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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 5
TO
SCHEDULE 13E-3
RULE 13-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
(NAME OF ISSUER)
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
FIRST COMMAND FINANCIAL CORPORATION
LAMAR C. SMITH
JAMES N. LANIER
HOWARD M. CRUMP
HAL N. CRAIG
DONALDSON D. FRIZZELL
JERRY D. GRAY
DAVID P. THORESON
CARROLL H. PAYNE II
NAOMI K. PAYNE
FREDA J. PAYNE
(NAME OF PERSON(S) FILING STATEMENT)
CLASS B NONVOTING COMMON STOCK, $0.02 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
NOT APPLICABLE
(CUSIP NUMBER OF CLASS OF SECURITIES)
LAMAR C. SMITH
CHAIRMAN OF THE BOARD
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
4100 SOUTH HULEN STREET
FORT WORTH, TEXAS 76109
(817) 731-8621
WITH A COPY TO:
ROBERT F. WATSON BRIAN D. BARNARD
CORPORATE COUNSEL HAYNES AND BOONE, LLP
INDEPENDENT RESEARCH AGENCY 201 Main Street
FOR LIFE INSURANCE, INC. Suite 2200
4100 South Hulen Street Fort Worth, Texas 76102
Fort Worth, Texas 76109 (817) 347-6600
(817) 731-8621
(NAME, ADDRESSES AND TELEPHONE NUMBERS OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON(s) FILING STATEMENT)
This statement is filed in connection with (check the appropriate box):
a. /X/ The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act of
1933.
c. / / A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: /X/
CALCULATION OF FILING FEE
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TRANSACTION VALUATION AMOUNT OF FILING FEE
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<S> <C>
$26,756,929.92 (1) $5,351.38 (1)
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</TABLE>
(1) The filing fee is calculated pursuant to Section 13(e)(3) of the Securities
Exchange Act of 1934.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $5,351.38.
Form or Registration No.: Schedule 14A.
Filing Party: Independent Research Agency for Life Insurance, Inc.
Date Filed: July 6, 1998.
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INTRODUCTION
This Amendment No. 5 to the Rule 13e-3 Transaction Statement on
Schedule 13E-3 is being filed by Independent Research Agency for Life
Insurance, Inc., a Texas corporation (the "Company"), First Command Financial
Corporation, a Texas corporation ("First Command"), Lamar C. Smith, James N.
Lanier, Howard M. Crump, Hal N. Craig, Donaldson D. Frizzell, Jerry D. Gray,
David P. Thoreson, Carroll H. Payne II, Naomi K. Payne and Freda J. Payne
(such individuals collectively referred to as the "Management Group") in
connection with the proposed merger (the "Merger") of the Company with and
into First Command pursuant to an Agreement and Plan of Merger, dated as of
July 1, 1998, as amended and restated on October 30, 1998 (as amended and
restated, the "Merger Agreement"), by and between the Company and First
Command.
This Amendment No. 5 to the Schedule 13E-3 is being filed with the
Securities and Exchange Commission concurrently with a supplement to the
Definitive Proxy Statement relating to the solicitation of proxies for the
Special Meeting of Shareholders of IRA (the "Proxy Statement Supplement"). A
copy of the Proxy Statement Supplement is attached hereto as Exhibit (d)(2).
2
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ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES.
Item 11 is amended as follows:
The information set forth in the Proxy Statement Supplement is hereby
incorporated herein by reference.
3
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ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Commitment Letter of Norwest Bank Texas N.A. filed as Exhibit
99(a) to the Schedule 13E-3 filed on July 6, 1998, and incorporated by
reference herein.
(a)(2) Loan Agreement, dated September 30, 1998, between Norwest
Bank Texas, N.A. and Independent Research Agency for Life Insurance, Inc.
filed as Exhibit 99(a)(2) to Amendment No. 3 to the Schedule 13E-3 filed on
October 13, 1998, and incorporated by reference herein.
(a)(3) Promissory Note, effective September 30, 1998, by Independent
Research Agency for Life Insurance, Inc. filed as Exhibit 99(a)(3) to
Amendment No. 3 to the Schedule 13E-3 filed on October 13, 1998, and
incorporated by reference herein.
(a)(4) Pledge Agreement, dated September 30, 1998, between
Independent Research Agency for Life Insurance, Inc. and Norwest Bank Texas,
N.A. filed as Exhibit 99(a)(4) to Amendment No. 3 to the Schedule 13E-3 filed
on October 13, 1998, and incorporated by reference herein.
(a)(5) Pledge Agreement, dated September 30, 1998, between United
Services Planning Association and Norwest Bank Texas, N.A. filed as Exhibit
99(a)(5) to Amendment No. 3 to the Schedule 13E-3 filed on
October 13, 1998, and incorporated by reference herein.
(b)(1) Opinion of PricewaterhouseCoopers LLP (the "IRA Financial
Advisor"), financial advisor to the Special Committee of the Board of Directors
of IRA included as Annex B in the Proxy Statement is hereby incorporated by
reference.
(b)(2) Discussion materials prepared by the IRA Financial Advisor for
the Board of Directors of IRA filed as Exhibit 99(b)(2) to the Schedule 13E-3
filed on July 6, 1998, and incorporated by reference herein.
(b)(3) Tax Opinion of Ernst & Young LLP included as Annex F to the
Proxy Statement is hereby incorporated by reference.
(b)(4) Report prepared by Ernst & Young LLP for the Company filed
as Exhibit 99(b)(4) to Amendment No. 1 to the Schedule 13E-3 filed on August
26, 1998, and incorporated by reference herein.
(b)(5) Special Committee Package prepared by the IRA Financial
Advisor for the Special Committee filed as Exhibit 99(b)(5) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and incorporated by
reference herein.
(b)(6) Mission Accomplishment Plan Summary; Form of Mission
Accomplishment Plan Agreement for a Select Group of Agents; Form of Mission
Accomplishment Plan Agreement for a Select Group of Management; Form of
Mission Accomplishment Plan for a Select Group of Highly Compensated
Employees; USPA&IRA Mission Accomplishment Plans Board Grant Declaration and
Administrative Policies; Mission Accomplishment Plan for a Select Group of
Management; USPA&IRA Mission Accomplishment Plans Board Grant Declaration and
Administrative Policies; Mission Accomplishment Plan for Agents; Mission
Accomplishment Plan for a Select Group of Key Employees; and Mission
Accomplishment Plan for a Select Group of Highly Compensated Employees,
provided by the Company to the Financial Advisor filed as Exhibit 99(b)(6) to
Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(7) List of Class A Shareholders and Class B Shareholders, as of
March 31, 1998, provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(7) to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
(b)(8) Charts of Proposed Plan of Merger, the Current Structure and
Structure after the Merger, provided by the Company to the Financial Advisor
filed as Exhibit 99(b)(8) to Amendment No. 2 to the Schedule 13E-3 filed on
September 8, 1998, and incorporated by reference herein.
(b)(9) List of Regional Agents and District Agents, as of August 1,
1998, provided by the Company to the Financial Advisor filed as Exhibit
99(b)(9) to Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998,
and incorporated by reference herein.
(b)(10) Home Office Organization Charts, as of March 5, 1998, provided
by the Company to the Financial Advisor filed as Exhibit 99(b)(10) to
Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(11) Treasury Transactions from September 30, 1998, through July
31, 1998, provided by the Company to the Financial Advisor filed as Exhibit
99(b)(11) to Amendment No. 2 to the Schedule 13E-3 filed on September 8,
1998, and incorporated by reference herein.
(b)(12) Plaintiff's Amended Motion for Summary Judgment, INDEPENDENT
RESEARCH AGENCY FOR LIFE INSURANCE, INC. V. HUGENBERG, filed May 3, 1991,
provided by the Company to the Financial Advisor filed as Exhibit 99(b)(12)
to Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(13) Brief in Support of Amended Motion for Summary Judgment,
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC. V. HUGENBERG, filed May
3, 1991, provided by the Company to the Financial Advisor filed as Exhibit
99(b)(13) to Amendment No. 2 to the Schedule 13E-3 filed on September 8,
1998, and incorporated by reference herein.
(b)(14) Affidavit of Sam F. Rhodes, INDEPENDENT RESEARCH AGENCY FOR
LIFE INSURANCE, INC. V. HUGENBERG, dated February 18, 1991, provided by the
Company to the Financial Advisor filed as Exhibit 99(b)(14) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and incorporated by
reference herein.
(b)(15) Corrected Brief for Appellee, INDEPENDENT RESEARCH AGENCY FOR
LIFE INSURANCE, INC. V. HUGENBERG, filed October 9, 1991, provided by the
Company to the Financial Advisor filed as Exhibit 99(b)(15) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and incorporated by
reference herein.
(b)(16) Form of Registered Representative/Agent Agreement, provided by
the Company to the Financial Advisor filed as Exhibit 99(b)(16) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and incorporated by
reference herein.
(b)(17) General Agent Agreement, between All American Life and
Casualty Company and Independent Research Agency for Life Insurance, dated
January 1, 1979, provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(17) to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
(b)(18) General Agency Contract, between Liberty National Life
Insurance Company and Independent Research Agency for Life Insurance, Inc.,
effective October 1, 1981, provided by the Company to the Financial Advisor
filed as Exhibit 99(b)(18) to Amendment No. 2 to the Schedule 13E-3 filed on
September 8, 1998, and incorporated by reference herein.
(b)(19) General Agency Contract, between Global Life Insurance Company
and Independent Research Agency for Life Insurance, Inc., dated February 7,
1997, provided by the Company to the Financial Advisor filed as Exhibit
99(b)(19) to Amendment No. 2 to the Schedule 13E-3 filed on September 8,
1998, and incorporated by reference herein.
(b)(20) Managing General Agent's Contract, between Monumental Life
Insurance Company and Independent Research Agency for Life Insurance, dated
April 11, 1979, provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(20) to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
(b)(21) General Agent's Agreement, between North American Company for
Life and Health Insurance and Independent Research Agency, dated January 1,
1971, provided by the Company to the Financial Advisor filed as Exhibit
99(b)(21) to Amendment No. 2 to the Schedule 13E-3 filed on September 8,
1998, and incorporated by reference herein.
(b)(22) General Agent's Agreement, between The Old Line Life Insurance
Company of America and Carroll H. Payne, dated July 31, 1972, provided by the
Company to the Financial Advisor filed as Exhibit 99(b)(22) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and incorporated by
reference herein.
(b)(23) Prospective Operating Information, Summary of Cash Flow
Analysis and Balance Sheet Data from 1998 through 2009, and Summary of
Shareholder Cash Flows, provided by the Company to the Financial Advisor
filed as Exhibit 99(b)(23) to Amendment No. 2 to the Schedule 13E-3 filed on
September 8, 1998, and incorporated by reference herein.
(b)(24) Dealer Agreement concerning Fidelity Systematic Investment
Plans: Destiny Plans I and Destiny Plans II, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(24) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(25) Dealer's Agreement, between A I M Distributors, Inc. and
United Services Planning Association, Inc., dated October 15, 1982, provided
by the Company to the Financial Advisor filed as Exhibit 99(b)(25) to
Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(26) Dealer's Sales Agreement, between The Pioneer Group, Inc. and
United Services Planning Association, Inc., dated August 1, 1979, provided by
the Company to the Financial Advisor filed as Exhibit 99(b)(26) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and incorporated by
reference herein.
(b)(27) List of Directors and Officers of Independent Research Agency
for Life Insurance, Inc., as of May 8, 1998, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(27) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(28) Biographical Information of Members of the Board of
Independent Research Agency for Life Insurance, Inc., provided by the Company
to the Financial Advisor filed as Exhibit 99(b)(28) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(29) USPA&IRA Mission Statement, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(29) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(30) History of USPA&IRA, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(30) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference herein.
(b)(31) Top Agent Producers in 1997 and 1996, provided by the Company
to the Financial Advisor filed as Exhibit 99(b)(31) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(32) List of Property of Independent Research Agency for Life
Insurance, Inc., provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(32) to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
(b)(33) Independent Research Agency for Life Insurance, Inc. Schedule
of Discretionary or Nonrecurring Items Included in the State of Operations,
for the Five Years Ended September 30, 1997, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(33) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(34) Form of Class B Stock Agreement, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(34) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(b)(35) Payne Family Stock Agreement, between Independent Research
Agency for Life Insurance, Inc., Carroll H. Payne, Freda J. Payne, Debra S.
Payne, Carroll H. Payne II and Naomi K. Payne, dated March 22, 1983, provided
by the Company to the Financial Advisor filed as Exhibit 99(b)(35) to
Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(36) Class A Stock Agreement, between Independent Research Agency
for Life Insurance, Inc. and Margaret L. Galda, dated December 5, 1997,
provided by the Company to the Financial Advisor filed as Exhibit 99(b)(36)
to Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(37) Articles of Incorporation of Independent Research Agency for
Life Insurance, Inc., as amended, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(37) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference herein.
(b)(38) Bylaws of Independent Research Agency for Life Insurance,
Inc., as amended December 5, 1996, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(38) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference herein.
(b)(39) Internal Financial Information of USPA&IRA, from 1992 through
1997, provided by the Company to the Financial Advisor filed as Exhibit
99(b)(39) to Amendment No. 2 to the Schedule 13E-3 filed on September 8,
1998, and incorporated by reference herein.
(b)(40) Independent Research Agency for Life Insurance, Inc. Class B
Stock Appreciation Schedule, from Fiscal Year 1990 Through Fiscal Year 1997,
provided by the Company to the Financial Advisor filed as Exhibit 99(b)(40)
to Amendment No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
(b)(41) Market and Industry Data, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(41) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated by reference
herein.
(c)(1) Agreement and Plan of Merger, dated as of July 1, 1998, as
amended and restated as of October 30, 1998, between Independent Research
Agency for Life Insurance, Inc. and First Command Financial Corporation,
included as Annex A in the Proxy Statement is hereby incorporated by
reference.
4
<PAGE>
(c)(2) Form of Shareholders' Agreement to be entered into among
Surviving Corporation Shareholders and Surviving Corporation filed as Exhibit
99(c)(2) to the Schedule 13E-3 filed on July 6, 1998, and incorporated by
reference herein.
(c)(3) Form of Articles of Incorporation of the Surviving Corporation,
as proposed to be amended, included as Annex E to the Proxy Statement is hereby
incorporated by reference.
(c)(4) Form of Bylaws of the Surviving Corporation, as proposed to be
amended, included as Annex E to the Proxy Statement is hereby incorporated by
reference.
(c)(5) Compromise Settlement Agreement and Mutual Release, dated
November 16, 1998, by and among Independent Research Agency for Life
Insurance, Inc., Carroll H. Payne II, Freda J. Payne, Naomi K. Payne and
Debra S. Payne.
(c)(6) Deferred Payment Agreement, dated November 16, 1998, by and
among Independent Research Agency for Life Insurance, Inc., First Command
Financial Corporation and Debra S. Payne.
(d)(1) Definitive copy of Letter to Shareholders, Notice of Special
Meeting of Shareholders, Proxy Statement, Form of Proxy and Form of Election,
dated October 30, 1998, for the Special Meeting of Shareholders to be held
on November 23, 1998 filed as Exhibit 99(d) to Amendment No. 4 to the
Schedule 13E-3 filed on October 30, 1998, and incorporated by reference herein.
(d)(2) Supplement to Definitive Proxy Statement, dated November 17,
1998.
(e) Articles 5.11 through 5.13 from the Texas Business Corporation
Act Relating to Rights of Dissenting Shareholders included as Annex C in the
Proxy Statement is hereby incorporated by reference.
(f) None.
99.1 Ground Lease, dated June 1, 1998, by and between Independent
Research Agency for Life Insurance, Inc. and First Command Financial
Corporation filed as Exhibit 99.1 to Amendment No. 1 to the Schedule 13E-3
filed on August 26, 1998, and incorporated by reference herein.
99.2 Memorandum of Ground Lease, dated June 1, 1998, by and
between Independent Research Agency for Life Insurance, Inc. and First
Command Financial Corporation filed as Exhibit 99.2 to Amendment No. 1 to the
Schedule 13E-3 filed on August 26, 1998, and incorporated by reference herein.
99.3 Lease Agreement, dated June 1, 1998, by and between
Independent Research Agency for Life Insurance, Inc. and First Command
Financial Corporation filed as Exhibit 99.3 to Amendment No. 1 to the Schedule
13E-3 filed on August 26, 1998, and incorporated by reference herein.
99.4 Management Agreement, dated June 1, 1998 by and between
Independent Research Agency for Life Insurance, Inc. and First Command
Financial Corporation filed as Exhibit 99.4 to Amendment No. 1 to the Schedule
13E-3 filed on August 26, 1998, and incorporated by reference herein.
99.5 Administration Agreement, dated June 1, 1998 by and between
Independent Research Agency for Life Insurance, Inc. and First Command
Financial Corporation filed as Exhibit 99.5 to Amendment No. 1 to the Schedule
13E-3 filed on August 26, 1998, and incorporated by reference herein.
99.6 Line of Credit Agreement, dated June 1, 1998, by and between
First Command Financial Corporation and Independent Research Agency for Life
Insurance, Inc. filed as Exhibit 99.6 to Amendment No. 1 to the Schedule 13E-3
filed on August 26, 1998, and incorporated by reference herein.
99.7 Promissory Note, dated June 1, 1998, by and between First
Command Financial Corporation and Independent Research Agency for Life
Insurance, Inc. filed as Exhibit 99.7 to Amendment No. 1 to the Schedule 13E-3
filed on August 26, 1998, and incorporated by reference herein.
99.8 Deed of Trust, Security Agreement and Assignment of Rents and
Leases, dated June 1, 1998, by and between First Command Financial
Corporation and Independent Research Agency for Life Insurance, Inc. filed as
Exhibit 99.8 to Amendment No. 1 to the Schedule 13E-3 filed on August 26,
1998, and incorporated by reference herein.
99.9 Uniform Commercial Code - Financing Statement, by and between
First Command Financial Corporation and Independent Research Agency for Life
Insurance, Inc. filed as Exhibit 99.9 to Amendment No. 1 to the Schedule 13E-3
filed on August 26, 1998, and incorporated by reference herein.
5
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: November 17, 1998 INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE,
INC.
By: /s/ Lamar C. Smith
--------------------------------------------
Name: Lamar C. Smith
--------------------------------------------
Title: Chairman of the Board/C.E.O.
--------------------------------------------
FIRST COMMAND FINANCIAL CORPORATION
By: /s/ James N. Lanier
--------------------------------------------
Name: James N. Lanier
--------------------------------------------
Title: President
--------------------------------------------
/s/ Lamar C. Smith
--------------------------------------------
Lamar C. Smith
/s/ James N. Lanier
--------------------------------------------
James N. Lanier
/s/ Howard M. Crump
--------------------------------------------
Howard M. Crump
/s/ Hal N. Craig
--------------------------------------------
Hal N. Craig
/s/ Donaldson D. Frizzell
--------------------------------------------
Donaldson D. Frizzell
/s/ Jerry D. Gray
--------------------------------------------
Jerry D. Gray
/s/ David P. Thoreson
--------------------------------------------
David P. Thoreson
/s/ Carroll H. Payne II
--------------------------------------------
Carroll H. Payne II
/s/ Naomi K. Payne
--------------------------------------------
Naomi K. Payne
/s/ Freda J. Payne
--------------------------------------------
Freda J. Payne
5
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EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT NAME
- ------- ------------
99(a)(1) Commitment Letter of Norwest Bank Texas N.A. filed as Exhibit
99(a) to the Schedule 13E-3 filed on July 6, 1998, and
incorporated by reference herein.
99(a)(2) Loan Agreement, dated September 30, 1998, between Norwest
Bank Texas, N.A. and Independent Research Agency for Life
Insurance, Inc. filed as Exhibit 99(a)(2) to Amendment
No. 3 to the Schedule 13E-3 filed on October 13, 1998,
and incorporated by reference herein.
99(a)(3) Promissory Note, effective September 30, 1998, by Independent
Research Agency for Life Insurance, Inc. filed as Exhibit
99(a)(3) to Amendment No. 3 to the Schedule 13E-3 filed on
October 13, 1998, and incorporated by reference herein.
99(a)(4) Pledge Agreement, dated September 30, 1998, between
Independent Research Agency for Life Insurance, Inc. and
Norwest Bank Texas, N.A. filed as Exhibit 99(a)(4) to
Amendment No. 3 to the Schedule 13E-3 filed on
October 13, 1998, and incorporated by reference herein.
99(a)(5) Pledge Agreement, dated September 30, 1998, between United
Services Planning Association and Norwest Bank Texas, N.A.
filed as Exhibit 99(a)(5) to Amendment No. 3 to the Schedule
13E-3 filed on October 13, 1998, and incorporated by
reference herein.
99(b)(1) Opinion of the IRA Financial Advisor, included as Annex B in
the Proxy Statement is hereby incorporated by reference.
99(b)(2) Discussion materials prepared by the IRA Financial Advisor for
the Board of Directors of IRA filed as Exhibit 99(b)(2) to
the Schedule 13E-3 filed on July 6, 1998 and incorporated
by reference herein.
99(b)(3) Tax Opinion of Ernst & Young LLP included as Annex F to the
Proxy Statement is hereby incorporated by reference.
99(b)(4) Report prepared by Ernst & Young LLP for the Company filed as
Exhibit 99(b)(4) to Amendment No. 1 to the Schedule 13E-3 filed
on August 26, 1998, and incorporated by reference herein.
99(b)(5) Special Committee Package prepared by the IRA Financial
Advisor for the Special Committee filed as Exhibit 99(b)(5)
to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
99(b)(6) Mission Accomplishment Plan Summary; Form of Mission
Accomplishment Plan Agreement for a Select Group of Agents;
Form of Mission Accomplishment Plan Agreement for a Select
Group of Management; Form of Mission Accomplishment Plan for
a Select Group of Highly Compensated Employees; USPA&IRA
Mission Accomplishment Plans Board Grant Declaration and
Administrative Policies; Mission Accomplishment Plan for a
Select Group of Management; USPA&IRA Mission Accomplishment
Plans Board Grant Declaration and Administrative Policies;
Mission Accomplishment Plan for Agents; Mission
Accomplishment Plan for a Select Group of Key Employees; and
Mission Accomplishment Plan for a Select Group of Highly
Compensated Employees, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(6) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(7) List of Class A Shareholders and Class B Shareholders, as of
March 31, 1998, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(7) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated
by reference herein.
99(b)(8) Charts of Proposed Plan of Merger, the Current Structure and
Structure after the Merger, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(8) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(9) List of Regional Agents and District Agents, as of August 1,
1998, provided by the Company to the Financial Advisor filed
as Exhibit 99(b)(9) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(10) Home Office Organization Charts, as of March 5, 1998, provided
by the Company to the Financial Advisor filed as Exhibit
99(b)(10) to Amendment No. 2 to the Schedule 13E-3 filed on
September 8, 1998, and incorporated by reference herein.
99(b)(11) Treasury Transactions from September 30, 1998, through July
31, 1998, provided by the Company to the Financial Advisor
filed as Exhibit 99(b)(11) to Amendment No. 2 to the Schedule
13E-3 filed on September 8, 1998, and incorporated by
reference herein.
99(b)(12) Plaintiff's Amended Motion for Summary Judgment, INDEPENDENT
RESEARCH AGENCY FOR LIFE INSURANCE, INC. V. HUGENBERG, filed
May 3, 1991, provided by the Company to the Financial Advisor
filed as Exhibit 99(b)(12) to Amendment No. 2 to the Schedule
13E-3 filed on September 8, 1998, and incorporated by
reference herein.
99(b)(13) Brief in Support of Amended Motion for Summary Judgment,
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC. V.
HUGENBERG, filed May 3, 1991, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(13) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(14) Affidavit of Sam F. Rhodes, INDEPENDENT RESEARCH AGENCY FOR
LIFE INSURANCE, INC. V. HUGENBERG, dated February 18, 1991,
provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(14) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(15) Corrected Brief for Appellee, INDEPENDENT RESEARCH AGENCY FOR
LIFE INSURANCE, INC. V. HUGENBERG, filed October 9, 1991,
provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(15) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(16) Form of Registered Representative/Agent Agreement, provided
by the Company to the Financial Advisor filed as Exhibit
99(b)(16) to Amendment No. 2 to the Schedule 13E-3 filed on
September 8, 1998, and incorporated by reference herein.
99(b)(17) General Agent Agreement, between All American Life and
Casualty Company and Independent Research Agency for Life
Insurance, dated January 1, 1979, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(17) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(18) General Agency Contract, between Liberty National Life
Insurance Company and Independent Research Agency for Life
Insurance, Inc., effective October 1, 1981, provided by the
Company to the Financial Advisor filed as Exhibit 99(b)(18)
to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
99(b)(19) General Agency Contract, between Global Life Insurance Company
and Independent Research Agency for Life Insurance, Inc.,
dated February 7, 1997, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(19) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(20) Managing General Agent's Contract, between Monumental Life
Insurance Company and Independent Research Agency for Life
Insurance, dated April 11, 1979, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(20) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(21) General Agent's Agreement, between North American Company for
Life and Health Insurance and Independent Research Agency,
dated January 1, 1971, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(21) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(22) General Agent's Agreement, between The Old Line Life Insurance
Company of America and Carroll H. Payne, dated July 31, 1972,
provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(22) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(23) Prospective Operating Information, Summary of Cash Flow
Analysis and Balance Sheet Data from 1998 through 2009, and
Summary of Shareholder Cash Flows, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(23) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(24) Dealer Agreement concerning Fidelity Systematic Investment
Plans: Destiny Plans I and Destiny Plans II, provided by the
Company to the Financial Advisor filed as Exhibit 99(b)(24)
to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
99(b)(25) Dealer's Agreement, between A I M Distributors, Inc. and
United Services Planning Association, Inc., dated October 15,
1982, provided by the Company to the Financial Advisor filed
as Exhibit 99(b)(25) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(26) Dealer's Sales Agreement, between The Pioneer Group, Inc. and
United Services Planning Association, Inc., dated August 1,
1979, provided by the Company to the Financial Advisor filed
as Exhibit 99(b)(26) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(27) List of Directors and Officers of Independent Research Agency
for Life Insurance, Inc., as of May 8, 1998, provided by the
Company to the Financial Advisor filed as Exhibit 99(b)(27)
to Amendment No. 2 to the Schedule 13E-3 filed on September
8, 1998, and incorporated by reference herein.
99(b)(28) Biographical Information of Members of the Board of
Independent Research Agency for Life Insurance, Inc.,
provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(28) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(29) USPA&IRA Mission Statement, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(29) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(30) History of USPA&IRA, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(30) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated
by reference herein.
99(b)(31) Top Agent Producers in 1997 and 1996, provided by the Company
to the Financial Advisor filed as Exhibit 99(b)(31) to
Amendment No. 2 to the Schedule 13E-3 filed on September 8,
1998, and incorporated by reference herein.
99(b)(32) List of Property of Independent Research Agency for Life
Insurance, Inc., provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(32) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated
by reference herein.
99(b)(33) Independent Research Agency for Life Insurance, Inc. Schedule
of Discretionary or Nonrecurring Items Included in the State
of Operations, for the Five Years Ended September 30, 1997,
provided by the Company to the Financial Advisor filed as
Exhibit 99(b)(33) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(34) Form of Class B Stock Agreement, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(34) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(35) Payne Family Stock Agreement, between Independent Research
Agency for Life Insurance, Inc., Carroll H. Payne, Freda J.
Payne, Debra S. Payne, Carroll H. Payne II and Naomi K.
Payne, dated March 22, 1983, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(35) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(36) Class A Stock Agreement, between Independent Research Agency
for Life Insurance, Inc. and Margaret L. Galda, dated
December 5, 1997, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(36) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated
by reference herein.
99(b)(37) Articles of Incorporation of Independent Research Agency for
Life Insurance, Inc., as amended, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(37) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(38) Bylaws of Independent Research Agency for Life Insurance,
Inc., as amended December 5, 1996, provided by the Company to
the Financial Advisor filed as Exhibit 99(b)(38) to Amendment
No. 2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(b)(39) Internal Financial Information of USPA&IRA, from 1992 through
1997, provided by the Company to the Financial Advisor filed
as Exhibit 99(b)(39) to Amendment No. 2 to the Schedule 13E-3
filed on September 8, 1998, and incorporated by reference
herein.
99(b)(40) Independent Research Agency for Life Insurance, Inc. Class B
Stock Appreciation Schedule, from Fiscal Year 1990 Through
Fiscal Year 1997, provided by the Company to the Financial
Advisor filed as Exhibit 99(b)(40) to Amendment No. 2 to the
Schedule 13E-3 filed on September 8, 1998, and incorporated
by reference herein.
99(b)(41) Market and Industry Data, provided by the Company to the
Financial Advisor filed as Exhibit 99(b)(41) to Amendment No.
2 to the Schedule 13E-3 filed on September 8, 1998, and
incorporated by reference herein.
99(c)(1) Agreement and Plan of Merger, dated as of July 1, 1998, as
amended and restated as of October 30, 1998, between
Independent Research Agency for Life Insurance, Inc. and First
Command Financial Corporation, included as Annex A in the Proxy
Statement is hereby incorporated by reference.
99(c)(2) Form of Shareholders' Agreement to be entered into among
Surviving Corporation Shareholders and Surviving Corporation
filed as Exhibit 99(c)(2) to the Schedule 13E-3 filed on July 6,
1998, and incorporated by reference herein.
99(c)(3) Form of Articles of Incorporation of the Surviving Corporation,
as proposed to be amended, included as Annex E to the Proxy
Statement is hereby incorporated by reference.
99(c)(4) Form of Bylaws of the Surviving Corporation, as proposed to be
amended, included as Annex E to the Proxy Statement is hereby
incorporated by reference.
99(c)(5) Compromise Settlement Agreement and Mutual Release, dated
November 16, 1998, by and among Independent Research Agency for
Life Insurance, Inc., Carroll H. Payne II, Freda J. Payne,
Naomi K. Payne and Debra S. Payne
99(c)(6) Deferred Payment Agreement, dated November 16, 1998, by and
among Independent Research Agency for Life Insurance, Inc.,
First Command Financial Corporation and Debra S. Payne.
99(d)(1) Definitive copy of Letter to Shareholders, Notice of Special
Meeting of Shareholders, Proxy Statement, Form of Proxy and
Form of Election, dated October 30, 1998, for the Special
Meeting of Shareholders to be held on November 23, 1998 is
hereby incorporated by reference filed as Exhibit 99(d) to
Amendment No. 4 to the Schedule 13E-3 filed on October 30,
1998, and incorporated by reference herein.
99(d)(2) Supplement to Definitive Proxy Statement, dated November 17,
1998.
99(e) Articles 5.11 through 5.13 from the Texas Business Corporation
Act Relating to Rights of Dissenting Shareholders included as
Annex C in the Proxy Statement is hereby incorporated by
reference.
99(f) None.
99.1 Ground Lease, dated June 1, 1998, by and between Independent
Research Agency for Life Insurance, Inc. and First Command
Financial Corporation filed as Exhibit 99.1 to Amendment No.
1 to the Schedule 13E-3 filed on August 26, 1998, and
incorporated by reference herein.
99.2 Memorandum of Ground Lease, dated June 1, 1998, by and
between Independent Research Agency for Life Insurance, Inc.
and First Command Financial Corporation filed as Exhibit 99.2
to Amendment No. 1 to the Schedule 13E-3 filed on August 26,
1998, and incorporated by reference herein.
99.3 Lease Agreement, dated June 1, 1998, by and between
Independent Research Agency for Life Insurance, Inc. and
First Command Financial Corporation filed as Exhibit 99.3 to
Amendment No. 1 to the Schedule 13E-3 filed on August 26, 1998,
and incorporated by reference herein.
99.4 Management Agreement, dated June 1, 1998, by and between
Independent Research Agency for Life Insurance, Inc. and
First Command Financial Corporation filed as Exhibit 99.4 to
Amendment No. 1 to the Schedule 13E-3 filed on August 26,
1998, and incorporated by reference herein.
99.5 Administration Agreement, dated June 1, 1998, by and between
Independent Research Agency for Life Insurance, Inc. and
First Command Financial Corporation filed as Exhibit 99.5 to
Amendment No. 1 to the Schedule 13E-3 filed on August 26,
1998, and incorporated by reference herein.
99.6 Line of Credit Agreement, dated June 1, 1998, by and between
First Command Financial Corporation and Independent Research
Agency for Life Insurance, Inc. filed as Exhibit 99.6 to
Amendment No. 1 to the Schedule 13E-3 filed on August 26,
1998, and incorporated by reference herein.
99.7 Promissory Note, dated June 1, 1998, by and between First
Command Financial Corporation and Independent Research Agency
for Life Insurance, Inc. filed as Exhibit 99.7 to Amendment No.
1 to the Schedule 13E-3 filed on August 26, 1998, and
incorporated by reference herein.
99.8 Deed of Trust, Security Agreement and Assignment of Rents and
Leases, dated June 1, 1998, by and between First Command
Financial Corporation and Independent Research Agency for
Life Insurance, Inc. filed as Exhibit 99.8 to Amendment No.
1 to the Schedule 13E-3 filed on August 26, 1998, and
incorporated by reference herein
99.9 Uniform Commercial Code - Financing Statement, by and between
First Command Financial Corporation and Independent Research
Agency for Life Insurance, Inc. filed as Exhibit 99.9 to
Amendment No. 1 to the Schedule 13E-3 filed on August 26, 1998,
and incorporated by reference herein.
<PAGE>
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE
This Compromise Settlement Agreement and Mutual Release (referred to
hereinafter as "Agreement" as defined herein) is made as of the 16th day of
November, 1998 (referred to hereinafter as the "Effective Date" as defined
herein), by and between The Independent Research Agency for Life Insurance, Inc.
(referred to hereinafter as "IRA," as defined herein), and Carroll H. Payne II,
Freda J. Payne and Naomi K. Payne (referred to hereinafter as the "Other Payne
Family Members," as defined herein) and Debra Sue Payne.
WITNESSTH:
WHEREAS, IRA, the Other Payne Family Members and Debra Sue Payne are
parties to a civil action styled CARROLL H. PAYNE, II, FREDA J. PAYNE, NAOMI K.
PAYNE, AND THE INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC. V. DEBRA SUE
PAYNE, filed in the District Court of Tarrant County, Texas, 17th Judicial
District, assigned Cause No. 017-175207-98 (referred to hereinafter as "Lawsuit"
as defined herein);
WHEREAS, the Parties to this Agreement desire to resolve fully and finally
all of the matters in dispute between them; and
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 1
<PAGE>
WHEREAS, the Parties to this Agreement desire to effect the release of the
Parties and additional individuals and entities set out herein, and to provide
the covenants not to sue and indemnification set forth herein;
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises, releases and agreements herein contained, and for other good and
valuable consideration, the Parties hereto do hereby agree as follows:
I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings and where the context so indicates or requires, each such defined term
stated in the singular includes the plural and each such defined term stated in
the plural includes the singular:
A. "Agreement" shall mean this settlement of the Lawsuit and the other
matters agreed to hereby.
B. "Class A Stock" shall mean the Class A Voting Common Stock, par value
$0.10 per share of IRA.
C. "Class B Stock" shall mean the Class B Non-Voting Common Stock, par
value $0.02 per share of IRA.
D. "Deferred Payment Agreement" shall mean IRA's contractual commitment
to Debra Sue Payne pursuant to the terms of the agreement attached to this
Agreement and incorporated herein by reference as EXHIBIT "A".
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 2
<PAGE>
E. "Dismissal Motion and Order" shall mean the Joint Motion to Dismiss
with Prejudice and Agreed Order in the form of EXHIBIT "B" attached to this
Agreement.
F. "Effective Date" shall mean the date of execution of the Agreement,
November 16, 1998.
G. "First Command" shall mean First Command Financial Corporation.
H. "IRA" shall mean The Independent Research Agency for Life Insurance,
Inc., the corporate entity organized and existing under the laws of the State of
Texas and having its principal office in Fort Worth, Texas.
I. "IRA Affiliates" shall mean IRA, and each and every one of their
respective past, present and future parents, subsidiaries, divisions,
affiliates of every kind or nature, associated entities, principals,
officers, directors, employees, agents, attorneys, accountants, insurers,
successors, heirs, executors, administrators, trustees, beneficiaries,
descendants, and assigns, and any other person or entity claiming by,
through, or under any of the foregoing, and includes but is not limited to
United Service Planning Association, Inc., First Command, IRA Annuities,
Inc., Lamar C. Smith, James N. Lanier, and Howard M. Crump.
J. "IRA Released Parties" shall mean IRA and IRA Affiliates.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 3
<PAGE>
K. "IRA Releasing Parties" shall mean IRA and IRA Affiliates.
L. "Lawsuit" shall mean the action entitled CARROLL H. PAYNE, II, FREDA
J. PAYNE, NAOMI K. PAYNE, AND THE INDEPENDENT RESEARCH AGENCY FOR LIFE
INSURANCE, INC. V. DEBRA SUE PAYNE, filed in the District Court of Tarrant
County, Texas, 17th Judicial District, on or about September 6, 1998, assigned
Cause No. 017-175207-98.
M. "Lawsuit Claims" shall mean any and all claims alleged directly or
indirectly by one or more of the Parties in the Lawsuit, or in connection
with the Lawsuit, including but not limited to claims of dissenter's and
appraisal rights, breach of fiduciary duty, specific performance of contract,
temporary and permanent injunctive relief, fraud, conspiracy, breach of
contract, anticipatory repudiation of contract, tortious interference with
contractual relationships, conversion, breach of good faith and fair dealing,
improper use of corporate forms as tools to carry out fraudulent and illegal
schemes, declaratory relief, constructive trust, self-dealing, extortion,
coercion, theft of corporate opportunities, conflict of interest,
misrepresentation, breach of duty of
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 4
<PAGE>
loyalty and obedience, attorneys' fees, costs, out-of-pocket expenses, interest,
and punitive damages.
N. "MAP" shall mean the Mission Accomplishment Plan implemented by IRA
prior to the Proposed Merger.
O. "Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of July 1, 1998, as amended and restated as of October 30, 1998, between IRA
and First Command.
P. "Original Answer" shall mean the Original Answer Debra Sue Payne filed
on October 22, 1998 in the Lawsuit.
Q. "Proxy" shall mean the Proxy Statement furnished to shareholders of
IRA dated October 30, 1998.
R. "Parties" shall mean IRA, the Other Payne Family Members and Debra Sue
Payne.
S. "Debra Sue Payne Released Parties" shall mean Debra Sue Payne and
each and every one of her respective past, present and future parents,
subsidiaries, divisions, affiliates of every kind or nature, associated
entities, principals, officers, directors, shareholders, employees, agents,
attorneys, accountants, insurers, successors, heirs, executors,
administrators, trustees, beneficiaries, descendants, and assigns, and any
other person or entity claiming by, through, or under any of the foregoing;
provided however, this definition expressly excludes the Other Payne Family
Members.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 5
<PAGE>
T. "Debra Sue Payne Releasing Parties" shall mean Debra Sue Payne and
each and every one of their respective past, present and future parents,
subsidiaries, divisions, affiliates of every kind or nature, associated
entities, principals, officers, directors, shareholders, employees,
agents, attorneys, accountants, insurers, successors, heirs, executors,
administrators, trustees, beneficiaries, descendants, and assigns, and any
other person or entity claiming by, through, or under any of the foregoing.
U. "Other Payne Family Members" shall mean Carroll H. Payne II, Freda J.
Payne and Naomi K. Payne.
V. "Other Payne Family Members Released Parties" shall mean the Other
Payne Family Members and each and every one of their respective past, present
and future parents, subsidiaries, divisions, affiliates of every kind or
nature, associated entities, principals, officers, directors, shareholders,
employees, agents, attorneys, accountants, insurers, successors,
heirs, executors, administrators, trustees, beneficiaries, descendants, and
assigns, and any other person or entity claiming by, through, or under any of
the foregoing; provided however, this definition expressly excludes Debra Sue
Payne.
W. "Other Payne Family Members Releasing Parties" shall mean the Other
Payne Family Members and each and every one of their respective past, present
and future parents, subsidiaries, divisions, affiliates of every kind or
nature, associated entities, principals, officers, directors, shareholders,
employees, agents, attorneys, accountants, insurers, successors, heirs,
executors, administrators, trustees, beneficiaries, descendants, and assigns,
and any other person or entity claiming by, through, or under any of the
foregoing.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 6
<PAGE>
X. "Proposed Merger" shall mean the proposed merger of IRA with and into
First Command pursuant to the Merger Agreement.
Y. "Released Claims" shall mean all manner of action, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, covenants, contracts, controversies, agreements, promises, damages,
expenses, claims, and demands whatsoever, existing on, or at any time prior
to, the Effective Date hereof, in law, in equity, or otherwise, whether now
known or hereafter discovered, whether suspected or unsuspected, that the
Debra Sue Payne Releasing Parties, the IRA Releasing Parties, or the Other
Payne Family Members Releasing Parties had, have, or may ever have upon or by
reason of any fact, matter, cause, occurrence, statement, omission, duty,
action, or failure to act, or anything whatsoever arising out of, involving,
regarding or relating to the relationship, dealings, or affairs between on
the one hand Debra Sue Payne and on the other hand IRA, IRA Affiliates and/or
one or more of the Other Payne Family Members, including, but not limited to,
all claims that were asserted or could have been asserted in the Lawsuit,
(including, without limitation, the Lawsuit Claims), and all claims arising
from or related to, directly or indirectly, (1) the facts, circumstances,
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 7
<PAGE>
allegations, and controversies related or giving rise to the Lawsuit, (2) the
Class A Stock, (3) the Class B Stock, (4) the MAP, (5) the Merger Agreement,
(6) the Proposed Merger, (7) the Stock Agreement, (8) the Schedule 13E-3 IRA
filed with the Securities and Exchange Commission ("SEC") on or about July 6,
1998, in connection with the Proposed Merger; (9) the Proxy, (10) all acts
and/or omissions prior to Effective Date relating in whole or in part in any
way to the control, ownership, operation, business, management, or formation
of IRA or IRA Affiliates, and (11) the settlement of the Lawsuit and/or the
negotiation and execution of this Agreement (including, without limitation,
all claims of fraudulent inducement, mistake, breach of fiduciary duty,
economic duress, and unfairness).
Z. "Settlement Amount" shall mean Four Million Eight Hundred thousand
U.S. Dollars ($4,800,000.00).
AA. "Stock Agreement" shall mean the Stock Purchase Agreement dated March
22, 1983, among IRA, Carroll H. Payne, Freda J. Payne, Debra Sue Payne,
Carroll H. Payne II, and Naomi K. Payne.
BB. "Wire Transfer Instructions" shall mean the wire transfer instructions
set out in EXHIBIT "C" to this Agreement.
II. RECITALS
SECTION 1. PAYMENT; SALE OF STOCK; DEFERRED PAYMENT AGREEMENT; DISMISSAL
OF THE LAWSUIT.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 8
<PAGE>
1.1 SETTLEMENT AMOUNT. Contemporaneously with the execution hereof,
and pursuant to the Wire Transfer Instructions, IRA shall pay to Debra Sue
Payne by wire transfer of immediately available funds, the Settlement Amount.
Receipt of such funds shall be deemed to have taken place when such funds
are received in the account set out in the Wire Transfer Instructions.
1.2 SALE OF STOCK. Contemporaneously with the execution hereof and the
Deferred Payment Agreement and receipt of payment described in Section 1.1
above, Debra Sue Payne shall sell to, and deliver to, IRA all of her Class A
Stock, all of her Class B stock, all stock certificates duly endorsed in
blank, any and all of her other claims to stock ownership rights in IRA and
the documents evidencing such claims, as well as any and all other rights in
or claims to IRA, ownership or otherwise, she may have pursuant to the Stock
Agreement or any other agreement or document.
1.3 In exchange for the consideration as set forth in Section 1, Debra
Sue Payne hereby releases (1) all rights related to her shares of Class A
Stock; (2) all rights related to her shares of Class B Stock; (3) any and all
of her rights under the Stock Agreement including but not limited to her
entitlement to buy the Class A Stock from the Other Payne Family Members,
"anti-dilution" rights, right of first refusal, pre-emptive right, right to
own a minority by one share of the outstanding shares of Class A Stock, pro
rata option right with respect to voting stock owned by the Other Payne
Family Members; (4) rights to receive dividends or distributions on her Class
A stock or on her Class B Stock; (5) her existing ownership interest in IRA;
(6) her rights to and interest in the Released Claims; and agrees to other
undertakings contained herein. This Agreement shall result in a complete
termination of Debra Sue Payne's interest in, and a complete redemption of,
all of her stock in IRA.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 9
<PAGE>
1.4 DISMISSAL OF LAWSUIT. Contemporaneously with the execution hereof,
the Parties hereto shall execute the Dismissal Motion and Order. Counsel for
IRA, George Bramblett, shall hold the original Dismissal Motion and Order in
trust until confirmation of the receipt of the Settlement Amount as set forth
in Section 1.1 and the delivery of documents as set forth in Section 1.2.
Upon confirmation of the receipt of the consideration as set out in Section
1.1, and the delivery of documents as set out in Section 1.2, George
Bramblett shall file the Dismissal Motion and Order. All Parties and their
counsel shall use their best efforts to prosecute the Dismissal Motion and
Order and obtain entry of the said Order.
1.5 The Parties and their attorneys agree to cooperate to effectuate this
Agreement, including executing any and all additional or supplemental documents,
and taking all additional actions, which may be necessary or appropriate to give
full force and effect to and implement the terms and intent of this Agreement.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 10
<PAGE>
1.6 DEFERRED PAYMENT AGREEMENT. In addition to the consideration
set forth in Section 1.1, IRA agrees to enter into and perform the Deferred
Payment Agreement.
SECTION 2. MUTUAL, GLOBAL RELEASES.
2.1. Effective upon receipt of the consideration as set out in Section
1, the Debra Sue Payne Releasing Parties fully release, remise, and forever
discharge, and by these presents do fully release and forever discharge the
IRA Released Parties and the Other Payne Family Members Released Parties,
jointly and severally, of and from all the Released Claims; provided,
however, that nothing in this Agreement is intended or shall be construed to
constitute a waiver, release, or covenant not to sue regarding, or otherwise
limit any Party's rights under this Agreement.
2.2 Effective upon receipt of the consideration as set out in Section
1, the Debra Sue Payne Releasing Parties covenant not to sue the IRA Released
Parties or the Other Payne Family Members Released Parties, or to instigate,
initiate, or pursue against the IRA Released Parties or the Other Payne
Family Members Released Parties, in any manner of judicial or administrative
proceeding on their own behalf or on behalf of any of their respective heirs,
executors, administrators, descendants, successors, agents, representatives,
beneficiaries and assigns or any other person or entity regarding any or all
Released Claims; provided, however, that nothing in this Agreement is
intended or shall be
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 11
<PAGE>
construed to constitute a waiver, release, or covenant not to sue regarding,
or otherwise limit any Party's rights under this Agreement. In the event of
any breach of the foregoing covenant by Debra Sue Payne, Debra Sue Payne
agrees to indemnify and hold harmless the IRA Released Parties or the Other
Payne Family Members Released Parties from any and all manner of action,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements, promises,
damages, expenses, claims, and demands (including, but not limited to, future
costs and attorneys' fees) arising from or related to, directly or
indirectly any such breach, claim, or proceeding.
2.3 Effective upon the execution and delivery of documents as set out in
Section 1, the IRA Releasing Parties and the Other Payne Family Members
Releasing Parties fully release, remise, and forever discharge, and by these
presents do fully release and forever discharge the Debra Sue Payne Released
Parties, jointly and severally, of and from all of the Released Claims;
provided, however, that nothing in this Agreement is intended or shall be
construed to constitute a waiver, release, or covenant not to sue regarding, or
otherwise limit any Party's rights under this Agreement.
2.4 Effective upon the execution and delivery of documents set out in
Section 1, the IRA Releasing Parties and the Other Payne Family Members
Releasing Parties covenant not to sue the Debra Sue Payne Released Parties or to
instigate, initiate, or pursue against the Debra Sue Payne Released Parties any
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 12
<PAGE>
manner of judicial or administrative proceeding on their own behalf or on behalf
of any of their respective heirs, executors, administrators, descendants,
successors, agents, representatives, beneficiaries and assigns or any other
person or entity regarding any or all the Released Claims; provided, however,
that nothing in this Agreement is intended or shall be construed to constitute a
waiver, release, or covenant not to sue regarding, or otherwise limit any
Party's rights under this Agreement.
In the event of any breach of the foregoing covenant by IRA or IRA
Affiliates, IRA and the IRA Affiliates agree to indemnify and hold harmless
the Debra Sue Payne Released Parties from any and all manner of action,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements, promises,
damages, expenses, claims, and demands (including, but not limited to, future
costs and attorneys' fees) arising from or related to, directly or indirectly
any such breach, claim, or proceeding.
In the event of any breach of the foregoing covenant by the Other Payne
Family Members, the Other Payne Family Members agree to indemnify and hold
harmless the Debra Sue Payne Released Parties from any and all manner of action,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements, promises,
damages, expenses, claims, and demands (including, but not limited to, future
costs and
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 13
<PAGE>
attorneys' fees) arising from or related to, directly or indirectly any such
breach, claim, or proceeding.
2.5 The Parties acknowledge that they have carefully read this Agreement,
that they fully understand its terms and import, and that they voluntarily
consent to it as a full and fair discharge of all of the claims of the IRA
Releasing Parties, the Other Payne Family Members Releasing Party, and the Debra
Sue Payne Releasing Parties, respectively; provided, however, that nothing in
this Agreement is intended or shall be construed to constitute a waiver,
release, or covenant not to sue regarding, or otherwise limit any Party's rights
under this Agreement. The Parties also acknowledge that certain states may have
laws, statutes and common law rulings which relate to a general release and the
effect thereof. Without acknowledging whether such laws apply to this Agreement
(and specifically acknowledging and agreeing that Texas law shall govern this
Agreement), the Parties further acknowledge that they are aware that they may
hereafter discover material facts in addition to or different from those that
they now know or believe to be true with respect to the subject matter of this
Agreement, but that it is their intention to settle and release any and all
claims, disputes, or differences referred to above, whether known or unknown,
suspected or unsuspected, fully, finally, and forever. Accordingly, each of the
Parties expressly waives any and all rights each may have under any state's
laws, statutes, regulations, or common law principles relating to or arising out
of a
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 14
<PAGE>
general release and the effect thereof which would limit, impair, or eliminate
the effectiveness of the releases provided herein. The Parties acknowledge
that they assume the risk of any mistake of fact or law with regard to all
aspects of this Agreement and any asserted rights released hereby.
SECTION 3. COVENANTS, REPRESENTATIONS, AND WARRANTIES.
3.1 Debra Sue Payne hereby severally covenants, represents, and warrants
to IRA and the Other Payne Family Members as follows:
(a) Debra Sue Payne is correctly described and named in this
Agreement.
(b) Before executing this Agreement, Debra Sue Payne became fully
informed of the terms, contents, provisions, and effect of this Agreement
and the attached exhibits.
(c) The signatory to this Agreement signing on behalf of Debra Sue
Payne is fully authorized and legally competent to execute this Agreement
as the legal, valid, and binding act and deed of Debra Sue Payne, and is a
duly authorized representative of such Party.
(d) This Agreement is fully and forever binding on, and enforceable
against, each of the Debra Sue Payne Releasing Parties in accordance with
its terms.
(e) The execution and delivery of this Agreement and any other
documents, agreements, or instruments executed or delivered by Debra Sue
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 15
<PAGE>
Payne pursuant hereto and the consummation of the transactions herein or
therein contemplated does not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, any material
agreement or instrument to which Debra Sue Payne is a party or any
provision of law, statute, rule, or regulation applicable to Debra Sue
Payne or any judicial or administrative order or decree by which Debra Sue
Payne is bound.
(f) The Debra Sue Payne Releasing Parties own the Released Claims
claimed by or attributable to them, and they are free and clear of any and
all claims, liens, or other encumbrances of any kind or nature, of any
other person, and there is no other person who could or should have
asserted such claims or joined in any settlement or compromise of such
claims.
(g) The Debra Sue Payne Releasing Parties have not assigned, pledged,
or in any other manner sold, transferred, or hypothecated the Released
Claims.
(h) In entering into and signing this Agreement, Debra Sue Payne has
had the benefit of the advice of attorneys of her own choosing, and enters
into this Agreement freely by her own choosing and judgment, and without
duress or other influence.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 16
<PAGE>
(i) Debra Sue Payne agrees that the negotiations and execution of
this Agreement have been at arm's length and that she is not relying on any
purported duty to her from any of the IRA Released Parties or the Other
Payne Family Members Released Parties in any manner whatsoever, in
connection with this Agreement.
(j) Debra Sue Payne has made an investigation to her satisfaction of
all facts and reasons why she should enter into this Agreement and agrees,
based upon her knowledge, experience, and investigation.
(k) Debra Sue Payne represents that she has not relied upon, and will
not rely upon any statements, acts, or omissions by any of the IRA Released
Parties or the Other Payne Family Members Released Parties, other than as
set forth in this Agreement, in making her decision to enter into this
Agreement.
(l) This Agreement is duly executed by Debra Sue Payne with full
knowledge and understanding of its terms and meaning, on her own judgment
and upon the advice of her attorneys and financial and tax advisors.
Specifically, Debra Sue Payne has consulted with her legal, financial, and
tax advisors, and she recognizes that the payment of the Settlement Amount
may result in tax liability for her for which she will be solely
responsible.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 17
<PAGE>
(m) This Agreement is not and shall not be construed as an admission
of wrongdoing or liability by any Party, any of which wrongdoing or
liability is and has been specifically denied by each Party. It is
expressly understood and agreed that the terms of this Agreement are
contractual and not merely recitals, and that the agreements contained
herein and the consideration transferred is intended to compromise doubtful
and disputed claims, avoid and terminate litigation, and buy peace, and
that no payments made and no release or other consideration given by any
Party shall be construed as an admission of wrongdoing or liability by any
Party, all wrongdoing or liability being expressly denied by each Party.
(n) Debra Sue Payne acknowledges that her aforesaid representations
are a material inducement to every other Party to enter into this
Agreement.
3.2 IRA and the IRA Affiliates hereby severally covenant, represent, and
warrant to Debra Sue Payne and the Other Payne Family Members as follows:
(a) IRA and IRA Affiliates are correctly described and named in this
Agreement.
(b) Before executing this Agreement, IRA and IRA Affiliates became
fully informed of the terms, contents, provisions, and effect of this
Agreement and the attached exhibits.
(c) The signatory to this Agreement signing on behalf of IRA and IRA
Affiliates is fully authorized and legally competent to execute this
Agreement as the legal, valid, and binding act and deed of IRA and IRA
Affiliates, and is a duly authorized representative of IRA and IRA
Affiliates.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 18
<PAGE>
(d) This Agreement is fully and forever binding on, and enforceable
against, each of the IRA Releasing Parties in accordance with its terms.
(e) The execution and delivery of this Agreement and any other
documents, agreements or instruments executed or delivered by IRA pursuant
hereto and the consummation of the transactions herein or therein
contemplated does not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material
agreement or instrument to which IRA or IRA Affiliates are a party or any
provision of law, statute, rule, or regulation applicable to such Party or
any judicial or administrative order or decree by which IRA and IRA
Affiliates are bound.
(f) The signatory for IRA and the IRA Affiliates fully informed all
appropriate directors, officers, beneficiaries, and representatives of or
persons having an interest in or relationship with IRA or IRA Affiliates of
the terms, contents, provisions, and effect of this Agreement; and the
execution and delivery of this Agreement by the signatory for IRA has been
duly authorized and approved by the beneficiaries, board of directors,
partners, or other persons, if any, whose authorization or approval is
required or necessary to authorize execution and delivery of this Agreement
by such signatory as the binding act and deed of IRA and IRA Affiliates.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 19
<PAGE>
(g) IRA and the IRA Releasing Parties own the Released Claims claimed
by or attributable to them, and they are free and clear of any and all
claims, liens, or other encumbrances of any kind or nature, of any other
person, and there is no other person who could or should have asserted such
claims or joined in any settlement or compromise of such claims.
(h) IRA and the IRA Releasing Parties have not assigned, pledged, or
in any other manner sold, transferred, or hypothecated any of the Released
Claims.
(i) In entering into and signing this Agreement, IRA and IRA
Affiliates have had the benefit of the advice of attorneys of their own
choosing, and enter into this Agreement freely by their own choosing and
judgment, and without duress or other influence.
(j) IRA and IRA Affiliates agree that the negotiations and execution
of this Agreement have been at arm's length and that they are not relying
on any purported duty to them from any of the Debra Sue Payne Released
Parties or the Other Payne Family Members Released Parties in any manner
whatsoever, in connection with this Agreement.
(k) IRA and IRA Affiliates have made an investigation to their
satisfaction of all facts and reasons why IRA and IRA Affiliates should
enter into this Agreement and agree, based upon their knowledge,
experience, and investigation.
(l) IRA and IRA Affiliates represent that they have not relied upon,
and will not rely upon, any statements, acts or omissions by any of the
Debra Sue Payne Released Parties or the Other Payne Family Members
Released Parties, other than as set forth in this Agreement, in making
their decision to enter into this Agreement.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 20
<PAGE>
(m) This Agreement is duly executed by IRA with full knowledge and
understanding of its terms and meaning, on IRA's own judgment and upon the
advice of IRA's attorneys and financial and tax advisors, and IRA
recognizes that it is solely responsible for any tax consequences to it as
a result of this Agreement.
(n) This Agreement is not and shall not be construed as an admission
of wrongdoing or liability by any Party, any which wrongdoing or liability
is and has been specifically denied by each Party. It is expressly
understood and agreed that the terms of this Agreement are contractual and
not merely recitals, and that the agreements contained herein and the
consideration transferred is intended to compromise doubtful and disputed
claims, avoid and terminate litigation, and buy peace, and that no payments
made and no release or other consideration given by any Party shall be
construed as an admission of wrongdoing or liability by any Party, all
wrongdoing or liability being expressly denied by each Party.
(o) IRA and the IRA Affiliates acknowledge that their aforesaid
representations are a material inducement to every other Party to enter
into this Agreement.
3.3 The Other Payne Family Members hereby severally covenant, represent,
and warrant to IRA and Debra Sue Payne as follows:
COMPROMISE SETTLEMENT AGREEMENT
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<PAGE>
(a) Each of the Other Payne Family Members is correctly described and
named in this Agreement.
(b) Before executing this Agreement, each of the Other Payne Family
Members became fully informed of the terms, contents, provisions, and
effect of this Agreement and the attached exhibits.
(c) The signatories to this Agreement signing on behalf of each of
the Other Payne Family Members is fully authorized and legally competent to
execute this Agreement as the legal, valid, and binding act and deed of
each of the Other Payne Family Members, and is a duly authorized
representative of such Party.
(d) This Agreement is fully and forever binding on, and enforceable
against, each of the Other Payne Family Members Releasing Parties in
accordance with its terms.
(e) The execution and delivery of this Agreement and any other
documents, agreements or instruments executed or delivered by each of the
Other Payne Family Members pursuant hereto and the consummation of the
transactions herein or therein contemplated does not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any material agreement or instrument to which each of the
Other Payne Family Members is a party or any provision of law, statute,
rule, or regulation applicable to such Party or any judicial or
administrative
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 22
<PAGE>
order or decree by which each of the Other Payne Family Members is bound.
(f) The Other Payne Family Members own the Released Claims claimed by
or attributable to the Other Payne Family Members, and they are free and
clear of any and all claims, liens, or other encumbrances of any kind or
nature, of any other person, and there is no other person who could or
should have asserted such claims or joined in any settlement or compromise
of such claims.
(g) Each of the Other Payne Family Members has not assigned, pledged,
or in any other manner sold, transferred, or hypothecated any of the
Released Claims.
(h) In entering into and signing this Agreement, each of the Other
Payne Family Members has had the benefit of the advice of attorneys of each
of the Other Payne Family Members' own choosing, and enters into this
Agreement freely by each of the Other Payne Family Members' own choosing
and judgment, and without duress or other influence.
(i) Each of the Other Payne Family Members agrees that the
negotiations and execution of this Agreement have been at arm's length and
that they are not relying on any purported duty to them from any of the
Debra Sue Payne Released Parties or the IRA Released Parties in any manner
whatsoever, in connection with this Agreement.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 23
<PAGE>
(j) Each of the Other Payne Family Members has made an investigation
to each of the Other Payne Family Members' satisfaction of all facts and
reasons why each of the Other Payne Family Members should enter into this
Agreement and agrees, based upon each of the Other Payne Family Members'
knowledge, experience, and investigation.
(k) Each of the Other Payne Family Members represents that he or she
has not relied upon, and will not rely upon, any statements, acts or
omissions by any of the Debra Sue Payne Released Parties, other than as set
forth in this Agreement, in making its decision to enter into this
Agreement.
(l) This Agreement is duly executed by each of the Other Payne Family
Members with full knowledge and understanding of its terms and meaning, on
each of the Other Payne Family Members' own judgment and upon the advice of
each of the Other Payne Family Members' attorneys and financial and tax
advisors.
(m) This Agreement is not and shall not be construed as an admission
of wrongdoing or liability by any Party, any which wrongdoing or liability
is and has been specifically denied by each Party. It is expressly
understood and agreed that the terms of this Agreement are contractual and
not merely recitals, and that the agreements contained herein and the
consideration transferred is intended to compromise doubtful and disputed
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 24
<PAGE>
claims, avoid and terminate litigation, and buy peace, and that no payments
made and no release or other consideration given by any Party shall be
construed as an admission of wrongdoing or liability by any Party, all
wrongdoing or liability being expressly denied by each Party.
(n) Each of the Other Payne Family Members acknowledges that its
aforesaid representations are a material inducement to every other Party to
enter into this Agreement.
3.4 Nothing in this Agreement shall, or shall be construed to, limit
any Parties' rights with respect to claims initiated by or against the
Internal Revenue Service or any other taxing authorities (including without
limitation any state or local agency).
3.5 As attested by the signatures of each Party and the signatures of the
attorneys for each Party, this Agreement was fully explained to each Party by
such Party's attorneys before such Party signed the Agreement, and each attorney
attests that the Party he represents has acknowledged that such party fully
understands the terms and the legal consequences of the Agreement and
understands that the Party's release in Section 2 shall operate as a full,
complete, and final release and settlement of any and all claims released in
Section 2.
SECTION 4. CONFIDENTIALITY.
4.1 The Parties shall not disclose to others any confidential or
proprietary information belonging to another Party, except as may be
specifically authorized in writing in advance of such disclosure by the Party
from whom the authorization is sought, or in the event authorization is sought
from IRA, by an officer of IRA. The confidential or proprietary information
in this context includes but is not limited to IRA or its subsidiaries'
client lists, business plans, product offerings, product pricing, investment
performance, and agent compensation materials.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 25
<PAGE>
SECTION 5. NOTICES.
5.1 All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been given
upon receipt by the persons designated below at the following addresses or
facsimile numbers or to such other address or facsimile number as any Party
hereto may specify by notice in writing, via certified mail, return receipt
requested, to the other Parties (and their attorneys named below) hereto:
If to IRA: Lamar C. Smith
THE INDEPENDENT RESEARCH AGENCY
FOR LIFE INSURANCE, INC.
4100 South Hulen Street
Fort Worth, Texas 76019
Telecopy: (817) 731-8621 Ext. 2200
George W. Bramblett
HAYNES AND BOONE, L.L.P.
3100 NationsBank Plaza
901 Main Street
Dallas, Texas 75202-3714
Telecopy: (214) 651-5490
If to the Other Payne Family Members:
Carroll H. Payne II
P.O. Box 11331
Fort Worth, Texas 76110-0331
Telecopier: (817) 923-6423
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 26
<PAGE>
Tom L. Larimore
MICHENER, LARIMORE, SWINDLE,
WHITAKER, FLOWERS, SAWYER,
REYNOLDS & CHALK, L.L.P.
301 Commerce Street, Suite 3500
Fort Worth, Texas 76102-4186
Facsimile: (817)335-6935
If to Debra Sue Payne:
Debra Sue Payne
4514 Cole Avenue, Suite 600
Dallas, Texas 75205
Facsimile (214) 922-7993
Robert Elkin
McKool Smith
300 Crescent Court
Suite 1500
Dallas, Texas 75201
Facsimile (214) 978-4044
SECTION 6. MISCELLANEOUS.
6.1 FULL SATISFACTION. The Debra Sue Payne Releasing Parties understand
and agree that the consideration herein is being paid and provided in full
satisfaction of all of Released Claims claimed by or attributable to Debra
Sue Payne and all claimed damages arising out of and relating to Released
Claims claimed by or attributable to Debra Sue Payne, and that the Debra Sue
Payne Releasing Parties, except as set forth herein, will receive no further
consideration for legal fees, costs, expenses, taxes, or for any other
purpose from the IRA Released Parties or the Other Payne Family Members
Released Parties, arising out of, or relating to, the Released Claims.
6.2 NO ADMISSION. The Parties to this Agreement understand that this
Agreement is a compromise of disputed claims and that payment is not to be
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 27
<PAGE>
construed as an admission of liability on the part of any Party hereto, each of
whom expressly denies liability.
6.3 AMENDMENTS. Neither this Agreement nor any term hereof may be
changed, waived, discharged, or terminated orally, but only by written agreement
signed by all of the Parties hereto.
6.4 HEADINGS. The headings of the sections and the sub-sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 28
<PAGE>
6.5 APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to conflict of
laws principles.
6.6 ENTIRE AGREEMENT. THIS AGREEMENT (INCLUDING EXHIBITS) CONSTITUTES THE
ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDES ANY PRIOR AGREEMENTS, UNDERSTANDINGS, CONDITIONS, REPRESENTATIONS
OR WARRANTIES, WHETHER ORAL OR WRITTEN, WITH RESPECT TO THE SUBJECT MATTER
HEREOF, AND THE TERMS OF THIS AGREEMENT ARE CONTRACTUAL AND NOT MERE RECITALS.
The Parties further agree not to seek to introduce other writings or parol
evidence to contradict the terms hereof.
6.7 SURVIVABILITY AND SEVERABILITY. The agreements, representations, and
warranties set forth in this Agreement shall survive the execution hereof. If
any term or provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such term or provision shall be ineffective to the
extent of such invalidity or unenforceability without invalidating the remaining
terms and provisions hereof, and this Agreement shall be construed as if such
invalid or unenforceable term or provision had not been contained herein,
provided, however, that the foregoing shall in no way be interpreted or
construed to affect the enforceability of the release, covenant not to sue,
and/or indemnification provisions of this Agreement upon payment of the
Settlement Amount.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 29
<PAGE>
6.8 VALID AGREEMENT. This Agreement has been duly authorized and
constitutes a legal, valid, and binding obligation and is enforceable in
accordance with its terms.
6.9 EXPENSES. IRA will pay legal fees, costs and expenses of the
Parties; provided however that it shall pay such fees, costs and expenses of
Debra Sue Payne in an amount not to exceed One Million Three Hundred Thousand
U.S. Dollars ($1,300,000.00) by transfer of immediately available funds
pursuant to the Wire Transfer Instruction.
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed one and the same instrument. No Party to this
Agreement shall be bound hereby until a counterpart of this Agreement has been
executed by every Party hereto. It shall not be necessary for each Party to
execute the same counterpart, but each Party hereto shall receive one or more
counterparts signed by all other Parties hereto.
6.11 PRONOUNS, GENDER. Pronouns, wherever used herein, and of whatever
gender, shall include natural persons, corporations, associations, partnerships,
and all other entities of every kind and character, and the singular shall
include the plural whenever and as often as is appropriate.
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<PAGE>
6.12 EXHIBITS. The three (3) exhibits referred to in this Agreement are
attached and are incorporated into this Agreement by reference as fully set
forth herein.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
November 16, 1998.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 31
<PAGE>
/s/ Tom L. Larimore
-----------------------------
Tom L. Larimore
State Bar No. 11950000
MICHENER, LARIMORE, SWINDLE,
WHITAKER, FLOWERS, SAWYER,
REYNOLDS & CHALK, L.L.P.
301 Commerce Street, Suite 3500
Fort Worth, Texas 76102-4186
Telephone: 817/335-4417
Telecopier: 817/335-6935
/s/ Walker C. Friedman
-----------------------------
Walker C. Friedman
State Bar No. 07472500
FRIEDMAN, YOUNG & SUDER, P.C.
500 Throckmorton, 20th Floor
Fort Worth, Texas 76102
Telephone: 817/334-0144
Telecopier: 817/334-0401
/s/ David Keltner
-----------------------------
David Keltner
State Bar No. 11249500
JOSE HENRY BRANTLEY KELTNER
309 West Seventh, Suite 1300
Fort Worth, Texas 76102-5113
Telephone: 817/877-3303
Telecopier: 817/338-9109
ATTORNEYS FOR CARROLL H.
PAYNE, II, FREDA J. PAYNE AND
NAOMI K. PAYNE
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 32
<PAGE>
/s/ George W. Bramblett
-----------------------------
George W. Bramblett
State Bar No. 02867000
HAYNES AND BOONE, L.L.P.
3100 NationsBank Plaza
901 Main Street
Dallas, Texas 75202-3714
Telephone: (214) 651-5000
Telecopier: (214) 651-5490
/s/ Ed Huddleston
-----------------------------
Ed Huddleston
State Bar No. 10148300
LAW SNAKARD & GAMBILL, P.C.
500 Throckmorton, Suite 3200
Fort Worth, Texas 76102-3859
Telephone: 817/878-6390
Telecopier: 817/332-7473
ATTORNEYS FOR THE
INDEPENDENT RESEARCH
AGENCY FOR LIFE INSURANCE,
INC.
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 33
<PAGE>
/s/ Robert Elkin
-----------------------------
Robert Elkin
State Bar No. 06522600
McKOOL SMITH, P.C.
300 Crescent Court, Suite 1500
Dallas, Texas 75201
Telephone: (214) 978-4000
Telecopier: (214) 978-4044
Marshall M. Searcy
State Bar No. 17955500
KELLY, HART & HALLMAN
201 Main Street, Suite 2500
Fort Worth, Texas 76102-3194
Telephone: (817) 332-2500
Telecopier: (817) 878-9280
ATTORNEYS FOR DEBRA SUE PAYNE
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 34
<PAGE>
THE INDEPENDENT RESEARCH AGENCY FOR LIFE
INSURANCE, INC.
By: /s/ Lamar C. Smith
-----------------------------
Lamar C. Smith.
Chairman of the Board
STATE OF TEXAS Section
Section
COUNTY OF TARRANT Section
BEFORE ME, the undersigned authority, on this day personally appeared LAMAR
C. SMITH, known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he has read the foregoing Compromise
Settlement Agreement and Mutual Release, fully understood the same, and that he
executed it as an act of The Independent Research Agency for Life Insurance,
Inc., knowingly and voluntarily for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 16th day of November, 1998.
/s/ Rosemary A. Norris
-----------------------------
Notary Public in and for
The State of Texas
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 35
<PAGE>
/s/ DEBRA SUE PAYNE
-----------------------------
Debra Sue Payne
STATE OF TEXAS Section
Section
COUNTY OF TARRANT Section
BEFORE ME, the undersigned authority, on this day personally appeared DEBRA
SUE PAYNE, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that she has read the foregoing
Compromise Settlement Agreement and Mutual Release, fully understood the same,
and that she executed it knowingly and voluntarily for the purposes and
consideration therein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 16th day of November, 1998.
/s/ Sheri Adams
-----------------------------
Notary Public in and for
The State of Texas
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 36
<PAGE>
/s/ CARROLL H. PAYNE II
-----------------------------
Carroll H. Payne II
STATE OF TEXAS Section
Section
COUNTY OF TARRANT Section
BEFORE ME, the undersigned authority, on this day personally appeared
CARROLL H. PAYNE II., known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he has read the foregoing
Compromise Settlement Agreement and Mutual Release, fully understood the same,
and that he executed it knowingly and voluntarily for the purposes and
consideration therein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 16th day of November, 1998.
/s/ Bobbie J. Wingo
-----------------------------
Notary Public in and for
The State of Texas
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 37
<PAGE>
/s/ Freda J. Payne
-----------------------------
Freda J. Payne
STATE OF TEXAS Section
Section
COUNTY OF TARRANT Section
BEFORE ME, the undersigned authority, on this day personally appeared FREDA
J. PAYNE, known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that she has read the foregoing Compromise
Settlement Agreement and Mutual Release, fully understood the same, and that she
executed it knowingly and voluntarily for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 16th day of November, 1998.
/s/ Bobbie J. Wingo
-----------------------------
Notary Public in and for
The State of Texas
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 38
<PAGE>
/s/ Naomi K. Payne
-----------------------------
Naomi K. Payne
COMMONWEALTH OF
MASSACHUSETTS Section
Section
COUNTY OF NORFOLK Section
BEFORE ME, the undersigned authority, on this day personally appeared NAOMI
K. PAYNE, known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that she has read the foregoing Compromise
Settlement Agreement and Mutual Release, fully understood the same, and that she
executed it knowingly and voluntarily for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 16th day of November, 1998.
/s/ Janet C. Yercia
---------------------------------
Notary Public in and for
The Commonwealth of Massachusetts
COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE PAGE 39
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DEFERRED PAYMENT AGREEMENT
This Deferred Payment Agreement ("AGREEMENT"), dated as of November 16,
1998, is by and among THE INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.,
a Texas corporation (the "COMPANY"), FIRST COMMAND FINANCIAL CORPORATION, a
Texas corporation ("FIRST COMMAND") and DEBRA S. PAYNE, an individual resident
of Dallas, Dallas County, Texas ("PAYNE") (individually, a "PARTY" and together,
the "PARTIES").
WHEREAS, the Company and Payne are parties to that certain Settlement
Agreement of even date herewith (the "SETTLEMENT AGREEMENT"); and
WHEREAS, in connection with the Settlement Agreement, the Parties desire to
enter into this Agreement whereby the Company and First Command agree, in the
event of each Sale (as defined below) at any time within ten (10) years of the
date hereof (the "TERM"), to pay to Payne the Deferred Payment Amount (as
defined below) attributable to that Sale.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. DEFERRED PAYMENT AMOUNT. The "DEFERRED PAYMENT AMOUNT" attributable
to a Sale shall be equal to the excess of (a) the value of the Subject
Interests (as defined below) in that Sale over (b) the sum of $6,100,000 plus
all prior Deferred Payment Amounts paid hereunder. The "SUBJECT INTERESTS"
are the following: (a) twelve percent (12%) of the direct or indirect voting
equity interests of the Company (on a fully diluted basis) (the "VOTING
INTERESTS") thereby entitling the holder thereof to receive that percent of
the Sales Proceeds (as defined below) otherwise attributable to those
interests; and (b) four and fifty-five hundredths percent (4.55%) of the
Non-Voting Interests (as defined below) (on a fully diluted basis) thereby
entitling the holder thereof to receive that percent of the Sales Proceeds
otherwise attributable to those interests; provided, however, as a result of
any Sale, such percentages shall be adjusted for future Sales in the same
proportions that existing holders' percentages thereof are adjusted in that
Sale (E.G., if, as a result of any Sale, existing holders of Voting Interests
tender sixty percent (60%) of their Voting Interests to a third party, the
percentage of Voting Interests on future Sales shall be reduced by sixty
percent (60%)). The "NON-VOTING INTERESTS" are (a) the Mission
Accomplishment Plan ("MAP") Units ("MAP UNITS") (or successor or similar
rights, which specifically exclude the Company's other existing deferred
compensation plans) and (b) the non-voting equity interests of the Company
(on a fully diluted basis). For these purposes, "SALES PROCEEDS" mean the
payments or proceeds or value resulting from a Sale, whether payable or
realizable at the time of the Sale or thereafter, to the holders of the
Voting Interests or Non-Voting Interests, as appropriate.
2. NATURE AND TIMING OF PAYMENT. The Company and First Command shall
immediately notify Payne upon the occurrence of any Sale. The Company and
First Command hereby agree that, in the event of each Sale during the Term,
the Company shall make a cash payment (by wire transfer) to Payne equal to
the Deferred Payment Amount attributable to that Sale, within fifteen (15)
days of the closing of that Sale.
3. SALE OF THE COMPANY. For purposes of this Agreement, "SALE" shall
mean each of the following occurrences: (a) the sale or transfer, directly or
indirectly, pursuant to a purchase, merger, exchange or reorganization agreement
of (i) more than fifty percent (50%) of the issued and outstanding capital stock
of the Company, or (ii) more than fifty percent (50%) of the issued and
outstanding voting stock
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of the Company, or (iii) all or substantially all of the Company's assets; or
(b) the consummation by the Company of a registered public offering of any
class of its capital stock thereby creating the opportunity for a public
trading market for such stock; or (c) a merger, exchange or other
reorganization transaction after which the Company is not the surviving
entity or after which the Company is the surviving entity and the
shareholders of the Company immediately prior to such transaction do not own
a majority of the Company immediately following such transactions; provided,
however, none of the following transactions shall constitute a Sale: (i) the
merger (the "MERGER") of the Company with and into First Command as described
in the Company's Proxy Statement dated October 30, 1998; (ii) the Company's
customary purchases of its stock pursuant to its existing shareholders'
agreements or its Articles (as such will be amended pursuant to the Merger)
or payments for MAP Units (or successor or similar rights) as contemplated by
the MAP (or successor or similar plan); (iii) a restructuring of the Company
in which each of its then existing shareholders thereafter directly or
indirectly hold equity interests in the Company in roughly the same
percentages held immediately prior thereto; and (iv) the transfer by one or
more shareholders of any of their shares to an entity in which their ultimate
beneficial ownership in the Company or its assets is not substantially
changed as a result thereof (e.g., a transfer to an "electing small business
trust" under Section 1361(e) of the Code). This Agreement shall survive the
Merger and is binding on the Company's successor in the Merger.
4. NO OBLIGATION TO EFFECT A SALE. This Agreement does not create any
obligation on behalf of the Company or any successor of the Company, or on the
Board of Directors or officers of the Company or any of their successors, to
effect or to attempt to effect any transaction which would constitute a Sale.
5. NO INTEREST AS A STOCKHOLDER. This Agreement does not grant Payne any
interest or rights as a stockholder or owner of any other equity interest in the
Company. Likewise, as a result of this Agreement, the Board of Directors and
the officers of the Company shall not owe Payne any of the duties or
obligations, if any, owed to shareholders of the Company, other equity holders
in their capacities as such holder, or holders of MAP Units (or successor or
similar rights). The Board of Directors and the officers of the Company shall
have full discretionary power to make all management and operational decisions
based on their determination of the best interest of the Company.
6. TERMINATION. This Agreement shall terminate and shall be of no
further force or effect immediately after the earlier of (a) the payment by the
Company to Payne of the Deferred Payment Amount from a Sale that results in no
continuing equity interest in the Company by any of the Company's existing
shareholders as of the date hereof, (b) the tenth (10th) anniversary of the date
of this Agreement or (c) the mutual agreement of the Parties.
7. REPRESENTATIONS AND WARRANTIES. The parties to this Agreement hereby
represent and warrant as follows:
(a) AUTHORIZATION OF AGREEMENT; BINDING OBLIGATION. Each Party has
the requisite power and authority to execute and to deliver this Agreement and
to perform the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each Party and thus, constitutes a valid and binding
obligation enforceable against each such Party in accordance with its terms.
(b) NO CONFLICTS. The execution and delivery of this Agreement by
the Parties and the consummation of the transactions contemplated herein do
not, and will not, conflict with or result in any violation of any charter,
bylaws or other organizational document of the Company or any other agreement,
document or law to which any Party is bound.
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8. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the Parties with respect to the subject matter hereof and
supersedes all prior agreements and/or understandings, oral or written, between
the Parties with respect to the subject matter hereof. No representation,
warranty, promise, inducement or statement of intention has been made by any
Party which is not embodied in this Agreement, and no Party hereto shall be
bound by, or liable for, any alleged representation, warranty, promise,
inducement or statement of intention not embodied herein.
(b) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
principles of conflicts of laws.
(c) BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the Parties and their respective successors, assigns, heirs or
devisees.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
to be effective as of the date first above written.
/s/ Debra S. Payne
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DEBRA S. PAYNE
THE INDEPENDENT RESEARCH AGENCY FOR
LIFE INSURANCE, INC.
By: /s/ Lamar C. Smith
----------------------------------------
Name: Lamar C. Smith
----------------------------------
Title: Chairman/C.E.O.
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FIRST COMMAND FINANCIAL CORPORATION
By: /s/ Lamar C. Smith
----------------------------------------
Name: Lamar C. Smith
----------------------------------
Title: Chairman/C.E.O.
----------------------------------
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Class B Non-Voting Common Stock, $0.02 par value per share
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(2) Aggregate number of securities to which transaction applies:
947,483 (1)
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
$28.24 (1)
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(4) Proposed maximum aggregate value of transaction:
$26,756,919.92
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(5) Total fee paid:
$5,351.38
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------------------------
(1) Total number of shares of Class B Non-Voting Common Stock
estimated to be outstanding as of June 15, 1998.
(2) Pursuant to Rule 0-11, the filing fee was computed on the basis of
a $28.24 per share cash price.
/X/ Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the revious filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$5,351.38
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(2) Form, Schedule or Registration Statement No.:
Schedule 14A-Preliminary
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(3) Filing Party:
Independent Research Agency for Life Insurance, Inc.
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(4) Date Filed:
July 6, 1998
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[LOGO]
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
4100 SOUTH HULEN STREET
FORT WORTH, TEXAS 76109
Dear Shareholder:
You recently received a copy of the Proxy Statement dated October 30, 1998
for the Special Meeting of Shareholders of Independent Research Agency for Life
Insurance, Inc. (the "Company") to be held on Monday, November 23, 1998, at 1:30
p.m., local time. Since the date that we mailed the proxy materials to you,
there has been a development in a matter that we discussed in the Proxy
Statement. Capitalized terms in this letter that are not defined have the
meanings given in the Proxy Statement.
As we told you in the Proxy Statement under the heading "SPECIAL
FACTORS--Background of the Merger," in response to a claim by Debra S. Payne
that the filing of the proxy materials with the Securities and Exchange
Commission was an event under the Payne Family Stock Agreement that required
Carroll H. Payne II, Freda J. Payne and Naomi K. Payne (the "Other Payne Family
Members") to sell their shares of Class A Stock to Debra S. Payne, the Company
and the Other Payne Family Members filed a declaratory judgment action. We also
told you that the Company, the Other Payne Family Members and Debra Sue Payne
were in settlement discussions.
The parties settled this matter pursuant to a Compromise Settlement
Agreement and Mutual Release, dated November 16, 1998 (the "Settlement
Agreement"), a copy of which has been filed as an exhibit to the Schedule 13E-3.
Under the terms of the Settlement Agreement, the Company has paid Debra S. Payne
$4.8 million and attorneys' fees and expenses of $1.3 million. In addition, the
Company, First Command and Debra S. Payne have entered into a Deferred Payment
Agreement, dated November 16, 1998 (the "Deferred Payment Agreement"), a copy of
which has been filed as an exhibit to the Schedule 13E-3. Pursuant to the
Deferred Payment Agreement, in the event of certain capital transactions
involving the Company, such as a sale, merger or public stock offering by the
Company within ten years of the settlement, Debra S. Payne will receive a cash
payment equal to the excess of a percentage of the proceeds of any such
transaction over $6.1 million. The Merger, customary purchases of stock and MAP
Units, and certain internal restructurings of the Company are not considered
sales of the Company. Notwithstanding this obligation to make a contingent
payment to Debra S. Payne, none of the Company, the Surviving Corporation, or
the Board of Directors or officers of the Company or the Surviving Corporation
is under any obligation to seek any transaction that would constitute a sale of
the Company, nor does any such person have the present intention or desire to
sell the Company. The terms of the Deferred Payment Agreement are binding on the
Surviving Corporation.
In return, Debra S. Payne has released (i) her shares of Class A Stock; (ii)
all of her rights related to such shares of Class A Stock; (iii) her shares of
Class B Stock; (iv) all of her rights related to such shares of Class B Stock;
(v) any and all of her rights under the Payne Family Stock Agreement, including
her entitlement to buy the Class A Stock from the Other Payne Family Members,
her anti-dilution rights, her right of first refusal, her preemptive right, her
right with the Other Payne Family Members to own a minority by one share of the
outstanding shares of Class A Stock and her pro rata option right with respect
to voting stock owned by the Other Payne Family Members; (vi) her rights to
receive dividends or distributions on her Class A Stock or on her Class B Stock;
(vii) her existing ownership interest in the Company; and (viii) her rights to
and interest in claims relating to the relationship, dealings or affairs between
her on the one hand and the Company and/or the Other Payne Family Members on the
other hand. In addition, Debra S. Payne has agreed to certain other
undertakings, as set forth in the Settlement Agreement.
In the event that you have already returned your proxy card and wish to
change your vote as a result of this information, please contact Sandra Allen,
Corporate Secretary of the Company, at (817) 731-8621, and you will be provided
with another proxy card. Proxy cards will also be available at the Special
Meeting. In the event that you do not desire to change your vote as a result of
this information, you do not need to do anything further at this time.
Sincerely,
/s/ Lamar C. Smith
Lamar C. Smith
Chairman of the Board
November 17, 1998
