, be reasonably likely to have a Company Material
Adverse Effect.
(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 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 or the NASD (collectively,
"LAWS"), except where the failure to so conduct such
business would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
Except as set forth in the Company Reports filed prior to
the date hereof and except as would not be reasonably likely
to have a Company Material Adverse Effect, no investigation
or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending or, to the
Knowledge of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the
same. To the Knowledge of the Company, no material 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 material noncompliance with any such
Laws that has not been cured as of the date hereof. 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. 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.
(j) TAKEOVER STATUTES. No "fair price",
"moratorium", "control share acquisition" or other similar
anti-takeover statute or regulation (each a "TAKEOVER
STATUTE") or any applicable anti-takeover provision in the
Company's articles of incorporation and by-laws is, or at
the Effective Time will be, applicable to the Company, the
Shares, the Merger, the Shareholders Agreement or the other
transactions contemplated by the Agreement. The board of
directors of the Company has approved the transactions
contemplated by this Agreement under Section 1109 of the
BCA.
(k) ENVIRONMENTAL MATTERS. To the Knowledge of
the Company, except as disclosed in the Company Reports
filed prior to the date hereof and except for such matters
that would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect:
(i) the Company and its Subsidiaries are in compliance with
all applicable Environmental Laws; (ii) no real property
currently or formerly owned or operated by the Company or
any of its Subsidiaries is contaminated with any Hazardous
Substance; (iii) neither the Company nor any of its
Subsidiaries is subject to liability under any Environmental
Law for off-site disposal or contamination; (iv) neither the
Company nor any of its Subsidiaries has received any claim,
notice, demand or letter indicating that it may be in
violation of, or subject to liability under, any
Environmental Law; (v) neither the Company nor any of its
Subsidiaries is subject to any order, decree, injunction or
agreement with any Governmental Entity or any third party
relating to any Environmental Law; and (vi) there are no
circumstances or conditions involving the Company or any of
its Subsidiaries that could result in any claims,
liabilities, costs or property restrictions pursuant to any
Environmental Law.
As used in this Agreement, "ENVIRONMENTAL LAW"
means any law, regulation, order, decree, common law,
opinion or agency requirement relating to the protection of
the environment or human health and safety and "HAZARDOUS
SUBSTANCE" means any substance in any concentration that is
listed, classified or regulated pursuant to any
Environmental Law including but not limited to petroleum
products, asbestos, lead products and polychlorinated
biphenyls.
(l) TAX MATTERS. As of the date hereof, neither
the Company nor any of its Affiliates has taken or agreed to
take any action, nor does the Company have any Knowledge of
any fact or circumstance, that would prevent the Merger and
the other transactions contemplated by this Agreement from
qualifying as a "reorganization" within the meaning of
section 368(a) of the Code.
(m) TAXES. (i) The Company and each of its
Subsidiaries (A) have prepared in good faith and duly and
timely filed, or there has been duly and timely filed on its
behalf, (in each case taking into account any extension of
time within which to file) all Tax Returns (as defined
below) required to be filed by any of them except to the
extent that any failure to file would not, individually or
in the aggregate, be reasonably likely to have a Company
Material Adverse Effect or, with respect to federal Tax
Returns, a material adverse effect on the financial
condition, prospects (as defined in Section 5.1(a)),
properties or results of operations of any of Equitable Life
Insurance Company of Iowa, USG Annuity & Life Company and
Golden American Life Insurance Company (a "SUBSIDIARY
MATERIAL ADVERSE EFFECT"); (B) have paid (or there has been
paid on its behalf) all Taxes (as defined below) that are
shown as due on such filed Tax Returns or 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 or to
the extent that any such failure to pay such Taxes would
not, individually or in the aggregate, have a Company
Material Adverse Effect or, with respect to federal Taxes, a
Subsidiary Material Adverse Effect; (C) have duly paid in
full or made provisions in accordance with U.S. generally
accepted accounting principles for the payment of (or there
has been paid on its behalf or such provisions have been
made on its behalf for the payment of) all Taxes for all
periods ending through the date hereof, except to the extent
that any failure to pay or make provision for the payment of
such Taxes would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect
or, with respect to federal Taxes, a Subsidiary Material
Adverse Effect; and (D) 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. 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, 1993, 1994 and 1995.
As used in this Agreement, (1) the term "TAX"
(including, with correlative meaning, the terms "TAXES", and
"TAXABLE") includes all federal, state, local and foreign
income, profits, premium, franchise, 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 (2)
the term "TAX RETURN" includes all returns and reports
(including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied
to a Tax authority relating to Taxes.
(ii) All annuity contracts and life insurance
policies issued by each Company Insurance Company meet all
definitional or other requirements for qualification under
the Code section applicable (or intended to be applicable)
to such annuity contracts or life insurance policies,
including, without limitation, the following: (A) each life
insurance policy meets the requirements of sections 101(f),
817(h) or 7702 of the Code, as applicable; (B) no life
insurance contract issued by any Company Insurance Company
is a "modified endowment contract" within the meaning of
section 7702A of the Code unless and to the extent that the
holders of the policies have been notified of their
classification; (C) each annuity contract issued, entered
into or sold by any Company Insurance Company qualifies as
an annuity under federal tax law; (D) each annuity contract
meets the requirements of, and has been administered
consistent with section 817(h) and 72 of the Code including
but not limited to section 72(s) of the Code (except for
those contracts specifically excluded from such requirement
pursuant to section 72(s)(5) of the Code); (E) each annuity
contract intended to qualify under sections 130, 403(a),
403(b) or 408(b) of the Code contains all provisions
required for qualification under such sections of the Code;
(F) each annuity contract marketed as, or in connection
with, plans that are intended to qualify under section 401,
403, 408 or 457 of the Code complies with the requirements
of such section; and (G) none of the Company Insurance
Companies have entered into any agreement or are involved in
any discussions or negotiations and there are no audits,
examinations, investigations or other proceedings with the
IRS with respect to the failure of any life insurance policy
under section 7702 or 817(h) of the Code or the failure of
any annuity contract to meet the requirements of
section 72(s) of the Code. There are no "hold harmless"
indemnification agreements respecting the tax qualification
or treatment of any product or plan sold, issued, entered
into or administered by the Company Insurance Companies, and
there have been no claims asserted by any Person under such
"hold harmless" indemnification agreements so set forth.
(n) 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.
(o) INSURANCE. All material fire and casualty,
general liability, directors' and officers', and sprinkler
and water damage insurance policies maintained by the
Company or any of its Subsidiaries are with reputable
insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of the Company and
its Subsidiaries and their respective properties and assets,
and are in character and amount at least equivalent to that
carried by Persons subject to the same or similar perils or
hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(p) INTELLECTUAL PROPERTY.
(i) Section 5.1(p) of the Disclosure Letter lists all
material copyrights, patents, trademarks, trade names,
service marks, any applications therefor, technology, know-
how, trade secrets, computer software programs or
applications, and tangible or intangible proprietary
information or materials ("INTELLECTUAL PROPERTY") owned or
licensed by the Company and/or each of its Subsidiaries.
The Company and/or each of its Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights
to use, all 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, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect,
and to the Knowledge of the Company all patents, trademarks,
trade names, service marks and copyrights held by the
Company and/or its Subsidiaries are valid and subsisting.
(ii) Except as disclosed in Company Reports filed prior
to the date hereof or as 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 ("THIRD-PARTY
INTELLECTUAL PROPERTY RIGHTS");
(B) no claims with respect to (I) Intellectual
Property owned by the Company or any its Subsidiaries
(the "COMPANY INTELLECTUAL PROPERTY RIGHTS"); (II) any
trade secret material to the Company; or (III) Third-Party
Intellectual Property Rights are currently
pending or, to the Knowledge of the Company, are
threatened by any Person;
(C) the Company does not have Knowledge of any
valid grounds for any bona fide claims (I) to the
effect that the manufacture, sale, licensing or use of
any product as now used, sold or licensed or proposed
for use, sale or license by the Company or any of its
Subsidiaries, infringes on any copyright, patent,
trademark, trade name, service 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;
(III) challenging the ownership, validity or
effectiveness of any of the Company Intellectual
Property Rights or other trade secret material to the
Company; or (IV) challenging the license or legally
enforceable right to use of the Third-Party
Intellectual Rights by the Company or any of its
Subsidiaries; and
(D) to the Knowledge of the Company, there is no
unauthorized use, infringement or misappropriation 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.
(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, except that the Company has employed J.P. Morgan
Securities Inc. as its financial advisor, which arrangements
have been disclosed to Parent prior to the date hereof.
(r) NO REGULATORY DISQUALIFICATIONS. To the
Knowledge of the Company, no event has occurred or condition
exists or, to the extent it is within the reasonable control
of the Company, will occur or exist with respect to the
Company that, in connection with obtaining any regulatory
Consents required for the Merger, would cause the Company to
fail to satisfy on its face any applicable statute or
written regulation of any applicable insurance regulatory
authority, which is reasonably likely to have a Company
Material Adverse Effect.
(s) ASSETS. (i) Except as would not be
reasonably likely to have a Company Material Adverse Effect
and except for Company Permitted Liens and Encumbrances (as
defined below), the Company and/or its Subsidiaries have
good and valid title to all personal property (including,
without limitation, Company Investment Assets (as defined
below)) that was carried as an asset on the Company's
financial statements in the 1996 10-K or acquired in the
ordinary course of business since December 31, 1996, other
than with respect to those assets which have been disposed
of in the ordinary course of business or redeemed in
accordance with their terms since such date or with respect
to statutory deposits which are subject to certain
restrictions on transfer. As used in this Agreement,
"COMPANY PERMITTED LIENS AND ENCUMBRANCES" means, as to any
assets or property, any (i) liens or encumbrances securing
taxes, assessments or other governmental charges which are
not yet due and payable or which are being diligently
contested in good faith by appropriate proceedings if
adequate reserves have been established in accordance with
U.S. GAAP or the statutory accounting principles and
practices prescribed or permitted by the insurance
department of the state of domicile of a Company Insurance
Company as appropriate, or, in the case of mortgage loans,
funds are held in escrow sufficient to discharge such liens
or the borrower has posted a bond in the amount of such
lien, (ii) liens or encumbrances imposed by law or incurred
in the ordinary course of business with respect to the
claims of materialmen, mechanics, carriers, warehousemen,
landlords and other Persons which (A) are not yet due and
payable and which do not materially detract from the value
of such property or assets or materially impair the use
thereof by the Company and its Subsidiaries in the operation
of their respective businesses, or (B) are being diligently
contested in good faith and by proper proceedings if
adequate reserves have been established with respect thereto
in accordance with U.S. GAAP or the statutory accounting
principles and practices prescribed or permitted by the
insurance department of the state of domicile or "commercial
domicile" of a Company Insurance Company, as appropriate,
and (iii) liens and encumbrances that would not,
individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect. As used in this
Agreement "COMPANY INVESTMENT ASSETS" means bonds, stocks,
mortgage loans or other investments that are carried on the
books and records of the Company and the Company Insurance
Companies.
(ii) The Company SAP Statements for each Company
Insurance Company for the year ended December 31, 1996 set
forth a list, which list is accurate and complete in all
material respects, of all Company Investment Assets owned by
such Company Insurance Company as of December 31, 1996,
together with the cost basis book or amortized value, as the
case may be, of such Company Investment Assets as of
December 31, 1996.
(t) COMPUTER TECHNOLOGY. The Company owns, or
possesses valid license rights to, all computer software
programs and hardware that are material to the conduct of
the business of the Company and its Subsidiaries taken as a
whole. There are no infringement suits, actions or
proceedings pending or, to the Knowledge of the Company,
threatened against the Company or any Company Insurance
Company with respect to any software or hardware owned or
licensed by the Company or any of its Subsidiaries, which,
if determined adversely, would, individually or in the
aggregate, be reasonably likely to have a Company Material
Adverse Effect. The Company has adequate software and
hardware to permit it to operate its business as currently
conducted by it. The execution, delivery and performance of
this Agreement by the Company do not, and the consummation
by the Company of the Merger and the other transactions
contemplated hereby will not, constitute or result in the
termination, the option to terminate, breach or violation of
the terms of any purchase or license of software or
hardware.
(u) INSURANCE BUSINESS. (i) Except as otherwise
would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect, all
policies, binders, slips, certificates, annuity contracts
and participation agreements and other agreements of
insurance, 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 Insurance
Companies (the "COMPANY 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. Section 5.1(u) of the Disclosure Letter
contains (A) a true and complete list of all forms of
Insurance Contracts that (1) are currently used by the
Company to sell insurance products or (2) have been used by
the Company to sell insurance products since January 1, 1985
for business which is still in force and represents greater
than $20,000,000 of insurance in force and (B) relevant
financial information for certain years for the Insurance
Contracts. Premium rates established by the Company
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, would not,
individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect.
(ii) Prior to the date hereof, the Company has
delivered to Parent a true and correct summary of each
material Contract between any Company Insurance Company and
its respective reinsurance intermediaries. No agent,
manager, reinsurance intermediary, broker or distributor of
any Company Insurance Company has binding authority on
behalf of any Company Insurance Company. No insurance
agent, manager, reinsurance intermediary, broker or
distributor, or group of related agents, reinsurance
intermediaries, brokers or distributors (except employees of
any Company Insurance Company), accounted for more than ten
percent of the gross premium income or annuity deposits or
charges of any of the Company Insurance Companies for the
year ended December 31, 1996.
(iii) Prior to the date hereof, the Company has
delivered to Parent a true and complete copy of any
actuarial reports prepared by actuaries, independent or
otherwise, with respect to any Company Insurance Company
since December 31, 1994, 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
Insurance Company to its independent actuaries in connection
with the preparation of the Company Actuarial Analyses were
accurate in all material respects. Furthermore, each
Company Actuarial Analysis was based upon an accurate
inventory of policies in force for the Company and the
Company Insurance Companies, as the case may be, at the
relevant time of preparation, was prepared using appropriate
modeling procedures accurately applied and in conformity
with generally accepted actuarial standards consistently
applied, and the projections contained therein were properly
prepared in accordance with the assumptions stated therein.
(iv) 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 Insurance Companies is likely to be modified,
qualified, lowered or placed under such surveillance or
review for any reason, including as a result of the
transactions contemplated hereby.
(v) Prior to the date hereof, the Company has
delivered to Parent true and complete summaries of all
analyses, reports and other data prepared by any Company
Insurance Company or submitted by any Company Insurance
Company to any insurance regulatory authority relating to
risk-based capital calculations or IRIS ratios as of
December 31, 1996.
(vi) Prior to the date hereof, the Company has
delivered to Parent a true and correct list on an aggregate
basis of the maximum underlying retentions (net of all
reinsurance maintained) on all insurance and reinsurance
policies written or entered into by any Company Insurance
Company since December 31, 1994.
(v) LIABILITIES AND RESERVES. (i) The reserves
carried on the Company SAP Statements of each Company
Insurance Company for the year ended December 31, 1996 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 state of domicile of such Company
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. The
Company has delivered to Parent true, correct and complete
copies of the actuarial valuation reports delivered to the
insurance department of the domiciliary state of each
Company Insurance Company for the years ended December 31,
1996 and 1995.
(ii) Except for regular periodic assessments in
the ordinary course of business 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
Insurance Company which is peculiar or unique to such
Company Insurance Company by any state insurance guaranty
associations in connection with such association's fund
relating to insolvent insurers which if determined
adversely, would, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
(w) SEPARATE ACCOUNTS; INVESTMENT ADVISOR. (i)
Each separate account maintained by a Company Insurance
Company is listed in Section 5.01(w) of the Company
Disclosure Letter (collectively, the "COMPANY SEPARATE
ACCOUNTS"). Except as otherwise would not, individually or
in the aggregate, be reasonably likely to have a Company
Material Adverse Effect, each Company Separate Account 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 Investment Company Act of 1940 (the
"1940 ACT") or is duly registered as an investment company
under the 1940 Act. Except as otherwise would not,
individually or in the aggregate, 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 would not, individually or
in the aggregate, be reasonably likely to have a Company
Material Adverse Effect, the Company Insurance Contracts
under which the Company Separate Accounts assets are held
are duly and validly issued 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 Insurance Company to receive contributions under
such policies.
(ii) The assets of each Company Separate Account
are adequately diversified within the meaning of
section 817(h) of the Code.
(iii) Each of the Company 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.
(iv) Except as set forth in the Company Reports,
neither the Company nor any of its Subsidiaries conducts
activities of an "investment advisor" as such term is
defined in Section 2(a)(20) of the 1940 Act, whether or not
registered under the Investment Advisers Act of 1940, as
amended. Neither the Company nor any of its Subsidiaries is
an "investment company" as defined under the 1940 Act, and
neither the Company nor any of its Subsidiaries sponsors any
Person that is such an investment company.
(x) RIGHTS AGREEMENT. The Company has amended
the Rights Agreement to provide that the Merger will not
entitle any Person to acquire securities of any Person at a
discount, regardless of whether there is an Acquiring Person
and the Rights Agreement will terminate immediately prior to
the Effective Time.
(y) INVESTIGATION BY THE COMPANY. In entering
into this Agreement, the Company has relied solely upon its
own investigation and analysis and the representations and
warranties contained herein, and the Company
(i) acknowledges that none of Parent, its
Subsidiaries or any of their respective directors, officers,
employees, Affiliates, agents or representatives makes any
representation or warranty, either express or implied, as to
the accuracy or completeness of any of the information
provided or made available to the Company or its agents or
representatives prior to the execution of this Agreement
except to the extent Parent, its Subsidiaries or any of
their respective directors, officers, employees, Affiliates,
agents or representatives commits fraud with respect to the
information that any of them provides or makes available to
the Company; and
(ii) agrees, to the fullest extent permitted by
law, that none of Parent, its Subsidiaries or any of their
respective directors, officers, employees, Affiliates,
agents or representatives shall have any liability or
responsibility whatsoever to the Company on any basis
(including, without limitation, in contract or tort, under
federal or state securities laws or otherwise) based upon
any information provided or made available, or statements
made, to the Company prior to the execution of this
Agreement, except that the foregoing shall not apply (1) to
the extent Parent makes the specific representations and
warranties set forth in Section 5.2 of this Agreement, but
always subject to the limitations and restrictions contained
in this Agreement, or (2) to the extent Parent, its
Subsidiaries or any of their respective directors, officers,
employees, Affiliates, agents or representatives commits
fraud with respect to the information that any of them
provides or makes available to the Company.
5.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB. Parent and Merger Sub each hereby represent and
warrant to the Company, that (the words "to the Knowledge of
Parent" or "to Parent's Knowledge" and any words of similar
import shall mean that any one of the persons listed in
Exhibit B has actually knowledge of the matter, PROVIDED,
HOWEVER, when such representations and warranties are given
as of the Closing Date as conditions to Closing, such words
shall mean to the best knowledge of such persons after
inquiry):
(a) CAPITALIZATION OF MERGER SUB. As of the date
hereof, the authorized capital stock of Merger Sub consists
of 1,000 shares of Common Stock, par value $1.00 per share,
of which one share is validly issued and outstanding. All
of the issued and outstanding capital stock of Merger Sub
is, and at the Effective Time will be, directly 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, the Merger and the other
transactions contemplated by this Agreement.
(b) ORGANIZATION, GOOD STANDING AND QUALIFICA-
TION. Each of Parent and its Subsidiaries 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
properties or conduct of its business requires such
qualification, except where the failure to be so qualified
or in such good standing, when taken together with all other
such failures, is not reasonably likely to have a Parent
Material Adverse Effect (as defined below). Parent has made
available to the Company a complete and correct copy of the
governing instruments of Parent and Merger Sub, each as
amended to date. Such governing instruments so delivered
are in full force and effect.
As used in this Agreement, the term "PARENT
MATERIAL ADVERSE EFFECT" means a material adverse effect on
the financial condition, prospects, properties, business or
results of operations of Parent and its Subsidiaries taken
as a whole (provided, however, that a material adverse
effect on the prospects of Parent shall be deemed to exist
only to the extent a development or combination of
developments have occurred and are reasonably likely to have
a material adverse effect on the financial condition,
properties, business or results of operations of Parent),
excluding developments affecting the banking, investment
banking and insurance industries generally or an effect
which is reasonably likely to prevent, materially delay or
materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(c) CAPITAL STRUCTURE. The authorized capital
stock of Parent consists of 1,500,000,000 Parent Shares, of
which 822,206,760 Parent Shares were outstanding as of the
close of business on May 31, 1997, and 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 8,780,450 A shares, no B Shares and no Cumulative
Preferred Shares were outstanding as of the close of
business on May 31, 1997. The A Shares, B Shares and
Cumulative Preference Shares are sometimes collectively
referred to as the "PREFERENCE SHARES". All of the
outstanding Parent Shares and A Shares have been duly
authorized and are validly issued, fully paid and nonassess-
able. As of June 18, 1997, 7,475,000 ADSs had been offered
and sold in the United States by or on behalf of Parent.
Parent has no options or warrants to acquire Parent Shares
or Preference Shares, except that, as of December 31, 1996,
there were options for 1,505,355 Parent Shares pursuant to
the Parent's Stock Option Plan and at April 30, 1997, there
were warrants to acquire 61,361,539 Bearer Receipts. Prior
to the Effective Date, Parent will have taken all necessary
action to permit it to provide, and at all times from the
date hereof through consummation of the Merger or
termination of this Agreement will have available
a number of Parent Shares which will be sufficient to permit
consummation of the Merger. Each such Parent Share will be
validly issued, fully paid and nonassessable, and will not
be subject to any preemptive rights. The ADSs which are the
Stock Consideration, the Bearer Receipts represented by such
ADSs, and the Parent 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 state blue sky or securities laws.
Except as set forth above, there are no Parent Shares
authorized, reserved, issued or outstanding and there are 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 Parent.
(d) CORPORATE AUTHORITY. No vote of holders of
capital stock of Parent is necessary to approve this
Agreement and the Merger and the other transactions
contemplated hereby. Each of 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 Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its
terms, subject to the Bankruptcy and Equity Exception.
(e) GOVERNMENTAL FILINGS; NO VIOLATIONS. Other
than the filings and/or notices (A) pursuant to Section 1.3,
(B) under the HSR Act, the Securities Act and the Exchange
Act, (C) to comply with state securities or "blue sky" laws,
(D) required to be made with the NYSE and (E) the filing of
appropriate documents with, and the approval of, the
respective Commissioners of Insurance of Iowa, Oklahoma,
Delaware, New York, Florida, Michigan and New Hampshire, and
such consents as may be required under the insurance laws of
any state or country in which the Company, Parent or any of
their respective subsidiaries is domiciled or does business,
no filings or notices are required to be made by Parent or
Merger Sub with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained
by Parent or Merger Sub from, any Governmental Entity, in
connection with the execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the Merger and the other transactions
contemplated hereby, except those that the failure to make
or obtain are not, individually or in the aggregate, reason-
ably likely to have a Parent Material Adverse Effect.
(ii) The execution, delivery and performance of
this Agreement by Parent and Merger Sub do not, and the
consummation by Parent and Merger Sub of the Merger and the
other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default
under, the Articles of Association of Parent, the articles
of incorporation or by-laws of Merger Sub or the comparable
governing instruments of any of Parent's Subsidiaries, (B) a
breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge,
security interest or other encumbrance on the assets of
Parent or any of its Subsidiaries (with or without notice,
lapse of time or both) pursuant to, any Contract binding
upon Parent or any of its Subsidiaries or any Law or
governmental or non-governmental permit or license to which
Parent or any of its Subsidiaries is subject or (C) any
change in the rights or obligations of any party under any
Contract, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation
or change that, individually or in the aggregate, is not
reasonably likely to have a Parent Material Adverse Effect.
(f) PARENT REPORTS; FINANCIAL STATEMENTS;
STATUTORY STATEMENTS. (i) Parent has delivered to the
Company its registration statement on Form F-1 (including
exhibits, annexes and any amendments thereto) in the form
filed with the SEC (which form together with any reports
filed with the SEC subsequent to the date hereof, the
"PARENT REPORTS"). As of their respective dates, the Parent
Reports did not, and any Parent Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by
reference into the Parent Reports (including the related
notes and schedules) fairly presents, or will fairly
present, the consolidated financial position of Parent and
its Subsidiaries as of its date and each of the consolidated
profit and loss accounts and consolidated statements of cash
flows in or incorporated by reference into the Parent
Reports (including any related notes and schedules) fairly
presents, or will fairly present, the results of operations,
changes in stockholders' equity and cash flows, as the case
may be, of Parent and its Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements,
to notes and normal year-end audit adjustments that 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, in the
case of its registration statement on Form F-1, with a
reconciliation of net profit, stockholders' equity and net
profit per share as of December 31, 1996 and 1995 to U.S.
GAAP.
(ii) Each of the Parent Insurance Subsidiaries (as
defined in (i) below) domiciled in the United States has
filed all annual and quarterly statements, together with all
exhibits and schedules thereto, required to be filed with or
submitted to the appropriate regulatory authorities of the
jurisdiction in which it is domiciled or "commercially
domiciled" on forms prescribed or permitted by such
authority (collectively, the "PARENT SAP STATEMENTS").
Since January 1, 1995, financial statements included in the
Parent SAP Statements and prepared on a statutory basis,
including the notes thereto, have been prepared in all
material respects in accordance with 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
the respective statutory financial positions and results of
operations of each of the Parent Insurance Subsidiaries as
of their respective dates and for the respective periods
presented therein.
(g) ABSENCE OF CERTAIN CHANGES. Except as
disclosed in the Parent Reports filed prior to the date
hereof, since December 31, 1996 (the "PARENT AUDIT DATE")
Parent and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any material
transaction other than according to, the ordinary and usual
course of such businesses and there has not been (i) any
change in the financial condition, prospects, properties,
business or results of operations of Parent and its
Subsidiaries or any development or combination of
developments of which Parent has Knowledge that,
individually or in the aggregate, has had or is reasonably
likely to have a Parent 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 Parent or any of its Subsidiaries, whether or not
covered by insurance, which is reasonably likely to have a
Parent Material Adverse Effect; (iii) any change by Parent
in accounting principles, practices or methods; or (iv) any
declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of
Parent, except for dividends or other distributions on its
capital stock publicly announced prior to the date hereof.
Since the Parent Audit Date, except as provided for herein
or as disclosed in the Parent Reports filed prior to the
date hereof, there has not been any increase in the
compensation payable or that could become payable by Parent
or any of its Subsidiaries to officers or key employees or
any amendment of any of the Parent Compensation and Benefit
Plans other than increases or amendments in the ordinary
course.
(h) LITIGATION AND LIABILITIES. Except as dis-
closed in the Parent Reports filed prior to the date hereof,
there are no (i) civil, criminal or administrative actions,
suits, claims, hearings, investigations or proceedings
pending or, to the Knowledge of Parent, threatened against
Parent or any of its Affiliates or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, including those
relating to environmental and occupational safety and health
matters, or any other facts or circumstances of which Parent
has Knowledge that could result in any claims against, or
obligations or liabilities of, Parent or any of its
Affiliates, except for those that are not, individually or
in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(i) COMPLIANCE WITH LAWS. (i) The insurance
business and operations of Parent conducted through its
Subsidiaries (the "Parent Insurance Subsidiaries") have been
conducted in compliance with all applicable Insurance Laws,
except where the failure to so conduct such business and
operations would not individually or in the aggregate have a
Parent Material Adverse Effect. Notwithstanding the
generality of the foregoing, except where the failure to do
so would not, individually or in the aggregate, be
reasonably likely to have a Parent Material Adverse Effect,
each Parent Insurance Subsidiary and its agents have
marketed, sold and issued insurance products in compliance,
in all material respects, with all Insurance Laws applicable
to the business of such Parent Insurance Subsidiary and in
the respective jurisdictions in which such products have
been sold, including, without limitation, in compliance with
(A) all applicable prohibitions against "redlining", (B) all
applicable requirements relating to the disclosure of the
nature of insurance products as policies of insurance and
(C) all applicable requirements relating to insurance
product projections and illustrations. In addition, (X)
there is no pending or, to the Knowledge of Parent,
threatened charge by any insurance regulatory authority that
any of the Parent Insurance Subsidiaries has violated, nor
any pending or, to the Knowledge of Parent, threatened
investigation by any insurance regulatory authority with
respect to possible violations of, any applicable Insurance
Laws where such violations would, individually or in the
aggregate, be reasonably likely to have a Parent Material
Adverse Effect; (Y) none of the Parent Insurance
Subsidiaries is subject to any order or decree of any
insurance regulatory authority relating specifically to such
Parent Insurance Subsidiary (as opposed to insurance
companies generally) which would, individually or in the
aggregate, be reasonably likely to have a Parent Material
Adverse Effect; and (Z) the Parent Insurance Subsidiaries
have filed all reports required to be filed with any
insurance regulatory authority on or before the date hereof
as to which the failure to file such reports would,
individually or in the aggregate, be reasonably likely to
have a Parent Material Adverse Effect.
(ii) In addition to Insurance Laws, except as set
forth in the Parent Reports filed prior to the date hereof,
the businesses of each of Parent and its Subsidiaries have
not been, and are not being, conducted in violation of any
Laws. Except as set forth in the Parent Reports filed prior
to the date hereof and except as would not be reasonably
likely to have a Parent Material Adverse Effect, no
investigation or review by any Governmental Entity with
respect to Parent or any of its Subsidiaries is pending or,
to the Knowledge of Parent, threatened, nor has any
Governmental Entity indicated an intention to conduct the
same. To the Knowledge of Parent, no material change is
required in Parent's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Laws,
and Parent has not received any notice or communication of
any material noncompliance with any such Laws that has not
been cured as of the date hereof. Parent and its
Subsidiaries each has all permits, licenses, trademarks,
patents, trade names, copyrights, service marks, 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 Parent Material Adverse Effect.
(j) TAX MATTERS. As of the date hereof, neither
Parent nor any of its Affiliates has taken or agreed to take
any action, nor does Parent have any Knowledge of any fact
or circumstance, that would prevent the Merger and the other
transactions contemplated by this Agreement from qualifying
as a "reorganization" within the meaning of section 368(a)
of the Code.
(k) BROKERS AND FINDERS. Neither Parent nor any
of its officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the
Merger or the other transactions contemplated by this Agree-
ment, except that Parent has employed Salomon Brothers Inc
as its financial advisor, the arrangements with which have
been disclosed in writing to the Company prior to the date
hereof.
(l) AVAILABLE FUNDS. Parent has or will have
available to it all funds necessary to satisfy all of its
obligations hereunder and in connection with the Merger and
the other transactions contemplated by this Agreement.
(m) TAXES AND TAX RETURNS. (i) each of Parent
and the Parent Subsidiaries has (i) prepared in good faith
and duly and timely filed (or there has been timely filed on
its behalf) with appropriate governmental authorities all
Tax Returns required to be filed by it on or prior to the
date thereof, except to the extent that any failure to file
would not, individually or in the aggregate, have a Parent
Material Adverse Effect, and (ii) duly paid in full or made
provisions in accordance with Dutch generally accepted
accounting principles (or there has been paid or provision
has been made on its behalf) for the payment of all material
Taxes for all periods ending through the date hereof, except
to the extent that any failure to pay or make provision for
the payment of such Taxes would not, individually or in the
aggregate, have a Material Adverse Effect; and
(ii) there is no proceeding presently pending with
regard to any Taxes or Tax Returns of Parent or the Parent
Subsidiaries wherein an adverse determination or ruling
would be reasonably likely to occur which in the aggregate
would have a Parent Material Adverse Effect.
(n) COLLECTIVE BARGAINING. Neither Parent nor
any of its Subsidiaries is party to a collective bargaining
agreement with respect to persons employed in the United
States.
(o) PARENT OWNERSHIP OF COMPANY COMMON STOCK. As
of the date hereof, Parent does not "own" (as defined in
Section 1109 of the BCA), and does not "beneficially own"
(as defined in the Company Rights Agreement) 10% or more of
the outstanding Company Common Stock.
(p) INTERIM OPERATIONS OF MERGER SUB. Merger Sub
was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as
contemplated hereby.
(q) INVESTIGATION BY PARENT. In entering into
this Agreement, Parent has relied solely upon its own
investigation and analysis and the representations and
warranties contained herein, and Parent:
(i) acknowledges that none of the Company, its
Subsidiaries or any of their respective directors, officers,
employees, Affiliates, agents or representatives makes any
representation or warranty, either express or implied, as to
the accuracy or completeness of any of the information
provided or made available to Parent or their agents or
representatives prior to the execution of this Agreement
except to the extent the Company, its Subsidiaries or any of
their respective directors, officers, employees, Affiliates,
agents or representatives commits fraud with respect to the
information that any of them provides or makes available to
Parent; and
(ii) agrees, to the fullest extent permitted by
law, that none of the Company, its Subsidiaries or any of
their respective directors, officers, employees, Affiliates,
agents or representatives shall have any liability or
responsibility whatsoever to Parent on any basis (including,
without limitation, in contract or tort, under federal or
state securities laws or otherwise) based upon any
information provided or made available, or statements made,
to Parent prior to the execution of this Agreement, except
that the foregoing shall not apply (1) to the extent the
Company makes the specific representations and warranties
set forth in Section 5.1 of this Agreement and in the
Company Disclosure Letter, but always subject to the
limitations and restrictions contained in this Agreement, or
(2) to the extent the Company, its Subsidiaries or any of
their respective directors, officers, employees, Affiliates,
agents or representatives commits fraud with respect to the
information that any of them provides or makes available to
Parent.
(r) NO REGULATORY DISQUALIFICATIONS. To the
Knowledge of Parent, no event has occurred or condition
exists or, to the extent it is within the reasonable control
of Parent, will occur or exist with respect to Parent that,
in connection with obtaining any regulatory consents
required for the Merger, would cause Parent to fail to
satisfy on its face any applicable statute or written
regulation of any applicable insurance regulatory authority,
which is, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect.
ARTICLE VI
Covenants
6.1. COMPANY INTERIM OPERATIONS. Except as set
forth in the Company Disclosure Letter, the Company
covenants and agrees as to itself and each of its
Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise approve in
writing and except as otherwise expressly contemplated by
this Agreement):
(a) its business shall be conducted in the
ordinary and usual course, consistent with past practice,
and, to the extent consistent therewith, it shall use its
best efforts to preserve its business organization intact
and maintain its existing relations and goodwill with
customers, suppliers, distributors, agents, regulators,
creditors, lessors, employees and business associates;
(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 articles 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 paid by the Company not in excess of $0.165
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) it shall not (i) issue, sell, pledge, dispose
of or encumber any shares of, or securities convertible into
or exchangeable or exercisable for, or options, warrants,
rights or agreements of any kind to acquire, any shares of
its capital stock of any class or any Voting Debt (other
than Shares issuable pursuant to options outstanding on the
date hereof under the Stock Plan or Shares issued pursuant
to the Company's Dividend Reinvestment and Stock Purchase
Plan); (ii) other than in the ordinary and usual course of
business, transfer, lease, license, guarantee, sell, mort-
gage, 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 indebtedness with a maturity of
one year or more; or (iv) make or authorize or commit for
any capital expenditures other than as contemplated by the
Company's current capital budget or, other than in the
ordinary course of business consistent with the Company's
present investment policies, by any means, make any -
acquisition of, or investment in, assets or stock of any
other Person or entity;
(d) it shall not 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 or
increase the salary, wage, bonus or other compensation of
any employees except increases occurring in the ordinary and
usual course of business (which shall include normal
periodic performance reviews and related compensation and
benefit increases) and except for bonuses to certain
employees and executive officers of the Company not to
exceed $100,000 in the aggregate;
(e) except as provided in Section 6.1(e) of the
Disclosure Schedule, it shall not settle or compromise any
material claims or litigation or, except in the ordinary and
usual course of business 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 canceled or terminated except in the
ordinary and usual course of business;
(g) it shall not take any action or omit to take
any action that would cause any representation or warranty
of the Company herein to become untrue in any material
respect; and
(h) it shall not authorize any of, or commit or
agree to take into any of, the foregoing actions.
6.2. PARENT INTERIM OPERATIONS. Except as set
forth on the Parent Disclosure Schedule, Parent covenants
and agrees as to itself and each of its Subsidiaries that,
after the date hereof and prior to the Effective Time
(unless the Company shall otherwise approve in writing and
except as otherwise expressly contemplated by this
Agreement):
(a) it shall not amend its governing instruments
in any manner that would have any adverse impact on the
transactions contemplated by this Agreement or which would
amend or modify the terms or provisions of the capital stock
of Parent;
(b) effect any reclassification, stock split,
stock combination, or stock dividend with Parent Shares
(other than a stock split, stock dividend or similar
transaction to which Section 4.4 is applicable and other
than regular interim and final stock dividends);
(c) merge or consolidate with any other Person if
such merger or consolidation could reasonably be expected to
have material adverse impact on the ability of Parent to
consummate the transactions contemplated by this Agreement;
(d) it shall not declare, set aside or pay any
dividend payable in cash, stock or property in respect of
any capital stock other than (i) dividends from its direct
or indirect wholly-owned Subsidiaries, (ii) regular interim
and final cash and stock dividends paid by Parent and (iii)
dividends paid on Parent Preferred Stock in accordance with
its terms;
(e) it shall not issue, sell, pledge, dispose of
or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants,
rights or 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 Parent Stock Plans) if any such action could,
individually or in the aggregate, reasonably be expected to
(i) delay materially the date of mailing of the Proxy
Statement such that the Closing would be delayed past March
31, 1998, (ii) if it were to occur after such date of
mailing, require an amendment of the Proxy Statement such
that the Closing would be delayed past March 31, 1998 or
(iii) have a material adverse effect on the ability of
Parent to consummate the transactions contemplated by this
Agreement;
(f) it shall not acquire any business or any
corporation, partnership, joint venture, association or
other business organization or division thereof, in each
case if any such action could, individually or in the
aggregate, reasonably be expected to (i) delay materially
the date of mailing of the Proxy Statement such that the
Closing would be delayed past March 31, 1998, (ii) if it
were to occur after such date of mailing, require any
amendment of the Proxy Statement such that the Closing would
be delayed past March 31, 1998 or (iii) have a material
adverse effect on the ability of Parent to consummate the
transactions contemplated by this Agreement; and
(g) it shall not authorize any of, or commit or
agree to take any of, the foregoing actions.
6.3. ACQUISITION PROPOSALS. The Company agrees
that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or any of 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 Subsidi-
aries)("REPRESENTATIVES") not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate 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 any significant portion 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 any of its Subsidiaries
shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' Representatives 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 Rule 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 of the Company receives
from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to
those contained in the Confidentiality Agreement dated
May 30, 1997 (referenced in Section 9.7); (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
shareholders 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, and after receipt of a
written opinion from, outside legal counsel that such action
is necessary in order for its directors to comply with their
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 financial
capacity and any other relevant characteristics of the
Person making the proposal and would, if consummated, result
in a transaction more favorable to the Company's
shareholders 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 of the
foregoing. The Company also agrees that it will promptly
request each Person that has heretofore executed a
confidentiality agreement in connection with its considera-
tion of acquiring it or any of its Subsidiaries to return or
destroy all confidential information heretofore furnished to
such Person by or on behalf of the Company or any of its
Subsidiaries. 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 6.3 and in the
Confidentiality Agreement dated June 30, 1997. The Company
agrees that it will notify Parent 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 officers, directors or 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
negotiations or discussions.
6.4. INFORMATION SUPPLIED. The Company and Parent
each agrees, as to itself and its Subsidiaries, that none of
the information supplied or to be supplied by it or its
Subsidiaries for inclusion or incorporation by reference in
(i) the Registration Statement on Form F-4 to be filed with
the SEC by Parent 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 shareholders and at the times of the meetings of
shareholders 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.
6.5. SHAREHOLDERS MEETING. The Company will take,
in accordance with applicable law and its articles of
incorporation and by-laws, all action necessary to convene a
meeting of holders of Shares (the "SHAREHOLDERS MEETING") as
promptly as practicable after the F-4 Registration Statement
is declared effective to consider and vote upon the approval
of this Agreement and the Merger. Subject to fiduciary
obligations under applicable law, the Company's board of
directors shall recommend such approval and shall take all
lawful action to solicit such approval.
6.6. FILINGS; OTHER ACTIONS; NOTIFICATION. (a)
Parent and the Company shall promptly prepare and file with
the SEC the Prospectus/Proxy Statement, and Parent shall
prepare and file with the SEC the F-4 Registration Statement
as promptly as practicable. Parent and the Company each
shall use its best 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
shareholders of the Company. Parent shall also use its best
efforts to obtain prior to the effective date of the F-4
Registration Statement all necessary state securities law or
"blue sky" permits and approvals required in connection with
the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses
incident thereto.
(b) The Company and Parent each shall use its
best efforts to cause to be delivered to the other party and
its directors letters of its independent auditors, dated
(i) the date on which the F-4 Registration Statement shall
become effective and (ii) the Closing Date, and addressed to
the other party and its directors, in form and substance
customary for "comfort" letters delivered by independent
public accountants in connection with registration
statements similar to the F-4 Registration Statement.
(c) The Company shall use its best efforts to
cause the Trusts to promptly prepare and file with the SEC a
Proxy Statement with respect to the votes of the Contract
Holders referenced in Section 5.1(d)(ii)(Y) hereof and will
use its best efforts to cause to be taken in accordance with
applicable law and the contracts and agreements governing
voting by Contract Holders, all action necessary to convene
meetings of Contract Holders as promptly as practicable to
consider and vote upon the approval of the matters set forth
in Section 5.1(d) hereof. The Company shall use its best
efforts to obtain (i) the recommendation of such approvals
by the board of trustees or board of governors, as the case
may be, with respect to each such vote and shall take or
cause to be taken all lawful action to solicit such approval
and (ii) the approvals referenced in Section 5.1(d)(ii)(Z).
(d) The Company and Parent shall cooperate with
each other and use (and shall cause their respective
Subsidiaries to use) their respective best efforts to take
or cause to be taken all actions, and do or cause to be done
all things, necessary, proper or advisable on its part under
this Agreement and applicable Laws to consummate and make
effective the Merger and the other transactions contemplated
by this Agreement and as soon as practicable, including
preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and
other filings and to obtain as promptly as practicable all
consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from
any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that
nothing in this Section 6.6 shall require, or be construed
to require, Parent or the Company to proffer to, or agree
to, sell or hold separate and agree to sell, before or after
the Effective Time, any assets, businesses, or interests 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, by the Company of any of its assets or
businesses) or to agree to any material changes or
restriction in the operations of any such assets or
businesses. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have
the right to review in advance, and to the extent
practicable each will consult the other with respect to all
the information relating to Parent or the Company, as the
case may be, and any of their respective Subsidiaries, that
appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity
in connection with the Merger and the other transactions
contemplated by this Agreement. In exercising the foregoing
right, each of the Company and Parent shall act reasonably
and as promptly as practicable.
(e) The Company and Parent each shall, upon
request by the other, furnish the other with all 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, the F-4 Registration Statement or any other
statement, filing, notice or application made by or on
behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental
Entity in connection with the Merger and the transactions
contemplated by this Agreement.
(f) The Company and Parent each shall keep the
other apprised of the status of matters relating to comple-
tion of the transactions contemplated hereby, including
promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the
case may be, or any of its Subsidiaries, from any third
party and/or any Governmental Entity with respect to the
Merger and the other transactions contemplated by this
Agreement. The Company and Parent each shall give prompt
notice to the other of any change that is reasonably likely
to result in a Company Material Adverse Effect or Parent
Material Adverse Effect, respectively.
6.7. TAXATION. Subject to Section 6.3, neither
Parent nor the Company shall take or cause to be taken any
action, whether before or after the Effective Time, that
would disqualify the Merger as a "reorganization" within the
meaning of section 368(a) of the Code.
6.8. ACCESS. Upon reasonable notice, and except
as may otherwise be required by applicable law, the Company
and Parent each shall (and shall cause its Subsidiaries to)
afford the other's officers and Representatives access,
during normal business hours throughout the period prior to
the Effective Time, to its properties, books, contracts and
records and, during such period, each 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, Parent or Merger Sub, and PROVIDED, FURTHER, that
the foregoing shall not require the Company or Parent to
permit any inspection, or to disclose any information, that
in the reasonable judgment of the Company or Parent, as the
case may be, 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 or Parent, as
the case may be, shall have used best efforts to obtain the
consent of such third party to such inspection or disclo-
sure. All requests for information made pursuant to this
Section shall be directed to an executive officer of the
Company or Parent, as the case may be, or such Person as may
be designated by either of its officers, as the case may be.
All such information shall be governed by the terms of the
Confidentiality Agreements.
6.9. AFFILIATES. Prior to the date of the
Shareholders Meeting, Parent shall deliver to the Company a
list of names and addresses of those Persons who are, in the
opinion of the Parent, as of the time of the Shareholders
Meeting referred to in Section 6.5, "affiliates" of the
Company within the meaning of Rule 145 under the Securities
Act. The Company shall provide to Parent such information
and documents as Parent shall reasonably request for
purposes of preparing such list. There shall be added to
such list the names and addresses of any other Person
subsequently identified by either Parent or the Company as a
Person who may be deemed to be such an affiliate of the
Company; PROVIDED, HOWEVER, that no such Person identified
by Parent shall remain on the list of affiliates of the
Company if Parent shall receive from the Company, on or
before the date of the Shareholders Meeting, an opinion of
counsel reasonably satisfactory to Parent to the effect that
such Person is not such an affiliate. The Company shall
exercise its best efforts to deliver or cause to be
delivered to Parent, prior to the date of the Shareholders
Meeting, from each affiliate of the Company identified in
the foregoing list (as the same may be supplemented as
aforesaid) who makes or is deemed to have made a Stock
Election or whose Cash Election is converted to a Stock
Election pursuant to Section 4.2(b), a letter dated as of
the Closing Date substantially in the form attached as
Exhibit A-1 (the "AFFILIATES LETTER"). Parent shall not be
required to maintain the effectiveness of the F-4
Registration Statement or any other registration statement
under the Securities Act for the purposes of resale of ADSs
by such affiliates received in the Merger and the American
Depositary Receipts representing ADSs received by such
affiliates shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of
this Section. With a view to making available to such
affiliates the benefits of certain rules and regulations of
the SEC which may permit the sale of ADSs without
registration, at all times after the Effective Time Parent
shall (i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act, (ii) file with the SEC in a timely manner
all reports and other documents required of the Parent under
the Securities Act and the Exchange Act and (c) so long as
such an affiliate owns any ADSs, to furnish such affiliate
forthwith upon such affiliate's request a written statement
by the Parent as to its compliance with the reporting
requirements of said Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or
quarterly reports of Parent and such other reports and
documents so filed by Parent as such affiliate may
reasonably request in availing itself of any rule or
regulation of the SEC allowing such affiliate to sell any
such securities without registration.
6.10. STOCK EXCHANGE LISTING AND DE-LISTING.
Parent shall use its best efforts to cause the ADSs to be
issued in the Merger 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.
6.11. PUBLICITY. The Company and Parent each
shall consult with each other prior to issuing any press
releases or otherwise making public announcements with
respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity
(including any national securities exchange) with respect
thereto, except as may be required by law or by obligations
pursuant to any listing agreement with or rules of any
national securities exchange.
6.12. STOCK OPTIONS; PERFORMANCE AWARDS; CASH
AWARDS AND RESTRICTED STOCK. (a) Immediately prior to the
Effective Time, each Company Option granted by the Company
under the Stock Plans which is outstanding immediately prior
to the Effective Time (and has not been exercised as of the
Effective Time) shall be terminated and the holder of each
such Company Option shall be entitled to receive from the
Company a lump sum cash payment equal to (A) the product of
(i) the excess of (x) the Cash Consideration over (y) the
per Company Share exercise price applicable to such Company
Option, multiplied by (ii) the number of Shares subject to
such Company Option, plus (B) any cash awards associated
with any such Company Option less (C) any amounts required
to be withheld, under applicable tax law, from such lump sum
payment. The Company shall take or cause to be taken any
and all action necessary to provide for such termination of
the Company Options, including obtaining all applicable
consents from holders.
(b) As to the awards under the Key Employee
Incentive Plan based upon 1997 performance, any payments to
be made with respect to those awards as a result of a
"change of control" (as defined therein) shall be made at
the same time that the awards would normally have been made
in 1998. With respect to the Company Performance Sharing
Plan for 1997, in the event of a change of control in 1997,
as defined in the Restated and Amended Key Employee
Incentive Plan, all performance criteria shall be deemed to
have been met at the target level, and time for payment
shall be at the same time that awards would normally have
been made in 1998.
(c) As to the contingent cash awards made to
certain management employees of Company in 1995 (item XI.A.2
in section 5.1(h)(i) of the Company Disclosure Letter) that
were to be paid if certain targets were met over a three
year period as to Cumulative Operating Earnings Per Share
(and if certain stock options were exercised), the target
level in the program shall be deemed to have been met as of
the Effective Time. Payments shall be made to the
individuals covered by these awards based on the target
level, irrespective of the exercise or cash out of the
related stock options, and payments shall be made on the
Effective Time.
(d) Immediately prior to the Effective Time, all
restricted stock of the Company (awarded under the Restated
And Amended 1992 Stock Incentive Plan, and any predecessor
plan) held by any individual that has not vested shall vest
and any other restrictions that may be applicable shall
lapse.
6.13. EXPENSES. The Surviving Corporation shall
pay all charges and expenses, including those of the
Exchange Agent, in connection with the transactions
contemplated in Article IV. 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 Merger and the other transactions
contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in
connection with the filing fee for the F-4 Registration
Statement and printing and mailing the Prospectus/Proxy
Statement and the F-4 Registration Statement shall be shared
equally by Parent and the Company.
6.14. INDEMNIFICATION; DIRECTORS' AND OFFICERS'
INSURANCE. (a) From and after the Effective Time, Parent
agrees that it will indemnify and hold harmless each present
and former director and officer of the Company, or any of
the Company's Subsidiaries and each officer or employee of
the Company or any of its Subsidiaries that is serving or
has served as a director or trustee of another entity
expressly at the Company's request or direction, determined
as of 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 or pertaining to matters
arising out of such party's position as, or actions taken
as, a director or officer of the Company or any of its
Subsidiaries or director or trustee of another entity at the
request or direction of the Company 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 Iowa law and its
articles of incorporation or by-laws in effect on the date
hereof to indemnify such Person (and Parent 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) as provided below. Except as
provided below, Parent shall not have any obligation
hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine that the
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law and the
Company's articles of incorporation and by-laws in effect as
of the date hereof, and such determination shall have become
final and nonappealable. Notwithstanding the foregoing,
from and after the Effective Time, Parent agrees that it
will indemnify and hold harmless each present director and
officer of the Company, against any and all Costs incurred
in connection with any and all claims, actions, suits,
proceedings or investigations, whether civil, criminal,
administrative or investigative, arising out of or
pertaining to matters arising out of or in connection with
such party's position as, or actions taken as, a director or
officer of the Company in connection with the Merger or the
transactions contemplated hereunder, at or prior to the
Effective Time, whether asserted or claimed prior to, at or
after the Effective Time (and also to advance all expenses
incurred in connection therewith), whether or not such
indemnification would be available pursuant to the Company's
articles of incorporation and by-laws. Nothing contained
herein, however, shall require Parent to indemnify any
person if a court of competent jurisdiction shall have
determined that such person has committed fraud in
connection herewith, and such determination shall have
become final and nonappealable.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 6.14,
upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any
liability it may have to such Indemnified Party if such
failure does not materially prejudice the indemnifying
party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after
the Effective Time), (i) Parent or the Surviving Corporation
shall have the right to assume the defense thereof and
Parent shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connec-
tion with the defense thereof, except that if Parent 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 Parent or
the Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them,
and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indem-
nified Parties promptly as statements therefor are received;
PROVIDED, HOWEVER, that Parent shall be obligated pursuant
to this paragraph (b) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction unless the
use of one counsel for such Indemnified Parties would
present such counsel with a conflict of interest, (ii) the
Indemnified Parties will cooperate in the defense of any
such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent; and
PROVIDED, FURTHER, that Parent 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 indemnifica-
tion of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law.
(c) The Surviving Corporation shall maintain a
policy of officers' and directors' liability insurance for
acts and omissions occurring prior to the Effective Time
with coverage in amount and scope at least as favorable as
the Company's existing directors' and officers' liability
insurance coverage ("D&O INSURANCE") for a period of two
years after the Effective Time so long as the annual premium
therefor is not in excess of 200% of the last annual premium
paid prior to the date hereof (the "CURRENT PREMIUM");
PROVIDED, HOWEVER, if the existing D&O Insurance expires, is
terminated or canceled during such two year period, the
Surviving Corporation will use its best efforts to obtain
comparable D&O Insurance for the remainder of such period
for a premium not in excess (on an annualized basis) of 200%
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.
6.15. OTHER ACTIONS BY THE COMPANY AND PARENT.
(a) TAKEOVER STATUTE. If any Takeover Statute is
or may become applicable to the Merger or the other
transactions contemplated by this Agreement, each of Parent
and the Company and its board of directors shall grant such
approvals and take such actions as are necessary so that
such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and
otherwise act to eliminate or minimize the effects of such
statute or regulation on such transactions.
(b) DIVIDENDS. The Company shall coordinate with
Parent the declaration, setting of record dates and payment
dates of dividends on Shares so that holders of Shares do
not receive dividends on both Shares and ADSs received in
the Merger in respect of any calendar quarter or fail to
receive a dividend on either Shares or ADSs received in the
Merger in respect of any calendar quarter.
6.16. DIRECTORS. Effective as of the Effective
Time all members of the Company's board of directors will be
invited by Parent to join the board of directors of Parent's
most directly held U.S. insurance holding company.
6.17. BENEFIT PLANS. Except as otherwise provided
in this Section 6.17(a), Parent agrees that, during the
period commencing at the Effective Time and ending on the
second anniversary thereof, the employees (including
individuals under career agent contracts with the Company)
("COVERED EMPLOYEES") of the Company and its Subsidiaries
who as of the Effective Time become employed by Parent or
any of its Subsidiaries, will continue to be provided with
benefits under those of the Company Compensation and Benefit
Plans so identified on Section 5.1(h) of the Company
Disclosure Letter to the extent such benefits are currently
provided. Notwithstanding the previous sentence, in the
event that Parent and its Subsidiaries shall integrate or
consolidate the employee benefit plans covering their
employees located in the United States, Parent shall not be
required, during the two-year period commencing at the
Effective Time, to provide Covered Employees with benefits
under the Company Compensation and Benefit Plans; PROVIDED
that Covered Employees are eligible to participate and
receive benefits under such integrated or consolidated
benefit plans of Parent and its Subsidiaries on
substantially the same terms and conditions applicable to
similarly situated employees of Parent and its Subsidiaries.
For purposes of employee benefit plans, programs and
arrangements maintained or contributed to by Parent or any
of its Subsidiaries, Parent shall, and shall cause its
Subsidiaries to, treat service of each Covered Employee with
the Company and its Subsidiaries (to the same extent such
service is recognized under analogous plans, programs and
arrangements of the Company and its Subsidiaries) as service
rendered to Parent and its Subsidiaries, solely for the
purposes of eligibility to participate and vesting
thereunder. Parent shall, and shall cause its Subsidiaries
to, cause any and all pre-existing condition limitations (to
the extent such limitations did not apply to a pre-existing
condition under the Compensation and Benefit Plans) under
any group health plans of Parent or any of its Subsidiaries
to be waived with respect to (i) Covered Employees who,
immediately prior to the Effective Time, participate in any
such group health plan, and (ii) their eligible dependents,
and to give credit for any out of pocket expenses paid by
Covered Employees toward maximums under co-insurance
arrangements and deductibles under the Company Compensation
and Benefit Plans which are group health plans.
6.18. PENSION PLAN STOCK ELECTION. The Company
shall take all action necessary to prevent the Equitable
Life Insurance of Iowa Pension Plan from acquiring Stock
Consideration equal to 10% or more, determined as of the
time of election, of its plan assets.
6.19. PARENT ANNUAL REPORT. Parent shall furnish
to its holders of ADRs within six months after the end of
each fiscal year an annual report (in English) (including a
balance sheet and statements of income, shareholders'
equity and cash flows of Parent and its consolidated
subsidiaries certified by independent public accountants
and prepared in conformity with generally accepted
accounting principles in the Netherlands), together with a
reconciliation of net income and total shareholders' equity
to U.S. generally accepted accounting principles and,
within four months after the end of each of the first six
months of each fiscal year of the Company (beginning with
the first such six-month period ending after the Effective
Time), consolidated summary financial information of Parent
and its Subsidiaries for such six-month period in reasonable
detail prepared in accordance with generally accepted
accounting principles in the Netherlands on a basis
consistent with the financial statements included in such
annual report.
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 and shall have been duly approved
by the sole shareholder of Merger Sub in accordance with
applicable law and the articles of incorporation and by-laws
of each such corporation.
(b) NYSE LISTING. The ADSs issuable to the
Company shareholders pursuant to this Agreement shall have
been authorized for listing on the NYSE upon official notice
of issuance.
(c) REGULATORY CONSENTS. The waiting period
applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated and, other than
the filing provided for in Section 1.3, all notices and
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 (collectively, "GOVERNMENTAL CONSENTS")
in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other
transactions contemplated hereby by the Company, Parent and
Merger Sub shall have been made or obtained (as the case may
be), upon terms and conditions that, and except those that
the failure to make or to obtain, are not, individually or
in the aggregate, reasonably likely to have a Company
Material Adverse Effect or a Parent Material Adverse Effect
or to provide a basis to conclude that the parties hereto or
any of their affiliates or respective directors, officers,
agents, advisors or other representatives would be subject
to the risk of criminal liability.
(d) LITIGATION. No court or Governmental Entity
of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Insurance Law
(whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits
consummation of the Merger (collectively, an "ORDER"), and
no Governmental Entity or any other Person shall have
instituted any proceeding or threatened to institute any
proceeding seeking any such Order.
(e) F-4. 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 APPROVALS. Parent shall have
received all state securities and "blue sky" permits and
approvals necessary to consummate the transactions
contemplated hereby.
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 satisfaction by the
Company or waiver by Parent at or prior to the Effective
Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company set forth in
this Agreement that are qualified by reference to a Company
Material Adverse Effect shall be true and correct, and those
that are not so qualified shall be true and correct, except
for failures to be true and correct as would not,
individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, 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 Parent shall have received a certificate signed
on behalf of the Company by an executive officer of the
Company to such effect.
(b) PERFORMANCE BY THE COMPANY. The Company
shall not have knowingly and wilfully breached, or with
respect to any breach which is not knowing and wilful shall
not have breached in any respect, any agreement, obligation
or covenant contained in this Agreement that is required to
be performed or complied with by it on or prior to the
Closing Date which latter breach would not, individually or
in the aggregate, be reasonably likely to have a Company
Material Adverse Effect, 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 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, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect
or is not reasonably likely to prevent or to materially
burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
Notwithstanding the foregoing, the Company shall have
obtained all Investment Company Approvals.
(d) TAX OPINION. Parent shall have received the
opinion of Sullivan & Cromwell, counsel to Parent, dated the
Closing Date, to the effect that the Merger will be treated
for Federal income tax purposes as a reorganization within
the meaning of section 368(a) of the Code, and that each of
Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of section 368(b) of the
Code.
(e) AFFILIATES LETTERS. Parent shall have
received an Affiliates Letter from each Person identified as
an affiliate of the Company pursuant to Section 6.9.
(f) ACCOUNTANT'S LETTER. Parent shall have
received, in form and substance reasonably satisfactory to
Parent, from the Company's accountants, the "comfort" letter
described in Section 6.6(b).
(g) RIGHTS AGREEMENT. The Rights Agreement shall
have been amended to terminate immediately prior to the
Effective Time.
(h) AVERAGE CLOSING PRICE. The Average Closing
Price shall be no higher than $54.5052; PROVIDED, HOWEVER,
that this condition shall be deemed satisfied if the Company
should offer to amend Section 4.1(a) so that "Stock
Consideration" will be defined such that each Share that is
the subject of a Stock Election will be converted into,
exchangeable for and represent the right to receive a number
of ADSs having the same aggregate value (based on the
Average Closing Price) as the number of ADSs into which such
Share would have been converted if the Average Closing Price
had been equal to $54.5052.
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. The
representations and warranties of Parent and Merger Sub set
forth in this Agreement that are qualified by reference to a
Parent Material Adverse Effect shall be true and correct,
and those that are not so qualified shall be true and
correct, except for failures to be true and correct as would
not, individually or in the aggregate, be reasonably likely
to have a Parent Material Adverse Effect, 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 and warranty expressly speaks as of an
earlier date) and the Company shall have received a
certificate signed on behalf of Parent by an executive
officer of Parent and on behalf of Merger Sub by an
executive officer of Merger Sub to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND
MERGER SUB. Neither Parent nor Merger Sub shall have
knowingly and wilfully breached, or with respect to any
breach which is not knowing or wilful shall have breached in
any respect, any agreement, obligation or covenant contained
in this Agreement that is required to be performed or
complied with by it on or prior to the Closing Date which
latter breach would not, individually or in the aggregate,
be reasonably likely to have a Parent Material Adverse
Effect, and the Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent
and on behalf of Merger Sub by an executive officer of
Merger Sub to such effect.
(c) CONSENTS UNDER AGREEMENTS. Parent 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
material Contract to which Parent 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 or is not reasonably likely to prevent or to
materially burden or materially impair the ability of Parent
to consummate the transactions contemplated by this
Agreement.
(d) TAX OPINION. The Company shall have received
the opinion of Nyemaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, P.C., counsel to the Company, dated the
Closing Date, to the effect that the Merger will be treated
for Federal income tax purposes as a reorganization within
the meaning of section 368(a) of the Code, and that each of
Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of section 368(b) of the
Code, that the Merger will not be a taxable event with
respect to the Company and that the receipt of the Stock
Consideration will be tax-free to the recipients. The form
of such opinion is set forth hereto as Exhibit C.
(e) LEGAL OPINION. The Company shall have
received an opinion of Sullivan & Cromwell, U.S. counsel to
Parent with respect to matters of New York law, and Dutch
counsel to Parent with respect to matters of the law of the
Netherlands, dated the Closing Date, substantially in the
forms attached as Exhibits D-1 and D-2, respectively.
(f) ACCOUNTANT'S LETTER. The Company shall have
received from Parent's accountants, the "comfort" letter
described in Section 6.6(b).
(g) AVERAGE CLOSING PRICE. The Average Closing
Price shall be at least $40.2864; PROVIDED, HOWEVER, that
this condition shall be deemed satisfied if Parent should
offer to amend Section 4.1(a) so that "Stock Consideration"
will be defined such that each Share that is the subject of
a Stock Election will be converted into, exchangeable for
and represent the right to receive a number of ADSs having
the same aggregate value (based on the Average Closing
Price) as the number of ADSs into which such Share would
have been converted if the Average Closing Price had been
equal to $40.2864.
ARTICLE VIII
Termination
8.1. TERMINATION BY MUTUAL CONSENT. This
Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or
after the approval by shareholders of the Company and Parent
referred to in Section 7.1(a), by mutual written consent of
the Company and Parent by action of their respective boards
of directors.
8.2. TERMINATION BY EITHER PARENT OR THE COMPANY.
This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time by action
of the board of directors of either Parent or the Company if
(i) the Merger shall not have been consummated by March 31,
1998, whether such date is before or after the date of
approval by the shareholders of the Company (the
"TERMINATION DATE"), (ii) the approval of the Company's
shareholders required by Section 7.1(a) shall not have been
obtained at a meeting duly convened therefor or at any
adjournment or postponement thereof or (iii) 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
shareholders of the Company); PROVIDED, that the right to
terminate this Agreement pursuant to clause (i) 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 by shareholders of the Company referred to in
Section 7.1(a), by action of the board of directors of the
Company:
(a) if (i) the Company is not in wilful breach of
Section 6.3 of this Agreement and (ii) the Company, subject
to complying with the terms of this Agreement, enters into a
binding written agreement concerning a transaction that
constitutes a Superior Proposal;
(b) if there has been a breach by Parent or
Merger Sub of any representation, warranty, covenant or
agreement contained in this Agreement that is not curable
or, if curable, is not cured within 30 days after written
notice of such breach is given by the Company to the party
committing such breach except for such breaches as would
not, individually or in the aggregate, be reasonably likely
to have a Parent Material Adverse Effect; or
(c) if the Average Closing Price is below
$40.2864; PROVIDED, HOWEVER, that the Company may not effect
such termination if Parent should offer to amend
Section 4.1(a) so that "Stock Consideration" will be defined
so that each Share that is the subject of a Stock Election
will be converted into, exchangeable for and represent the
right to receive a number of ADSs having the same aggregate
value (based on the Average Closing Price) as the number of
ADSs into which such Share would have been converted if the
Average Closing Price had been equal to $40.2864.
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:
a) if (i) the Company enters into a binding
agreement for a Superior Proposal or the board of directors
of the Company shall have withdrawn or adversely modified
its approval or recommendation to the Company's shareholders
of this Agreement or failed to reconfirm its recommendation
to the Company's shareholders of this Agreement within five
business days after a written request by Parent to do so
or(ii) there has been a breach by the Company of any
representation, warranty, covenant or agreement contained in
this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is
given by Parent to the Company except for such breaches as
would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect; or
(b) if the Average Closing Price is above
$54.5052; PROVIDED, HOWEVER, that Parent may not effect such
termination if the Company should offer to amend Section
4.1(a) so that "Stock Consideration" will be defined so that
each Share that is the subject of a Stock Election will be
converted into, exchangeable for and represent the right to
receive a number of ADSs having the same aggregate value
(based on the Average Closing Price) as the number of ADSs
into which such Share would have been converted if the
Average Closing Price had been equal to $54.5052.
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 officers,
directors or other Representatives); PROVIDED, HOWEVER, no
such termination shall relieve any party hereto of any
liability or damages resulting from any breach of this
Agreement.
(b) In the event that (i) a bona fide Acquisition
Proposal shall have been made to the Company or to any of
its Subsidiaries or to its shareholders generally or any
Person shall have publicly announced an intention (whether
or not conditional) to make a bona fide Acquisition Proposal
to the Company or to any of its Subsidiaries or to its
shareholders generally and thereafter this Agreement is
terminated by either Parent or the Company pursuant to
Section 8.2(ii), or (ii) this Agreement is terminated (x) by
the Company pursuant to Section 8.3(a) or (y) by Parent
pursuant to Section 8.4(a), then if terminated by the
Company, the Company shall prior to such termination or if
terminated by Parent, within two business days after such
termination pay Parent in immediately available funds a fee
of $65,000,000 payable by wire transfer of same day funds.
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, charges or expenses referred to in this para-
graph (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 such
fee, charges or expenses at the base 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, the agreements of
the Company, Parent and Merger Sub contained in Sections 6.7
(Taxation), 6.9 (Affiliates), 6.10 (Stock Exchange Listing
and De-listing), 6.12 (Stock Options; Performance Awards;
Cash Awards and Restricted Stock), 6.13 (Expenses), 6.14
(Indemnification; Directors' and Officers' Insurance), 6.16
(Directors), 6.17 (Benefit Plans) and 6.19 (Parent Annual
Report) shall survive the consummation of the Merger. This
Article IX, the agreements of the Company, Parent and Merger
Sub contained in Section 6.13 (Expenses), Section 8.5
(Effect of Termination and Abandonment) and the Confiden-
tiality Agreements 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.
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) EXCEPT TO THE EXTENT THE BCA IS APPLICABLE TO
THE MERGER, 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 courts of the State of Delaware and 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 of the
documents referred to in this Agreement, and in respect of
the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and
determined in such a Delaware State or Federal court. The
parties hereby consent to and grant any such court
jurisdiction over the Person of such parties and over the
subject matter of such dispute and agree that mailing of
process or other papers in connection with any such action
or proceeding in the manner provided in Section 9.6 or in
such other manner as may be permitted by law shall be valid
and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO OFFICER, DIRECTOR OR
REPRESENTATIVE, OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6. NOTICES. Any notice, request, instruction or
other document to be given hereunder by any party to the
others shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid, or by
facsimile:
IF TO PARENT:
Strawinskylaan 2631, 1077 ZZ Amsterdam,
P.O. Box 810,
1000 Av. Amsterdam, the Netherlands
Attention: Jan Holsboer
Fax: 31-20-541-5496
(with a copy to Henk Kooiker
Fax: 31-20-541-8723
and to Benjamin F. Stapleton, Esq.,
Sullivan & Cromwell,
125 Broad Street, New York, NY 10004
Fax: (212) 558-3588)
IF TO MERGER SUB:
c/o ING FSI N.A.
5780 Powers Ferry Road,
Atlanta, Georgia 30327.
Attention: Michael Cunningham
Fax: (770) 980-3303
IF TO THE COMPANY:
604 Locust Street
P.O. Box 1635
Des Moines, Iowa 50306
Attention: Fred S. Hubbell
Fax: (515) 245-6973
(with a copy to G.R. Neumann, Esq.,
Nymaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, P.C.
1900 Hub Tower
Des Moines, Iowa 50309
Fax: (515) 283-3108)
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 Confidentiality Agreements, dated May
30, 1997 and June 30, 1997, between Parent and the Company
(the "CONFIDENTIALITY AGREEMENTS") 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. Notwithstanding the foregoing, the
prohibition on acquiring Shares pursuant to the May 30, 1997
Confidentiality Agreement shall not be applicable until any
termination of this Agreement. EACH PARTY HERETO AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND MERGER SUB
NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR
WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
OFFICERS, DIRECTORS OR REPRESENTATIVES, WITH RESPECT TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF
ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
9.8. NO THIRD PARTY BENEFICIARIES. Except as
provided in Sections 6.9 (Affiliates), 6.12 (Stock Options;
Performance Awards; Cash Awards and Restricted Stock), 6.14
(Indemnification; Directors' and Officers' Insurance), 6.17
(Benefit Plans) and 6.19 (Parent Annual Report), this
Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder
(provided that no employees shall have any rights to enforce
any provisions of Section 6.17 unless at least 50 employees
shall join in such action with respect to a specific benefit
in a specific plan).
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 Subsidi-
ary to take such action. Whenever this Agreement requires a
Subsidiary of the Company to take any action, such require-
ment 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. SEVERABILITY. The provisions of this Agree-
ment shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other
jurisdiction.
9.11. INTERPRETATION. The table of contents and
headings herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions
hereof. Where a reference in this Agreement is made to a
Section or Exhibit, such reference shall be to a Section of
or Exhibit to this Agreement unless otherwise indicated.
Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed
by the words "without limitation".
9.12. 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, subject to
Section 6.7, indirect United States domestic 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.
Equitable of Iowa Companies
By: /S/ FRED S. HUBBELL
_______________________________
Name: Fred S. Hubbell
Title: Chairman of the Board,
President of Chief
Executive Officer
ING Groep N.V.
By: /S/ JAN HOLSBOER
________________________________
Name: Holsboer, Jan
Title: Authorized Representative
PFHI Holdings, Inc.
By: /S/ MICHAEL CUNNINGHAM
________________________________
Name: Michael Cunningham
Title: President
Exhibit A
Fred S. Hubbell (Chief Executive Officer)
Paul E. Larson (Chief Financial Officer)
John A. Merriman (General Counsel)
Lawrence Durland, Jr. (Senior Vice-President)
Paul R. Schlaack (Chief Investment Officer)
EXHIBIT A-1
________________, 1997
ING Groep N.V.
c/o ING FSI N.A.
5780 Powers Ferry Road
Atlanta, GA 30327
Attention: Legal Department
Ladies and Gentlemen:
1. I have been advised that I might be considered to be an
"affiliate", as that term is defined for purposes of paragraphs
(c) and (d) of Rule 145 ("Rule 145") promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), of Equitable of
Iowa Companies, an Iowa corporation ("Equitable").
2. Pursuant to an Agreement and Plan of Merger, dated as of
July __,1997 (the "Agreement"), by and among ING Groep Inc., a
Netherlands corporation ("ING"), PFHI Holdings, Inc., a Delaware
corporation ("PFHI") and Equitable, it is contemplated that
Equitable will merge with and into PFHI (the "Merger") and that,
among other things, all of the outstanding common stock, no par
value, of Equitable ("Equitable Common Stock") will be converted
into American Depository Shares ("ADSs") representing Bearer
Depository Receipts representing Ordinary Shares, par value $1.00
per share, of ING or cash or a combination of both as set forth in
the Agreement. In connection with the Merger, I may receive ADSs
upon distribution thereof to the holders of Equitable Common Stock.
3. I will not offer to sell, transfer or otherwise dispose
of any of the ADSs distributed to me pursuant to the Merger,
except (i) in compliance with the applicable provisions of Rule
145, (ii) in a transaction that is otherwise exempt from the
registration requirements of the Securities Act, or (iii) in an
offering registered under the Securities Act.
4. ING's transfer agent shall be given an appropriate stop
transfer order and shall not be required to register any attempted
transfer of the ADSs, unless the transfer has been effected in
compliance with the terms of this letter agreement.
5. It is understood and agreed that this letter agreement
shall terminate and be of no further force and effect, and the
related stop transfer restrictions shall be lifted forthwith, if
(a) (i) any such ADSs shall have been registered under the
Securities Act for sale, transfer or other disposition by me or on
my behalf and are sold, transferred or otherwise disposed of, or
(ii) any such ADSs are sold in accordance with the provisions of
paragraphs (c), (e), (f) and (g) of Rule 144 promulgated under the
Securities Act, or (iii) I am not at the time an affiliate of ING
and have been the beneficial owner of the ADSs for at least one
year (or such other period as may be prescribed by the Securities
Act and the rules and regulations promulgated thereunder) and ING
has filed with the Commission all of the reports it is required to
file under the Securities Exchange Act of 1934, as amended, during
the preceding 12 months, or (iv) I am not and have not been for at
least three months an affiliate of ING and have been the
beneficial owner of ADSs for at least two years (or such other
period as may be prescribed by the Securities Act and the rules
and regulations promulgated thereunder), or (v) ING shall have
received a letter from the staff of the Commission, or an opinion
of counsel reasonably acceptable to ING, to the effect that the
stock transfer restrictions are not required.
6. I have carefully read this letter agreement and the
Agreement and have discussed their requirements and other
applicable limitations upon my ability to offer to sell, transfer or
otherwise dispose of ADSs, to the extent I felt necessary, with my
counsel or counsel for Equitable.
Sincerely,
______________________
Name
Agreed and accepted this ___
day of ____________, 1997, by
ING Groep N.V.
By __________________
Its_________________
Exhibit B
Members of the Executive Board
Aad Jacobs (Chairman)
Godfrey van der Lugt
Jan Holsboer
Cees Maas
Alexander Rinnooy Kan
Exhibit C
Form of Tax Opinion
[inside address]
Re: Agreement and Plan of Merger Among Parent, Merger
Sub and the Company by and among Equitable of
Iowa Companies, ING Groep N.V., and PFHI Holdings,
Inc. dated as of the 7th day of July, 1997
Gentlemen:
We have acted as counsel to Equitable of Iowa
Companies, an Iowa corporation ("Company"), in connection
with the proposed merger (the "Merger") of the Company, with
and into PFHI Holdings, Inc., a Delaware corporation
("Merger Sub"), a wholly-owned subsidiary of ING Groep N.V.,
a Netherlands corporation ("Parent"), pursuant to the terms
of the Agreement and Plan of Merger dated as of July 7, 1997
by and among Parent, Merger Sub, and the Company (the
"Merger Agreement"), each as described in the Registration
Statement on Form F-4 to be filed by Parent with the
Securities and Exchange Commission (the "Registration
Statement"). This opinion is being rendered pursuant to
your request. All capitalized terms, unless otherwise
specified, have the meaning assigned to them in the Merger
Agreement.
In connection with this opinion, we have examined and
are familiar with the original or copies, certified or
otherwise identified to our satisfaction of (i) the Merger
Agreement, (ii) the Registration Statement, and (iii) such
other documents as we have deemed necessary or appropriate
in order to enable us to render the opinion below. In our
examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic
copies and the authenticity of the originals of such
documents. In rendering the opinion set forth below, we
have relied upon certain written representations and
covenants of Parent and the Company.
In rendering our opinion, we have considered the
applicable provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations, pertinent
judicial authorities, interpretative rulings of the Internal
Revenue Service and such other authorities as we have
considered relevant.
Based upon and subject to the foregoing, we are of the
opinion that the Merger will, under current law, constitute
a tax-free reorganization under Section 368(a) of the Code,
and Parent, Merger Sub and the Company will each be a party
to the reorganization within the meaning of Section 368(b)
of the Code. As a tax-free reorganization, the Merger will
have the following federal income tax consequences for
Company shareholders, Company and Parent:
1. No gain or loss will be recognized by holders of
the common stock, of no par value, of the Company
("Company Common Stock") as a result of the
exchange of such shares solely for American
Depositary Shares representing bearer receipts
representing Ordinary Shares (such American
Depositary Receipts hereafter "Parent Common
Stock") pursuant to the Merger, except that gain
or loss will be recognized on the receipt of cash,
if any, received in lieu of fractional shares.
Any cash received by a shareholder of the Company
in lieu of a fractional share will be treated as
received in exchange for such fractional share and
not as a dividend, and any gain or loss recognized
as a result of the receipt of such cash will be
capital gain or loss equal to the difference
between the cash received and the portion of the
shareholders basis in Company Common Stock
allocable to such fractional share interest.
2. Company shareholders who receive both Parent
Common Stock and cash in the Merger will recognize
gain to the extent of the lesser of a) the amount
of cash received, or b) the total fair market
value of cash and Parent Common Stock received
less the basis of Company Common Stock
surrendered.
3. The tax basis of the shares of Parent Common Stock
received by each shareholder of Company will equal
the tax basis of such shareholder's shares of
Company Common Stock exchanged in the Merger,
increased by any gain recognized and reduced by
any cash received. The holding period for the
shares of Parent Common Stock received by each
shareholder of the Company will include the
holding period for the shares of Company Common
Stock of each shareholder exchanged in the Merger.
4. Parent will not recognize gain or loss as a result
of the Merger.
5. The Company will not recognize gain or loss as a
result of the Merger.
6. Merger Sub will not recognize gain or loss as a
result of the Merger.
7. The transfer by Company shareholders of Company
Common Stock is not subject to Code Section
367(a)(1) by reason of Treas. Reg. Section
1.367(a)-3(c).
Except as set forth above, we express no opinion as to
the tax consequences to any party, whether federal, state,
local or foreign, the Merger or of any transactions related
to the Merger or contemplated by the Merger Agreement. This
opinion is being furnished only to you in connection with
the Merger and solely for your benefit in connection
therewith and may not be used or relied upon for any other
purpose and may not be circulated, quoted or otherwise
referred to for any other purpose without our express
written consent.
Sincerely,
NYEMASTER, GOODE, MCLAUGHLIN,
VOIGTS, WEST, HANSELL & O'BRIEN, P.C.
By:
_________________________________
Steven J. Roy
Exhibit D-1
Form of Opinion of
Sullivan & Cromwell
1. Merger Sub has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware.
2. Upon due issuance by the Depositary of ADRs evidencing
ADSs against the deposit of Bearer Receipts in respect
thereof in accordance with the provisions of the Deposit
Agreement and due execution of such ADRs by one of the
Depositary's authorized officers, such ADRs will be duly and
validly issued and the person in whose name such ADRs are
registered will be entitled to the rights specified therein
and in the Deposit Agreement.
Such counsel may state that such opinion is limited to the
Federal laws of the United Sates and the laws of the State
of New York and that they have relied on the opinions of
Dutch counsel as to all matters therein covered therein
relating to Netherlands law.
Exhibit D-2
Form of Opinion of
Dutch Counsel
1. Parent has been duly incorporated and is validly
existing under the laws of the Netherlands as a legal entity
in the form of a naamloze vennootschap (public company with
limited liability.
2. The Ordinary Shares underlying the Bearer Receipts
(underlying the ADSs) have been duly and validly authorized
and issued by Parent in accordance with the law of the
Netherlands and the provisions of the Articles of
Association applicable thereto and are fully paid-up and
non-assessable.
3. The Bearer Receipts (underlying the ADSs) have been
duly and validly authorized and issued by the Trust in
accordance with the law of the Netherlands and the
provisions of the Conditions of Trust applicable thereto and
are fully paid-up and non-assessable.
In giving such opinion, such counsel may state that
with respect to all matters of United States federal and New
York law they have relied upon the opinion of United States
counsel.
