SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 1997
AMERICAN GENERAL CORPORATION
(Exact name of registrant as specified in charter)
Texas I-7981 74-0483432
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
2929 Allen Parkway, Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-1111
Item 5. Other Events
American General Corporation (the "Company")
and USLIFE Corporation ("USLIFE") issued a
joint News Release today, announcing the
signing of a definitive agreement under which
the Company will acquire USLIFE for a total
consideration of $1.8 billion or $49.00 per
share. The transaction, which is subject to
approval by the shareholders of the Company
and USLIFE, and by requisite regulatory
authorities, is expected to close by the end
of the second quarter of 1997.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits
Exhibit Number
10.1 Agreement and Plan of Merger, dated
February 12, 1997, by and among American
General Corporation, Texas Stars
Corporation and USLIFE Corporation.
99.1 News Release issued February 13, 1997.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
Report to be signed on its behalf by the undersigned
thereunto duly authorized.
AMERICAN GENERAL CORPORATION
Dated: February 17, 1997 By: /s/ Jon P. Newton
-------------------------
Vice Chairman and General
Counsel
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
10.1 Agreement and Plan of Merger, dated February
12, 1997, by and among American General
Corporation, Texas Stars Corporation and
USLIFE Corporation.
99.1 News Release issued February 13, 1997.
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN GENERAL CORPORATION,
TEXAS STARS CORPORATION
AND
USLIFE CORPORATION
DATED AS OF FEBRUARY 12, 1997
TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1 The Merger..................................... 1
Section 1.2 Closing........................................ 2
Section 1.3 Effective Time of the Merger................... 2
Section 1.4 Directors and Officers of the Surviving
Corporation.................................. 2
ARTICLE II
SHAREHOLDER APPROVAL
Section 2.1 Shareholder Meetings........................... 2
Section 2.2 Proxy Statement/Prospectus; Registration
Statement.................................... 3
Section 2.3 No False or Misleading Statements.............. 3
ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 3.1 Conversion of Shares........................... 4
Section 3.2 Fractional Interests........................... 5
Section 3.3 Dissenting Shares.............................. 5
Section 3.4 Exchange of Certificates....................... 5
Section 3.5 No Liability................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERICAN
GENERAL CORPORATION AND MERGER SUB
Section 4.1 Organization................................... 8
Section 4.2 Capitalization................................. 8
Section 4.3 Merger Sub and American General
Corporation Subsidiaries..................... 9
Section 4.4 Authority Relative to this Agreement........... 10
Section 4.5 Consents and Approvals; No Violations.......... 11
Section 4.6 American General Corporation SEC Reports....... 12
Section 4.7 Statutory Financial Statements................. 12
Section 4.8 Absence of Certain Changes..................... 13
Section 4.9 Litigation..................................... 13
Section 4.10 Absence of Undisclosed Liabilities............. 13
Section 4.11 No Default..................................... 14
Section 4.12 Taxes.......................................... 14
Section 4.13 Title to Property.............................. 15
Section 4.14 Insurance Practices; Permit and
Insurance Licenses........................... 16
Section 4.15 Regulatory Filings............................. 16
Section 4.16 Investments.................................... 17
Section 4.17 Reserves....................................... 17
Section 4.18 Ownership of Company Common Stock.............. 18
Section 4.19 Information in Proxy Statement/Prospectus
and Registration Statement................... 18
Section 4.20 Brokers........................................ 18
Section 4.21 Employee Benefit Plans; ERISA.................. 18
Section 4.22 Labor Relations; Employees..................... 21
Section 4.23 Environmental Matters.......................... 21
Section 4.24 Related Party Transactions..................... 21
Section 4.25 Opinion of Financial Advisor................... 22
Section 4.26 Derivatives.................................... 22
Section 4.27 Contracts...................................... 22
Section 4.28 Intellectual Property.......................... 23
Section 4.29 Investment Advisor; Investment Company......... 23
Section 4.30 Disclosure..................................... 24
Section 4.31 Investigation by American General
Corporation.................................. 24
Section 4.32 Pooling of Interests........................... 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization................................... 24
Section 5.2 Capitalization................................. 25
Section 5.3 Company Subsidiaries........................... 25
Section 5.4 Authority Relative to this Agreement........... 27
Section 5.5 Consents and Approvals: No Violations.......... 27
Section 5.6 Company SEC Reports............................ 28
Section 5.7 Statutory Financial Statements................. 28
Section 5.8 Absence of Certain Changes..................... 29
Section 5.9 Litigation..................................... 29
Section 5.10 Absence of Undisclosed Liabilities;
Actuarial Appraisal.......................... 29
Section 5.11 No Default..................................... 30
Section 5.12 Taxes.......................................... 30
Section 5.13 Title to Property.............................. 31
Section 5.14 Insurance Practices; Permits and
Insurance Licenses........................... 31
Section 5.15 Regulatory Filings............................. 32
Section 5.16 Investments.................................... 32
Section 5.17 Reserves....................................... 33
Section 5.18 Repurchases of Company Common Stock............ 33
Section 5.19 Information in Proxy Statement/Prospectus
and Registration Statement................... 33
Section 5.20 Brokers........................................ 34
Section 5.21 Employee Benefit Plans; ERISA.................. 34
Section 5.22 Labor Relations; Employees..................... 36
Section 5.23 Environmental Matters.......................... 37
Section 5.24 Related Party Transactions..................... 37
Section 5.25 Opinion of Financial Advisor................... 37
Section 5.26 Derivatives.................................... 37
Section 5.27 Contracts...................................... 37
Section 5.28 Intellectual Property.......................... 39
Section 5.29 Investment Advisor; Investment Company......... 39
Section 5.30 Disclosure..................................... 39
Section 5.31 Investigation by the Company................... 39
Section 5.32 Pooling of Interests........................... 40
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company
Pending the Merger........................... 40
Section 6.2 Conduct of Business by American General
Corporation Pending the Merger............... 42
Section 6.3 Amendment to Rights Plan....................... 45
Section 6.4 Redemption of Company Preferred Stock.......... 46
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information......................... 46
Section 7.2 Acquisition Proposals.......................... 46
Section 7.3 Fiduciary Duties............................... 47
Section 7.4 Filings; Other Action.......................... 48
Section 7.5 Public Announcements........................... 48
Section 7.6 Employee Benefits.............................. 49
Section 7.7 Stock Exchange Listing......................... 49
Section 7.8 Surviving Corporation Directors................ 49
Section 7.9 Employee Stock Options......................... 49
Section 7.10 Company Indemnification Provision.............. 49
Section 7.11 Comfort Letters................................ 50
Section 7.12 Tax Matters; Pooling of Interests.............. 50
Section 7.13 Intercompany Dividends......................... 50
Section 7.14 Affiliates..................................... 51
Section 7.15 Additional Matters............................. 51
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger............................ 51
Section 8.2 Conditions to Obligation of the Company
to Effect the Merger......................... 52
Section 8.3 Conditions to Obligations of American
General Corporation and Merger Sub to
Effect the Merger............................ 53
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent.................. 55
Section 9.2 Termination by Either American General
Corporation or the Company................... 55
Section 9.3 Termination by American General
Corporation.................................. 55
Section 9.4 Termination by the Company..................... 55
Section 9.5 Effect of Termination and Abandonment.......... 56
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties
and Agreements............................... 56
Section 10.2 Notices........................................ 56
Section 10.3 Descriptive Headings........................... 57
Section 10.4 Entire Agreement; Assignment................... 57
Section 10.5 Governing Law.................................. 58
Section 10.6 Expenses....................................... 58
Section 10.7 Amendment...................................... 59
Section 10.8 Waiver......................................... 59
Section 10.9 Counterparts; Effectiveness.................... 59
Section 10.10 Severability; Validity; Parties in
Interest..................................... 59
Section 10.11 Enforcement of Agreement....................... 59
Section 10.12 Definition of "knowledge" of the
Company and of American General
Corporation................................. 59
EXHIBIT A CHARTER OF MERGER SUB......................... A-1
EXHIBIT B BYLAWS OF MERGER SUB.......................... B-1
EXHIBIT C-1 FORM OF COMPANY AFFILIATE AGREEMENT......... C-1-1
EXHIBIT C-2 FORM OF AMERICAN GENERAL CORPORATION
AFFILIATE AGREEMENT....................... C-2-1
EXHIBIT D EMPLOYEE BENEFIT MATTERS...................... D-1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 12, 1997, by
and among AMERICAN GENERAL CORPORATION, a Texas corporation ("American
General Corporation"), TEXAS STARS CORPORATION, a New York corporation and
a wholly-owned subsidiary of American General Corporation ("Merger Sub"),
and USLIFE CORPORATION, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of American General
Corporation, Merger Sub and the Company have approved the merger of Merger
Sub with and into the Company upon the terms and subject to the conditions
set forth herein (the "Merger"); and
WHEREAS, American General Corporation, Merger Sub and the Company
intend that the Merger qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and qualify for pooling-of-interest accounting treatment.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, at the Effective Time (as defined in Section 1.3
hereof), Merger Sub shall be merged with and into the Company in accordance
with the applicable provisions of the New York Business Corporation Law
(the "NYBCL") and the separate corporate existence of Merger Sub shall
thereupon cease, and the Company shall be the surviving corporation in the
Merger (the "Surviving Corporation") and all the properties, rights,
privileges, immunities, powers and purposes of the Company and of Merger
Sub shall vest in the Surviving Corporation, and all liabilities,
obligations and penalties of Merger Sub and the Company shall become the
liabilities, obligations and penalties of the Surviving Corporation, and
the Merger shall have the other effects set forth in the NYBCL. Pursuant to
the Merger, (a) the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended as
provided by law and such Certificate of Incorporation and (b) the Bylaws of
Merger Sub as in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation, until thereafter amended as
provided by law, such Bylaws and the Certificate of Incorporation of the
Surviving Corporation.
Section 1.2 Closing. The Company shall as promptly as practicable
notify American General Corporation, and American General Corporation and
Merger Sub shall as promptly as practicable notify the Company, when the
conditions to such party's or parties' obligation to effect the Merger
contained in Article VIII have been satisfied. The closing of the Merger
(the "Closing") shall take place at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP, 919 Third Avenue, New York, New York, at 10:00 a.m.,
New York time, on the sixth business day after the later of these notices
has been given (the "Closing Date"), unless another date or place is agreed
to in writing by the parties hereto; provided, however, that the parties
hereto agree to use all reasonable efforts to consummate the Closing on
April 30, 1997, or as soon as practicable thereafter.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective when an appropriate Certificate of Merger is executed, verified
and delivered to the Department of State of the State of New York as
provided by the NYBCL, or at such later time as the parties hereto shall
have designated in such Certificate of Merger as the effective time of the
Merger (the "Effective Time"), which filings shall be made as soon as
practicable after the closing of the transactions contemplated by this
Agreement in accordance with Section 1.2 hereof.
Section 1.4 Directors and Officers of the Surviving Corporation.
Prior to the Effective Time, American General Corporation and the Company
shall mutually agree on the composition of the Board of Directors and the
officers of the Surviving Corporation. The directors and officers of the
Surviving Corporation shall hold office until their respective successors
shall have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
ARTICLE II
SHAREHOLDER APPROVAL
Section 2.1 Shareholder Meetings. In order to consummate the
Merger, (i) the Company, acting through its Board of Directors and subject
to Section 7.3, shall, in accordance with applicable law, its Certificate
of Incorporation and its By-Laws, duly call, give notice of, convene and
hold a special meeting of its shareholders (the "Company Special Meeting"),
and (ii) American General Corporation, acting through its Board of
Directors, shall, in accordance with applicable law, duly call, give notice
of, convene and hold a special meeting of its shareholders (the "American
General Corporation Special Meeting" and, together with the Company Special
Meeting, the "Special Meetings"), in each case as soon as practicable after
the Registration Statement (as hereinafter defined) is declared effective
(the date on which such Company Special Meeting is held, the "Company
Meeting Date", and the date on which such American General Corporation
Special Meeting is held, the "American General Corporation Meeting Date"),
for the purpose of (A) in the case of the Company Special Meeting, voting
upon the adoption of this Agreement and (B) in the case of the American
General Corporation Special Meeting, authorizing the issuance of the Shares
(as hereinafter defined) as Merger Consideration (as hereinafter defined).
Each of the Company (subject to Section 7.3) and American General
Corporation shall include in the Proxy Statement/Prospectus (as hereinafter
defined) the recommendation of its respective Board of Directors that its
respective shareholders vote (i) in the case of the Company, in favor of
the approval of the Merger and the adoption of this Agreement, and (ii) in
the case of American General Corporation, in favor of the issuance of the
Shares as Merger Consideration.
Section 2.2 Proxy Statement/Prospectus; Registration Statement.
In connection with the solicitation of approval of the principal terms of
this Agreement and the Merger by the Company's and American General
Corporation's shareholders, the Company and American General Corporation
shall as promptly as practicable prepare and file with the Securities and
Exchange Commission (the "SEC") a preliminary joint proxy statement
relating to the Merger and this Agreement and use reasonable best efforts
to obtain and furnish the information required to be included by the SEC in
the Proxy Statement/Prospectus (as hereinafter defined). The Company and
American General Corporation shall respond as promptly as practicable to
any comments made by the SEC with respect to the preliminary proxy
statement and shall cause a definitive proxy statement to be mailed to
their respective shareholders at the earliest practicable date. Such
definitive proxy statement shall also constitute a prospectus of American
General Corporation with respect to the American General Corporation Common
Stock (as hereinafter defined) to be issued in the Merger (such proxy
statement and prospectus are referred to herein as the "Proxy
Statement/Prospectus"), which prospectus is to be filed with the SEC as
part of a registration statement on Form S-4 (the "Registration Statement")
for the purpose of registering the American General Corporation Common
Stock under the Securities Act of 1933, as amended (the "Securities Act").
American General Corporation shall as promptly as practicable prepare and
file with the SEC the Registration Statement. American General Corporation,
after consultation with the Company, shall respond as promptly as
practicable to any comments made by the SEC with respect to the
Registration Statement, and shall use reasonable best efforts to have the
Registration Statement declared effective by the SEC. American General
Corporation shall also take any action required to be taken under
applicable state securities laws in connection with the issuance of
American General Corporation Common Stock in the Merger, and the Company
shall furnish all information concerning the Company and the holders of
Company Common Stock (as hereinafter defined) as may be reasonably
requested by American General Corporation in connection with such action.
Section 2.3 No False or Misleading Statements. The information
provided and to be provided by each of American General Corporation and the
Company specifically for use in the Registration Statement and the Proxy
Statement/Prospectus shall not, with respect to the information supplied by
such party, in the case of the Registration Statement, on the date the
Registration Statement becomes effective and, in the case of the Proxy
Statement/Prospectus, on the date upon which the Proxy Statement/Prospectus
is mailed to the shareholders of the Company and American General
Corporation or on the date upon which approval of the Merger by the
shareholders of the Company and of American General Corporation is
obtained, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of American General Corporation and the
Company agrees to correct as promptly as practicable any such information
provided by it that shall have become false or misleading in any material
respect and to take all steps necessary to file with the SEC and have
declared effective or cleared by the SEC any amendment or supplement to the
Registration Statement or the Proxy Statement/Prospectus so as to correct
the same and to cause the Proxy Statement/Prospectus as so corrected to be
disseminated to the shareholders of the Company and of American General
Corporation to the extent required by applicable law. The Registration
Statement and the Proxy Statement/Prospectus shall comply as to form in all
material respects with the provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and other applicable
law.
ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 3.1 Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of any of the
parties hereto or any holder of any of the following securities:
(a) Each share of Common Stock, par value $1.00 per share,
of the Company (the "Company Common Stock" and the shares of such
Common Stock, the "Shares") issued and outstanding immediately
prior to the Effective Time (other than Shares to be cancelled
pursuant to Section 3.1(c) hereof) shall, at the Effective Time,
by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive a number
of duly authorized, validly issued, fully paid and nonassessable
shares of common stock of American General Corporation (together
with the attached Series A Junior Participating Preferred Stock
Purchase Rights, issued in accordance with the Rights Agreement,
dated as of July 27, 1989, between Purchaser and Texas Commerce
Bank, as Rights Agent, as amended by the First Amendment Rights
Agreement, dated as of October 26, 1992, between Purchaser and
the First Chicago Trust Company of New York, as Rights Agent, as
such amended agreement may be amended from time to time, the
"American General Corporation Common Stock"), par value $0.50 per
share (the "Merger Consideration"), calculated by dividing (x)
$49.00 by (y) the Average American General Price (as hereinafter
defined), rounded to four decimal places (such fraction being
referred to herein as the "Exchange Ratio"). As used herein, the
"Average American General Price" shall mean the average of the
high and low sales prices, regular way, per share of American
General Corporation Common Stock as reported in The Wall Street
Journal during the ten consecutive New York Stock Exchange
("NYSE") trading days (each, a "Trading Day") ending on (and
including) the fifth Trading Day prior to the Effective Time (the
"Trading Average"); provided, however, that if the Trading
Average is less than $37.8750, then the Average American General
Price shall be $37.8750; and if the Trading Average is greater
than $44.8750, then the Average American General Price shall be
$44.8750. All Shares of Company Common Stock converted or
exchanged into Merger Consideration shall no longer be
outstanding and shall automatically be canceled and retired and
shall cease to exist, and each certificate previously evidencing
any such Shares of Company Common Stock shall thereafter
represent the right to receive, upon the surrender of such
certificate in accordance with the provisions of Section 3.4,
only the Merger Consideration. The holders of such certificates
previously evidencing such Shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such Shares of Company Common
Stock except as otherwise provided herein or by law.
(b) Each share of Common Stock of Merger Sub, par value
$1.00 per share, issued and outstanding immediately prior to the
Effective Time, shall, at the Effective Time, by virtue of the
Merger and without any action on the part of American General
Corporation, be converted into one fully paid and nonassessable
share of common stock, par value $1.00 per share, of the
Surviving Corporation.
(c) All Shares of Company Common Stock that are owned by the
Company as treasury stock and (except for shares held in a
separate account or mutual fund managed by a American General
Corporation Subsidiary or a pension trust established for the
benefit of American General Corporation retirees) any Shares of
Company Common Stock owned by American General Corporation or
Merger Sub or any other direct or indirect wholly owned American
General Corporation Subsidiary (as defined in Section 4.3(b)
hereof) shall, at the Effective Time, be canceled and retired and
shall cease to exist and no American General Corporation Common
Stock or other consideration shall be delivered in exchange
therefor.
(d) On and after the Effective Time, holders of certificates
which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") shall cease to have any
rights as stockholders of the Company, except the right to
receive the Merger Consideration for each Share held by them.
Section 3.2 Fractional Interests. No certificates or scrip
representing fractional shares of American General Corporation Common Stock
shall be issued in connection with the Merger, and such fractional
interests will not entitle the owner thereof to any rights as a shareholder
of American General Corporation. In lieu of a fractional interest in a
share of American General Corporation Common Stock, each holder of a Share
or Shares of Company Common Stock exchanged pursuant to Section 3.4 who
would otherwise have been entitled to receive a fraction of a share of
American General Corporation Common Stock shall receive cash (without
interest) in an amount equal to the product of such fractional interest
multiplied by the Average American General Price.
Section 3.3 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, no Share of Company Common Stock outstanding
immediately prior to the Effective Time, the holder of which shall have
complied with the provisions of Sections 623 and 910 of the NYBCL as to
dissenter's rights (a "Dissenting Share"), shall be deemed converted into
and to represent the right to receive Merger Consideration hereunder, and
the holders of Dissenting Shares, if any, shall be entitled to payment,
solely from the Surviving Corporation, of the appraised value of such
Dissenting Shares to the extent permitted by and in accordance with the
provisions of Sections 623 and 910 of the NYBCL; provided, however, that
(i) if any holder of Dissenting Shares shall, under the circumstances
permitted by the NYBCL, subsequently deliver a written withdrawal of his or
her demand for appraisal of such Dissenting Shares, or (ii) if any holder
fails to establish his or her entitlement to rights to payment as provided
in such Sections 623 and 910, or (iii) if neither any holder of Dissenting
Shares nor the Surviving Corporation has filed a petition demanding a
determination of the value of all Dissenting Shares within the time
provided in such Sections 623 and 910, such holder or holders (as the case
may be) shall forfeit such right to payment for such Dissenting Shares
pursuant to such Sections 623 and 910, and each such Share shall not be
considered a Dissenting Share but shall thereupon be converted into the
Merger Consideration. The Company shall give American General Corporation
(X) prompt notice of any written demands for appraisal of any Company
Common Stock, attempted withdrawals of such demands, and any other
instruments received by the Company relating to shareholders' rights of
appraisal and (Y) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the NYBCL. The
Company shall not, except with the prior written consent of American
General Corporation, voluntarily make any payment with respect to any
demands for appraisals of Company Common Stock, offer to settle or settle
any such demands or approve any withdrawal of any such demands.
Section 3.4 Exchange of Certificates.
(a) As soon as practicable after the execution and delivery
of this Agreement and, in any event, not less than five business
days prior to the mailing of the Proxy Statement/Prospectus to
holders of Company Common Stock, American General Corporation
shall designate a bank or trust company (or such other person or
persons as shall be reasonably acceptable to American General
Corporation and the Company) to act as exchange agent (the
"Exchange Agent") in effecting the exchange of certificates that,
prior to the Effective Time, represented Shares of Company Common
Stock (the "Certificates") for the Merger Consideration pursuant
to Section 3.1(a) hereof (and cash in lieu of fractional
interests in accordance with Section 3.2). Upon the surrender of
each such Certificate representing Shares of Company Common
Stock, the Exchange Agent shall pay the holder of such
Certificate the Merger Consideration (and cash in lieu of
fractional interests in accordance with Section 3.2), and such
Certificate shall forthwith be cancelled. Until so surrendered
and exchanged, each such Certificate that prior to the Effective
Time represented Shares of Company Common Stock (other than
Shares of Company Common Stock to be cancelled in accordance with
Section 3.1(c)) shall represent solely the right to receive
Merger Consideration (and cash in lieu of fractional interests in
accordance with Section 3.2). No interest shall be paid or
accrued on Merger Consideration.
(b) As of the Effective Time, American General Corporation
shall deposit or cause to be deposited in trust with the Exchange
Agent, for the benefit of the holders of Shares of Company Common
Stock, for exchange in accordance with this Article III, the
Merger Consideration.
(c) As promptly as practicable following the date which is
six months after the Effective Time, the Exchange Agent shall
deliver to the Surviving Corporation all shares of American
General Corporation Common Stock, Certificates and other
documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Certificate may
surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar
laws and, in the case of Dissenting Shares, subject to applicable
law) receive in exchange therefor the Merger Consideration (and
cash in lieu of fractional interests in accordance with Section
3.2), without any interest thereon.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any
Shares of Company Common Stock. If, after the Effective Time,
Certificates formerly representing Shares of Company Common Stock
are presented to the Surviving Corporation or the Exchange Agent,
they shall be cancelled and (subject to applicable abandoned
property, escheat and similar laws and, in the case of Dissenting
Shares, subject to applicable law) exchanged for Merger
Consideration (and cash in lieu of fractional interests in
accordance with Section 3.2) without any interest thereon, as
provided in this Article III.
(e) No dividends or other distributions declared or made
after the Effective Time with respect to shares of American
General Corporation Common Stock shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of
American General Corporation Common Stock such holder is entitled
to receive, and no cash payment in lieu of fractional interests
shall be paid pursuant to Section 3.2, in each case, until the
holder of such Certificate shall surrender such Certificate, in
accordance with the provisions of this Agreement.
(f) The Exchange Agent or American General Corporation shall
be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as the Exchange Agent, American
General Corporation or the Surviving Corporation, as the case may
be, is required to deduct and withhold with respect to such
payment under the Code or any provision of state, local or
foreign tax law. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the holder of
the Company Common Stock in respect of which such deduction and
withholding was made.
Section 3.5 No Liability. Neither American General Corporation,
the Company nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any Merger Consideration in respect of
such shares (or dividends or distributions with respect thereto) delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law. In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by American General Corporation, the posting by such person of a bond in
customary form and amount as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration (and cash in lieu of fractional interests in accordance
with Section 3.2), without any interest or other payments thereon, upon due
surrender and delivery of such affidavit pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERICAN GENERAL
CORPORATION AND MERGER SUB
Except as otherwise disclosed to the Company in a letter
delivered to it prior to the execution hereof (which letter contains
appropriate references to identify the representations and warranties
herein to which the information in such letter relates) (the "American
General Corporation Disclosure Letter"), American General Corporation
represents and warrants to the Company as follows:
Section 4.1 Organization. Each of American General Corporation
and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the States of Texas and New York,
respectively, with the corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted or presently proposed to
be conducted. Each of American General Corporation and Merger Sub is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not
individually or in the aggregate have a material adverse effect on the
business, assets, liabilities, results of operations or financial condition
of American General Corporation, Merger Sub and the American General
Corporation Subsidiaries (as hereinafter defined), taken as a whole (a
"American General Corporation Material Adverse Effect").
Section 4.2 Capitalization. As of December 31, 1996: (i) the
authorized capital stock of American General Corporation consisted of
300,000,000 shares of American General Corporation Common Stock and
60,000,000 shares of Preferred Stock, par value $1.50 per share of American
General Corporation ("American General Corporation Preferred Stock"), (ii)
203,090,677 shares of American General Corporation Common Stock, and
2,317,701 shares of American General Corporation Preferred Stock (all of
which are shares in the series designated 7% Convertible Preferred Stock),
were issued and outstanding and (iii) stock options to acquire 2,933,184
shares of American General Corporation Common Stock (the "American General
Corporation Stock Options") were outstanding under all stock option plans
of American General Corporation. All the issued and outstanding shares of
capital stock of American General Corporation are validly issued, fully
paid and nonassessable and free of preemptive rights. All the shares of
American General Corporation Common Stock reserved for issuance in exchange
for shares of Company Common Stock at the Effective Time in accordance with
this Agreement will be, when so issued, duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. Since December
31, 1996 to the date hereof, no shares of American General Corporation's
capital stock have been issued, except American General Corporation Common
Stock issued pursuant to the exercise of American General Corporation Stock
Options or upon conversion of shares of 7% Convertible Preferred Stock.
Except for (i) American General Corporation Stock Options, (ii) 2,317,701
shares of 7% Convertible Preferred Stock of American General Corporation,
(iii) 4,500,000 shares of 6% Convertible Monthly Income Preferred
Securities, Series A, of American General Delaware, L.L.C. and (iv) the
Series A Junior Participating Preferred Stock Purchase Rights attached to
the American General Corporation Common Stock as of the date of this
Agreement, there are no options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating
American General Corporation to issue, transfer, sell, redeem, repurchase
or otherwise acquire any shares of its capital stock. American General
Corporation has delivered to the Company a complete and correct copy of the
Rights Agreement, dated as of July 29, 1989, as amended and supplemented as
of the date hereof (the "American General Rights Agreement") relating to
the Series A Junior Preferred Stock Purchase Rights issued thereunder.
Section 4.3 Merger Sub and American General Corporation
Subsidiaries.
(a) The authorized capital stock of Merger Sub consists of
100 shares of Common Stock, par value $.01 per share. As of the
date hereof,100 shares of Common Stock of Merger Sub are issued
and outstanding and are owned by American General Corporation.
(b) Each subsidiary of American General Corporation set
forth on Exhibit 21 to the Annual Report on Form 10-K for the
year ended December 31, 1995 of American General Corporation,
other than Merger Sub (collectively the "American General
Corporation Subsidiaries"), is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority and all necessary government approvals to own, lease
and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority
or necessary governmental approvals would not individually or in
the aggregate have a American General Corporation Material
Adverse Effect. Each American General Corporation Subsidiary is
duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not individually or in the
aggregate have a American General Corporation Material Adverse
Effect. Section 4.3(b) of the American General Corporation
Disclosure Letter sets forth the name of each of the American
General Corporation Subsidiaries that is as of the date hereof a
significant subsidiary as such term is defined in Rule 1-02 of
Regulation S-X under the Exchange Act (collectively, the
"American General Corporation Significant Subsidiaries") and the
state or jurisdiction of its incorporation.
(c) Section 4.3(c) of the American General Corporation
Disclosure Letter sets forth the name of each of the American
General Corporation Significant Subsidiaries that is as of the
date hereof an insurance company (collectively, the "American
General Corporation Insurance Subsidiaries"). Except as set forth
in the American General Corporation SEC Reports or in Section
4.3(c) of the American General Corporation Disclosure Letter,
each of the American General Corporation Insurance Subsidiaries
is (i) duly licensed or authorized as an insurance company in its
jurisdiction of incorporation and (ii) duly licensed or
authorized as an insurance company in each other jurisdiction
where it is required to be so licensed or authorized.
(d) Except as set forth in the American General Corporation
SEC Reports or in Section 4.3(d) of the American General
Corporation Disclosure Letter, American General Corporation is,
directly or indirectly, the record and beneficial owner of all
the outstanding shares of capital stock of Merger Sub and of each
of the American General Corporation Significant Subsidiaries,
there are no proxies with respect to any such shares, and no
equity securities of Merger Sub or of any American General
Corporation Significant Subsidiary are or may become required to
be issued by reason of any options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable or
exercisable for, shares of any capital stock of Merger Sub or of
any American General Corporation Significant Subsidiary, and
there are no contracts, commitments, understandings or
arrangements by which American General Corporation or any
American General Corporation Significant Subsidiary is or may be
bound to issue, redeem, purchase or sell additional shares of
capital stock of Merger Sub or of any American General
Corporation Significant Subsidiary or securities convertible into
or exchangeable or exercisable for any such shares. Except as set
forth in the American General Corporation SEC Reports or in
Section 4.3(d) of the American General Corporation Disclosure
Letter, all of such shares so owned by American General
Corporation are validly issued, fully paid and nonassessable and
are owned by it free and clear of any Encumbrances (as
hereinafter defined) securing obligations not reflected in the
American General Corporation SEC Reports.
Section 4.4 Authority Relative to this Agreement. Each of
American General Corporation and Merger Sub has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by
American General Corporation and Merger Sub and the consummation by
American General Corporation and Merger Sub of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
American General Corporation and Merger Sub, and by American General
Corporation as the sole shareholder of Merger Sub by written consent, and,
other than the approval of the issuance of the shares of American General
Corporation Common Stock as Merger Consideration by the American General
Corporation stockholders, no other corporate proceedings on the part of
American General Corporation or Merger Sub are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each of American General
Corporation and Merger Sub and (assuming this Agreement constitutes a valid
and binding obligation of the Company) constitutes a valid and binding
agreement of each of American General Corporation and Merger Sub,
enforceable against American General Corporation and Merger Sub in
accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles.
Section 4.5 Consents and Approvals; No Violations. Except (a) for
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), the Securities Act, the Exchange Act,
the rules of the NYSE, state or foreign laws relating to takeovers, state
securities or blue sky laws, state insurance laws and the regulations
promulgated thereunder and the filing of the Certificate of Merger as
required by the NYBCL (collectively, the "Governmental Requirements"), or
(b) where the failure to make any filing with, or to obtain any permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency, commission,
division, department, public body or other authority (a "Government
Entity") would not prevent or delay the consummation of the Merger, or
otherwise prevent American General Corporation or Merger Sub from
performing its respective obligations under this Agreement, and would not
individually or in the aggregate have a American General Corporation
Material Adverse Effect, no filing with, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the
execution, delivery and performance of this Agreement by American General
Corporation and Merger Sub and the consummation of the transactions
contemplated by this Agreement. Except as set forth in Section 4.5 of the
American General Corporation Disclosure Letter, no material consent or
approval of any other party is required to be obtained by American General
Corporation or Merger Sub for the execution, delivery or performance of
this Agreement, or the performance by American General Corporation or
Merger Sub of the transactions contemplated hereby. Neither the execution,
delivery or performance of this Agreement by American General Corporation
or Merger Sub, nor the consummation by American General Corporation or
Merger Sub of the transactions contemplated hereby, nor compliance by
American General Corporation or Merger Sub with any of the provisions
hereof, will (i) conflict with or result in any breach of any provisions of
the Articles or Certificate of Incorporation, as the case may be, or Bylaws
of American General Corporation or Merger Sub or the Articles or
Certificate of Incorporation, as the case may be, or Bylaws of any of the
American General Corporation Subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation,
acceleration, vesting, payment, exercise, suspension or revocation) under,
any of the terms, conditions, or provisions of any note, bond, mortgage,
deed of trust, security interest, indenture, license, contract, agreement,
plan or other instrument or obligation to which American General
Corporation, Merger Sub or any of the American General Corporation
Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound, (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to American General Corporation,
Merger Sub, any American General Corporation Subsidiary or any of their
properties or assets, (iv) result in the creation or imposition of any
Encumbrance (as hereinafter defined) on any asset of American General
Corporation, Merger Sub or any American General Corporation Subsidiary, or
(v) cause the suspension or revocation of any permit, license, governmental
authorization, consent or approval necessary for American General
Corporation, Merger Sub or any of the American General Corporation
Subsidiaries to conduct its business as currently conducted, except in the
case of clauses (ii), (iii), (iv) and (v) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations which would not individually or in
the aggregate have a American General Corporation Material Adverse Effect.
Section 4.6 American General Corporation SEC Reports. American
General Corporation has delivered to the Company true and complete copies
of each Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K, Proxy Statement, Schedule 13D filed with respect to
American General Corporation, Form S-4, and the prospectus included in any
other registration statement as presently in effect and as last amended,
pursuant to which American General Corporation has registered equity
securities for sale in underwritten offerings (including any amendments
thereto), filed by American General Corporation with the SEC since January
1, 1994 through the date hereof (collectively, the "American General
Corporation SEC Reports"). As of the respective dates such American General
Corporation SEC Reports were filed or, if any such American General
Corporation SEC Reports were amended, as of the date such amendment was
filed, each of the American General Corporation SEC Reports (i) complied in
all material respects with all applicable requirements of the Securities
Act and the Exchange Act, and the rules and regulations promulgated
thereunder and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of (i) the audited and
consolidated financial statements of American General Corporation
(including any related notes and schedules) included (or incorporated by
reference) in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and (ii) the unaudited consolidated interim financial
statements of American General Corporation (including any related notes and
schedules) included (or incorporated by reference) in its Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996, fairly present, in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of American General Corporation and the
American General Corporation Subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in their financial
position for the periods then ended (subject to normal year-end adjustments
in the case of any unaudited interim financial statements).
Section 4.7 Statutory Financial Statements. The Annual Statements
and Quarterly Statements of the American General Corporation Insurance
Subsidiaries, as filed with the departments of insurance for all applicable
domiciliary states for the years ended December 31, 1994 and December 31,
1995 (the "Annual Statutory Statements of American General Corporation")
and the quarters ended March 31, June 30 and September 30, 1995, and March
31, June 30, and September 30, 1996 (collectively, the "Quarterly Statutory
Statements of American General Corporation"), respectively, together with
all exhibits and schedules thereto (all Annual Statutory Statements of
American General Corporation and all Quarterly Statutory Statements of
American General Corporation, together with all exhibits and schedules
thereto, referred to in this Section 4.7 are hereinafter referred to as the
"Statutory Financial Statements of American General Corporation"), have
been prepared in accordance with the accounting practices prescribed or
permitted by the departments of insurance for all applicable domiciliary
states for purposes of financial reporting to the respective state's
insurance regulators ("State Statutory Accounting Principles"), and such
accounting practices have been applied on a basis consistent with State
Statutory Accounting Principles throughout the periods involved, except as
expressly set forth in the notes, exhibits or schedules thereto, and the
Statutory Financial Statements of American General Corporation present
fairly in all material respects the financial position and the results of
operations for the American General Corporation Insurance Subsidiaries as
of the dates and for the periods therein in accordance with State Statutory
Accounting Principles. American General Corporation has delivered to the
Company true and complete copies of the Annual Statutory Statements of
American General Corporation and the Quarterly Statutory Statements of
American General Corporation.
Section 4.8 Absence of Certain Changes. Except as set forth in
Section 4.8 of the American General Corporation Disclosure Letter, since
September 30, 1996, there has been no event or condition (other than (i)
any event or condition resulting from general economic conditions
(including without limitation changes in interest rates), (ii) any
occurrence or condition affecting the life insurance, reinsurance and/or
consumer finance industries generally (including without limitation any
change or proposed change in insurance laws or regulations in any
jurisdiction), or (iii) any occurrence or condition arising out of the
transactions contemplated by this Agreement or the public announcement
thereof, but excluding in the case of clauses (i) or (ii), any such event,
condition or occurrence that has had, or is reasonably likely to have, a
disproportionate effect on American General Corporation and the American
General Corporation Subsidiaries, taken as a whole) which has had (or is
reasonably likely to result in) a American General Corporation Material
Adverse Effect, and American General Corporation and the American General
Corporation Significant Subsidiaries have in all material respects
conducted their businesses in the ordinary course consistent with past
practices and have not taken any action which, if taken after the date
hereof, would violate Section 6.2 hereof.
Section 4.9 Litigation. Except as disclosed in Section 4.9 of the
American General Corporation Disclosure Letter or the American General
Corporation SEC Reports, there is no suit, action, proceeding or
investigation (whether at law or equity, before or by any federal, state or
foreign court, tribunal, commission, board, agency or instrumentality, or
before any arbitrator) pending or, to the knowledge of American General
Corporation, threatened against or affecting American General Corporation,
Merger Sub or any of the American General Corporation Subsidiaries or any
American General Corporation Plan, the outcome of which, in the reasonable
judgment of American General Corporation, is likely individually or in the
aggregate to have a American General Corporation Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against American General Corporation, Merger Sub or any of the
American General Corporation Subsidiaries having, or which, insofar as can
reasonably be foreseen, in the future would be reasonably likely to have, a
American General Corporation Material Adverse Effect.
Section 4.10 Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in
American General Corporation's financial statements (or reflected in the
notes thereto) included in the American General Corporation SEC Reports or
disclosed in Section 4.10 of the American General Corporation Disclosure
Letter or which were incurred after September 30, 1996 in the ordinary
course of business and consistent with past practices or in connection with
the transactions contemplated by this Agreement or liabilities incurred in
connection with acquisitions made after September 30, 1996, American
General Corporation and the American General Corporation Subsidiaries do
not have any material liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in a consolidated balance sheet (or reflected in the notes
thereto) of American General Corporation.
Section 4.11 No Default. Except as set forth in the American
General Corporation SEC Reports or Section 4.11 of the American General
Corporation Disclosure Letter, neither American General Corporation, Merger
Sub nor any of the American General Corporation Subsidiaries is in
violation or breach of, or default under (and no event has occurred which
with notice or the lapse of time or both would constitute a violation or
breach of, or default under) any term, condition or provision of (a) its
Articles or Certificate of Incorporation, as the case may be, or Bylaws,
(b) any note, bond, mortgage, deed of trust, security interest, indenture,
license, agreement, plan, contract, lease, commitment or other instrument
or obligation to which American General Corporation, Merger Sub or any of
the American General Corporation Subsidiaries is a party or by which they
or any of their properties or assets may be bound or affected, (c) any
order, writ, injunction, decree, statute, rule or regulation applicable to
American General Corporation, Merger Sub or any of the American General
Corporation Subsidiaries or any of their properties or assets, or (d) any
permit, license, governmental authorization, consent or approval necessary
for American General Corporation, Merger Sub or any of the American General
Corporation Subsidiaries to conduct their respective businesses as
currently conducted, except in the case of clauses (b), (c) and (d) above
for violations, breaches or defaults which would not individually or in the
aggregate have a American General Corporation Material Adverse Effect.
Section 4.12 Taxes.
(a) Except as set forth in the American General Corporation
SEC Reports or Section 4.12 of the American General Corporation
Disclosure Letter:
(i) American General Corporation and the American
General Corporation Subsidiaries have (x) duly filed (or
there has been filed on their behalf) with the appropriate
governmental authorities all income Tax Returns (as
hereinafter defined) and all other material Tax Returns
required to be filed by them on or prior to the date hereof,
and (y) duly paid in full or made provision in accordance
with GAAP (or there has been paid or provision has been made
on their behalf) for the payment of all material Taxes (as
hereinafter defined) for all periods or portions thereof
ending through the date hereof;
(ii) no federal, state, local or foreign audits or
other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of
the American General Corporation or any American General
Corporation Subsidiary wherein an adverse determination or
ruling in any one such proceeding or in all such proceedings
in the aggregate would have a American General Corporation
Material Adverse Effect;
(iii) the federal income Tax Returns of American
General Corporation and the American General Corporation
Subsidiaries have been examined by the Internal Revenue
Service (or the applicable statutes of limitation for the
assessment of federal income Taxes for such periods have
expired) for all periods through and including December 31,
1987, and no material deficiencies were asserted as a result
of such examinations that have not been resolved and fully
paid; and
(iv) to the knowledge of American General Corporation,
no insurance contracts or insurance policies issued by
American General Corporation or any American General
Corporation Subsidiary fail to comply with the applicable
provisions of Code Section 7702 where the failure to so
comply, individually or in the aggregate, would reasonably
be expected to have a American General Corporation Material
Adverse Effect.
(b) "Taxes" shall mean all federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto. "Tax Returns"
shall mean all federal, state, local and foreign tax returns,
declarations, statements, reports, schedules, forms and
information returns and any amendments to any of the foregoing
relating to Taxes.
Section 4.13 Title to Property.
(a) Except as set forth in the American General Corporation
SEC Reports or Section 4.13(a) of the American General
Corporation Disclosure Letter, each of American General
Corporation and American General Corporation Subsidiaries (i) has
good and valid title to all the properties, assets and other
rights used in its business that do not constitute real property,
free and clear of all Encumbrances, except for such Encumbrances
that do not, individually or in the aggregate, have a American
General Corporation Material Adverse Effect, and (ii) owns, has
valid leasehold interests in or valid contractual rights to use,
all of the assets, tangible and intangible, used by, or necessary
for the conduct of, its business, except where the failure to
have such valid leasehold interests or such valid contractual
rights do not, individually or in the aggregate, have a American
General Corporation Material Adverse Effect.
(b) Except as set forth in the American General Corporation
SEC Reports or Section 4.13(b) of the American General
Corporation Disclosure Letter or as would not reasonably be
expected to result in a American General Corporation Material
Adverse Effect, each of American General Corporation and the
American General Corporation Subsidiaries:
(i) owns and has good and valid title to the real
property owned by such party and used in its business, free
and clear of all mortgages, pledges, liens, charges,
encumbrances, defects, security interests, claims, options
and restrictions of any kind ("Encumbrances"), except for
(A) minor imperfections of title, easements and rights of
way, none of which, individually or in the aggregate,
materially detracts from the value of or impairs the use of
the affected property or impairs the operation of American
General Corporation or any of the American General
Corporation Subsidiaries and (B) liens for current taxes not
yet due and payable ("Permitted American General Corporation
Liens");
(ii) is in peaceful and undisturbed possession of the
space and/or estate under each lease under which it is a
tenant, and there are no material defaults by it as tenant
thereunder; and
(iii) has good and valid rights of ingress and egress
to and from all the real property owned or leased by such
party from and to the public street systems for all usual
street, road and utility purposes.
Section 4.14 Insurance Practices; Permit and Insurance Licenses.
(a) The business of each of the American General Corporation
Insurance Subsidiaries is being conducted in compliance, in all
material respects, with all applicable laws, including, without
limitation, all insurance laws, ordinances, rules, regulations,
decrees and orders of any Governmental Entity, and all material
notices, reports, documents and other information required to be
filed thereunder within the last three years were properly filed
in all material respects and were in compliance in all material
respects with such laws.
(b) Each of the American General Corporation Insurance
Subsidiaries has all permits and insurance licenses the use and
exercise of which are necessary for the conduct of its business
as now conducted, other than such permits and insurance licenses
the absence of which would not, individually or in the aggregate,
be reasonably expected to have a American General Corporation
Material Adverse Effect. The business of each of the American
General Corporation Insurance Subsidiaries has been and is being
conducted in compliance, in all material respects, with all such
permits and insurance licenses. To the knowledge of American
General Corporation, all such permits and insurance licenses are
in full force and effect, and there is no proceeding or
investigation pending or threatened which would reasonably be
expected to lead to the revocation, amendment, failure to renew,
limitation, suspension or restriction of any such permit or
insurance license.
Section 4.15 Regulatory Filings. American General Corporation has
made available for inspection by the Company complete copies of all
material registrations, filings and submissions made since January 1, 1994
by American General Corporation or any of the American General Corporation
Subsidiaries with any Governmental Entity and any reports of examinations
issued since January 1, 1994 by any such Governmental Entity that relate to
American General Corporation or any of the American General Corporation
Subsidiaries. American General Corporation and the American General
Corporation Subsidiaries have filed all reports, statements, documents,
registrations, filings or submissions required to be filed by any of them
with any Governmental Entity, except where the failure to file, in the
aggregate, would not reasonably be expected to have a American General
Corporation Material Adverse Effect; and, to the knowledge of American
General Corporation, all such reports, statements, documents,
registrations, filings or submissions were in all material respects true,
complete and accurate when filed.
Section 4.16 Investments.
(a) American General Corporation has made available to the
Company a list, which list is accurate and complete in all
material respects, of all securities, mortgages and other
investments (collectively, the "American General Corporation
Investments") owned by American General Corporation and the
American General Corporation Insurance Subsidiaries as of
December 31, 1996, together with their cost basis book or
amortized value, as the case may be, as of December 31, 1996. All
transactions in American General Corporation Investments by each
of the American General Corporation Insurance Subsidiaries from
January 1, 1997 to the date hereof have complied in all material
respects with the investment policies of such American General
Corporation Insurance Subsidiary and all applicable insurance
laws and regulations.
(b) Except as set forth in Section 4.16(b) of the American
General Corporation Disclosure Letter, the American General
Corporation Insurance Subsidiaries have good and marketable title
to the American General Corporation Investments and to those
securities, mortgages and other investments acquired in the
ordinary course of business since December 31, 1996, other than
with respect to those American General Corporation Investments
which have been disposed of in the ordinary course of business or
redeemed in accordance with their terms since such date and other
than American General Corporation Permitted Liens and other than
with respect to statutory deposits which are subject to certain
restrictions on transfer.
(c) Section 4.16(c) of the American General Corporation
Disclosure Letter identifies American General Corporation
Investments which to the knowledge of American General
Corporation (i) are expected to be written down as of December
31, 1996, or (ii) are as of December 31, 1996 in default in the
payment of principal or interest.
Section 4.17 Reserves. The aggregate reserves of the American
General Corporation Insurance Subsidiaries as recorded in the Statutory
Accounting Statements of American General Corporation have been determined
in accordance with generally accepted actuarial principles consistently
applied (except as set forth therein). Except as disclosed in the American
General Corporation SEC Reports or Section 4.17 of the American General
Corporation Disclosure Letter, the insurance reserving practices and
policies of the American General Corporation Insurance Subsidiaries have
not changed, in any material respect, since December 31, 1995 and the
results of the application of such practices and policies are reflected in
the Statutory Accounting Statements of the American General Corporation
Insurance Subsidiaries. All reserves of the American General Corporation
Insurance Subsidiaries set forth in the Statutory Accounting Statements of
American General Corporation are, to the knowledge of American General
Corporation, fairly stated in accordance with sound actuarial principles
and meet the requirements of the insurance laws of the applicable insurance
authority, except where the failure to so state such reserves or meet such
requirements would not have a American General Corporation Material Adverse
Effect.
Section 4.18 Ownership of Company Common Stock. As of the date
hereof, American General Corporation and the American General Corporation
Subsidiaries are not beneficial owners (as defined in Rule 16a-1(a) (2) of
the Exchange Act) of any shares of Company Common Stock except for any
shares held in a separate account or mutual fund managed by a American
General Corporation Subsidiary or in a pension trust for the benefit of
American General Corporation retirees.
Section 4.19 Information in Proxy Statement/Prospectus and
Registration Statement. The Registration Statement (or any amendment
thereof or supplement thereto), at the date it becomes effective and at the
time of the Special Meetings, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by American General Corporation with respect to
statements made therein based on information supplied by the Company in
writing for inclusion in the Registration Statement. None of the
information supplied by American General Corporation for inclusion or
incorporation by reference in the Proxy Statement/Prospectus will, at the
date mailed to American General Corporation shareholders and to the
Company's shareholders and at the time of the Special Meetings, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply in all material respects
with the provisions of the Securities Act and the rules and regulations
thereunder.
Section 4.20 Brokers. Except as set forth in Section 4.20 of the
American General Corporation Disclosure Letter, no person is entitled to
any brokerage, financial advisory, finder's or similar fee or commission
payable by American General Corporation in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on
behalf of American General Corporation.
Section 4.21 Employee Benefit Plans; ERISA.
(a) Section 4.21(a) of the American General Corporation
Disclosure Letter contains a true and complete list of each
deferred compensation and each incentive compensation, stock
purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination
pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program (within the meaning of section
3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of section
3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by
American General Corporation or by any trade or business, whether
or not incorporated (an "ERISA Affiliate"), that together with
American General Corporation would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which
American General Corporation or an ERISA Affiliate is party,
whether written or oral, for the benefit of any employee or
former employee of American General Corporation or any American
General Corporation Subsidiary (the "Plans"). Each of the Plans
that is subject to section 302 or Title IV of ERISA or section
412 of the Code is hereinafter referred to in this Section 4.21
as a "Title IV Plan." Neither American General Corporation, any
American General Corporation Subsidiary nor any ERISA Affiliate
has any commitment or formal plan, whether legally binding or
not, to create any additional employee benefit plan or modify or
change any existing Plan that would affect any employee or former
employee of American General Corporation or any American General
Corporation Subsidiary.
(b) With respect to each Plan, American General Corporation
has heretofore delivered or made available to the Company true
and complete copies of the Plan and any amendments thereto (or if
the Plan is not a written Plan, a description thereof), any
related trust or other funding vehicle, any reports or summaries
required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service
with respect to each Plan intended to qualify under section 401
of the Internal Revenue Code of 1986, as amended (the "Code").
(c) No liability under Title IV or section 302 of ERISA has
been incurred by American General Corporation or any ERISA
Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to American General
Corporation or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension
Benefit Guaranty Corporation ("PBGC") (which premiums have been
paid when due). Insofar as the representation made in this
section 4.21(c) applies to sections 4064, 4069 or 4204 of Title
IV of ERISA, it is made with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of
ERISA to which American General Corporation or any ERISA
Affiliate made, or was required to make, contributions during
the five (5)-year period ending on the last day of the most
recent plan year ended prior to the Closing Date.
(d) The PBGC has not instituted proceedings to terminate any
Title IV Plan and no condition exists that presents a material
risk that such proceedings will be instituted.
(e) As of the date hereof, with respect to each Title IV
Plan, the present value of accrued benefits under such plan,
based upon the actuarial assumptions used for funding purposes in
the most recent actuarial report prepared by such plan's actuary
with respect to such plan did not exceed, as of its latest
valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
(f) No Title IV Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each
Title IV Plan ended prior to the Closing Date. All con-
tributions required to be made with respect to any Plan on or
prior to the Closing Date have been timely made.
(g) No Title IV Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Title IV Plan a
plan described in section 4063(a) of ERISA. Neither American
General Corporation nor any ERISA Affiliate has made or
suffered a "complete withdrawal" or a "partial withdrawal," as
such terms are respectively defined in sections 4203 and 4205 of
ERISA (or any liability resulting therefrom has been satisfied in
full).
(h) Neither American General Corporation or any American
General Corporation Subsidiary, any Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged
in a transaction in connection with which American General
Corporation, any American General Corporation Subsidiary, or any
American General Corporation Plan could be subject to either a
civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to section 4975 or 4976 of the Code
that would reasonably be expected to have a American General
Corporation Material Adverse Effect.
(i) Except as set forth in Section 4.21(i) of the American
General Corporation Disclosure Letter, each Plan has been
operated and administered in all material respects in accordance
with its terms and applicable law, including but not limited to
ERISA and the Code.
(j) Each Plan intended to be "qualified" within the meaning
of section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under section
501(a) of the Code. Each Plan intended to satisfy the
requirements of Section 501(c)(9) has satisfied such
requirements.
(k) Except as set forth in Section 4.21(k) of the American
General Corporation Disclosure Letter, no Plan provides medical,
surgical, hospitalization, death or similar benefits (whether or
not insured) for employees or former employees of American
General Corporation or any American General Corporation
Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension plan," or
(iii) benefits the full cost of which is borne by the current or
former employee (or his beneficiary).
(l) There is no matter pending (other than routine
qualification determination filings, copies of which have been
furnished to the Company or will be promptly furnished to the
Company when made) with respect to any of the Plans before the
Internal Revenue Service, Department of Labor or PBGC.
Section 4.22 Labor Relations; Employees. Except as set forth in
the American General Corporation SEC Reports or Section 4.22 of the
American General Corporation Disclosure Letter:
(a) None of the employees of American General Corporation or
any of the American General Corporation Subsidiaries are
represented by any labor organization and, to the knowledge of
American General Corporation, no union claims to represent these
employees have been made. To the knowledge of American General
Corporation, there have been no union organizing activities with
respect to employees of American General Corporation or American
General Corporation Subsidiaries within the past five years. To
the knowledge of American General Corporation, American General
Corporation and the American General Corporation Subsidiaries are
not, and have not been, engaged in any unfair labor practices as
defined in the National Labor Relations Act or similar applicable
law, ordinance or regulation, nor is there pending any unfair
labor practice charge.
(b) American General Corporation and the American General
Corporation Subsidiaries have not during the past two years
effectuated a "plant closing" or "mass layoff" (as defined in the
Worker Adjustment and Retraining Notification Act) affecting any
of their sites of employment or one or more facilities or
operating units within any site of employment or facility, nor is
any such action scheduled within the 90 day period prior to the
Effective Time.
Section 4.23 Environmental Matters. Except as disclosed in
Section 4.23 of the American General Corporation Disclosure Letter or the
American General Corporation SEC Reports, with respect to real property
owned or leased by American General Corporation or any of the American
General Corporation Subsidiaries currently or within the past two years,
including foreclosure property, to the knowledge of American General
Corporation, there are no past or present actions, conditions or
occurrences that could form the basis of any outstanding claim under
Environmental Laws against, or liability under such laws of, American
General Corporation or any of the American General Corporation
Subsidiaries, except for such claims or liabilities which in the aggregate
would not reasonably be expected to result in a American General
Corporation Material Adverse Effect.
Section 4.24 Related Party Transactions. Except for the
transactions described in the American General Corporation SEC Reports or
Section 4.24 of the American General Corporation Disclosure Letter, all
transactions involving American General Corporation or any of the American
General Corporation Subsidiaries that are required to be disclosed in the
American General Corporation SEC Reports in accordance with Item 404 of
Regulation S-K have been so disclosed, and to the knowledge of American
General Corporation since December 31, 1995, neither American General
Corporation nor any of the American General Corporation Subsidiaries has
entered into any transactions that would be required to be disclosed in
future public filings under the Exchange Act pursuant to such Item which
have not already been disclosed in the American General Corporation SEC
Reports filed prior to the date hereof.
Section 4.25 Opinion of Financial Advisor. American General
Corporation has received a written opinion from Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") dated as of the date hereof,
to the effect that the consideration to be paid by American General
Corporation pursuant to the Merger is fair to American General Corporation
from a financial point of view.
Section 4.26 Derivatives. As of December 31, 1996, none of
American General Corporation or any of the American General Corporation
Subsidiaries was subject to any material exposure, individually or in the
aggregate, under any agreements relating to Derivatives.
Section 4.27 Contracts.
(a) Section 4.27 of the American General Corporation
Disclosure Letter sets forth a list of each contract to which
American General Corporation or any of the American General
Corporation Subsidiaries is a party or by which it is bound
which:
(i) has been entered into since September 30, 1996 and
would be required to be filed by American General
Corporation as an exhibit to a American General Corporation
SEC Report filed after such date under Item 10 of Rule 601
of Regulation S-K under the Exchange Act;
(ii) is a reinsurance or retrocession contract which
requires the payment of premiums by American General
Corporation or any of the American General Corporation
Subsidiaries of amounts in excess of $2,000,000 per year;
(iii) contains covenants limiting the freedom of
American General Corporation or any of the American General
Corporation Subsidiaries to engage in any line of business
in any geographic area or to compete with any person or
entity or restricting the ability of any of the American
General Corporation Subsidiaries to acquire equity
securities of any person or entity; or
(iv) is an employment or severance contract applicable
to any employee of American General Corporation or any of
the American General Corporation Subsidiaries, including
without limitation contracts to employ executive officers
and other contracts with officers or directors of American
General Corporation or any of the American General
Corporation Subsidiaries, other than any such contract which
(A) by its terms is terminable by American General
Corporation or any of the American General Corporation
Subsidiaries on not more than 60 days' notice without
material liability, or (B) does not require payments by
American General Corporation or any American General
Corporation Subsidiary individually in excess of $100,000 or
in the aggregate in excess of $2,000,000 (collectively,
together with such contracts as are filed as exhibits to the
American General Corporation SEC Reports, the "American
General Corporation Contracts").
(b) With respect to each of the American General Corporation
Contracts, to the knowledge of American General Corporation,
except as disclosed in Section 4.27 of the American General
Corporation Disclosure Letter:
(i) such contract is (assuming due power and authority
of, and due execution and delivery by, the other party or
parties thereto) valid and binding upon each party thereto
and is in full force and effect;
(ii) there is no material default or claim of material
default thereunder and no event has occurred which, with the
passage of time or the giving of notice (or both), would
constitute a material default thereunder, or would permit
material modification, acceleration or termination thereof;
and
(iii) the consummation of the transactions contemplated
by this Agreement will not give rise to a right of the other
party or parties thereto to terminate such contract or
impose liability under the terms thereof on American General
Corporation or any of the American General Corporation
Subsidiaries; provided, that this representation shall not
be deemed to give assurances regarding rights of termination
based on any decrease in insurance industry ratings of
American General Corporation or the American General
Corporation Subsidiaries resulting from the declaration
and/or payment of any of the extraordinary dividends
contemplated by Section 7.12 hereof.
Section 4.28 Intellectual Property. Except as set forth on
Section 4.28 of the American General Corporation Disclosure Letter,
American General Corporation and each American General Corporation
Subsidiary has the right to use, free and clear of any royalty or other
payment obligations, claims of infringement or alleged infringement or
other Liens, other than Permitted American General Corporation Liens and
other than contractual agreements with respect to licensing and maintenance
fees, all American General Intellectual Property (as hereinafter defined)
that is material to the conduct of its business; and neither American
General Corporation nor any American General Corporation Subsidiary is in
material default under any license or similar agreements under which
American General Corporation or any of the American General Corporation
Subsidiaries has obtained rights to use or permit its customers or agents
to use any American General Corporation Intellectual Property owned by
others and neither American General Corporation nor any of the American
General Corporation Subsidiaries has made a claim that the other party
thereto is in default. As used herein, "American General Intellectual
Property" shall mean all patents and trademarks, service marks, trade
names, jingles, assumed names, trade secrets and other proprietary
information, copyrights, licenses, permits and other similar intangible
property rights and interest applied for, issued to or presently owned or
used by American General Corporation or any of the American General
Corporation Subsidiaries or under which American General Corporation or any
of the American General Corporation Subsidiaries is licensed or franchised.
Section 4.29 Investment Advisor; Investment Company. Except as
set forth in Section 4.29 of the American General Corporation Disclosure
Letter, neither American General Corporation nor any of the American
General Corporation Subsidiaries conducts activities of an "investment
advisor" as such term is defined in Section 2 (a) (20) of the Investment
Company Act of 1940, as amended ("ICA"), whether or not registered under
the Investment Advisers Act of 1940, as amended. Except as disclosed in
Section 4.29 of the American General Corporation Disclosure Letter, neither
American General Corporation nor any of the American General Corporation
Subsidiaries is an "investment company" as defined under the ICA, and
neither American General Corporation nor any of the American General
Corporation Subsidiaries sponsors any person that is such an investment
company.
Section 4.30 Disclosure. No representation or warranty by
American General Corporation or the American General Corporation
Subsidiaries in this Agreement (including the American General Corporation
Disclosure Letter), and no statement contained in the American General
Corporation SEC Reports and the Statutory Financial Statements of American
General Corporation, contains any untrue statement of a material fact or
omits to state any material fact necessary, in light of the circumstances
under which it was made, to make the statements herein or therein not
misleading. There is no fact known to American General Corporation which
would reasonably be expected to have a American General Corporation
Material Adverse Effect which has not been set forth in the American
General Corporation SEC Reports, the Statutory Financial Statements of
American General Corporation or in this Agreement (including the American
General Corporation Disclosure Letter).
Section 4.31 Investigation by American General Corporation.
American General Corporation agrees, to the fullest extent permitted by
law, that none of the respective directors, officers, employees,
affiliates, agents or representatives of the Company or of any of the
Company Subsidiaries shall have any liability or responsibility whatsoever
to American General Corporation on any basis (including, without
limitation, in contract or tort, under federal or state securities laws or
otherwise) based upon any information provided or made available, or
statements made, to American General Corporation prior to the execution of
this Agreement.
Section 4.32 Pooling of Interests. Following consultation with
the independent public accountants of American General Corporation, neither
American General Corporation nor Merger Sub has any reason to believe that
the Merger will not qualify for pooling of interests accounting treatment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to American General Corporation in
a letter delivered to it prior to the execution hereof (which letter
contains appropriate references to identify the representations and
warranties herein to which the information in such letter relates) (the
"Company Disclosure Letter"), the Company represents and warrants to
American General Corporation as follows:
Section 5.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York and has the corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted or presently
proposed to be conducted. The Company is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned or held under lease or the
nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not individually or in the aggregate
have a material adverse effect on the business, assets, liabilities,
results of operations or financial condition of the Company and the Company
Subsidiaries, taken as a whole (a "Company Material Adverse Effect").
Section 5.2 Capitalization. As of February 6, 1997: (i) the
authorized capital stock of the Company consisted of 120,000,000 shares of
Company Common Stock and 10,800,000 shares of Preferred Stock; (ii)
34,509,812 shares of Company Common Stock, 4,232 shares of $4.50 Series A
Convertible Preferred Stock (the "Series A Preferred Stock") and 1,678
shares of $5.00 Series B Convertible Preferred Stock (the "Series B
Preferred Stock," and together with the Series A Preferred Stock, the
"Company Preferred Stock") were issued and outstanding; and (iii) stock
options to acquire 1,360,180 shares of Company Common Stock (such options,
together with (a) up to no more than 175,661 shares of restricted stock
that may be issued in connection with the exercise of such options under
the Company's restricted stock plans and arrangements, (b) any additional
options as may be granted upon exercise of such options in accordance with
the "reload" provisions of the Company's stock option plans, and (c) any
additional shares of restricted stock that may be issued in connection with
the exercise of the "reload" options referred to in clause (b), the
"Company Stock Incentives") were outstanding under all stock option plans
of the Company. All the issued and outstanding shares of Company Common
Stock and Company Preferred Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. Since February 6, 1997 to the
date hereof, no shares of the Company's capital stock have been issued,
except Company Common Stock issued upon exercise of Company Stock
Incentives or upon conversion of Company Preferred Stock. Except for (i)
Company Stock Incentives, (ii) 4,232 shares of Series A Preferred Stock
(iii) 1,678 shares of Series B Preferred Stock and (iv) as set forth in
Section 5.2 of the Company Disclosure Letter, as of the date of this
Agreement there are no options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating the
Company to issue, transfer, sell, redeem, repurchase or otherwise acquire
any shares of its capital stock.
Section 5.3 Company Subsidiaries.
(a) Each subsidiary of the Company set forth on Exhibit 21
to the Annual Report on Form 10-K for the year ended December 31,
1995 of the Company (collectively, together with USLIFE Financial
Institution Marketing Group, Inc., the "Company Subsidiaries") is
a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
and has the corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or
to have such power and authority or necessary governmental
approvals would not individually or in the aggregate have a
Company Material Adverse Effect. Each Company Subsidiary is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not individually or in the
aggregate have a Company Material Adverse Effect.
(b) Section 5.3(b) of the Company Disclosure Letter sets
forth the name of each of the Company Subsidiaries that is an
insurance company (collectively, the "Company Insurance
Subsidiaries"). Except as disclosed in the Company SEC Reports
(as defined below) or Section 5.3(b) of the Company Disclosure
Letter, each of the Company Insurance Subsidiaries is (i) duly
licensed or authorized as an insurance company in its
jurisdiction of incorporation and (ii) duly licensed or
authorized as an insurance company in each other jurisdiction
where it is required to be so licensed or authorized.
(c) Except as set forth in the Company SEC Reports or
Section 5.3(c) of the Company Disclosure Letter, the Company is,
directly or indirectly, the record and beneficial owner of all of
the outstanding shares of capital stock of each of the Company
Subsidiaries, there are no proxies with respect to any such
shares, and no equity securities of any Company Subsidiary are or
may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable or exercisable for, shares of
any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which
the Company or any Company Subsidiary is or may be bound to
issue, redeem, purchase or sell additional shares of capital
stock of any Company Subsidiary or securities convertible into or
exchangeable or exercisable for any such shares. Except as set
forth in the Company SEC Reports or Section 5.3(c) of the Company
Disclosure Letter, all of such shares so owned by the Company are
validly issued, fully paid and nonassessable and are owned by it
free and clear of any Encumbrances, restraints on alienation, or
any other restrictions with respect to the transferability or
assignability thereof (other than restrictions on transfer
imposed by federal or state securities laws).
(d) Except for the Company Subsidiaries, the Company
Investments (as hereinafter defined), and as set forth in the
Company SEC Reports or Section 5.3(d) of the Company Disclosure
Letter, the Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into
or exchangeable or exercisable for any equity or similar interest
in, any corporation, partnership, joint venture or other business
association or entity that directly or indirectly conducts any
activity which is material to the Company.
Section 5.4 Authority Relative to this Agreement. The Company has
the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors, and no other corporate proceedings on the part of the
Company, other than obtaining shareholder approval pursuant to Section 2.1
hereof, are necessary to authorize this Agreement or the transactions
contemplated hereby. Subject to the foregoing, this Agreement has been duly
and validly executed and delivered by the Company and (assuming this
Agreement constitutes a valid and binding obligation of American General
Corporation and Merger Sub) constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting creditors' rights generally from time to time in
effect and to general equitable principles.
Section 5.5 Consents and Approvals: No Violations. Except (a) for
the Governmental Requirements, or (b) where the failure to make any filing
with, or to obtain any permit, authorization, consent or approval of, any
Governmental Entity would not prevent or delay the consummation of the
Merger, or otherwise prevent the Company from performing its obligations
under this Agreement, and would not individually or in the aggregate have a
Company Material Adverse Effect, no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary
for the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement. Except as set forth on Section 5.5 of the
Company Disclosure Letter, no material consent or approval of any other
party (including, but not limited to, any party to any Company Contracts
(as defined below)) is required to be obtained by the Company or any
Company Subsidiary for the execution, delivery or performance of this
Agreement or the performance by the Company of the transactions
contemplated hereby. Except as set forth in Section 5.5 of the Company
Disclosure Letter, neither the execution, delivery or performance of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company with any of
the provisions hereof, will (i) conflict with or result in any breach of
any provisions of the Articles or Certificate of Incorporation, as the case
may be, or Bylaws of the Company or the Certificate or Articles of
Incorporation, as the case may be, or Bylaws of any of the Company
Subsidiaries, (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation, vesting, payment, exercise,
acceleration, suspension or revocation) under, any of the terms, conditions
or provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, license, contract, agreement, plan or other instrument
or obligation to which the Company or any of the Company Subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound or affected, (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, of the Company
Subsidiaries or any of their properties or assets, (iv) result in the
creation or imposition of any Encumbrance on any asset of the Company or
any Company Subsidiary or (v) cause the suspension or revocation of any
permit, license, governmental authorization, consent or approval necessary
for the Company or any of the Company Subsidiaries to conduct its business
as currently conducted, except in the case of clauses (ii), (iii), (iv) and
(v) for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations which
would not individually or in the aggregate have a Company Material Adverse
Effect.
Section 5.6 Company SEC Reports. The Company has delivered to
American General Corporation true and complete copies of each registration
statement, report and proxy or information statement (including exhibits
and any amendments thereto) filed by the Company with the SEC since January
1, 1994 through the date hereof (collectively, the "Company SEC Reports").
As of the respective dates the Company SEC Reports were filed or, if any
such Company SEC Reports were amended, as of the date such amendment was
filed, each of the Company SEC Reports (i) complied in all material
respects with all applicable requirements of the Securities Act and
Exchange Act, and the rules and regulations promulgated thereunder and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Each of (i) the audited consolidated financial
statements of the Company (including any related notes and schedules)
included (or incorporated by reference) in its Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 and (ii) the unaudited
consolidated interim financial statements for the Company (including any
related notes and schedules) included (or incorporated by reference) in its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996,
fairly present, in conformity with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated
financial position of the Company and the Company Subsidiaries as of the
dates thereof and the consolidated results of their operations and changes
in their financial position for the periods then ended (subject to normal
year-end adjustments, in the case of any unaudited interim financial
statements).
Section 5.7 Statutory Financial Statements. The Annual Statements
and Quarterly Statements of the Company Insurance Subsidiaries, as filed
with the respective departments of insurance for all applicable domiciliary
states for the years ended December 31, 1994 and December 31, 1995 (the
"Annual Statutory Statements of the Company") and the quarters ended March
31, June 30, and September 30, 1995, and March 31, June 30, and September
30, 1996 (collectively, the "Quarterly Statutory Statements of the
Company"), respectively, together with all exhibits and schedules thereto
(all Annual Statutory Statements of the Company and all Quarterly Statutory
Statements of the Company, together with all exhibits and schedules
thereto, referred to in this Section 5.7 are hereinafter referred to as the
"Statutory Financial Statements of the Company"), have been prepared in
accordance with the applicable State Statutory Accounting Principles, and
such accounting practices have been applied on a basis consistent with
State Statutory Accounting Principles throughout the periods involved,
except as expressly set forth in the notes, exhibits or schedules thereto,
and the Statutory Financial Statements of the Company present fairly in all
material respects the financial position and the results of operations for
the Company Insurance Subsidiaries as of the dates and for the periods
therein in accordance with State Statutory Accounting Principles. The
Company has delivered to American General Corporation true and complete
copies of the Annual Statutory Statements of the Company and the Quarterly
Statutory Statements of the Company.
Section 5.8 Absence of Certain Changes. Since September 30, 1996,
there has been no event or condition (other than (i) any event or condition
resulting from general economic conditions (including without limitation
changes in interest rates), (ii) any occurrence or condition affecting the
life insurance or reinsurance industry generally (including without
limitation any change or proposed change in insurance laws or regulations
in any jurisdiction), (iii) any occurrence or condition arising out of the
transactions contemplated by this Agreement or the public announcement
thereof, but excluding in the case of clauses (i) or (ii), any such event,
condition or occurrence that has had, or is reasonably likely to have, a
disproportionate effect on the Company and Company Subsidiaries taken as a
whole) which has had (or is reasonably likely to result in) a Company
Material Adverse Effect, and except as set forth in Section 5.8 of the
Company Disclosure Letter, the Company and the Company Subsidiaries have in
all material respects conducted their businesses in the ordinary course
consistent with past practices and have not taken any action which, if
taken after the date hereof, would violate Section 6.1 hereof.
Section 5.9 Litigation. Except as disclosed in the Company SEC
Reports or as set forth in Section 5.9 of the Company Disclosure Letter,
there is no suit, action, proceeding or investigation (whether at law or
equity, before or by any federal, state or foreign court, tribunal,
commission, board, agency or instrumentality, or before any arbitrator)
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the Company Subsidiaries or any Company
Plan, the outcome of which, in the reasonable judgment of the Company, is
likely individually or in the aggregate to have a Company Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company or any of the Company
Subsidiaries or any Company Plan having, or which, insofar as can
reasonably be foreseen, in the future would be reasonably likely to have, a
Company Material Adverse Effect.
Section 5.10 Absence of Undisclosed Liabilities; Actuarial
Appraisal. Except for liabilities or obligations which are accrued or
reserved against in the Company's financial statements (or reflected in the
notes thereto) included in the Company SEC Reports or disclosed in Section
5.10 of the Company Disclosure Letter or which were incurred after
September 30, 1996 in the ordinary course of business and consistent with
past practices or in connection with the transactions contemplated by this
Agreement, the Company and the Company Subsidiaries do not have any
liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of a nature required by GAAP to be reflected in a consolidated
balance sheet (or reflected in the notes thereto) of the Company. The
Company has not within the past three years obtained a detailed actuarial
appraisal which incorporates significant nonpublic information, performed
by an independent actuarial consultant, of the aggregate value of the
consolidated life insurance operations of the Company and the Company
Insurance Subsidiaries.
Section 5.11 No Default. Except as set forth in the Company SEC
Reports or Section 5.11 of the Company Disclosure Letter, neither the
Company nor any of the Company Subsidiaries is in violation or breach of,
or default under (and no event has occurred which with notice or the lapse
of time or both would constitute a violation or breach of, or a default
under) any term, condition or provision of (a) its Articles or Certificate
of Incorporation, as the case may be, or Bylaws, (b) any note, bond,
mortgage, deed of trust, security interest, indenture, license, agreement,
plan, contract, lease, commitment or other instrument or obligation to
which the Company or any of the Company Subsidiaries is a party or by which
they or any of their properties or assets may be bound or affected, (c) any
order, writ, injunction, decree, statute, rule or regulation applicable to
the Company or any of the Company Subsidiaries or any of their properties
or assets, or (d) any permit, license, governmental authorization, consent
or approval necessary for the Company or any of the Company Subsidiaries to
conduct their respective businesses as currently conducted, except in the
case of clauses (b), (c) and (d) above for breaches, defaults or violations
which would not individually or in the aggregate have a Company Material
Adverse Effect.
Section 5.12 Taxes. Except as set forth in the Company SEC
Reports or Section 5.12 of the Company Disclosure Letter:
(a) the Company and the Company Subsidiaries have (i) duly
filed (or there has been filed on their behalf) with the
appropriate governmental authorities all income Tax Returns and
all other material Tax Returns required to be filed by them on or
prior to the date hereof, and (ii) duly paid in full or made
provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of all
material Taxes for all periods or portions thereof ending through
the date hereof;
(b) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Company or
any Company Subsidiary wherein an adverse determination or ruling
in any one such proceeding or in all such proceedings in the
aggregate would have a Company Material Adverse Effect;
(c) the federal income Tax Returns of the Company and the
Company Subsidiaries have been examined by the Internal Revenue
Service (or the applicable statutes of limitation for the
assessment of federal income Taxes for such periods have expired)
for all periods through and including December 31, 1988, and no
material deficiencies were asserted as a result of such
examinations that have not been resolved and fully paid; and
(d) to the knowledge of the Company, no insurance contracts
or insurance policies issued by the Company or any Company
Subsidiary fail to comply with the applicable provisions of Code
Section 7702 where the failure to so comply, individually or in
the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.
Section 5.13 Title to Property.
(a) Except as set forth in the Company SEC Reports or
Section 5.13(a) of the Company Disclosure Letter, each of the
Company and the Company Subsidiaries (i) has good and valid title
to all the properties, assets and other rights used in its
business that do not constitute real property, free and clear of
all Encumbrances, except for such Encumbrances that do not,
individually or in the aggregate, have a Company Material Adverse
Effect, and (ii) owns, has valid leasehold interests in or valid
contractual rights to use, all of the assets, tangible and
intangible, used by, or necessary for the conduct of, its
business, except where the failure to have such valid leasehold
interests or such valid contractual rights do not, individually
or in the aggregate, have a Company Material Adverse Effect.
(b) Except as set forth in the Company SEC Reports or
Section 5.13(b) of the Company Disclosure Letter or as would not
reasonably be expected to result in a Company Material Adverse
Effect, each of the Company and the Company Subsidiaries:
(i) owns and has good and valid title to the real
property owned by such party and used in its business, free
and clear of all Encumbrances, except for (A) minor
imperfections of title, easements and rights of way, none of
which, individually or in the aggregate, materially detracts
from the value of or impairs the use of the affected
property or impairs the operation of the Company or any of
the Company Subsidiaries and (B) liens for current taxes not
yet due and payable ("Permitted Company Liens");
(ii) is in peaceful and undisturbed possession of the
space and/or estate under each lease under which it is a
tenant, and there are no material defaults by it as tenant
thereunder; and
(iii) has good and valid rights of ingress and egress
to and from all the real property owned or leased by such
party from and to the public street systems for all usual
street, road and utility purposes.
Section 5.14 Insurance Practices; Permits and Insurance Licenses.
(a) The business of each of the Company Insurance
Subsidiaries is being conducted in compliance in all material
respects with all applicable laws, including, without limitation,
all insurance laws, ordinances, rules, regulations, decrees and
orders of any Governmental Entity, and all material notices,
reports, documents and other information required to be filed
thereunder within the last three years were properly filed in all
material respects and were in compliance in all material respects
with such laws.
(b) Each of the Company Insurance Subsidiaries has all
permits and insurance licenses the use and exercise of which are
necessary for the conduct of its business as now conducted, other
than such permits and insurance licenses the absence of which
would not, individually or in the aggregate, be reasonably
expected to have a Company Material Adverse Effect. The business
of each of the Company Insurance Subsidiaries has been and is
being conducted in compliance, in all material respects, with all
such permits and insurance licenses. To the knowledge of the
Company, all such permits and insurance licenses are in full
force and effect, and there is no proceeding or investigation
pending or threatened which would reasonably be expected to lead
to the revocation, amendment, failure to renew, limitation,
suspension or restriction of any such permit or insurance
license.
Section 5.15 Regulatory Filings. The Company has made available
for inspection by American General Corporation complete copies of all
material registrations, filings and submissions made since January 1, 1994
by the Company or any of the Company Subsidiaries with any Governmental
Entity and any reports of examinations issued since January 1, 1994 by any
such Governmental Entity that relate to the Company or any of the Company
Subsidiaries. The Company and the Company Subsidiaries have filed all
reports, statements, documents, registrations, filings or submissions
required to be filed by any of them with any Governmental Entity, except
where the failure to file, in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect; and, to the knowledge
of the Company, all such reports, statements, documents, registrations,
filings or submissions were in all material respects true, complete and
accurate when filed.
Section 5.16 Investments.
(a) The Company has made available to American General
Corporation a list, which list is accurate and complete in all
material respects, of all securities, mortgages and other
investments (collectively, the "Company Investments") owned by
the Company and the Company Insurance Subsidiaries as of December
31, 1996, together with their cost basis, book or amortized
value, as the case may be, as of December 31, 1996. All
transactions in Company Investments by each Company Insurance
Subsidiary from January 1, 1997 to the date hereof have complied
in all material respects with the investment policies of such
Company Insurance Subsidiary and all applicable insurance laws
and regulations.
(b) Except as set forth in Section 5.16(b) of the Company
Disclosure Letter, the Company Insurance Subsidiaries have good
and marketable title to the Company Investments and to those
securities, mortgages and other investments acquired in the
ordinary course of business since December 31, 1996, other than
with respect to those Company Investments which have been
disposed of in the ordinary course of business or redeemed in
accordance with their terms since such date and other than
Permitted Company Liens or with respect to statutory deposits
which are subject to certain restrictions on transfer, and none
of the Company Investments consists of securities loaned to third
parties.
(c) Section 5.16(c) of the Company Disclosure Letter
identifies the Company Investments which to the knowledge of the
Company (i) are expected to be written down as of December 31,
1996 or (ii) are as of December 31, 1996 in default in the
payment of principal or interest.
Section 5.17 Reserves. The aggregate reserves of the Company
Insurance Subsidiaries as recorded in the Statutory Accounting Statements
of the Company have been determined in accordance with generally accepted
actuarial principles consistently applied (except as set forth therein).
Except as disclosed in the Company SEC Reports or Section 5.17 of the
Company Disclosure Letter, the insurance reserving practices and policies
of the Company Insurance Subsidiaries have not changed, in any material
respect, since December 31, 1995 and the results of the application of such
practices and policies are reflected in the Statutory Accounting Statements
of the Company. All reserves of the Company Insurance Subsidiaries set
forth in the Statutory Accounting Statements of the Company are, to the
knowledge of the Company, fairly stated in accordance with sound actuarial
principles and meet the requirements of the insurance laws of the
applicable insurance authority, except where the failure to so state such
reserves or meet such requirements would not have a Company Material
Adverse Effect.
Section 5.18 Repurchases of Company Common Stock. Except as set
forth in Section 5.18 of the Company Disclosure Letter, since December 31,
1996, the Company has not repurchased any shares of Company Common Stock,
other than de minimis amounts of shares repurchased from Company Plans (as
hereinafter defined).
Section 5.19 Information in Proxy Statement/Prospectus and
Registration Statement. The Proxy Statement/Prospectus (or any amendment
thereof or supplement thereto), at the date mailed to Company shareholders
and to American General Corporation shareholders and at the time of the
Special Meetings, will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made
therein based on information supplied by American General Corporation in
writing for including in the Proxy Statement/Prospectus. None of the
information supplied by the Company for inclusion or incorporation by
reference in the Registration Statement will, at the date it becomes
effective and at the time of the Special Meetings, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Proxy Statement/Prospectus will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 5.20 Brokers. Except for Goldman, Sachs & Co. ("Goldman
Sachs"), no person is entitled to any brokerage, financial advisory,
finder's or similar fee or commission payable by the Company in connection
with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company.
Section 5.21 Employee Benefit Plans; ERISA.
(a) Section 5.21(a) of the Company Disclosure Letter
contains a true and complete list of each deferred compensation
and each incentive compensation, stock purchase, stock option and
other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (within the meaning of section 3(1) of
ERISA); each profit-sharing, stock bonus or other "pension" plan,
fund or program (within the meaning of section 3(2) of ERISA);
each employment, termination or severance agreement; and each
other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company or
by any trade or business, whether or not incorporated (a "Company
ERISA Affiliate"), that together with the Company would be deemed
a "single employer" within the meaning of section 4001(b) of
ERISA, or to which the Company or a Company ERISA Affiliate is
party, whether written or oral, for the benefit of any employee
or former employee of the Company or any Company Subsidiary (the
"Company Plans"). Each of the Company Plans that is subject to
section 302 or Title IV of ERISA or section 412 of the Code is
hereinafter referred to in this Section 5.21 as a "Company
Title IV Plan." Neither the Company, any Company Subsidiary nor
any Company ERISA Affiliate has any commitment or formal plan,
whether legally binding or not, to create any additional employee
benefit plan or modify or change any existing Company Plan that
would affect any employee or former employee of the Company or
any Company Subsidiary.
(b) With respect to each Company Plan, the Company has
heretofore delivered or made available to American General
Corporation true and complete copies of the Company Plan and any
amendments thereto (or if the Company Plan is not a written plan,
a description thereof), any related trust or other funding vehi-
cle, any reports or summaries required under ERISA or the Code
and the most recent determination letter received from the
Internal Revenue Service with respect to each Company Plan
intended to qualify under section 401 of the Internal Revenue
Code of 1986, as amended (the "Code").
(c) No liability under Title IV or section 302 of ERISA has
been incurred by the Company or any Company ERISA Affiliate
that has not been satisfied in full, and no condition exists
that presents a material risk to the Company or any Company ERISA
Affiliate of incurring any such liability, other than liability
for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due). Insofar as the
representation made in this section 5.21(c) applies to sections
4064, 4069 or 4204 of Title IV of ERISA, it is made with respect
to any employee benefit plan, program, agreement or arrangement
subject to Title IV of ERISA to which the Company or any Company
ERISA Affiliate made, or was required to make, contributions
during the five (5)-year period ending on the last day of the
most recent plan year ended prior to the Closing Date.
(d) The PBGC has not instituted proceedings to terminate any
Company Title IV Plan and no condition exists that presents a
material risk that such proceedings will be instituted.
(e) As of the date hereof, with respect to each Company
Title IV Plan, the present value of accrued benefits under such
plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such
plan's actuary with respect to such plan did not exceed, as of
its latest valuation date, the then current value of the assets
of such plan allocable to such accrued benefits.
(f) No Company Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, as of the last day of the most recent
fiscal year of each Company Title IV Plan ended prior to the
Closing Date. All contributions required to be made with respect
to any Company Plan on or prior to the Closing Date have been
timely made.
(g) No Company Title IV Plan is a "multiemployer pension
plan," as defined in section 3(37) of ERISA, nor is any Company
Title IV Plan a plan described in section 4063(a) of ERISA.
Neither the Company nor any Company ERISA Affiliate has made or
suffered a "complete withdrawal" or a "partial withdrawal," as
such terms are respectively defined in sections 4203 and 4205 of
ERISA (or any liability resulting therefrom has been satisfied in
full).
(h) Neither the Company or any Company Subsidiary, any
Company Plan, any trust created thereunder, nor any trustee or
administrator thereof has engaged in a transaction in connection
with which the Company, any Company Subsidiary, or any Company
Plan could be subject to either a civil penalty assessed pursuant
to section 409 or 502(i) of ERISA or a tax imposed pursuant to
section 4975 or 4976 of the Code that would reasonably be
expected to have a Company Material Adverse Effect.
(i) Except as set forth in Section 5.21(i) of the Company
Disclosure Letter, each Company Plan has been operated and
administered in all material respects in accordance with its
terms and applicable law, including but not limited to ERISA and
the Code.
(j) Each Company Plan intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and the
trusts maintained thereunder are exempt from taxation under
section 501(a) of the Code. Each Company Plan intended to satisfy
the requirements of Section 501(c)(9) has satisfied such
requirements.
(k) Except as set forth in Section 5.21(k) of the Company
Disclosure Letter, no Company Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of the Company or any
Company Subsidiary for periods extending beyond their re-
tirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any
"pension plan," or (iii) benefits the full cost of which is borne
by the current or former employee (or his beneficiary).
(l) There is no matter pending (other than routine
qualification determination filings, copies of which have been
furnished to American General Corporation or will be promptly
furnished to American General Corporation when made) with respect
to any of the Company Plans before the Internal Revenue Service,
Department of Labor or PBGC.
Section 5.22 Labor Relations; Employees. Except as set forth in
the Company SEC Reports or Section 5.22 of the Company Disclosure Letter:
(a) None of the employees of the Company or the Company
Subsidiaries are represented by any labor organization and, to
the knowledge of the Company, no union claims to represent these
employees have been made. To the knowledge of the Company, there
have been no union organizing activities with respect to
employees of the Company or the Company Subsidiaries within the
past five years. To the knowledge of the Company, the Company and
Company Subsidiaries are not, and have not been, engaged in any
unfair labor practices as defined in the National Labor Relations
Act or similar applicable law, ordinance or regulation, nor is
there pending any unfair labor practice charge.
(b) The Company and the Company Subsidiaries have not during
the past two years effectuated a "plant closing" or "mass layoff"
(as defined in the Worker Adjustment and Retraining Notification
Act) affecting any of their sites of employment or one or more
facilities or operating units within any site of employment or
facility, nor is any such action scheduled within the 90 day
period prior to the Effective Time.
Section 5.23 Environmental Matters. Except as disclosed in the
Company SEC Reports or Section 5.23 of the Company Disclosure Letter and in
any environmental report obtained by American General Corporation in
connection with its due diligence review of the Company, with respect to
real property owned or leased by the Company or any of the Company
Subsidiaries currently or within the last two years, including foreclosure
property, to the knowledge of the Company, there are no past or present
actions, conditions or occurrences that could form the basis of any
outstanding claim under Environmental Laws against, or liability under such
laws of, the Company or any of the Company Subsidiaries, except for such
claims or liabilities which in the aggregate would not reasonably be
expected to result in a Company Material Adverse Effect.
Section 5.24 Related Party Transactions. Except for the
transactions described in the Company SEC Reports or Section 5.24 of the
Company Disclosure Letter, all transactions involving the Company or any of
the Company Subsidiaries that are required to be disclosed in the Company
SEC Reports in accordance with Item 404 of Regulation S-K have been so
disclosed, and to the knowledge of the Company, since December 31, 1995,
neither the Company nor any of the Company Subsidiaries has entered into
any transactions that would be required to be disclosed in future public
filings under the Exchange Act pursuant to such Item which have not already
been disclosed in the Company SEC Reports filed prior to the date hereof.
Section 5.25 Opinion of Financial Advisor. The Company has
received an opinion from Goldman Sachs dated the date hereof to the effect
that the Merger Consideration to be received by the shareholders of the
Company pursuant to this Agreement is fair as of the date hereof to such
shareholders.
Section 5.26 Derivatives. As of December 31, 1996, none of the
Company or any of the Company Subsidiaries was subject to any material
exposure, individually or in the aggregate, under any agreements relating
to Derivatives.
Section 5.27 Contracts.
(a) Section 5.27 of the Company Disclosure Letter sets forth
a list of each contract to which the Company or any of the
Company Subsidiaries is a party or by which it is bound which:
(i) has been entered into since September 30, 1996 and
would be required to be filed by the Company as an exhibit
to a Company SEC Report filed after such date under Item 10
of Rule 601 of Regulation S-K under the Exchange Act;
(ii) is a reinsurance or retrocession contract which
requires the payment of premiums by the Company or any of
the Company Subsidiaries of amounts in excess of $2,000,000
per year;
(iii) contains covenants limiting the freedom of the
Company or any of the Company Subsidiaries to engage in any
line of business in any geographic area or to compete with
any person or entity or restricting the ability of any of
the Company Subsidiaries to acquire equity securities of any
person or entity; or
(iv) is an employment or severance contract applicable
to any employee of the Company or any of the Company
Subsidiaries, including without limitation contracts to
employ executive officers and other contracts with officers
or directors of the Company or any of the Company
Subsidiaries, other than any such contract which (A) by its
terms is terminable by the Company or any of the Company
Subsidiaries on not more than 60 days' notice without
material liability, or (B) does not require payments by the
Company or any Company Subsidiary individually in excess of
$100,000 or in the aggregate in excess of $2,000,000.
(collectively, together with such contracts as are filed as exhibits to the
Company SEC Reports, the "Company Contracts").
(b) With respect to each of the Company Contracts, to the
knowledge of the Company, except as disclosed in Section 5.27 of
the Company Disclosure Letter:
(i) such contract is (assuming due power and authority
of, and due execution and delivery by, the other party or
parties thereto) valid and binding upon each party thereto
and is in full force and effect;
(ii) there is no material default or claim of material
default thereunder and no event has occurred which, with the
passage of time or the giving of notice (or both), would
constitute a material default thereunder, or would permit
material modification, acceleration or termination thereof;
and
(iii) the consummation of the transactions contemplated
by this Agreement will not give rise to a right of the other
party or parties thereto to terminate such contract or
impose liability under the terms thereof on the Company or
any of the Company Subsidiaries; provided, that this
representation shall not be deemed to give assurances
regarding rights of termination based on any decrease in
insurance industry ratings of the Company or the Company
Subsidiaries resulting from the declaration and/or payment
of any of the extraordinary dividends contemplated by
Section 7.12 hereof.
Section 5.28 Intellectual Property. Except as set forth on
Section 5.28 of the Company Disclosure Letter, the Company and each Company
Subsidiary has the right to use, free and clear of any royalty or other
payment obligations, claims of infringement or alleged infringement or
other Liens, other than Permitted Company Liens and other than contractual
agreements with respect to licensing and maintenance fees, all Company
Intellectual Property (as hereinafter defined) that is material to the
conduct of its business; and neither the Company nor any Company Subsidiary
is in material default under any license or similar agreements under which
the Company or any of the Company Subsidiaries has obtained rights to use
or permit its customers or agents to use any Company Intellectual Property
owned by others and neither the Company nor any of the Company Subsidiaries
has made a claim that the other party thereto is in default. As used
herein, "Company Intellectual Property" shall mean all patents and
trademarks, service marks, trade names, jingles, assumed names, trade
secrets and other proprietary information, copyrights, licenses, permits
and other similar intangible property rights and interest applied for,
issued to or presently owned or used by the Company or any of the Company
Subsidiaries or under which the Company or any of the Company Subsidiaries
is licensed or franchised.
Section 5.29 Investment Advisor; Investment Company. Except as
disclosed in Section 5.29 of the Company Disclosure Letter, neither the
Company nor any of the Company Subsidiaries conducts activities of an
"investment advisor" as such term is defined in Section 2 (a) (20) of the
ICA, whether or not registered under the Investment Advisers Act of 1940,
as amended. Except as disclosed in Section 5.29 of the Company Disclosure
Letter, neither the Company nor any of the Company Subsidiaries is an
"investment company" as defined under the ICA, and neither the Company nor
any of the Company Subsidiaries sponsors any person that is such an
investment company.
Section 5.30 Disclosure. No representation or warranty by the
Company or the Company Subsidiaries in this Agreement (including the
Company Disclosure Letter), and no statement contained in the Company SEC
Reports and the Statutory Financial Statements of the Company, contains any
untrue statement of a material fact or omits to state any material fact
necessary, in light of the circumstances under which it was made, to make
the statements herein or therein not misleading. There is no fact known to
the Company which would reasonably be expected to have a Company Material
Adverse Effect which has not been set forth in the Company SEC Reports, the
Statutory Financial Statements of the Company or in this Agreement
(including the Company Disclosure Letter).
Section 5.31 Investigation by the Company. The Company agrees, to
the fullest extent permitted by law, that none of the respective directors,
officers, employees, affiliates, agents or representatives of American
General Corporation or of any of the American General Corporation
Subsidiaries shall have any liability or responsibility whatsoever to the
Company on any basis (including, without limitation, in contract or tort,
under federal or state securities laws or otherwise) based upon any
information provided or made available, or statements made, to the Company
prior to the execution of this Agreement.
Section 5.32 Pooling of Interests. Following consultation with
its independent public accountants, the Company has no reason to believe
that the Merger will not qualify for pooling of interests accounting
treatment.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the
Merger. From the date hereof until the Effective Time, unless American
General Corporation shall otherwise agree in writing, or except as set
forth in the Company Disclosure Letter or as otherwise contemplated by this
Agreement, the Company and the Company Subsidiaries shall conduct their
respective businesses in the ordinary course consistent with past practice
and shall use all reasonable efforts to preserve intact their business
organizations and relationships with third parties (including but not
limited to their respective relationships with policyholders, insureds,
agents, underwriters, brokers and investment customers) and to keep
available the services of their present officers and key employees, subject
to the terms of this Agreement. Except as set forth in the Company
Disclosure Letter or as otherwise provided in this Agreement, from the date
hereof until the Effective Time, without the prior written consent of
American General Corporation:
(a) the Company shall not adopt or propose any change in its
Restated Certificate of Incorporation or Bylaws;
(b) the Company shall not declare, set aside or pay any
dividend or other distribution with respect to any shares of
capital stock of the Company (except for regular quarterly
dividends payable in an amount no greater than $.25 per share on
the Company Common Stock, $1.125 per share on the Series A
Preferred Stock, and $1.25 per share on the Series B Preferred
Stock), or split, combine or reclassify any of the Company's
capital stock, and the Company and the Company Subsidiaries shall
not repurchase, redeem or otherwise acquire any shares of capital
stock or other securities of, or other ownership interests in,
the Company;
(c) subject to Section 7.3, the Company shall not, and shall
not permit any Company Subsidiary to, merge or consolidate with
any other person or (except in the ordinary course of business)
acquire a material amount of assets of any other person;
(d) the Company shall not, and shall not permit any Company
Subsidiary to, sell, lease, license or otherwise surrender,
relinquish or dispose of (i) any material facility owned or
leased by the Company or any Company Subsidiary or (ii) any
assets or property which are material to the Company and the
Company Subsidiaries, taken as a whole, except pursuant to
existing contracts or commitments (the material terms of which
have been disclosed to American General Corporation prior to the
date hereof), or in the ordinary course of business consistent
with past practice;
(e) the Company shall not, and shall not permit any Company
Subsidiary to, settle any material audit, make or change any
material Tax election or file any material amendment to any
material Tax Return;
(f) except as set forth in a certificate of the President of
the Company previously delivered to American General Corporation,
the Company and the Company Subsidiaries shall not issue any
capital stock (other than pursuant to the Company Stock
Incentives, and upon the conversion of Company Preferred Stock)
or other securities or enter into any amendment of any material
term of any outstanding security of the Company, and the Company
and the Company Subsidiaries shall not incur any material
indebtedness except in the ordinary course of business pursuant
to existing credit facilities or arrangements, amend or otherwise
increase, accelerate the payment or vesting of the amounts
payable or to become payable under or fail to make any required
contribution to, any Company Plan (as hereinafter defined) or
materially increase any non-salary benefits payable to any
employee or former employee, except in the ordinary course of
business consistent with past practice or as otherwise permitted
by this Agreement;
(g) except as set forth in a certificate of the President of
the Company previously delivered to American General Corporation,
the Company shall not, and shall not permit any Company
Subsidiary to, (i) grant any increase in the compensation or
benefits (including, but not limited to, salary, bonus, stock
option, restricted stock awards, annual incentive plan or book
unit plan of the Company) of directors, officers, employees,
consultants or agents of the Company or any Company Subsidiary,
or (ii) enter into or amend any employment agreement or other
employment arrangement with any employee of the Company or any
Company Subsidiary;
(h) the Company shall not change any method of accounting or
accounting practice by the Company or any Company Subsidiary,
except for any such required change in GAAP or applicable
Statutory Accounting Principles;
(i) the Company shall not, and shall not permit any Company
Subsidiary to, take any action that would reasonably be expected
to cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368(a) of the Code;
(j) the Company shall not, and shall not permit any Company
Subsidiary to, take any action that could, directly or
indirectly, reasonably be expected to cause the Merger to fail to
qualify for pooling-of-interest accounting treatment;
(k) the Company shall not permit any Company Insurance
Subsidiary to conduct transactions in Company Investments except
in compliance with the investment policies of such Company
Insurance Subsidiary in effect on the date hereof and all
applicable insurance laws and regulations;
(l) the Company shall not, and shall not permit any Company
Subsidiary to, enter into any agreement to purchase, or to lease
for a term in excess of one year, any real property (other than
real property constituting a Company Investment), provided that
the Company, or any Company Subsidiary, (i) may as a tenant, or a
landlord, renew any existing lease for a term not to exceed
eighteen months and (ii) nothing herein shall prevent the
Company, in its capacity as a landlord, from renewing any lease
pursuant to an option granted prior to the date hereof;
(m) the Company shall not, and shall not permit any Company
Subsidiary to, agree or commit to do any of the foregoing;
(n) except to the extent necessary to comply with the
requirements of applicable laws and regulations, the Company
shall not, and shall not permit any Company Subsidiary to, (i)
take, or agree or commit to take, any action that would make any
representation and warranty of the Company hereunder inaccurate
in any material respect at, or as of any time prior to, the
Effective Time, (ii) omit, or agree or commit to omit, to take
any action necessary to prevent any such representation or
warranty from being inaccurate in any material respect at any
such time, provided however, that the Company shall be permitted
to take or omit to take such action which (without any
uncertainty) can be cured, and in fact is cured, at or prior to
the Effective Time or (iii) take, or agree or commit to take, any
action that would result in, or is reasonably likely to result
in, any of the conditions of the Merger set forth in Article VIII
not being satisfied; and
(o) none of the Company Insurance Subsidiaries shall make
any material change in its underwriting, claims management or
reserving practices.
Section 6.2 Conduct of Business by American General Corporation
Pending the Merger. From the date hereof until the Effective Time, unless
the Company shall otherwise agree in writing, or except as set forth in the
American General Corporation Disclosure Letter or as otherwise contemplated
by this Agreement, American General Corporation and American General
Corporation Subsidiaries shall conduct their respective businesses in the
ordinary course consistent with past practice and shall use all reasonable
efforts to preserve intact their business organizations and relationships
with third parties (including but not limited to their respective
relationships with policyholders, insureds, agents, underwriters, brokers
and investment customers) and to keep available the services of their
present officers and key employees, subject to the terms of this Agreement.
Except as set forth in the American General Corporation Disclosure Letter
or as otherwise provided in this Agreement, from the date hereof until the
Effective Time, without the prior written consent of the Company:
(a) American General Corporation shall not adopt or propose
any change in its Restated Articles of Incorporation or Bylaws;
(b) American General Corporation shall not declare, set
aside or pay any dividend or other distribution with respect to
any shares of capital stock of the Company (except for regular
quarterly dividends payable in an amount no greater than $.35 per
quarter per share of American General Corporation Common Stock,
and $.6453 per quarter per share of American General Corporation
7% Convertible Preferred Stock), or split, combine or reclassify
any of American General Corporation's capital stock;
(c) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, merge or
consolidate with any other person or (except in the ordinary
course of business) acquire a material amount of assets of any
other person;
(d) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, sell,
lease, license or otherwise surrender, relinquish or dispose of
(i) any material facility owned or leased by American General
Corporation or any American General Corporation Subsidiary or
(ii) any assets or property which are material to American
General Corporation and the American General Corporation
Subsidiaries, taken as a whole, except pursuant to existing
contracts or commitments (the material terms of which have been
disclosed to the Company prior to the date hereof), or in the
ordinary course of business consistent with past practice;
(e) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, settle any
material audit, make or change any material Tax election or file
any material amendment to any material Tax Return;
(f) American General Corporation and the American General
Corporation Subsidiaries shall not issue any capital stock (other
than pursuant to the exercise of American General Corporation
Stock Options or upon conversion of shares of American General
Corporation 7% Convertible Preferred Stock) or other securities
or enter into any amendment of any material term of any
outstanding security of American General Corporation, and
American General Corporation and the American General Corporation
Subsidiaries shall not incur any material indebtedness except in
the ordinary course of business pursuant to existing credit
facilities or arrangements, amend or otherwise increase,
accelerate the payment or vesting of the amounts payable or to
become payable under or fail to make any required contribution
to, any American General Corporation Plan (as hereinafter
defined) or materially increase any non-salary benefits payable
to any employee or former employee, except in the ordinary course
of business consistent with past practice or as otherwise
permitted by this Agreement;
(g) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, (i) grant
any increase in the compensation or benefits of directors,
officers, employees, consultants or agents of American General
Corporation or any American General Corporation Subsidiary, or
(ii) enter into or amend any employment agreement or other
employment arrangement with any employee of American General
Corporation or any American General Corporation Subsidiary;
(h) American General Corporation shall not change any method
of accounting or accounting practice by American General
Corporation or any American General Corporation Subsidiary,
except for any such required change in GAAP or applicable
Statutory Accounting Principles;
(i) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, take any
action that would reasonably be expected to cause the Merger to
fail to qualify as a reorganization within the meaning of Section
368(a) of the Code;
(j) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, take any
action that could, directly or indirectly, cause the Merger to
fail to qualify for pooling-of-interests accounting treatment;
(k) American General Corporation shall not permit any
American General Corporation Insurance Subsidiary to conduct
transactions in American General Corporation Investments except
in compliance with the investment policies of such American
General Corporation Insurance Subsidiary in effect on the date
hereof and all applicable insurance laws and regulations;
(l) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, enter into
any agreement to purchase, or to lease for a term in excess of
one year, any real property (other than real property
constituting a American General Corporation Investment), provided
that American General Corporation or any American General
Corporation Subsidiary, (i) may as a tenant, or a landlord, renew
any existing lease for a term not to exceed eighteen months and
(ii) nothing herein shall prevent American General Corporation in
its capacity as a landlord, from renewing any lease pursuant to
an option granted prior to the date hereof;
(m) American General Corporation shall not, and shall not
permit any American General Corporation Subsidiary to, agree or
commit to do any of the foregoing;
(n) except to the extent necessary to comply with the
requirements of applicable laws and regulations, American General
Corporation shall not, and shall not permit any American General
Corporation Subsidiary to, (i) take, or agree or commit to take,
any action that would make any representation and warranty of
American General Corporation hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time, (ii)
omit, or agree or commit to omit, to take any action necessary to
prevent any such representation or warranty from being inaccurate
in any material respect at any such time, provided however, that
American General Corporation shall be permitted to take or omit
to take such action which (without any uncertainty) can be cured,
and in fact is cured, at or prior to the Effective Time or (iii)
take, or agree or commit to take, any action that would result
in, or is reasonably likely to result in, any of the conditions
of the Merger set forth in Article VIII not being satisfied; and
(o) none of the American General Corporation Insurance
Subsidiaries shall make any material change in its underwriting,
claims management or reserving practices.
Section 6.3 Amendment to Rights Plan. Within one business day
following the execution of this Agreement, the Board of Directors of the
Company (a) shall amend the Amended and Restated Rights Agreement, dated as
of June 24, 1986 and amended and restated as of January 24, 1989 and as
further amended and restated as of September 27, 1994 (the "Company Rights
Agreement"), between the Company and Chemical Bank (as successor by merger
to Manufacturers Hanover Trust Company), as Rights Agent, so that (i)
American General Corporation will not become an "Acquiring Person" as a
result of the consummation of the transactions contemplated by this
Agreement, (ii) no "Stock Acquisition Date" or "Separation Date" (as such
terms are defined in the Company Rights Agreement) will occur as a result
of the consummation of the transactions contemplated by this Agreement, and
(iii) all outstanding "Rights" (the "Company Rights") issued and
outstanding under the Company Rights Agreement will expire immediately
prior to the Effective Time. Except as provided above with respect to the
transactions contemplated by this Agreement, and subject to the exercise of
its fiduciary duties as provided in Section 7.3, the Board of Directors of
the Company shall not (a) amend the Company Rights Agreement, or (b) take
any actions with respect to, or make any determination under, the Company
Rights Agreement, including, but not limited to, any redemption of the
Company Rights or any action that would have the effect of facilitating an
Acquisition Proposal (as defined in Section 7.2), unless the Board of
Directors of the Company determines in good faith, following consultation
with independent legal counsel, that in order to comply with its fiduciary
duties to stockholders under applicable law it is necessary to make any
such amendment, take any such action or make any such determination.
Section 6.4 Redemption of Company Preferred Stock. The Board of
Directors of the Company shall take all action necessary to call for
redemption all outstanding shares of Company Preferred Stock at the
redemption price stated in the Company's Restated Certificate of
Incorporation as soon as practicable following the date of this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The Company and American
General Corporation shall each afford to the other and to the other's
financial advisors, legal counsel, accountants, consultants, financing
sources, and other authorized representatives access during normal business
hours throughout the period prior to the Effective Time to all of its
books, records, properties, plants and personnel and, during such period,
each shall furnish as promptly as practicable to the other (a) a copy of
each report, schedule and other document filed or received by it pursuant
to the requirements of federal securities laws, and (b) all other
information as such other party reasonably may request, provided that
neither party shall disclose to the other any competitively sensitive
information and no investigation pursuant to this Section 7.1 shall affect
any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Merger. Each party
shall continue to abide by the terms of the confidentiality agreement
between American General Corporation and the Company, dated January 28,
1997 (the "Confidentiality Agreement").
Section 7.2 Acquisition Proposals. The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or
permit any officer, director or employee of or any investment banker,
attorney, accountant or other advisor or representative of, the Company or
any of its subsidiaries to, directly or indirectly, (i) solicit, initiate
or encourage the submission of any Acquisition Proposal (as hereinafter
defined) or (ii) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or agree to or
endorse, or take any other action to facilitate, any Acquisition Proposal
or any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal; provided,
however, that nothing contained in this Section 7.2 shall prohibit the
Board of Directors of the Company from furnishing information to, or
entering into discussions or negotiations with, any person or entity that
makes an unsolicited bona fide Acquisition Proposal if, and only to the
extent that (A) the Board of Directors of the Company, after consultation
with and based upon the advice of independent legal counsel, determines in
good faith that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary duties to the Company's stockholders
under applicable law and (B) prior to taking such action, the Company (x)
provides reasonable notice to American General Corporation to the effect
that it is taking such action and (y) receives from such person or entity
an executed confidentiality/standstill agreement in reasonably customary
form. The Company shall notify American General Corporation of any
Acquisition Proposal (including, without limitation, the material terms and
conditions thereof and the identity of the person making it) as promptly as
practicable after its receipt thereof, and shall provide American General
Corporation with a copy of any written Acquisition Proposal or amendments
or supplements thereto, and shall thereafter inform American General
Corporation on a prompt basis of the status of any discussions or
negotiations with such a third party, and any material changes to the terms
and conditions of such Acquisition Proposal, and shall promptly give
American General Corporation a copy of any information delivered to such
person which has not previously been reviewed by American General
Corporation. The term "Acquisition Proposal" as used herein means any
tender or exchange offer involving the capital stock of the Company or
any of the Company Subsidiaries, any proposal for a merger, consolidation
or other business combination involving the Company or any of the Company
Subsidiaries, any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the business or assets of,
the Company or any of the Company Subsidiaries, any proposal or offer with
respect to any recapitalization or restructuring of the Company or any of
the Company Subsidiaries, or any proposal or offer with respect to any
other transaction similar to any of the foregoing with respect to the
Company or any of the Company Subsidiaries, other than the Merger
contemplated by this Agreement. Immediately after the execution and
delivery of this Agreement, the Company will, and will cause its
Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
cease and terminate any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any possible
Acquisition Proposal and shall notify each party that it, or any officer,
director, investment advisor, financial advisor, attorney or other
representative retained by it, has had discussions with during the 30 days
prior to the date of this Agreement that the Board of Directors of the
Company no longer seeks the making of any Acquisition Proposal.
Section 7.3 Fiduciary Duties. The Board of Directors of the
Company shall not (i) withdraw or modify, or propose to withdraw or modify,
in a manner adverse to American General Corporation or Merger Sub, the
approval or recommendation by such Board of Directors of this Agreement or
the Merger, (ii) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal, (iii) enter into any agreement (other than a
confidentiality/standstill agreement entered into in accordance with
Section 7.2(B)) with respect to any Acquisition Proposal, or (iv) terminate
this Agreement in response to an Acquisition Proposal unless, in each case,
the Company receives an unsolicited Acquisition Proposal and the Board of
Directors of the Company determines in good faith, following consultation
with independent legal counsel, that in order to comply with its fiduciary
duties to stockholders under applicable law it is necessary for the Board
of Directors to withdraw or modify its approval or recommendation of this
Agreement or the Merger, approve or recommend such Acquisition Proposal,
enter into an agreement with respect to such Acquisition Proposal or
terminate this Agreement. Nothing contained in this Section 7.3 shall
prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to the Company's stockholders which, in the
good faith reasonable judgment of the Board of Directors of the Company
based on the advice of independent legal counsel, is required under
applicable law; provided that, except as otherwise permitted in this
Section 7.3, the Company does not withdraw or modify, or propose to
withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal.
Notwithstanding anything contained in this Agreement to the contrary, any
action by the Board of Directors permitted by, and taken in accordance
with, this Section 7.3 shall not constitute a breach of this Agreement by
the Company.
Section 7.4 Filings; Other Action. Subject to the terms and
conditions herein provided, as promptly as practicable, the Company,
American General Corporation and Merger Sub shall: (i) promptly make all
filings and submissions under the HSR Act and all filings required by the
insurance regulatory authorities in New York, and deliver notices and
consents to jurisdiction to state insurance departments, each as reasonably
may be required to be made in connection with this Agreement and the
transactions contemplated hereby, (ii) use reasonable best efforts to
cooperate with each other in (A) determining which filings are required to
be made prior to the Effective Time with, and which material consents,
approvals, permits, notices or authorizations are required to be obtained
prior to the Effective Time from, governmental or regulatory authorities of
the United States, the several states or the District of Columbia, the
Commonwealth of Puerto Rico and foreign jurisdictions in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such consents, approvals, permits, notices or
authorizations, and (iii) use reasonable best efforts to take, or cause to
be taken, all other action and do, or cause to be done, all other things
necessary or appropriate to consummate the transactions contemplated by
this Agreement as soon as practicable. In connection with the foregoing,
the Company will provide American General Corporation, and American General
Corporation will provide the Company, with copies of correspondence,
filings or communications (or memoranda setting forth the substance
thereof) between such party or any of its representatives, on the one hand,
and any governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement and the
transactions contemplated hereby.
Each of American General Corporation and the Company acknowledge
that certain actions may be necessary with respect to the foregoing in
making notifications and obtaining clearances, consents, approvals, waivers
or similar third party actions which are material to the consummation of
the transactions contemplated hereby, and each of American General
Corporation and the Company agree to take such action as is necessary to
complete such notifications and obtain such clearances, approvals, waivers
or third party actions, provided, however, that nothing in this Section 7.4
or elsewhere in this Agreement shall require any party hereto to take any
action that would reasonably be expected to have a material adverse effect
on the business, financial condition or results of operations of American
General Corporation and its Subsidiaries taken as a whole (after giving
effect to the consummation of the Merger).
Section 7.5 Public Announcements. American General Corporation,
on the one hand, and the Company, on the other hand, agree that they will
not issue any press release or otherwise make any public statement or
respond to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without the prior approval of the other
party (which approval will not be unreasonably withheld), except as may be
required by applicable law.
Section 7.6 Employee Benefits. From and after the Effective Time,
American General Corporation agrees to take, and following the Effective
Time to cause the Company to take, the actions described in Exhibit D
hereto.
Section 7.7 Stock Exchange Listing. American General Corporation
shall as promptly as practicable prepare and submit to the New York Stock
Exchange a listing application covering the shares of American General
Corporation Common Stock to be issued in connection with the Merger and
this Agreement, and shall use all reasonable efforts to obtain, prior to
the Effective Time, approval for the listing of such shares, subject to
official notice of issuance.
Section 7.8 Surviving Corporation Directors. American General
Corporation shall take all necessary action to cause the persons mutually
agreed upon by American General Corporation and the Company to be appointed
to the Board of Directors of the Surviving Corporation as of the Effective
Time, to serve until the next annual election of directors of American
General Corporation.
Section 7.9 Employee Stock Options. From and after the Effective
Time, each of the Employee Stock Options which is outstanding and
unexercised at the Effective Time shall be treated in accordance with the
terms of Exhibit D hereto.
Section 7.10 Company Indemnification Provision. American General
Corporation agrees that all rights to indemnification existing in favor of
the present or former directors, officers, employees, fiduciaries and
agents of the Company or any of the Company Subsidiaries (collectively, the
"Indemnified Parties") as provided in the Company's Articles of
Incorporation or By-Laws or the certificate or articles of incorporation,
by-laws or similar organizational documents of any of the Company
Subsidiaries as in effect as of the date hereof or pursuant to the terms of
any indemnification agreements entered into between the Company and any of
the Indemnified Parties with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force
and effect (without modification or amendment, except as required by
applicable law or except to make changes permitted by law that would
enlarge the Indemnified Parties' right of indemnification), to the fullest
extent and for the maximum term permitted bylaw, and shall be enforceable
by the Indemnified Parties against the Surviving Corporation. American
General Corporation shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
American General Corporation may substitute therefor policies of at least
equivalent coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective
Time, provided that in no event shall American General Corporation or the
Surviving Corporation be required to expend to maintain or procure
insurance coverage pursuant to this Section 7.10 any amount per annum in
excess of 200% of the aggregate premiums paid in 1996 on an annualized
basis for such purpose. In the event the payment of such amount for any
year is insufficient to maintain such insurance or equivalent coverage
cannot otherwise be obtained, the Surviving Corporation shall purchase as
much insurance as may be purchased for the amount indicated. The provisions
of this Section 7.10 shall survive the consummation of the Merger and
expressly are intended to benefit each of the Indemnified Parties.
Section 7.11 Comfort Letters.
(a) American General Corporation shall use all reasonable
efforts to cause Ernst & Young LLP, American General
Corporation's independent accountants, to deliver to the Company
a letter dated as of the date of the Proxy Statement/Prospectus
and addressed to the Company, in form and substance reasonably
satisfactory to the Company, in connection with the procedures
undertaken by them with respect to the financial statements and
other financial information of American General Corporation
contained in the Registration Statement and the other matters
contemplated by AICPA Statement No. 72 and customarily included
in comfort letters relating to transactions similar to the
Merger.
(b) The Company shall use all reasonable efforts to cause
KPMG Peat Marwick LLP, the Company's independent accountants, to
deliver to American General Corporation a letter dated as of the
date of the Proxy Statement/Prospectus and addressed to American
General Corporation, in form and substance reasonably
satisfactory to American General Corporation, in connection with
the procedures undertaken by them with respect to the financial
statements and other financial information of the Company and the
Company Subsidiaries contained in the Registration Statement and
the other matters contemplated by AICPA Statement No. 72 and
customarily included in comfort letters relating to transactions
similar to the Merger.
Section 7.12 Tax Matters; Pooling of Interests.
(a) The Company and American General Corporation shall each
reasonably cooperate in connection with obtaining the opinions of
special counsel described in Sections 8.2(b) and 8.3(b)
including, without limitation, providing to special counsel such
representations that are reasonably required by special counsel
to enable them to render such opinions.
(b) The parties intend for the Merger to qualify as a
reorganization under Section 368(a) of the Code; each party and
its affiliates shall use all reasonable efforts to cause the
Merger to so qualify; neither party nor any affiliate shall take
any action that would cause the Merger not to so qualify; and the
parties will take the position for all purposes that the Merger
so qualifies.
(c) The parties intend for the Merger to qualify as a
pooling of interests transaction for accounting purposes; each
party shall use all reasonable efforts to cause the Merger to so
qualify; neither party nor any affiliate shall take any action
that would cause the Merger not to so qualify; and the parties
will take the position for all purposes that the Merger so
qualifies.
Section 7.13 Intercompany Dividends. On or before the date
immediately prior to the Closing Date, subject to compliance with
applicable law and the receipt of all necessary approvals, the Company
shall use all reasonable efforts to cause (i) All American Life Insurance
Company to pay a dividend to the Company of at least $86 million and (ii)
The Old Line Life Insurance Company of America to pay a dividend to the
Company of at least $29 million (collectively, such dividends are referred
to as the "Intercompany Dividends"), such Intercompany Dividends to be paid
in the form of demand promissory notes, or such other form as the parties
may mutually agree.
Section 7.14 Affiliates. The Company and American General
Corporation shall use all reasonable efforts to obtain and deliver to each
other prior to the Closing executed letter agreements (i) in the case of
the letter agreement to be delivered by the Company, in the form attached
as Exhibit C-1 hereto and (ii) in the case of the letter agreement to be
delivered by American General Corporation, in the form attached as Exhibit
C-2 hereto, from all persons who, in the reasonable judgment of the Company
or American General Corporation, respectively, may be deemed to be
affiliates of the Company or American General Corporation, respectively,
under Rule 145 of the Securities Act. For a period of at least two years
following the Effective Time, American General Corporation or any successor
issuer thereto shall make available adequate current public information
with respect to itself, within the meaning of Rule 144(c) under the
Securities Act. In addition, American General Corporation agrees to publish
financial results covering at least 30 days of combined operations as soon
as practicable after the Effective Time.
Section 7.15 Additional Matters. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using all reasonable
efforts to obtain all necessary waivers, consents and approvals in
connection with the Governmental Requirements and any other third party
consents and to effect all necessary registrations and filings. In case at
any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of American General Corporation, Merger Sub and the
Company shall take all such necessary action.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated,
and no action shall have been instituted by the Department of
Justice or Federal Trade Commission challenging or seeking to
enjoin the consummation of this transaction, which action shall
have not been withdrawn or terminated;
(b) no statute, rule, regulation, executive order, decree,
ruling or preliminary or permanent injunction shall have been
enacted, entered, promulgated or enforced by any federal or state
court or governmental authority having jurisdiction which
prohibits, restrains, enjoins or restricts consummation of the
Merger;
(c) each of the Company and American General Corporation
shall have made such filings, and obtained such permits,
authorizations, consents, or approvals, required by Governmental
Requirements to consummate the transactions contemplated hereby,
and the appropriate forms shall have been executed, filed and
approved as required by the corporate and insurance laws and
regulations of the states of New York and such other states as
may have jurisdiction over the transactions contemplated by this
Agreement pursuant to insurance holding company or other
insurance laws or regulations; provided, however, that such
permits, authorizations, consents and approvals may be subject to
(i) conditions customarily imposed by insurance regulatory
authorities in transactions of the type contemplated by this
Agreement or (ii) other conditions that would not reasonably be
expected to have a material adverse effect on the business,
financial condition or results of operations of American General
Corporation and its Subsidiaries taken as a whole (after giving
effect to the consummation of the Merger);
(d) this Agreement and the Merger shall have been adopted
and approved by the requisite vote of the holders of the Company
Common Stock in accordance with the applicable provisions of the
NYBCL;
(e) the shareholders of American General Corporation shall
have voted to approve the issuance of Shares of American General
Corporation Common Stock as Merger Consideration;
(f) the Registration Statement shall have become effective
under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order; and
(g) the shares of American General Corporation Common Stock
issuable to the Company's shareholders pursuant to this Agreement
shall have been authorized for listing on the NYSE upon official
notice thereof.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) each of American General Corporation and Merger Sub
shall have performed in all material respects its obligations
under this Agreement required to be performed by it at or prior
to the Effective Time; the representations and warranties of
American General Corporation and Merger Sub contained in this
Agreement shall be true and correct in all respects as of the
date of this Agreement and at and as of the Effective Time as if
made at and as of such time (except to the extent such
representations and warranties specifically relate to an earlier
date, in which case as of such earlier date) except as
contemplated by this Agreement and except to the extent that the
failure of such representations and warranties to be true and
correct would not, in the aggregate, be reasonably likely to
result in a American General Corporation Material Adverse Effect;
and the Company shall have received a certificate of the Chairman
of the Board, the President, an Executive Vice President, a
Senior Vice President or the Chief Financial Officer of American
General Corporation as to the satisfaction of this condition;
(b) the Company shall have received an opinion from
Debevoise & Plimpton, special counsel to the Company, dated the
Effective Time, to the effect that, on the basis of certain
facts, representations and assumptions set forth in such opinion
which are consistent with the stated facts existing at the
Effective Time, the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code, and that American General Corporation, Merger Sub
and the Company will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. In rendering
the opinion described in the preceding sentence, such counsel may
require and rely upon representations contained in certificates
of officers of American General Corporation, Merger Sub and the
Company and their respective subsidiaries received pursuant to
Section 7.12 hereof; and
(c) the audited GAAP financial statements of American
General Corporation for the fiscal year ended December 31, 1996
shall not reflect any event, change or effect having, or which
would be reasonably likely to have, in the aggregate, a American
General Corporation Material Adverse Effect.
Section 8.3 Conditions to Obligations of American General
Corporation and Merger Sub to Effect the Merger. The obligations of
American General Corporation and Merger Sub to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following additional conditions:
(a) the Company shall have performed in all material
respects its obligations under this Agreement required to be
performed by it at or prior to the Effective Time; and the
representations and warranties of the Company contained in this
Agreement shall be true and correct in all respects as of the
date of this Agreement and at and as of the Effective Time as if
made at and as of such time (except to the extent such
representations and warranties specifically relate to an earlier
date, in which case as of such earlier date), except as
contemplated by the Company Disclosure Letter or this Agreement
and except to the extent that the failure of such representations
and warranties to be true and correct would not, in the
aggregate, be reasonably likely to result in a Company Material
Adverse Effect; and American General Corporation and Merger Sub
shall have received a Certificate of the Chairman of the Board,
the President, or a Vice President of the Company as to the
satisfaction of this condition;
(b) American General Corporation shall have receive an
opinion from Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to American General Corporation, dated the Effective
Time, to the effect that, on the basis of certain facts,
representations and assumptions set forth in such opinion which
are consistent with the stated facts existing at the Effective
Time, the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the
Code, and that American General Corporation, Merger Sub and the
Company will each be a party to that reorganization within the
meaning of Section 368(b) of the Code. In rendering the opinion
described in the preceding sentence, such counsel may require and
rely upon representations contained in certificates of officers
of American General Corporation, Merger Sub and the Company and
their respective subsidiaries received pursuant to Section 7.12
hereof;
(c) the audited GAAP financial statements of the Company for
the fiscal year ended December 31, 1996 shall not reflect any
event, change or effect having, or which would be reasonably
likely to have, in the aggregate, a Company Material Adverse
Effect;
(d) American General Corporation shall have received a
letter of its independent public accountants, dated the Closing
Date, in form and substance reasonably satisfactory to it stating
that the Merger will qualify as a transaction to be accounted for
in accordance with the pooling-of-interests method of accounting
under the requirements of APB No. 16; and
(e) all outstanding shares of Company Preferred Stock shall
either have been redeemed or converted into Shares of Company
Common Stock, in accordance with the terms of the certificate of
designation of such Company Preferred Stock.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Effective Time by mutual written
agreement of American General Corporation and the Company.
Section 9.2 Termination by Either American General Corporation or
the Company. This Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either American General
Corporation or the Company if (a) this Agreement and the transactions
contemplated thereby shall fail to receive the requisite vote for approval
and adoption by the shareholders of the Company at the Company Special
Meeting, (b) the issuance of American General Corporation Common Stock as
Merger Consideration shall fail to receive the requisite vote for approval
by the shareholders of American General Corporation at the American General
Corporation Special Meeting, (c) the Merger shall not have been consummated
before October 31, 1997, provided, however, that this Agreement may be
extended by written notice of either American General Corporation or the
Company to a date not later than December 31, 1997, if the Merger shall not
have been consummated as a direct result of the condition set forth in
Section 8.1(c) not having been satisfied by such date or (d) a United
States federal or state court of competent jurisdiction or United States
federal or state governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable; provided, that
the party seeking to terminate this Agreement pursuant to clause (c) shall
not have taken any action that would cause it to be in material violation
of any of its representations, warranties or covenants set forth in this
Agreement, and the party seeking to terminate this Agreement pursuant to
clause (d) shall have used all reasonable efforts to remove such
injunction, order or decree.
Section 9.3 Termination by American General Corporation. This
Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by action of the Board of Directors of American
General Corporation, if (a) there has been a breach by the Company of any
representation or warranty contained in this Agreement which would have or
would be likely to have a Company Material Adverse Effect, or (b) there has
been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the Company, which breach, in the case of
clauses (a) and (b), is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach has been given by
American General Corporation to the Company; or (c) if the Board of
Directors of the Company shall have taken or resolved to take any of the
actions set forth in clauses (i), (ii), (iii), or (iv) of Section 7.3.
Section 9.4 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of the Company, if (a)
there has been a breach by American General Corporation of any
representation or warranty contained in this Agreement which would have or
would be likely to have a American General Corporation Material Adverse
Effect, or (b) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of American General
Corporation, which breach, in the case of clauses (a) and (b), is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach has been given by the Company to American General
Corporation; or (c) if the Board of Directors of the Company shall have
taken or resolved to take any of the actions set forth in, and in
accordance with the terms of, clauses (i), (ii), (iii) or (iv) of Section
7.3.
Section 9.5 Effect of Termination and Abandonment. In the event
of termination of the Agreement and the abandonment of the Merger pursuant
to this Article IX, written notice thereof shall as promptly as practicable
be given to the other parties to this Agreement and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned,
without further action by any of the parties hereto. If this Agreement is
terminated as provided herein: (a) there shall be no liability or
obligation on the part of American General Corporation, the American
General Corporation Subsidiaries, the Company or the Company Subsidiaries
or their respective officers and directors, and all obligations of the
parties shall terminate, except for (i) the obligations of the parties
pursuant to this Section 9.5, (ii) the provisions of Sections 4.20, 5.20,
7.5, 10.4, 10.5, 10.6 and 10.10, (iii) the obligations of the parties set
forth in the Confidentiality Agreement referred to in Section 7.1 hereof
(provided, however, that if this Agreement is terminated by the Company
pursuant to Section 9.4(c), American General Corporation shall no longer be
bound by any standstill provisions of the Confidentiality Agreement), and
except that (iv) a party who is in material breach of its representations,
warranties, covenants or agreements set forth in this Agreement shall be
liable for damages occasioned by such breach, including without limitation
any expenses incurred by the other party in connection with this Agreement
and the transactions contemplated hereby, and (b) all filings, applications
and other submissions made pursuant to the transactions contemplated by
this Agreement shall, to the extent practicable, be withdrawn from the
agency or person to which made.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and
Agreements. No representations or warranties in this Agreement or in any
instrument delivered pursuant to this Agreement, shall survive beyond the
Effective Time. This Section 10.1 shall not limit any covenant or agreement
set forth in this Agreement, which covenants and agreements shall survive
the Effective Time.
Section 10.2 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon
(a) confirmation of receipt of a facsimile transmission, (b) confirmed
delivery by a standard overnight carrier or when delivered by hand or (c)
the expiration of five business days after the day when mailed by
registered or certified mail (postage prepaid, return receipt requested),
addressed to the respective parties at the following addresses (or such
other address for a party as shall be specified by like notice):
(a) If to American General Corporation or Merger Sub, to:
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Telecopy: (713) 831-1300
Attention: Jon P. Newton, Esq.
with copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopy: (212) 735-2000
Attention: Morris J. Kramer, Esq.
(b) If to the Company, to:
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Telecopy: (212) 709-6410
Attention: Wesley E. Forte, Esq.
with copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Telecopy: (212) 909-6836
Attention: Michael W. Blair, Esq.
Section 10.3 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 10.4 Entire Agreement; Assignment. This Agreement
(including the Exhibits, Company Disclosure Letter, American General
Corporation Disclosure Letter and other documents and instruments referred
to herein) constitutes the entire agreement and supersedes all other prior
agreements and understandings (other than those contained in the
Confidentiality Agreement, which are hereby incorporated by reference
herein), both written and oral, among the parties or any of them, with
respect to the subject matter hereof, including, without limitation, any
transaction between or among the parties hereto. This Agreement shall not
be assigned by operation of law or otherwise, except that Merger Sub may
assign all of its rights and obligations hereunder to any direct
wholly-owned subsidiary of American General Corporation which shall then be
substituted for Merger Sub for all purposes hereof; provided, however, that
no such assignment shall be made if such assignment would have a material
adverse effect on the Company, the Company's shareholders or the likelihood
that the transaction contemplated hereby would be consummated.
Section 10.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to the provisions thereof relating to conflicts of law,
provided, that the laws of the respective states of incorporation of the
parties hereto shall govern the respective internal rights and obligations
of the parties and the effects of the Merger contemplated hereby.
Section 10.6 Expenses. (a) Except as provided in clause (b) and
clause (c) of this Section 10.6, whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except that those expenses incurred in connection
with printing and mailing the Proxy Statement/Prospectus, as well as the
filing fees relating to the Registration Statement and the HSR Act, will be
shared equally by American General Corporation and the Company.
(b) In the event that (i) this Agreement is terminated by
American General Corporation pursuant to Section 9.3(c), (ii) this
Agreement is terminated by the Company pursuant to Section 9.4(c), or (iii)
prior to the termination of this Agreement any person or entity shall have
commenced a tender or exchange offer which would, if successful, result in
the acquisition by such person or entity of twenty percent (20%) or more of
the outstanding shares of Company Common Stock and such tender or exchange
offer is completed not later than six (6) months following the termination
of this Agreement, the Company shall promptly, but not later than two
business days after the date of any such termination (or the date of
completion of such tender or exchange offer, as the case may be), pay to
American General Corporation in same day funds $48 million. The Company
acknowledges that the agreements contained in this Section 10.6(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, American General Corporation would not enter into
this Agreement.
(c) In the event that (i) an Acquisition Proposal (as defined
in Section 7.2 but with respect to American General Corporation and the
American General Corporation Subsidiaries) shall have been made known to
American General Corporation or any of its subsidiaries or shall have been
made known directly to the shareholders of American General Corporation or
any person shall have publicly announced an intention (whether or not
conditional) to make such Acquisition Proposal, (ii) the Board of Directors
of American General Corporation shall have withdrawn or modified, or have
proposed to withdraw or modify, in a manner adverse to the Company the
approval or recommendation by such Board of Directors of the issuance of
American General Corporation Common Stock as Merger Consideration, or
approved or recommended, or have proposed to approve or recommend, any such
Acquisition Proposal and (iii) thereafter this Agreement is terminated by
either the Company or American General Corporation pursuant to Section
9.2(b), American General Corporation shall promptly, but not later than two
business days after the date of any such termination, pay to the Company in
same day funds $48 million. American General Corporation acknowledges that
the agreements contained in this Section 10.6(c) are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, the Company would not enter into this Agreement.
Section 10.7 Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
Section 10.8 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the Agreements or conditions contained herein. Any agreement on the part of
a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
Section 10.9 Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be
an original but all of which shall constitute one and the same agreement.
This Agreement shall become effective when each party hereto shall have
received counterparts thereof signed by all of the other parties hereto.
Section 10.10 Severability; Validity; Parties in Interest. If any
provision of this Agreement, or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this
Agreement, and the application of such provision to other persons or
circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable. Except as provided
in Sections 7.6, 7.9, 7.10, 7.14 and Exhibit D, nothing in this Agreement,
express or implied, is intended to confer upon any person not a party to
this Agreement any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 10.11 Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.12 Definition of "knowledge" of the Company and of
American General Corporation. As used herein, the term "knowledge of the
Company" shall mean the actual knowledge of the officers of the Company and
its subsidiaries set forth on Section 10.12 of the Company Disclosure
Letter; and the term "knowledge of American General Corporation" shall mean
the actual knowledge of any individual holding the title of "Senior Vice
President" or higher of American General Corporation.
IN WITNESS WHEREOF, each of American General Corporation, Merger
Sub and the Company has caused this Agreement to be executed as of the date
first above written.
AMERICAN GENERAL CORPORATION
By: /s/ Robert M. Devlin
----------------------------
Name: Robert M. Devlin
Title: President & Chief Executive
Officer
TEXAS STARS CORPORATION
By: /s/ Robert M. Devlin
----------------------------
Name: Robert M. Devlin
Title: President & Chairman
USLIFE CORPORATION
By: /s/ Gordon E. Crosby, Jr.
----------------------------
Name: Gordon E. Crosby, Jr.
Title: Chairman of the Board
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
TEXAS STARS CORPORATION
-----------------------------------------
Under Section 402 of the Business
Corporation Law of the State of New York
------------------------------------------
The undersigned, being of the age of eighteen years or over, for
the purpose of forming a corporation pursuant to the provisions of the
Business Corporation Law of the State of New York do hereby certify:
(a) The name of the corporation shall be Texas Stars Corporation
(hereinafter sometimes called the "Corporation").
(b) The purposes for which it is formed are to engage in any
lawful act or activity for which corporations may be organized under the
Business Corporation Law provided that the corporation is not formed to
engage in any act or activity which requires the consent or approval of any
state official, department, board, agency or other body, without such
consent or approval first being obtained.
It is hereby expressly provided that the foregoing shall not be
held to limit or restrict in any manner the powers of this Corporation; and
that this Corporation may do all and everything necessary, suitable and
appropriate for the exercise of any of its general powers.
(c) The office of the Corporation in the State of New York shall
be located in the County of New York.
(d) The aggregate number of shares which the Corporation shall
have authority to issue is 100 shares of Common Stock, each share having a
par value of one penny ($.01) The holders of the Common Stock shall have no
preemptive rights to subscribe for any shares of any class of stock of the
Corporation whether now or hereafter authorized.
(e) The Secretary of State of the State of New York is hereby
designated as the agent of the Corporation upon whom any process may in any
action or proceeding against it be served. The post office address to which
the Secretary of State shall mail a copy of any process in any action or
proceeding against the Corporation which may be served upon it is: 1633
Broadway, New York, New York 10019; Attention: C T Corporation System.
(f) The corporation designated C T Corporation System, 1633
Broadway, New York, New York 10019 as its registered agent upon whom
process against it may be served within the State of New York.
(g) The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the
By-Laws of the Corporation. Election of directors need not be by
written ballot unless the By-Laws so provide.
(4) In addition to the powers and authority hereinbefore or
by statute expressly conferred upon them, the directors are
hereby empowered to exercise all such powers and do all such acts
and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the Business
Corporation Law, this Certificate of Incorporation, and any
By-Laws adopted by the stockholders; provided, however, that no
By-Laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
(5) Any member of the Board of Directors may be removed,
with or without cause, at any time prior to the expiration of his
term by a majority vote of the outstanding shares.
(h) The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (b) of Section 402 of the Business Corporation Law of the State
of New York, as the same may be amended and supplemented.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury, this 10th
day of February, 1997.
/s/ Catherine D. Ledyard
------------------------
Catherine D. Ledyard
Sole Incorporator
Address
-------
Skadden Arps, Slate,
Meagher & Flom (Delaware)
One Rodney Square
Wilmington, DE 19801
EXHIBIT B
* * * * *
B Y - L A W S
* * * * *
OF
TEXAS STARS CORPORATION
ARTICLE I
OFFICES
Section 1. The office of the corporation shall be located in the
County of New York.
Section 2. The corporation may also have offices at such other
places both within and without the State of New York as the board of
directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in the City of New York, State of New York, at such
place as may be fixed from time to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with the
year 1997, shall be held on the 1st day of May if not a legal holiday, and
if a legal holiday, then on the next secular day following, at 9:00 A.M.,
at which they shall elect by a plurality vote, a board of directors, and
transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting
stating the place, date and hour of the meeting shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the president, the
secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders may be held at such
time and place within or without the State of New York as shall be stated
in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Special meetings of the shareholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the certificate
of incorporation, may be called by the president, the board of directors,
or the holders of not less than 25% of all the shares entitled to vote at
the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by
mail, by, or at the direction of, the president, the secretary, or the
officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. The notice should also indicate that it
is being issued by, or at the direction of, the person calling the meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote, represented in person or by
proxy, shall constitute a quorum at all meetings of the shareholders for
the transaction of business except as otherwise provided by statute or by
the certificate of incorporation. If, however, such quorum shall not be
present or represented at any meeting of the shareholders, the shareholders
present in person or represented by proxy shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may
be transacted that might have been transacted at the meeting as originally
notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act
of the shareholders, unless the vote of a greater or lesser number of
shares of stock is required by law or the certificate of incorporation.
Section 3. Each outstanding share of stock having voting power
shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact.
Section 4. The board of directors in advance of any shareholders'
meeting may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person
presiding at a shareholders' meeting may, and, on the request of any
shareholder entitled to vote thereat, shall appoint one or more inspectors.
In case any person appointed as inspector fails to appear or act, the
vacancy may be filled by the board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality
and according to the best of his ability.
Section 5. Whenever shareholders are required or permitted to
take any action by vote, such action may be taken without a meeting on
written consent, setting forth the action so taken, signed by the holders
of all outstanding shares entitled to vote thereon.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be two (2). Directors
shall be at least eighteen years of age and need not be residents of the
State of New York nor shareholders of the corporation. The directors, other
than the first board of directors, shall be elected at the annual meeting
of the shareholders, except as hereinafter provided, and each director
elected shall serve until the next succeeding annual meeting and until his
successor shall have been elected and qualified. The first board of
directors shall hold office until the first annual meeting of shareholders.
Section 2. Any or all of the directors may be removed, with or
without cause, at any time by the vote of the shareholders at a special
meeting called for that purpose.
Section 3. Unless otherwise provided in the certificate of
incorporation, newly created directorships resulting from an increase in
the board of directors and all vacancies occurring in the board of
directors, including vacancies caused by removal without cause, may be
filled by the affirmative vote of a majority of the board of directors;
however, if the number of directors then in office is less than a quorum,
then such newly created directorships and vacancies may be filled by a vote
of a majority of the directors then in office. A director elected to fill a
vacancy shall hold office until the next meeting of shareholders at which
election of directors is the regular order of business, and until his
successor shall have been elected and qualified. A director elected to fill
a newly created directorship shall serve until the next succeeding annual
meeting of shareholders and until his successor shall have been elected and
qualified.
Section 4. The business affairs of the corporation shall be
managed by its board of directors, which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws directed
or required to be exercised or done by the shareholders.
Section 5. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of
the State of New York, at such place or places as they may from time to
time determine.
Section 6. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the corporation as
directors, officers or otherwise.
ARTICLE VI
MEETING OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or
special, may be held either within or without the State of New York.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the
vote of the shareholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present, or it may
convene at such place and time as shall be fixed by the consent in writing
of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as
shall from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be
called by the president on three (3) days' notice to each director, either
personally or by mail or by telegram; special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of two directors.
Section 5. Notice of a meeting need not be given to any director
who submits a signed waiver of notice whether before or after the meeting,
or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. One of the directors shall constitute a quorum for the
transaction of business unless a greater or lesser number is required by
law or by the certificate of incorporation. The vote of a majority of the
directors present at any meeting at which a quorum is present shall be the
act of the board of directors, unless the vote of a greater number is
required by law or by the certificate of incorporation. If a quorum shall
not be present at any meeting of directors, the directors present may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a
meeting of the board of directors, or any committee, by means of conference
telephone or similar communications by means of which all persons
participating in the meeting can hear each other, and such participation in
a meeting shall constitute presence in person at the meeting.
Section 8. Unless the certificate of incorporation provides
otherwise, any action required or permitted to be taken at a meeting of the
directors or a committee thereof may be taken without a meeting if a
consent in writing to the adoption of a resolution authorizing the action
so taken, shall be signed by all of the directors entitled to vote with
respect to the subject matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board or directors, by resolution adopted by a
majority of the entire board, may designate, from among its members, an
executive committee and other committees, each consisting of three or more
directors, and each of which, to the extent provided in the resolution,
shall have all the authority of the board, except as otherwise required by
law. Vacancies in the membership of the committee shall be filled by the
board of directors at a regular or special meeting of the board of
directors. The executive committee shall keep regular minutes of its
proceedings and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is required to
be given to any director or shareholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail,
addressed to such director or shareholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given
by telegram.
Section 2. Whenever any notice of a meeting is required to be
given under the provisions of the statutes or under the provisions of the
certificate of incorporation or these by-laws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary
and a treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant
treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom needs to be a
member of the board.
Any two or more offices may be held by the same person, except
the offices of president and secretary. When all the issued and outstanding
stock of the corporation is owned by one person, such person may hold all
or any combination of offices.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of
the corporation, shall preside at all meetings of the shareholders and the
board of directors, shall have general and active management of the
business of the corporation and shall see that all orders and resolutions
of the board of directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal under the seal of the corporation, except where required
or permitted by law to be otherwise signed and executed and except where
the signing and execution thereof shall be expressly delegated by the board
of directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than
one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties
and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time
to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board
of directors and all meetings of the shareholders and record all the
proceedings of the meetings of the corporation and of the board of
directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause
to be given, notice of all meetings of the shareholders and special
meetings of the board of directors, and shall perform such other duties as
may be prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the corporate seal of the
corporation and he, or an assistant secretary, shall have authority to
affix the same to any instrument requiring it and, when so affixed, it may
be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by
his signature.
Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform
the duties and exercise the powers of the secretary and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may
be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors
at its regular meetings, or when the board of directors so requires, an
account of all his transactions as treasurer and of the financial condition
of the corporation.
Section 13. If required by the board of directors, he shall give
the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 14. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates or shall be uncertified. Certificates shall be signed by the
chairman or vice-chairman of the board or the president or a vice-president
and the secretary or an assistant secretary or the treasurer or an
assistant treasurer of the corporation and may be sealed with the seal of
the corporation of a facsimile thereof.
When the corporation is authorized to issue shares of more than
one class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation
will furnish to any shareholder upon request and without charge, a full
statement of the designation, relative rights, preferences, and limitations
of the shares of each class authorized to be issued and, if the corporation
is authorized to issue any class of preferred shares in series, the
designation, relative rights, preferences and limitations of each such
series so far as the same have been fixed and the authority of the board of
directors to designate and fix the relative rights, preferences and
limitations of other series.
Within a reasonable time after the issuance or transfer of any
uncertificated shares there shall be sent to the registered owner thereof a
written notice containing the information required to be set forth or
stated on certificates pursuant to paragraphs (b) and (c) of Section 508 of
the New York Business Corporation Law.
Section 2. The signatures of the officers of the corporation upon
a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation
itself or an employee of the corporation. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer at the date of issue.
Section 3. The board of directors may direct a new certificate to
be issued in place of any certificate theretofore issued by the corporation
alleged to have been lost or destroyed. When authorizing such issue of a
new certificate, the board of directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it
deems adequate, to protect the corporation from any claim that may be made
against it with respect to any such certificate alleged to have been lost
or destroyed.
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate representing shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto,
and the old certificate shall be cancelled and the transaction shall be
recorded upon the books of the corporation.
Section 5. For the purpose of determining shareholders entitled
to notice of or to vote at any meeting of shareholders or any adjournment
thereof, or to express consent to or dissent from any proposal without a
meeting, or for the purpose of determining shareholders entitled to receive
payment of any dividend or the allotment of any rights, or for the purpose
of any other action, the board of directors may fix, in advance, a date as
the record date for any such determination of shareholders. Such date shall
not be more than fifty nor less than ten days before the date of any
meeting nor more than fifty days prior to any other action. When a
determination of shareholders of record entitled to notice of or to vote at
any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, unless the board
fixes a new record date for the adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of New York.
Section 7. A list of shareholders as of the record date,
certified by the corporate officer responsible for its preparation or by a
transfer agent, shall be produced at any meeting upon the request thereat
or prior thereto of any shareholder. If the right to vote at any meeting is
challenged, the inspectors of election, or person presiding thereat, shall
require such list of shareholders to be produced as evidence of the right
of the persons challenged to vote at such meeting and all persons who
appear from such list to be shareholders entitled to vote thereat may vote
at such meeting.
ARTICLE XI
GENERAL PROVISIONS
Section 1. Subject to the provisions of the certificate of
incorporation relating thereto, if any, dividends may be declared by the
board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in shares of the capital stock or in the
corporation's bonds or its property, including the shares or bonds of other
corporations subject to any provisions of law and of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation,
or for such other purpose as the directors shall think conducive to the
interest of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time
designate.
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
Section 5. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words
"Corporate Seal, New York". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the vote of the holders of
shares entitled to vote in the election of any directors, provided notice
of the proposed alteration, amendment or repeal be contained in the notice
of such meeting. These by-laws may also be amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board
of directors at any regular or special meeting of the board. If any by-law
regulating an impending election of directors is adopted, amended or
repealed by the board, there shall be set forth in the notice of the next
meeting of shareholders for the election of directors the by-law so
adopted, amended or repealed, together with precise statement of the
changes made. By-laws adopted by the board of directors may be amended or
repealed by the shareholders.
EXHIBIT C-1
FORM OF COMPANY AFFILIATE AGREEMENT
February , 1997
American General Corporation
2929 Allen parkway
Houston, TX 77019
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of USLIFE Corporation, a New York corporation
(the "Company"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), or
(ii) used in and for purposes of Accounting Series, Releases Nos. 130 and
135, as amended, of the Commission. Pursuant to the terms of the Agreement
and Plan of Merger, dated as of February , 1997 (the "Agreement"), by and
among the Company, American General Corporation, a Texas corporation
("American General Corporation"), and Texas Stars Corporation, a New York
corporation and a wholly-owned subsidiary of American General Corporation
("Merger Sub"), Merger Sub will be merged with and into the Company (the
"Merger").
As a result of the Merger, I will receive shares of common stock,
par value $.50 per share, of American General Corporation (together with
the attached Series A Junior Participating Preferred Stock Purchase Rights,
issued in accordance with the Rights Agreement, dated as of July 27, 1989,
between American General Corporation and Texas Commerce Bank, as Rights
Agent, as amended by the First Amendment Rights Agreement, dated as of
October 26, 1992, between American General Corporation and First Chicago
Trust Company of New York, as Rights Agent, as such agreement may be
amended from time to time, the "American General Corporation Stock"), in
exchange for shares owned by me of common stock, par value $1.00 per share
of the Company (the "Company Common Stock").
I represent, warrant, and covenant to American General
Corporation that in the event I receive any American General Corporation
Stock as a result of the Merger:
1. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer, or otherwise
dispose of the American General Corporation Stock to the extent I
considered necessary, with my counsel or counsel for the Company.
2. I have been advised that the issuance of the American
General Corporation Stock to me pursuant to the Merger has been
registered with the Commission under the Act on a Registration
Statement on Form S-4. However, I have also been advised that,
since at the time the Merger was submitted for a vote of the
stockholders of the Company, I may be deemed to have been an
affiliate of the Company and the distribution by me of the
American General Corporation Stock has not been registered under
the Act, I may not sell, transfer or otherwise dispose of the
American General Corporation Stock issued to me in the Merger
unless (i) such sale, transfer, or other disposition has been
registered under the Act, (ii) such sale, transfer, or other
disposition is made in conformity with Rule 145 promulgated by
the Commission under the Act, or (iii) in the opinion of counsel
reasonably acceptable to American General Corporation, or a "no
action" letter obtained by the undersigned from the staff of the
Commission, such sale, transfer, or other disposition is
otherwise exempt from registration under the Act.
3. I understand that American General Corporation is under
no obligation to register the sale, transfer, or other
disposition of the American General Corporation Stock by me or on
my behalf under the Act.
4. I also understand that stop transfer instructions will be
given to American General Corporation's transfer agent with
respect to the American General Corporation Stock and that there
will be placed on the certificates for the American General
Corporation Stock issued to me, or any substitutions therefor, a
legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED [ ]
BETWEEN THE REGISTERED HOLDER HEREOF AND AMERICAN
GENERAL CORPORATION A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF AMERICAN GENERAL
CORPORATION."
5. I also understand that unless the transfer by me of my
American General Corporation Stock has been registered under the
Act or is a sale made in conformity with the provisions of Rule
145, American General Corporation reserves the right to put the
following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs 4 and 5 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for
purposes of the Act or the Agreement, including sales under Rule 145(d). It
is also understood and agreed that such legends and the stop orders
referred to above will be removed if (i) two years shall have elapsed from
the date the undersigned acquired the American General Corporation Stock
received in the Merger and the provisions of Rule 145(d)(2) are then
available to the undersigned, (ii) three years shall have elapsed from the
date the undersigned acquired the American General Corporation Stock
received in the Merger and the provisions of Rule 145(d)(3) are then
available to the undersigned, or (iii) American General Corporation has
received either an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to American General Corporation, or a "no action"
letter obtained by the undersigned from the staff of the Commission, to the
effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
The undersigned further represents to and covenants with American
General Corporation as follows:
a. The undersigned has not sold, transferred or otherwise
disposed of any shares of Company Common Stock held by it, and
will not sell, transfer or otherwise dispose of such shares, at
any time within thirty (30) days prior to the Effective Time. The
undersigned agrees that the Company may issue stop transfer
instructions to its transfer agent with respect to the
undersigned's shares of Company Common Stock for so long as the
undersigned is obligated not to sell, transfer, or otherwise
dispose of its shares of Company Common Stock under this
paragraph a.
b. The undersigned will not sell, transfer or otherwise
dispose of any shares of American General Corporation Stock
received by it in the Merger until after such time as results
covering at least 30 days of combined operations of the Company
and American General Corporation (or such shorter period as shall
be determined by American General Corporation satisfies the
requirements for pooling transactions) have been published by
American General Corporation, in the form of a quarterly earnings
report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q or 8-K,
or any other public filing or announcement which includes such
combined results of operations.
This Letter Agreement will terminate and will be of no further
force or effect upon any termination of the Merger Agreement before the
Effective Time.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this
letter.
Very truly yours,
Accepted this day of
February, 1997
AMERICAN GENERAL CORPORATION
By: _________________________
Name:
Title:
EXHIBIT C-2
FORM OF AMERICAN GENERAL CORPORATION
AFFILIATE AGREEMENT
February , 1997
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of American General Corporation, a Texas
corporation ("American General Corporation"), as the term "affiliate" is
(i) defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules
and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), or (ii) used in and for purposes of Accounting Series,
Releases Nos. 130 and 135, an amended, of the Commission. Pursuant to the
terms of the Agreement and Plan of Merger, dated as of February , 1997 (the
"Agreement"), by and among USLIFE Corporation, a New York corporation (the
"Company"), American General Corporation and Texas Stars Corporation, a New
York corporation and a wholly-owned subsidiary of American General
Corporation ("Merger Sub"), Merger Sub will be merged with and into the
Company (the "Merger").
The undersigned is the owner of _____ shares of common stock, par
value $.50 per share of American General Corporation (together with the
attached Series A Junior Participating Preferred Stock Purchase Rights,
issued in accordance with the Rights Agreement, dated as of July 27, 1989,
between American General Corporation and Texas Commerce Bank, as Rights
Agent, as amended by the First Amendment Rights Agreement, dated as of
October 26, 1992, between American General Corporation and First Chicago
Trust Company of New York, as Rights Agent, as such agreement may be
amended from time to time, the "American General Corporation Stock").
The undersigned represents to and covenants with American General
Corporation as follows:
a. The undersigned has not sold, transferred or otherwise
disposed of any shares of American General Corporation Stock held
by it, and will not sell, transfer or otherwise dispose of such
shares, at any time within thirty (30) days prior to the
Effective Time. The undersigned agrees that American General
Corporation may issue stop transfer instructions to its transfer
agent with respect to the undersigned's shares of American
General Corporation Stock for so long as the undersigned is
obligated not to sell, transfer, or otherwise dispose of its
shares of American General Corporation Stock under this paragraph
a.
b. The undersigned will not sell, transfer or otherwise
dispose of any shares of American General Corporation Stock until
after such time as results covering at least 30 days of combined
operations of the Company and American General Corporation (or
such shorter period as shall be determined by American General
Corporation satisfies the requirements for pooling transactions)
have been published by American General Corporation, in the form
of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission
on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations.
This Letter Agreement will terminate and will be of no further
force or effect upon any termination of the Merger Agreement before the
Effective Time.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of American General Corporation as
described in the first paragraph of this letter or as a waiver of any
rights I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
Very truly yours,
Accepted this day of
February, 1997
AMERICAN GENERAL CORPORATION
By: ________________________
Name:
Title:
EXHIBIT D
Employee Benefits Matters
1. Capitalized terms used herein and not otherwise defined shall
have the meanings given them in the Agreement and Plan of Merger dated as
of February 12, 1997, by and among American General Corporation, Texas
Stars Corporation and USLIFE Corporation.
2. From and after the Effective Time, American General
Corporation shall, or shall cause the Company, to honor and be bound by the
terms and conditions of each employee or executive benefit plan, program or
agreement sponsored or maintained by the Company or to which the Company is
party (a "Company Benefit Arrangement") and to administer and interpret any
such Company Benefit Arrangement in accordance with the practices of the
Company as in effect prior to the Effective Time. Nothing in the
immediately preceding sentence shall be construed to limit the right of
American General Corporation or the Company, as the case may be, following
the Effective Time to amend, modify or terminate any such Company Benefit
Arrangement pursuant to the terms and conditions thereof as in effect
immediately prior to the Effective Time, provided that (a) no such
amendment, modification or termination shall reduce any of the benefits or
compensation payable thereunder which are accrued as of the Effective Time
(or as of the date of such action, whichever is greater) and (b) in no
event shall the severance and/or other termination benefits payable to any
employee whose employment terminates prior to the first anniversary of the
Effective Time be less than the amount that would have been payable to such
employee under the terms of any and all such Company Benefit Arrangements
as in effect immediately prior to such amendment, modification or
termination.
3. Without limiting the generality of the foregoing, from and
after the Effective Time, American General Corporation shall, or shall
cause the Company and its subsidiaries to, make available to each person
who is an employee of the Company and its subsidiaries at the Effective
Time (the "Company Employees") employee benefit plans and programs which
are either (a) the same as are made available to the employees of American
General Corporation, on terms and conditions which are no less favorable to
the Company Employees than the terms and conditions generally applicable to
the employees of American General Corporation or (b) no less favorable to
the Company Employees than the terms and conditions of the Company Benefit
Arrangements in which they were participating immediately prior to the
Effective Time. To the extent service is a factor in determining
eligibility for and vesting in the benefits provided thereunder (including,
without limitation eligibility for any early retirement benefits and
similar benefit subsidies), the plans and programs in which each Company
Employee participates after the Effective Time in accordance with the
preceding sentence shall recognize service with the Company and its
subsidiaries (as taken into account for purposes of administering the
corresponding Company Benefit Arrangement immediately prior to the
Effective Time and as enhanced upon the Effective Time under the terms and
conditions of any such Company benefit Arrangement) as service with
American General Corporation (i) for purposes of determining each such
Company Employee's eligibility to participate in, and vest in the benefits
provided under, such plan or program and (ii) for purposes of determining
the benefits accrued under such plan or program to the extent required by
applicable law. Notwithstanding the foregoing, in no event shall any
employee receive duplicate benefits with respect to any period of prior
service. To the extent any welfare benefit plan in which any Company
Employee participates after the Effective Time (x) imposes any pre-existing
condition limitation, such condition shall be waived or (y) has a
deductible or requires a co-payment by the Company Employee that is subject
to a maximum out-of-pocket limitation, there shall be credited against any
such deductible or limitation any costs incurred by such Company Employee
during the comparable period under the terms of the corresponding Company
Benefit Arrangement prior to the Effective Time.
4. For the avoidance of doubt, American General Corporation
agrees and acknowledges that upon the Effective Time a "change of control"
shall have occurred under the terms and conditions of any Company Benefit
Arrangement.
5. At the Effective Time, each option to purchase Company Common
Stock ("Company Stock Options") which is outstanding and unexercised at the
Effective Time shall be converted automatically into an option to purchase
American General Corporation Shares (a "Substituted Option") in an amount
and at an exercise price determined as provided below (and otherwise
subject to the terms of the Company Stock Option Plans:
a. The number of American General Corporation Shares to be
subject to the Substituted Option shall be equal to the
product of the number of Shares subject to the corresponding
Company Stock Option and the Exchange Ratio, provided that
any fractional American General Corporation Shares resulting
from such multiplication shall be rounded down to the
nearest share and, except with respect to any options which
are intended to qualify as "incentive stock options" (as
defined in Section 422 of the Code ("ISOs")), American
General Corporation shall pay an amount in cash to the
holder of such Company Stock Option equal to the product of
such fractional interest multiplied by the Average American
General Price; and
b. The exercise price per American General Corporation Share
under the Substituted Option shall be equal to the aggregate
exercise price of the corresponding Employee Stock Option
divided by the total number of full American General
Corporation Shares subject to the Substituted Option (as
determined under paragraph 1 immediately above), provided
that such exercise price shall be rounded up to the nearest
cent.
The adjustment provided herein with respect to any ISOs shall be
and is intended to be effected in a manner that is consistent with section
424(a) of the Code. To the extent required by law, the duration and other
terms of the Substituted Option shall be the same as that of the
corresponding Company Stock Option, except to the extent that the holder of
such option shall have waived the "reload" feature associated with such
option, and except that all references to the Company shall be deemed to be
references to American General Corporation. American General Corporation
shall file with the SEC a registration statement on Form S-8 (or other
appropriate form) or a post-effective amendment to the Registration
Statement for purposes of registering all American General Corporation
Shares issuable after the Effective Time upon exercise of the Company Stock
Options, which shall be effective at the Effective Time, and shall comply,
to the extent applicable, with state securities or blue sky laws with
respect thereto at the Effective Time.
6. American General Corporation will adopt a procedure, in
consultation with the Company, whereby employees and directors of the
Company shall each have the right to exercise Substituted Options
immediately upon the occurrence of, and at any time following, the
Effective Time, including without limitation, through the use of the
American General Corporation Shares to be received in connection with the
Merger, by delivering written notice (including prior to the Effective
Time) to a person designated by American General Corporation at least 10
business days prior to the Effective Time. American General Corporation
will allow Substitute Options to be exercised by the same means and methods
as were permitted by the Company prior to the Effective Time and by such
other methods of exercise as are available to employees of American General
Corporation and its subsidiaries.
7. American General Corporation will take such action as shall be
necessary to cause each holder of a Substituted Option at the Effective
Time to have the right to exercise such Substituted Option for a period of
not less than 60 days following the Effective Time (the "Minimum Exercise
Period"), it being understood that continued employment of any employee
holding such a Substituted Option during the Minimum Exercise Period will
satisfy this requirement without any further action on the part of American
General Corporation and that the termination of any such holder's service
with the Company shall not shorten the Minimum Exercise Period. In the case
of any individual who enters into an agreement with American General
Corporation or with any other person at the request of American General
Corporation which limits the ability of such individual to sell American
General Corporation Shares until a date which is after the Effective Time
(e.g., until after the first publication of combined financial results of
American General Corporation and the Company), the Minimum Exercise Period
shall not be less than 30 days following the expiration of the period
during which such individual is so limited.
NEWS RELEASE
<TABLE>
<CAPTION>
CONTACT:
AMERICAN 97-03
GENERAL AMERICAN GENERAL USLIFE CORP.
<S> <C> <C> <C>
American General Corporation Robert D. Mrlik or John E. Pluhowski Richard G. Hohn
P.O. Box 3247 Vice President - Director - Corporate Senior Vice President
Houston, Texas 77253 Investor Relations Communications Investor Relations
(713) 831-1137 (713) 831-1149 (212) 709-6415
</TABLE>
FOR IMMEDIATE RELEASE
AMERICAN GENERAL AND USLIFE CORPORATION TO MERGE
Houston, February 13, 1997 -- American General Corporation (NYSE:
AGC) and USLIFE Corporation (NYSE: USH) today jointly announced the
signing of a definitive merger agreement. The combined companies have
assets of $74 billion and 1996 earnings of $757 million on revenues of
$9 billion.
Under the agreement, USLIFE Corporation shareholders will
exchange each share of USLIFE common stock for $49.00 worth of
American General common stock. Based upon 36.1 million common
equivalent shares of USLIFE outstanding, USLIFE shareholders will
receive aggregate value of $1.8 billion. On a pro forma basis, market
value of the combined entity would be in excess of $10 billion.
In commenting on the transaction, Robert M. Devlin, president and
chief executive officer of American General, said, "This merger
represents the largest transaction in American General's history and
is an outstanding strategic fit which offers a unique opportunity to
combine two of the premier providers of life insurance and financial
services in the nation. During Gordon Crosby's 38-year career with
USLIFE, it has grown to become one of the nation's leading life
insurance-based financial services organizations. The combination of
these two firms will create one of the nation's most formidable and
competitive providers of financial services. We are confident that the
shareholders and customers of both companies will benefit from the
merger. Given the consolidation savings, we expect this transaction
to be non-dilutive from its inception on a pro forma basis."
In commenting on the transaction, Gordon E. Crosby, Jr., chairman
of the board and executive committee of USLIFE, said, "This is truly
an outstanding result for both organizations. American General and
USLIFE Corporation have an excellent cadre of officers and life
insurance marketing professionals which, when combined into a cohesive
unit, will augur well for the future of our shareholders,
policyholders, distribution channels and employees."
The transaction, which is subject to approval by American General
and USLIFE shareholders, and requisite regulatory approvals, is
expected to close by the end of the second quarter of 1997. The
transaction will be tax free to USLIFE shareholders and will be
accounted for under the pooling of interests method.
The exchange ratio for American General common stock will be
determined by dividing $49.00 by an average trading price of American
General common stock prior to closing. The exchange ratio is subject
to a minimum of 1.09 shares and a maximum of 1.29 shares of American
General common stock for each USLIFE common share.
USLIFE Corporation is a life insurance-based holding company with
more than $168 billion of life insurance in force and nearly $8
billion in assets. USLIFE Corporation operates nationwide through
three ordinary life insurance companies, a credit insurance group, and
six other financial services and support companies. USLIFE
Corporation common stock is traded on the New York, Pacific, and
London stock exchanges.
Following the merger, American General Corporation will have life
insurance in force of over $300 billion and will serve the financial
needs of 10 million customers through a distribution network of 25,000
sales representatives. USLIFE provides American General with
financial products and services that are complementary to those
offered by its three business segments - retirement services, consumer
loans, and life insurance.
The American General Corporation and USLIFE Corporation merger
will be discussed during USLIFE's regularly scheduled 1996 fourth
quarter and preliminary year-end results conference call later this
morning. USLIFE Corporation's conference call will be held on
Thursday, February 13, 1997, at 10:00 a.m. (EST). The phone number is
(800) 553-2197; participants should plan to dial into the call 10
minutes in advance to ensure smooth connection.
* * * * *
American General Corporation is one of the nation's largest
diversified financial services organizations with assets of $66
billion and shareholders' equity of $5.6 billion. Headquartered in
Houston, it is a leading provider of retirement services, consumer
loans, and life insurance to nine million customers. American General
common stock is listed on the New York, Pacific, London, and Swiss
stock exchanges.
Certain information included in this press release is forward
looking and involves risk and uncertainties, including general
economic and competitive conditions that could significantly impact
expected results. Investors are also directed to other risks and
uncertainties discussed in documents filed by the company with the
Securities and Exchange Commission.
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