<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): August 19, 1998
AMERICAN INTERNATIONAL GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8787 13-2592361
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
70 Pine Street
New York, New York 10270
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 770-7000
_________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
American International Group, Inc., a Delaware corporation ("AIG"),
and SunAmerica Inc., a Maryland corporation ("SunAmerica"), entered into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of August 19,
1998, pursuant to which SunAmerica will merge with and into AIG (the "Merger")
with AIG as the corporation surviving the Merger.
Under the terms of the Merger Agreement, each share of common stock,
$1.00 par value per share, of SunAmerica ("SunAmerica Common Stock")
outstanding at the effective time of the Merger will be converted into 0.855
shares of common stock, $2.50 par value per share, of AIG ("AIG Common Stock").
The Merger is subject to certain regulatory approvals and other
customary conditions as well as to the approval of the Merger by the
stockholders of SunAmerica and AIG.
The preceding is qualified in its entirety by reference to the
Merger Agreement, which is attached hereto as an Exhibit and which is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
2 Agreement and Plan of Merger between SunAmerica Inc.
and American International Group, Inc., dated as of
August 19, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AMERICAN INTERNATIONAL GROUP, INC.
(Registrant)
Date: August 24, 1998 By /s/ KATHLEEN E. SHANNON
---------------------------------
Name: Kathleen E. Shannon
Title: Vice President & Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2 Agreement and Plan of Merger between SunAmerica Inc.
and American International Group, Inc., dated as of
August 19, 1998.
</TABLE>
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
Between
SUNAMERICA INC.
and
AMERICAN INTERNATIONAL GROUP, INC.
Dated as of August 19, 1998
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
RECITALS ....................................................................1
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger..........................................................2
1.2. Closing.............................................................2
1.3. Effective Time......................................................2
ARTICLE II
Certificate of Incorporation
and Bylaws
of the Surviving Corporation
2.1. The Certificate of Incorporation....................................3
2.2. The Bylaws..........................................................3
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors...........................................................3
3.2. Officers............................................................3
ARTICLE IV
Effect of the Merger on Stock;
Exchange of Certificates
4.1. Effect on Stock.....................................................4
(a) Merger Consideration.........................................4
(b) Cancellation of Common Shares................................4
(c) Parent Capital Stock.........................................4
4.2. Exchange of Certificates for Common Shares..........................5
(a) Exchange Agent...............................................5
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(b) Exchange Procedures..........................................5
(c) Distributions with Respect to Unexchanged Common Shares......6
(d) Transfers....................................................6
(e) Fractional Shares............................................6
(f) Termination of Exchange Fund.................................7
(g) Lost, Stolen or Destroyed Certificates.......................7
(h) Affiliates...................................................7
4.3. Dissenters' Rights..................................................8
4.4. Adjustments to Prevent Dilution.....................................8
4.5. Treatment of Preferred Shares and Depositary Shares.................8
4.6. Treatment of the Security Units.....................................8
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company.......................8
(a) Organization, Good Standing and Qualification................8
(b) Capital Structure...........................................10
(c) Corporate Authority; Approval and Fairness..................11
(d) Governmental Filings; No Violations.........................12
(e) Company Reports; Financial Statements; Undisclosed
Liabilities; Statutory Statements.........................13
(f) Absence of Certain Changes..................................15
(g) Litigation and Liabilities..................................15
(h) Employee Benefits...........................................16
(i) Compliance with Laws; Permits...............................18
(j) Takeover Statutes...........................................20
(k) Environmental Matters.......................................20
(l) Taxes.......................................................21
(m) Intellectual Property.......................................22
(n) Brokers and Finders.........................................23
(o) No Regulatory Disqualifications.............................23
(p) Insurance Business..........................................23
(q) Liabilities and Reserves....................................25
(r) Separate Accounts...........................................26
(s) Material Contracts..........................................26
(t) Year 2000 Compliance........................................27
(u) Investment Contracts, Funds and Clients.....................27
(v) Company Broker/Dealers......................................28
(w) Pooling of Interests; Reorganization........................29
(x) Derivatives.................................................29
5.2. Representations and Warranties of Parent...........................29
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(a) Organization, Good Standing and Qualification...............30
(b) Capital Structure...........................................30
(c) Corporate Authority.........................................30
(d) Governmental Filings; No Violations.........................31
(e) Parent Reports; Financial Statements; Undisclosed
Liabilities...............................................32
(f) Absence of Certain Changes..................................33
(g) Litigation and Liabilities..................................33
(h) Compliance with Laws........................................33
(i) Year 2000 Compliance........................................35
(j) Takeover Statutes...........................................35
(k) Pooling of Interests; Reorganization........................35
(l) Separate Operating Company..................................35
ARTICLE VI
Covenants
6.1. Company Interim Operations.........................................35
6.2. Acquisition Proposals..............................................37
6.3. Information Supplied...............................................38
6.4. Stockholders Meeting...............................................39
6.5. Filings; Other Actions; Notification...............................39
6.6. Pooling............................................................40
6.7. Access.............................................................40
6.8. Affiliates.........................................................41
6.9. Stock Exchange Listing and De-listing..............................42
6.10. Publicity..........................................................42
6.11. Benefits...........................................................42
(a) Stock Options and Other Awards..............................42
(b) Employee Benefits...........................................43
6.12. Expenses...........................................................45
6.13. Indemnification; Directors' and Officers' Insurance................45
6.14. Preferred Shares and Depositary Shares.............................46
6.15. Security Units.....................................................47
6.16. Other Actions by the Company and Parent............................47
(a) Takeover Statute............................................47
(b) Dividends...................................................47
6.17. Compliance with 1940 Act Section 15................................47
6.18. Fund Client Contracts..............................................48
6.19. Non-Fund Advisory Contracts........................................48
6.20. Qualification of the Fund Clients; Fund Client Boards..............48
6.21. Board of Directors of Parent.......................................49
6.22. Delivery of Disclosure Information.................................49
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6.23. SunAmerica Inc.....................................................49
6.24. Thrift Application.................................................49
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger.........49
(a) Stockholder Approval........................................49
(b) NYSE Listing................................................49
(c) Regulatory Consents.........................................49
(d) Litigation..................................................50
(e) S-4.........................................................50
(f) Blue Sky Approvals..........................................50
(g) Pooling of Interests........................................50
(h) Affiliates Letters..........................................50
7.2. Conditions to Obligations of Parent................................50
(a) Representations and Warranties..............................50
(b) Performance of Obligations of the Company...................51
(c) Consents....................................................51
(d) Tax Opinion.................................................51
(e) Client Approvals............................................51
7.3. Conditions to Obligation of the Company............................52
(a) Representations and Warranties..............................52
(b) Performance of Obligations of Parent........................52
(c) Consents Under Agreements...................................52
(d) Tax Opinion.................................................52
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent......................................53
8.2. Termination by Either Parent or the Company........................53
8.3. Termination by Parent..............................................54
8.4. Effect of Termination and Abandonment..............................54
ARTICLE IX
Miscellaneous and General
9.1. Survival...........................................................55
9.2. Modification or Amendment..........................................55
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9.3. Waiver of Conditions...............................................55
9.4. Counterparts.......................................................55
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL......................55
9.6. Notices............................................................56
9.7. Entire Agreement; No Other Representations.........................57
9.8. No Third Party Beneficiaries.......................................57
9.9. Obligations of Parent and of the Company...........................57
9.10. Severability.......................................................57
9.11. Interpretation.....................................................58
9.12. Assignment.........................................................58
9.13. Right to Revise Form of Merger.....................................58
Exhibit A -- Voting Agreement
Exhibit A-1 -- Form of Company Affiliate Letter
Exhibit A-2 -- Form of Parent Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of August 19, 1998, between SunAmerica Inc., a Maryland
corporation (the "Company"), and American International Group, Inc., a Delaware
corporation ("Parent").
RECITALS
WHEREAS, the Boards of Directors of the Company and Parent
have approved this Agreement, declared that this Agreement is advisable, and
adopted the plan of merger set forth herein whereby the Company will merge with
and into Parent upon the terms and subject to the conditions set forth in this
Agreement (the "Merger");
WHEREAS, it is intended that, for federal income tax purposes,
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, it is intended that, for financial accounting
purposes, the Merger shall be accounted for as a "pooling of interests";
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, a certain stockholder of the Company has entered into a
voting and conversion agreement, dated as of the date hereof and attached hereto
as Exhibit A (the "Voting Agreement"), pursuant to which such stockholder has
agreed, among other things, to (i) vote all of his Common Shares and Class B
Shares (both as defined below) in favor of the Merger and (ii) elect to convert
each Class B Share held by him into one Common Share, such conversion to be
effective immediately prior to the Effective Time (as defined below) ; and
WHEREAS, the Company and Parent desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
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ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 1.3)
the Company shall be merged with and into Parent and the separate corporate
existence of the Company shall thereupon cease. Parent shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of Parent with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. The Merger shall have the effects specified in the Maryland
General Corporation Law, as amended (the "Maryland Code"), and the Delaware
General Corporation Law (the "DGCL").
1.2. Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New
York, New York at 9:00 a.m. New York City time on the tenth business day after
which the last to be fulfilled or waived of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or (ii) at such other
place and time and/or on such other date as the Company and Parent may agree in
writing (the "Closing Date").
1.3. Effective Time. As soon as practicable following the
Closing, Parent will (i) cause Articles of Merger (the "Articles of Merger") to
be executed, acknowledged and filed with and accepted for record by the State
Department of Assessments and Taxation of Maryland (the "Department") pursuant
to Maryland Code Section 3-107 and (ii) cause a Certificate of Merger (the
"Delaware Certificate of Merger") to be executed, acknowledged and filed with
the Secretary of State of Delaware as provided in DGCL Section 251. The Merger
shall become effective on the date on which the latest of the following actions
shall have been completed: (i) at the time when the Articles of Merger are
accepted for record by the Department, (ii) the Delaware Certificate of Merger
has been duly filed with the Secretary of State of Delaware or (iii) such later
time agreed to by the Company and Parent and established under the Articles of
Merger and the Delaware Certificate of Merger but not later than 30 days after
the date of its filing and acceptance for record by the Department (the
"Effective Time").
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ARTICLE II
Certificate of Incorporation
and Bylaws
of the Surviving Corporation
2.1. The Certificate of Incorporation. The Certificate of
Incorporation of Parent, as amended, as in effect immediately prior to the
Effective Time shall continue to be the certificate of incorporation of the
Surviving Corporation (the "Charter"), until duly amended as provided therein or
by applicable law.
2.2. The Bylaws. The bylaws of Parent in effect at the
Effective Time shall continue to be the bylaws of the Surviving Corporation (the
"Bylaws"), until thereafter amended as provided therein or by applicable law.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors. Except as contemplated by Section 6.21, the
directors of Parent at the Effective Time shall, from and after the Effective
Time, continue to be the directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Charter and the
Bylaws.
3.2. Officers. The officers of Parent at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Charter and the Bylaws.
ARTICLE IV
Effect of the Merger on Stock;
Exchange of Certificates
4.1. Effect on Stock. At the Effective Time, as a result of
the Merger and without any action on the part of the holder of any stock of the
Company:
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(a) Merger Consideration. Subject to Section 4.2(e), each
share of the Common Stock, par value $1.00 per share, of the Company (a "Common
Share" or, collectively, the "Common Shares") issued and outstanding immediately
prior to the Effective Time (other than Shares owned by Parent or any Subsidiary
(as defined in Section 5.1) of Parent (collectively, the "Parent Companies") or
Common Shares that are owned by the Company or any Subsidiary of the Company
other than the 8,707,500 Non-Transferable Class B Shares held by the Company's
Subsidiary, Stanford Ranch, Inc. and in each case not held on behalf of third
parties (collectively, "Excluded Common Shares")) shall be converted into, and
become exchangeable for, 0.855 (the "Exchange Ratio") shares (the "Merger
Consideration") of Common Stock, par value $2.50 per share, of Parent ("Parent
Common Stock").
(b) Cancellation of Common Shares.
(i) At the Effective Time, all Common Shares shall no longer
be outstanding and shall be cancelled and retired and shall cease to exist, and
each certificate (a "Certificate") formerly representing any of such Common
Shares (other than Excluded Common Shares) shall thereafter represent only the
right to receive the Merger Consideration and the right, if any, to receive
pursuant to Section 4.2(e) cash in lieu of fractional shares into which such
Common Shares have been converted pursuant to this Section 4.1(b) and any
distribution or dividend pursuant to Section 4.2(c).
(ii) Each Common Share issued and outstanding immediately
prior to the Effective Time and owned by any of the Parent Companies or owned by
the Company or any Subsidiary of the Company (in each case other than Common
Shares that are owned on behalf of third parties), shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be cancelled and retired without payment of any consideration
therefor and shall cease to exist.
(c) Parent Capital Stock. At and after the Effective Time,
each share of Parent Common Stock issued and outstanding immediately prior to
the Effective Time (except as set forth in the next sentence hereof) shall
remain an issued and outstanding share of capital stock of the Surviving
Corporation and shall not be affected by the Merger. At the Effective Time, each
share of Parent Common Stock owned by the Company or any Subsidiary of the
Company (in each case other than Common Shares that are owned on behalf of third
parties), shall, by virtue of the Merger and without any action on the part of
the holder thereof, become authorized but unissued stock of the Company.
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4.2. Exchange of Certificates for Common Shares.
(a) Exchange Agent. Promptly after the Effective Time, Parent
shall deposit, or shall cause to be deposited, with an exchange agent selected
by Parent with the Company's prior approval, which shall not be unreasonably
withheld, (the "Exchange Agent"), for the benefit of the holders of Common
Shares immediately prior to the Effective Time, certificates representing the
shares of Parent Common Stock and cash in lieu of fractional shares and, after
the Effective Time, if applicable, any cash, dividends or other distributions
with respect to the Parent Common Stock to be issued or paid pursuant to Section
4.2(c) in exchange for Common Shares outstanding immediately prior to the
Effective Time upon due surrender of the Certificates (or affidavits of loss in
lieu thereof) pursuant to the provisions of this Article IV (such certificates
for shares of Parent Common Stock, together with the amount of any dividends or
other distributions payable with respect thereto, being hereinafter referred to
as the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record of Common Shares (other than holders of Excluded Common Shares) (i) a
letter of transmittal specifying that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Exchange Agent, such
letter of transmittal to be in such form and have such other provisions as
Parent and the Company may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for (A) certificates
representing shares of Parent Common Stock or (B) if applicable, any cash,
unpaid dividends or other distributions and cash in lieu of fractional shares.
Subject to Section 4.2(h), upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Parent Common Stock
that such holder is entitled to receive pursuant to this Article IV and (y) a
check in the amount (after giving effect to any required tax withholdings) of
(A) any cash in lieu of fractional shares plus (B) if applicable, any cash,
unpaid non-stock dividends and any other dividends or other distributions, that
such holder has the right to receive pursuant to the provisions of this Article
IV, and the Certificate so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on any amount payable upon due surrender of the
Certificates. In the event of a transfer of ownership of Common Shares that is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock, together with a
check for any cash to be paid upon due surrender of the Certificate and any
other dividends or distributions in respect thereof, may be issued and/or paid
to such a transferee if the Certificate formerly representing such Common Shares
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. If any certificate for shares of Parent Common
Stock is to be issued in a name other
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than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Person (as defined
below) requesting such exchange shall pay any transfer or other taxes required
by reason of the issuance of certificates for shares of Parent Common Stock in a
name other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of Parent or the Exchange Agent that such
tax has been paid or is not applicable.
For the purposes of this Agreement, the term "Person" shall
mean any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Common Shares.
All shares of Parent Common Stock to be issued pursuant to the Merger shall be
deemed issued and outstanding as of the Effective Time and whenever a dividend
or other distribution is declared by Parent in respect of the Parent Common
Stock the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares issuable pursuant to this Agreement. No dividends or other distributions
in respect of the Parent Common Stock shall be paid to any holder of any
unsurrendered Certificate until such Certificate is surrendered for exchange in
accordance with this Article IV. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be issued and/or paid
to the holder of the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of Parent
Common Stock and not paid and (ii) at the appropriate payment date, the
dividends or other distributions payable with respect to such whole shares of
Parent Common Stock with a record date after the Effective Time but with a
payment date subsequent to surrender.
(d) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Common Shares that
were outstanding immediately prior to the Effective Time.
(e) Fractional Shares. Notwithstanding any other provision of
this Agreement, no fractional shares of Parent Common Stock will be issued and
any holder of Common Shares entitled to receive a fractional share of Parent
Common Stock but for this Section 4.2(e) shall be entitled to receive a cash
payment in lieu thereof, which payment shall represent such holder's
proportionate interest in the net proceeds from the sale by the Exchange Agent
on behalf of such holder of the aggregate fractional shares of Parent Common
Stock that such holder otherwise would be entitled to receive. Any such sale
shall be made by the Exchange Agent within five business days after the date
upon which the Certificate(s) (or affidavit(s) of loss in lieu thereof) that
would otherwise result
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in the issuance of such fractional shares of Parent Common Stock have been
received by the Exchange Agent.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund (including the proceeds of any investments thereof and any Parent Common
Stock) that remains unclaimed by the stockholders of the Company for 180 days
after the Effective Time shall be paid or transferred to Parent. Any
stockholders of the Company who have not theretofore complied with this Article
IV shall thereafter look only to Parent for payment of their shares of Parent
Common Stock and any cash, dividends and other distributions in respect thereof
payable and/or issuable pursuant to Section 4.1, Section 4.2(c) and Section
4.2(e) upon due surrender of their Certificates (or affidavits of loss in lieu
thereof), in each case, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Surviving Corporation, the Exchange Agent or any
other Person shall be liable to any former holder of Common Shares for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and any cash payable and any unpaid dividends or other distributions in respect
thereof pursuant to Section 4.2(c) and Section 4.2(e) upon due surrender of and
deliverable in respect of the Common Shares represented by such Certificate
pursuant to this Agreement.
(h) Affiliates. Notwithstanding anything herein to the
contrary, Certificates surrendered for exchange by any "affiliate" (as
determined pursuant to Section 6.8) of the Company shall not be exchanged until
Parent has received a written agreement from such Person as provided in Section
6.8 hereof.
4.3. Dissenters' Rights. In accordance with Section 3-202(c)
of the Maryland Code, no right to demand or receive fair value shall be
available to holders of Shares (as defined in Section 5.1(b)) in connection with
the Merger.
4.4. Adjustments to Prevent Dilution. In the event that the
Company changes the number of Shares or securities convertible or exchangeable
into or exercisable for Shares (other than as permitted by this Agreement), or
Parent changes the number of shares of Parent Common Stock or securities
convertible or exchangeable into or exercisable for shares of Parent Common
Stock, issued and outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse split), stock
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dividend or distribution, recapitalization, merger, subdivision, issuer tender
or exchange offer, or other similar transaction, the Merger Consideration shall
be equitably adjusted.
4.5. Treatment of Preferred Shares and Depositary Shares. The
Preferred Shares and the Depositary Shares (as each term is defined in Section
5.1(b)) shall be treated as set forth in Section 6.14.
4.6. Treatment of the Security Units. The Security Units (as
defined in Section 5.1(b)) shall be treated as set forth in Section 6.15.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as
set forth in the disclosure letter delivered to Parent by the Company on or
prior to entering into this Agreement, or in accordance with Section 6.22 hereof
(the "Company Disclosure Letter"), the Company hereby represents and warrants to
Parent that (it being understood that the words "to the Knowledge of the
Company" or "the Company's Knowledge" and any words of similar import shall mean
the actual knowledge of the persons whose names are set forth in Section
5.1(a)(i) of the Company Disclosure Letter; provided, however, when such
representations and warranties are given as of the Closing Date as conditions to
Closing, such words shall mean to the actual knowledge of such persons and Gary
Krat after reasonable inquiry of others within the Company and its
Subsidiaries):
(a) Organization, Good Standing and Qualification.
(i) Each of the Company and its Subsidiaries (as defined
below) is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing, when taken together with all other such failures,
is not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect (as defined below). The Company has made available to
Parent a complete and correct copy of the Company's charter and bylaws, and,
promptly following the date of this Agreement, the Company will make available
the charter and bylaws or other comparable governing instruments of its material
Subsidiaries, each as amended to date. The Company's and its material
Subsidiaries' charter and bylaws made available are in full force and effect. As
promptly as practicable following the date of this Agreement,
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the Company shall deliver to Parent Section 5.1(a)(ii) of the Company Disclosure
Letter which contains a correct and complete list of each jurisdiction where the
Company and each of its Subsidiaries is organized and qualified to do business,
and the jurisdictions where the transactions contemplated by this Agreement will
require Parent to obtain "change in control" approvals from applicable
regulators.
As used in this Agreement, the term (x) "Subsidiary" means,
with respect to the Company or Parent, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or other persons performing similar functions
is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries (other than voting securities as to which instructions
are taken as to voting and other than entities which do not conduct any activity
relating to the operations of the Company), (y) "Company Material Adverse
Effect" means a material adverse effect on the financial condition, operations,
properties, business or results of operations of the Company and its
Subsidiaries taken as a whole or an effect which is reasonably likely to
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
(ii) The Company conducts its insurance operations through
SunAmerica Life Insurance Company of America, SunAmerica National Life Insurance
Company, First SunAmerica Life Insurance Company, Anchor National Life Insurance
Company and CalAmerica Life Insurance Company (collectively, the "Company
Insurance Companies"). As promptly as practicable following the date of this
Agreement, the Company will deliver to Parent Section 5.1(ii) of the Company
Disclosure Letter which sets forth the jurisdictions where the Company Insurance
Companies are domiciled or "commercially domiciled" and licensed to do an
insurance business for insurance regulatory purposes. Each of the Company
Insurance Companies is (A) duly licensed or authorized as an insurance company
and, where applicable, a reinsurer in its jurisdiction of incorporation, (B)
duly licensed or authorized as an insurance company and, where applicable, a
reinsurer in each other jurisdiction where it is required to be so licensed or
authorized, and (C) duly authorized in its jurisdiction of incorporation and
each other applicable jurisdiction to write each line of business reported as
being written in the Company SAP Statements (as defined in Section 5.1(e))),
except, in each case, where the failure to be so licensed or authorized is not
reasonably likely to have a Company Material Adverse Effect. The Company and
each of the Company Insurance Companies have made all required filings under
applicable insurance company statutes except where the failure to file is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect.
(b) Capital Structure. The authorized stock of the Company
consists of 350,000,000 Common Shares, of which 179,469,132 Common Shares were
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<PAGE> 16
outstanding as of the close of business on July 31, 1998, 25,000,000 shares of
Non-Transferable Class B Stock, par value $1.00 per share (the
"Non-Transferable Class B Shares"), of which 16,272,702 Non-Transferable Class
B Shares were outstanding as of the date hereof and of which 8,707,500
Non-Transferable Class B Shares were held by Stanford Ranch, Inc. (all such
Non-Transferable Class B Shares held by Stanford Ranch, Inc. being without
voting rights), 15,000,000 shares of Transferable Class B Stock, par value
$1.00 per share (the "Transferable Class B Shares" and, together with the
Non-Transferable Class B Shares, the "Class B Shares"), none of which were
outstanding as of the close of business on the date hereof, and 20,000,000
shares of preferred stock, no par value, of which 92,000 shares have been
designated Series E Mandatory Conversion Premium Dividend Preferred Stock (the
"Preferred Shares" and together with the Common Shares and Class B Shares, the
"Shares"), and of which 80,000 Preferred Shares were outstanding as of the date
hereof. All of the outstanding Shares have been duly authorized and are validly
issued, fully paid and nonassessable. As of October 31, 1998, there will be no
Preferred Shares or Depository Shares (as defined below) outstanding, and as of
the Effective Time, there will be no Class B Shares or Security Units (as
defined below) outstanding. The Company has no commitments to issue or deliver
Shares except that, as of August 19, 1998, there were 40,335,140 Common Shares
reserved for issuance pursuant to the Company's 1997 Employee Incentive Stock
Plan, 1988 Employee Stock Plan, 1995 Performance Stock Plan Amended and
Restated 1996, 1997 Long-Term Incentive Plan, 1998 Long-Term Performance-Based
Incentive Plan for the Chief Executive Officer, 1997 Employee Stock Purchase
Plan, Long-Term Performance Based Incentive Plan Amended and Restated 1997,
Non-Employee Directors' Stock Option Plan and 1987 Restricted Stock Plan
(collectively, the "Stock Plans"), 13,340,591 Common Shares subject to issuance
upon conversion of the Non-Transferable Class B Shares pursuant to the Voting
Agreement, 18,000,000 Common Shares subject to issuance upon the conversion of
the Preferred Shares and the simultaneous conversion of the $3.10 Depositary
Shares (the "Depositary Shares") (plus additional Common Shares subject to
issuance pursuant to Section 3 of the Articles Supplementary dated October 30,
1995 governing the terms of the Preferred Shares in respect of accrued and
unpaid dividends) and 17,250,000 Common Shares subject to issuance on
conversion of the Company's 8 1/2% Premium Equity Redemption Cumulative
Security Units (the "Security Units") pursuant to the terms thereof. As
promptly as practicable following the date of this Agreement, the Company will
deliver to Parent Section 5.1(b) of the Company Disclosure Letter which will
contain a correct and complete list of each outstanding option to purchase
Shares under the Stock Plans (each a "Company Option"), including the holder,
date of grant, exercise price and number of Shares subject thereto. Each of the
outstanding shares of capital stock or other securities of each of the
Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by the Company or by a direct or indirect wholly-owned
subsidiary of the Company, free and clear of any lien, pledge, security
interest, claim or other encumbrance. Except as set forth above, there are no
Shares authorized, reserved, issued or outstanding and there are no preemptive
or other outstanding rights,
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<PAGE> 17
subscriptions, options, warrants, stock appreciation rights, redemption rights,
repurchase rights, convertible securities or other agreements, arrangements or
commitments of any character relating to the issued or unissued share capital or
other ownership interest of the Company or any of its Subsidiaries or any other
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of the
Company or its Subsidiaries, and no securities evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or, except as referred to in this subsection (b), convertible
into or exercisable for securities having the right to vote) with the
stockholders of the Company on any matter ("Voting Debt").
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate,
subject only to approval of the Merger by the holders of at least two-thirds of
the outstanding Common Shares and Class B Shares (each voting separately as a
class), respectively, entitled to vote on the matter (the "Company Requisite
Vote"), the Merger. This Agreement is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
(ii) The Board of Directors of the Company (A) has unanimously
adopted the plan of merger set forth herein and approved this Agreement and the
other transactions contemplated hereby, (B) has declared that the Merger and
this Agreement and the other transactions contemplated hereby are advisable, and
(C) has received the opinions of its financial advisors, Goldman, Sachs & Co.
and Wasserstein Perella & Co., Inc., to the effect that as of the date hereof,
the Exchange Ratio to be received by the holders of the Common Shares in the
Merger is fair to such holders from a financial point of view.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act of 1933, as amended (the "Securities Act"),
the Investment Company Act of 1940 (the "1940 Act") and the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), (C) to comply with state
securities or "blue-sky" laws, (D) required to be made with the New York Stock
Exchange, Inc. (the "NYSE"), the National
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<PAGE> 18
Association of Securities Dealers, Inc. ("NASD") and the Pacific Exchange, Inc.,
and other applicable self-regulatory organizations, applicable state banking
authorities and applicable federal regulatory agencies including the Federal
Deposit Insurance Corporation and the Office of Thrift Supervision, and (E) the
filing of appropriate documents with, and, to the extent necessary, approval of,
the respective Commissioners of Insurance of the states of Arizona, California,
New York and the insurance authorities of the Cayman Islands and such notices
and consents as may be required under the insurance laws of any jurisdiction in
which the Company, Parent or any of their respective subsidiaries is domiciled
or does business, no filings, reports or notices are required to be made by the
Company with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any governmental or
regulatory authority, agency, commission, body or other governmental entity
("Governmental Entity"), in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company of the Merger and
the other transactions contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement
by the Company do not, and the consummation by the Company of the Merger and the
other transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the charter or bylaws of the Company
or the comparable governing instruments of any of its Subsidiaries, (B) a breach
or violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of the Company or any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to, any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation, whether written or oral ("Contracts" and
individually, a "Contract"), binding upon the Company or any of its Subsidiaries
(provided, as to consummation, the filings, reports and notices are made, and
approvals are obtained, as referred to in Section 5.1(d)(i) or Section 6.18) or
any Law (as defined in Section 5.1(i)) or governmental or non-governmental
permit, registration, authorization or license to which the Company or any of
its Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any Contract, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation or change that is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. As promptly as practicable following the date of this
Agreement, the Company will deliver to Parent Section 5.1(d) of the Company
Disclosure Letter which sets forth, to the Knowledge of the Company, a correct
and complete list in all material respects of Contracts of the Company and its
Subsidiaries pursuant to which consents or waivers are or may be required prior
to consummation of the transactions contemplated by this Agreement (whether or
not subject to the exception set forth with respect to clauses (B) and (C)
above).
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<PAGE> 19
(e) Company Reports; Financial Statements; Undisclosed
Liabilities; Statutory Statements.
(i) The Company has delivered or made available to Parent each
registration statement, report, proxy statement or information statement
prepared by it since September 30, 1995, including (A) the Company's Annual
Report on Form 10-K for the year ended September 30, 1997 (the "Audit Date," and
such report on Form 10-K, the "1997 10-K") and (B) the Company's Quarterly
Report on Form 10-Q for the periods ended December 31, 1997, March 31, 1998 and
June 30, 1998, each in the form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such reports filed with the SEC subsequent to the
date hereof, the "Company Reports"). As of their respective dates, the Company
Reports did not, and any Company Reports filed with the SEC subsequent to the
date hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of income and of changes in stockholders' equity
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents, or will fairly present, the
results of operations, retained earnings and changes in financial position, as
the case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with accounting principles generally accepted in the
United States ("U.S. GAAP") consistently applied during the periods involved,
except as may be noted therein.
(ii) Except for those liabilities that are fully reflected or
reserved against on the consolidated balance sheet of the Company included in
the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998,
and for liabilities incurred in the ordinary course of business consistent with
past practice, since June 30, 1998, neither the Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, individually or in the aggregate, has had or is reasonably likely to have
a Company Material Adverse Effect.
(iii) Each of the Company Insurance Companies has filed all
annual and quarterly statements, together with all exhibits, interrogatories,
notes, schedules and any actuarial opinions, affirmations or certifications or
other supporting documents in connection therewith, required to be filed with or
submitted to the appropriate regulatory authorities of the jurisdiction in which
it is domiciled or commercially domiciled on
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<PAGE> 20
forms prescribed or permitted by such authority (collectively, the "Company SAP
Statements"). The Company has delivered or made available to Parent all Company
SAP Statements for each Company Insurance Company for the period ended December
31, 1995, each in the form (including exhibits, annexes and any amendments
thereto) filed with the applicable state insurance regulatory agency. Financial
statements included in the Company SAP Statements and prepared on a statutory
basis, including the notes thereto, were prepared in conformity with statutory
accounting practices prescribed or permitted by the applicable insurance
regulatory authority consistently applied for the periods covered thereby and
present fairly the statutory financial position of such Company Insurance
Companies as at the respective dates thereof and the results of operations of
such Company Insurance Companies for the respective periods then ended. The
Company SAP Statements complied in all material respects with all applicable
laws, rules and regulations when filed, and no material deficiency has been
asserted with respect to any Company SAP Statements by the applicable insurance
regulatory body or any other governmental agency or body. Except as indicated
therein, all assets that are reflected on the Company SAP Statements comply with
applicable Insurance Laws with respect to admitted assets and are in an amount
at least equal to the minimum amounts required by applicable Insurance Laws. The
statutory balance sheets and income statements included in the Company SAP
Statements have been audited by PricewaterhouseCoopers LLP and the Company has
delivered or made available to Parent true and complete copies of all audit
opinions related thereto. As promptly as practicable following the date of this
Agreement, the Company will deliver or make available to Parent true and
complete copies of all examination reports of insurance departments and any
insurance regulatory agencies since January 1, 1995 relating to the Company
Insurance Companies.
(f) Absence of Certain Changes. Except as disclosed in the
Company Reports filed prior to the date hereof, since the Audit Date the Company
and its Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses consistent with past practice and
there has not been (i) any change in the financial condition, operations,
properties, business or results of operations of the Company and its
Subsidiaries or any development or combination of developments of which the
Company has Knowledge, that, individually or in the aggregate, has had or is
reasonably likely to have a Company Material Adverse Effect; (ii) any damage,
destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
Subsidiaries, whether or not covered by insurance, except for such damage,
destruction or other casualty loss which is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect; (iii)
any change by the Company in accounting principles, practices or methods other
than as required by U.S. GAAP or as disclosed in the Company Reports or Company
SAP Statements filed prior to the date hereof; (iv) any declaration, setting
aside or payment of any dividend or other distribution in respect of the stock
of the Company,
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<PAGE> 21
except for cash dividends on its capital stock publicly announced prior to the
date hereof; (v) any addition, or any development involving a prospective
material addition, to the Company's consolidated reserves for future policy
benefits or other policy claims and benefits, except for such additions or
developments which are not, individually or in the aggregate, reasonably likely
to have a Company Material Adverse Effect; or (vi) any change in the accounting,
actuarial, investment, reserving, underwriting or claims administration
policies, practices, procedures, methods, assumptions or principles of the
Company or any Company Insurance Company not disclosed in the Company Reports or
Company SAP Statements filed prior to the date hereof except as required by U.S.
GAAP. Since the Audit Date, except as provided for herein or as disclosed in the
Company Reports filed prior to the date hereof, there has not been any increase
in the compensation payable or that could become payable by the Company or any
of its Subsidiaries to officers or key employees or any amendment of any of the
Compensation and Benefit Plans (as defined in Section 5.1(h)) other than
increases or amendments in the ordinary course consistent with past practice.
(g) Litigation and Liabilities. Except as disclosed in the
Company Reports filed prior to the date hereof, there are no (i) civil, criminal
or administrative actions, suits, claims, hearings, investigations, inquiries or
proceedings pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries or (ii) obligations or liabilities of any
nature, whether or not accrued, contingent or otherwise and whether or not
required to be disclosed, including those relating to matters involving any
Environmental Law (as defined in Section 5.1(k)) and occupational safety and
health matters, or any other facts or circumstances of which the Company has
Knowledge that is reasonably likely to result in any claims against, or
obligations or liabilities of, the Company or any of its Subsidiaries, except
for those that are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(h) Employee Benefits.
(i) A copy of each material bonus, incentive, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, medical, health, welfare,
fringe benefits or other plan, agreement, policy or arrangement that covers
employees, directors, former employees or former directors of the Company and
its Subsidiaries (the "Compensation and Benefit Plans") and any trust agreement
or insurance contract forming a part of such Compensation and Benefit Plans has
been made available to Parent prior to the date hereof. The Compensation and
Benefit Plans are listed in Section 5.1(h) of the Company Disclosure Letter and
any Compensation and Benefit Plan containing a "change of control" or similar
provision is identified in Section 5.1(h) of the Company Disclosure Letter.
Neither the Company nor any of its Subsidiaries has any commitment, oral or
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<PAGE> 22
written, to create any additional material Compensation and Benefit Plan or to
modify or change any existing Compensation and Benefit Plan in a material
respect.
(ii) All Compensation and Benefit Plans are in substantial
compliance with all applicable law, including the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any
regulations and rules promulgated thereunder, and all required filings and
disclosures with respect to any Compensation and Benefit Plan have been made.
Each Compensation and Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received all
required favorable determination letters (including a determination that the
related trust under such Compensation and Benefit Plan is exempt from tax under
Section 501(a) of the Code) from the Internal Revenue Service (the "IRS"),
including with respect to "TRA" (as defined in Rev. Proc. 93-39), and the
Company is not aware of any circumstances reasonably likely to result in
revocation of any such favorable determination letter. There is no pending or,
to the Knowledge of the Company, threatened legal action, suit, claim or
governmental investigation relating to any of the Compensation and Benefit
Plans. Neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any Compensation and Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would be
reasonably likely to subject the Company or any of its Subsidiaries to a
material tax or penalty imposed by either Section 4975 of the Code or Section
502 of ERISA.
(iii) No liability (other than for payment of premiums to
Pension Benefit Guaranty Corporation ("PBGC")), under Subtitle C or D of Title
IV of ERISA has been or is expected to be incurred by the Company or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity (an "ERISA
Affiliate") which is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate Plan"). The Company and
its Subsidiaries have not contributed, or been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or any ERISA
Affiliate Plan within the 12-month period ending on the date hereof.
(iv) All contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan as of the date hereof
have been made or have been reflected on the Company's most recent financial
statements. Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither the Company nor its
Subsidiaries (A) has provided, or is required to
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<PAGE> 23
provide, security to any Pension Plan or to any ERISA Affiliate Plan pursuant to
Section 401(a)(29) of the Code or (B) has taken any action, or omitted to take
any action, that has resulted, or would reasonably be expected to result, in the
imposition of a lien under Section 412(n) of the Code or pursuant to ERISA.
(v) Under each Pension Plan which is a single-employer plan
and each ERISA Affiliate Plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the most
recent actuarial valuation of such Pension Plan and ERISA Affiliate Plan), did
not exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan, and to the Knowledge of the Company, since such date there has
been neither an adverse change in the financial condition of such Pension Plan
or ERISA Affiliate Plan nor any amendment or other change to such Pension Plan
or ERISA Affiliate Plan that would increase the amount of benefits thereunder
which reasonably could be expected to change such result.
(vi) Neither the Company nor any of its Subsidiaries have any
obligations for retiree health and life benefits under any Compensation and
Benefit Plan (other than benefits mandated under Section 4980B of the Code). The
Company or its Subsidiaries may amend or terminate any such plan under the terms
of such plan at any time without incurring any material liability thereunder.
(vii) Except as set forth in the Company Disclosure Letter,
the consummation of the Merger and the other transactions contemplated by this
Agreement (including, without limitation, as a result of any termination of
employment prior to or following the Effective Time) will not (A) entitle any
employee, consultant or director of the Company or any of its Subsidiaries to
any payment (including severance pay or similar compensation) or any increase in
compensation, (B) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Compensation and
Benefit Plans, (C) result in any breach or violation of, or a default under, any
of the Compensation and Benefit Plans or (D) result in any of Parent, the
Company or the Surviving Corporation being obligated to make a payment that
would be reasonably likely to be characterized as an "excess parachute payment"
to an individual who is a "disqualified individual" (as such terms are defined
in Section 280G of the Code), without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
(viii) Neither the Company nor any Subsidiary maintains any
Compensation and Benefit Plan covering foreign employees.
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<PAGE> 24
(ix) With respect to each Compensation and Benefit Plan, if
applicable, the Company has provided, made available, or will make available
upon request, to the Parent, true and complete copies of existing: (A) the two
most recent Forms 5500 filed with the IRS; (B) the most recent actuarial report
and financial statement; (C) the most recent summary plan description; (D) the
forms filed with the PBGC (other than for premium payments); (E) the most recent
determination letter issued by the IRS; and (F) any Form 5310 or Form 5330 filed
with the IRS.
(i) Compliance with Laws; Permits.
(i) The business and operations of the Company Insurance
Companies have been conducted in compliance with all applicable foreign,
federal, state and local statutes and regulations regulating the business and
products of insurance and all applicable orders and directives of insurance
regulatory authorities (collectively, "Insurance Laws"), except where the
failure to so conduct such business and operations would not, individually or in
the aggregate, be reasonably likely to have a Company Material Adverse Effect.
Notwithstanding the generality of the foregoing, except where the failure to do
so would not, individually or in the aggregate, be reasonably likely to have a
Company Material Adverse Effect, each Company Insurance Company and, to the
Company's Knowledge, its agents have marketed, sold and issued insurance and
annuity and guaranteed investment products in compliance, in all material
respects, with all Insurance Laws applicable to the business of such Company
Insurance Company and such activities and in the respective jurisdictions in
which such products have been sold, including, without limitation, in compliance
with (A) all applicable prohibitions against withdrawal of business lines, (B)
all applicable requirements relating to the disclosure of the nature of
insurance products as policies of insurance, (C) all applicable requirements
relating to insurance product projections and illustrations, and (D) all
applicable requirements relating to the advertising, sales and marketing of
insurance and annuity products and guaranteed investment contracts. In addition,
(X) there is no pending or, to the Knowledge of the Company, threatened charge
by any insurance regulatory authority that any of the Company Insurance
Companies has violated, nor any pending or, to the Knowledge of the Company
threatened investigation by any insurance regulatory authority with respect to
possible violations of, any applicable Insurance Laws where such violations
would, individually or in the aggregate, be reasonably like to have a Company
Material Adverse Effect; (Y) none of the Company Insurance Companies is subject
to any order or decree of any insurance regulatory authority relating
specifically to such Company Insurance Company (as opposed to insurance
companies generally) which would, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect; and (Z) the Company
Insurance Companies have filed all reports required to be filed with any
insurance regulatory authority on or before the date hereof as to which the
failure to file such reports would, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
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<PAGE> 25
(ii) In addition to Insurance Laws, except as set forth in the
Company Reports filed prior to the date hereof or as would not, individually or
in the aggregate, be reasonably likely to have a Company Material Adverse
Effect, the businesses of each of the Company and its Subsidiaries have not
been, and are not being, conducted in violation of any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively with Insurance Laws, "Laws"). Except as set
forth in the Company Reports filed prior to the date hereof or as would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect, no investigation or review by any Governmental Entity
with respect to the Company or any of its Subsidiaries is pending or, to the
Knowledge of the Company, threatened, nor has any Governmental Entity indicated
an intention to conduct the same. To the Knowledge of the Company, no material
change is required in the Company's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Laws, and the Company has
not received any written notice or communication of any material noncompliance
with any such Laws that has not been cured as of the date hereof. The Company
and its Subsidiaries each has all permits, licenses, trademarks, patents,
tradenames, copyrights, servicemarks, franchises, variances, exemptions, orders
and other governmental authorizations, consents and approvals necessary to
conduct its business as presently conducted except those the absence of which is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(iii) Except as would not, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect, with respect to
every syndication of property that was intended to allow investors to claim a
low income housing tax credit or similar tax credit, the property so syndicated
is eligible for the relevant credit in an amount no less than the amount that it
was intended to produce.
(j) Takeover Statutes. No restrictive provision of any "fair
price," "moratorium," "control share acquisition," "interested shareholder" or
other similar anti-takeover statute or regulation (each a "Takeover Statute")
(including Sections 3-602 and 3-702 of the Maryland Code) or any restrictive
provision of any applicable anti-takeover provision in the Company's charter and
bylaws is, or at the Effective Time will be, applicable to the Company, Parent,
the Shares, the Merger, the Voting Agreement or the other transactions
contemplated by this Agreement.
(k) Environmental Matters. Except as disclosed in the Company
Reports filed prior to the date hereof: (i) the Company and its Subsidiaries
have materially complied with all applicable Environmental Laws; (ii) the
properties currently owned or operated by the Company (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substance which is reasonably likely to require remediation
under any applicable Environmental Law; (iii) the properties formerly owned or
operated by the Company or any of its Subsidiaries
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<PAGE> 26
were not contaminated with any Hazardous Substance which could reasonably be
expected to require remediation under any applicable Environmental Law during
the period of ownership or operation by the Company or any of its Subsidiaries;
(iv) neither the Company nor any of its Subsidiaries is subject to liability for
any Hazardous Substance disposal or contamination on any third party property
which is reasonably likely to require remediation under applicable Environmental
Laws; (v) neither the Company nor any of its Subsidiaries has received any
notice, demand, letter, claim or request for information indicating that the
Company or any of its Subsidiaries may be in material violation of or subject to
liability under any Environmental Law; (vi) neither the Company nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or any material indemnity or other
material agreement with any third party relating to any Environmental Law or
Hazardous Substances; and (vii) there are no other circumstances or conditions
involving the Company or any of its Subsidiaries that could reasonably be
expected to result in any material claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any property of the Company
pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any
federal, state, local or foreign law, statute, ordinance, regulation, judgment,
order, decree, arbitration award, agency requirement, license, permit,
authorization or common law, relating to: (A) the protection, investigation or
restoration of the environment, health and safety, or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property.
As used herein, the term "Hazardous Substance" means any
substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which may be the
subject of regulatory action by any Government Authority pursuant to any
Environmental Law.
(l) Taxes. The Company, and each of its Subsidiaries (which,
for the purposes of this Section 5.1(l) shall include any predecessor of any
Subsidiary) (i) have prepared in good faith and duly and timely filed (taking
into account any extension of time within which to file) all material Tax
Returns (as defined below) required to be filed by any of them and all such
filed Tax Returns are complete and accurate in all material respects; (ii) have
paid all Taxes that are shown as due and payable on such filed Tax Returns or
that the Company or any of its Subsidiaries are obligated to pay without the
filing of a Tax Return; (iii) have paid all other charges, claims and
assessments received to date in respect of Taxes other than those being
contested in good faith for which provision has been made in accordance with
U.S. GAAP on the most recent balance sheet included in the Company Reports; (iv)
have withheld from amounts owing to any
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<PAGE> 27
employee, creditor or other person all material Taxes required by law to be
withheld and have paid over to the proper governmental authority in a timely
manner all such withheld amounts to the extent due and payable; (v) as of the
date hereof, have neither extended nor waived any applicable statute of
limitations with respect to United States federal or state income or franchise
Taxes and have not otherwise agreed to any extension of time with respect to a
United States federal or state income or franchise Tax assessment or deficiency;
(vi) have never been members of any consolidated group for income tax purposes
other than the consolidated group of which the Company is the common parent; and
(vii) are not parties to any tax sharing agreement or arrangement other than
with each other. As of the date hereof, there are not pending or threatened in
writing any audits, examinations, investigations, litigation, or other
proceedings in respect of Taxes of the Company or any Subsidiary. There are not
any unresolved questions or claims concerning the Company's or any of its
Subsidiaries' Tax liability that are reasonably likely to have a Company
Material Adverse Effect. No liens for Taxes exist with respect to any of the
assets or properties of the Company or its Subsidiaries, except for statutory
liens for Taxes not yet due or payable or that are being contested in good
faith. Except as would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect, the assets of each Company
Separate Account are adequately diversified within the meaning of Section 817(h)
of the Code. Each of the Company Insurance Companies is treated for federal tax
purposes, as the owner of the assets underlying the respective life insurance
contracts and annuity contracts that such insurer has issued, entered into or
sold. The Company has made available to Parent true and correct copies of the
United States federal income Tax Returns filed by the Company and its
Subsidiaries for each of the fiscal years ended September 30, 1997, 1996 and
1995.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, premium, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or governmental
levies of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts and any interest in respect of
such penalties and additions, and (ii) the term "Tax Return" includes all
returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.
(m) Intellectual Property.
(i) Except as disclosed in Company Reports filed prior to the
date hereof or as is not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect: the Company does not have Knowledge of
any valid grounds for any bona fide claims (A) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by the
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<PAGE> 28
Company or any of its Subsidiaries, infringes on any copyright, patent,
trademark, trade name, service mark or trade secret; (B) against the use by the
Company or any of its Subsidiaries, of any copyrights, patents, trademarks,
trade names, service marks, trade secrets, technology, know-how or computer
software programs and applications used in the business of the Company or any of
its Subsidiaries as currently conducted or as proposed to be conducted; (C)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company; or
(D) challenging the license or legally enforceable right to use of the
Third-Party Intellectual Rights by the Company or any of its Subsidiaries.
(ii) As used in this Agreement, the term (x) "Intellectual
Property" means all patents, trademarks, trade names, service marks, copyrights
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or
materials; (y) "Third-Party Intellectual Property Rights" means any third-party
patents, trademarks, trade names, service marks and copyrights; and (z) "Company
Intellectual Property Rights" means the patents, registered and material
unregistered trademarks, trade names and service marks, registered copyrights,
and any applications therefor owned by the Company or any of its Subsidiaries.
(n) Brokers and Finders. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement except
that the Company has employed Goldman, Sachs & Co. and Wasserstein Perella &
Co., Inc. as its financial advisors, the arrangements with which have been
disclosed to Parent prior to the date hereof.
(o) No Regulatory Disqualifications. To the Knowledge of the
Company, no event has occurred or condition exists or, to the extent it is
within the reasonable control of the Company, will occur or exist with respect
to the Company that, in connection with obtaining any regulatory Consents
required for the Merger, would cause the Company to fail to satisfy on its face
any applicable statute or written regulation of any applicable insurance
regulatory authority, that is, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
(p) Insurance Business.
(i) Except as otherwise would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, all
policies, binders, slips, certificates, guaranteed insurance contracts, annuity
contracts and participation agreements and other agreements of insurance,
whether individual or group, in effect as of the date hereof (including all
applications, supplements, endorsements, riders and ancillary agreements in
connection therewith) that are issued by the Company Insurance
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<PAGE> 29
Companies (the "Company Insurance Contracts") and any and all marketing
materials, are, to the extent required under applicable law, on forms approved
by applicable insurance regulatory authorities or which have been filed and not
objected to by such authorities within the period provided for objection, and
such forms and marketing materials comply in all material respects with the
insurance statutes, regulations and rules applicable thereto. As promptly as
practicable following the date of this Agreement, the Company will deliver to
Parent Section 5.1(p)(i) of the Company Disclosure Letter which contains a true
and complete list of all forms of Company Insurance Contracts that (A) are
currently used by any Company Insurance Company or (B) have been used by any
Company Insurance Company for business which is still in force.
(ii) Each insurance agent, third party administrator, manager,
broker and distributor (each an "Agent"), at the time such Agent wrote, sold,
produced or managed business for the Company Insurance Companies was duly
licensed (for the type of business written, sold, produced or managed) and no
such Agent violated (or with or without notice or lapse of time or both, would
have violated) any term or provision of any Law applicable to the writing, sale,
production or management of business for any Company Insurance Company, except
for such failures to be licensed or such violations which have been cured, which
have been resolved or settled through agreements with applicable Governmental
Entities or which are barred by an applicable statute of limitations, or that,
individually or in the aggregate, have not had or are not reasonably likely to
have a Company Material Adverse Effect.
(iii) As promptly as practicable following the date of this
Agreement, the Company will deliver or make available to Parent a true and
complete copy of all actuarial reports prepared by the Company's actuaries, and
any actuarial reports prepared by other actuaries, independent or otherwise,
with respect to any Company Insurance Company since December 31, 1995, and all
attachments, addenda, supplements and modifications thereto (the "Company
Actuarial Analyses"). To the Knowledge of the Company, the information and data
furnished by the Company or any Company Insurance Company to its independent
actuaries in connection with the preparation of the Company Actuarial Analyses
were accurate in all material respects. Furthermore, each Company Actuarial
Analysis was based upon an accurate inventory of policies in force for the
Company Insurance Companies, at the relevant time of preparation, was prepared
using appropriate modeling procedures accurately applied and in conformity with
generally accepted actuarial standards consistently applied, and the projections
contained therein were properly prepared in accordance with the assumptions
stated therein.
(iv) To the Knowledge of the Company, except as set forth in
Section 5.1(p)(iv) of the Company Disclosure Letter or as reserved for or
disclosed in the Company Reports, or as is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect all
amounts recoverable under reinsurance, coinsurance or other similar Contracts to
which any Company Insurance Company is a
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<PAGE> 30
party (including, but not limited to, amounts based on paid and unpaid losses)
are fully collectible.
(v) Promptly following the date of this Agreement, the Company
will deliver to Parent true and complete copies of all analyses, reports and
other data prepared by the Company or any Company Insurance Company or submitted
by the Company or any Company Insurance Company to any insurance regulatory
authority or received by the Company or any Company Insurance Company relating
to risk-based capital calculations or IRIS ratios for the years ended December
31, 1997 and 1996.
(vi) Promptly following the date of this Agreement, the
Company will deliver to Parent a true and correct list on a per risk and
aggregate basis of the maximum underlying retentions (net of all reinsurance
maintained) on all insurance and reinsurance policies written or entered into by
any Company Insurance Company since December 31, 1995.
(vii) Except as would not, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect, all annuity
contracts and life insurance policies issued by a Company Insurance Company meet
all definitional or other requirements for qualification under the Code section
applicable (or intended to be applicable) to such annuity contracts or life
insurance policies. Except as set forth in Section 5.1(p)(vii) of the Company
Disclosure Letter, which the Company will deliver to Parent promptly following
the date of this Agreement, there are no material "hold harmless"
indemnification agreements respecting the tax qualification or treatment of any
product or plan sold, issued, entered into or administered by the Company
Insurance Companies, and there have been no claims asserted by any Person under
such "hold harmless" indemnification agreements set forth in Section 5.1(p)(vii)
of the Company Disclosure Letter.
(q) Liabilities and Reserves.
(i) The reserves carried on the books of each Company
Insurance Company for future insurance policy benefits, losses, claims and
similar purposes were, as of the respective dates of such Company SAP
Statements, in compliance in all material respects with the requirements for
reserves established by the insurance departments of the state of domicile of
such Company Insurance Company, were determined in all material respects in
accordance with generally accepted actuarial standards consistently applied, and
were fairly stated in all material respects in accordance with sound actuarial
and statutory accounting principles. Promptly following the date of this
Agreement, the Company will deliver or make available to Parent true, correct
and complete copies of the actuarial valuation reports delivered to the
insurance department of the domiciliary state of each Company Insurance Company
for the years ended December 31, 1997 and 1996. Promptly following the date of
this Agreement, the Company will deliver or make
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<PAGE> 31
available to Parent copies of all work papers used as the basis for establishing
the reserves for the Company and the Company Insurance Companies at December 31,
1997 and December 31, 1996, respectively, as well as all reports with respect to
the adequacy of such reserves.
(ii) Except for regular periodic assessments in the ordinary
course of business or as reserved for or disclosed in the Company Reports, no
claim or assessment is pending nor, to the Knowledge of the Company, threatened
against any Company Insurance Company by any state insurance guaranty
associations in connection with such association's fund relating to insolvent
insurers which if determined adversely, would, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect.
(r) Separate Accounts.
(i) Except as otherwise would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, each
separate account maintained by a Company Insurance Company (a "Company Separate
Account") is duly and validly established and maintained under the laws of its
state of formation and is either excluded from the definition of an investment
company pursuant to Section 3(c)(11) of the 1940 Act or is duly registered as an
investment company under the 1940 Act. Except as otherwise would not,
individually or in the aggregate, have a Company Material Adverse Effect, each
such Company Separate Account, if registered, is operated in compliance with the
1940 Act, has filed all reports and amendments of its registration statement
required to be filed, and has been granted all exemptive relief necessary for
its operations as presently conducted. Except as otherwise would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect, the Company Insurance Contracts under which the Company
Separate Accounts assets are held are duly and validly issued and are either
exempt from registration under the Securities Act pursuant to Section 3(a)(2) of
the Securities Act or were sold pursuant to an effective registration statement
under the Securities Act, and any such registration statement is currently in
effect to the extent necessary to allow the appropriate Company Insurance
Company to receive contributions under such policies. Such registration
statements, at the time that each become effective, contained no untrue
statement of a material fact, and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Each prospectus, statement of additional information, or
private placement memorandum, as amended or supplemented, relating to any
registered separate account and all supplemental advertising material relating
to any registered separate account since January 1, 1995, as of their respective
mailing dates or dates of use (A) contained no untrue statement of material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and (B)
complied with applicable law including but not limited to, state insurance laws,
state
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securities laws, rules of the NASD, the Securities Act and the 1940 Act, except
for such instances of non-compliance which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(s) Material Contracts. All of the material Contracts of the
Company and its Subsidiaries that are required to be described in the Company
Reports or to be filed as exhibits thereto are described in the Company Reports
or filed as exhibits thereto, respectively, and are in full force and effect.
Promptly following the date of this Agreement, true and complete copies of all
such material Contracts will be delivered or made available by the Company to
Parent. Neither the Company nor any of its Subsidiaries nor, to the Knowledge of
the Company, any other party is in breach of or in default under any such
Contract except for such breaches and defaults as are not, individually or in
the aggregate, reasonably likely to have a Company Material Adverse Effect.
Except as would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, neither the Company nor any of its
Subsidiaries is party to any Contract containing any provision or covenant
limiting in any material respect the ability of the Company or any of its
Subsidiaries or, except as specifically identified on Section 5.1(s) of the
Company Disclosure Letter, assuming the consummation of the transactions
contemplated by this Agreement, Parent or any of its Subsidiaries to (A) sell
any products or services of or to any other person, (B) engage in any line of
business or (C) compete with or to obtain products or services from any person
or limiting the ability of any person to provide products or services to the
Company or any of its Subsidiaries.
(t) Year 2000 Compliance. The software and hardware operated
by the Company and the Company Insurance Companies are capable of providing or
are being adapted or replaced to provide uninterrupted millennium functionality
to record, store, process and present calendar dates falling on or after January
1, 2000 and date-dependent data in substantially the same manner and with the
same functionality as such software records, stores, processes and presents such
calendar dates and date-dependent data as of the date hereof, except for the
failure to have such capability which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect.
(u) Investment Contracts, Funds and Clients.
(i) Certain of the Company's Subsidiaries provide investment
management, investment advisory, sub-advisory, administration, distribution or
certain other services (each Contract for such services being referred to as an
"Investment Contract", each other party thereto being referred to as a "Client",
and each Client which is registered as an investment company under the 1940 Act
being referred to as a "Fund Client") to the Fund Clients, a complete list of
which has previously been made available by the Company to Parent. Each of the
Fund Clients (or the trust of which it is a series) is
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duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. The Boards of Trustees or Directors of
the Fund Clients operate in all material respects in conformity with the
requirements and restrictions of Sections 9, 10 and 16 of the 1940 Act.
(ii) Except as would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect, each of the Fund
Clients is in compliance with all applicable laws of the SEC, the NASD, the IRS
and any other governmental agency or self-regulatory body having jurisdiction
over such Fund Client or its distributor or investment adviser and of any state
in which such Fund Client is registered, qualified or sold and with its
Prospectus and Statement of Additional Information. Except as would not be,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect, each Fund Client has elected to be treated as, and has qualified
as, a "regulated investment company" under subchapter M of Chapter 1 of Subtitle
A of the Code. Except as would not be, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, each Fund Client
that is intended to be a tax-exempt municipal bond fund has satisfied the
requirements of Section 852(b)(5) of the Code and is qualified to pay exempt
interest dividends as defined therein.
(iii) Each of the Company's Subsidiaries (each an "Advisory
Entity" and, collectively "Advisory Entities"), a complete list of which has
previously been made available by the Company to the Parent, that provides
investment management, investment advisory or sub-advisory services to any Fund
Client or any other Person (each an "Advisory Client") is duly registered with
the SEC as an investment adviser and is not subject to state regulation. The
Company is not an Advisory Entity. No Advisory Client is exempt from
registration under the 1940 Act by virtue of Sections 3(c)(1), 3(c)(7) or
(except Company Separate Accounts) 3(c)(11).
(iv) Each Fund Client and Advisory Entity has operated and is
currently operating in compliance with all laws, rules, regulations and orders
applicable to it or its business except for such noncompliance as would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect. Each Advisory Entity has been and is in compliance with
each Investment Contract to which it is a party, except as would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect.
(v) The accounts of each Advisory Client subject to ERISA have
been managed by the applicable Company Subsidiary in compliance in all material
respects with the applicable requirements of ERISA.
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<PAGE> 34
(v) Company Broker/Dealers.
(i) The Company operates its broker/dealer operations
exclusively through Advantage Capital Corporation, Royal Alliance Associates,
Inc., SunAmerica Securities, Inc., Sentra Securities Corporation, SunAmerica
Capital Services, Inc., Spelman & Co., Inc. and FSC Securities Corporation
(collectively, the "Company Broker/Dealers"). Each Company Broker/Dealer that is
required to be registered as a broker-dealer with the SEC or under applicable
state laws, is so registered and is registered with each other Governmental
Entity with which it is required to register in order to conduct its business as
now conducted, and is and has been since January 1, 1995 in full compliance with
all applicable Laws thereunder, except for any failures to register or comply
which are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. Each Company Broker/Dealer is a member
organization in good standing of the NASD and such other organizations in which
its membership is required in order to conduct its business as now conducted
except such failures to be in good standing or such memberships the failure to
have or maintain which are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
(ii) Except as would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect, no Company
Broker/Dealer is, nor is any "associated person" of it, subject to a "statutory
disqualification" (as such terms are defined in the Exchange Act) or subject to
a disqualification that would be a basis for censure, limitations on the
activities, functions or operations of, or suspension or revocation of the
registration of the Company as broker-dealer, municipal securities dealer,
government securities broker or government securities dealer under Section 15,
Section 15B or Section 15C of the Exchange Act and, to the Company's Knowledge,
there are no proceedings or investigations pending by any Governmental Entity or
self-regulatory organization that is reasonably likely to result in any such
censure, limitations, suspension or revocation.
(iii) Except as would not, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect, since its
inception, each Company Broker/Dealer has had net capital (as such term is
defined in Rule 15c3-1 under the Exchange Act) that satisfies the minimum net
capital requirements of the Exchange Act and of the laws of any jurisdiction in
which such company conducts business.
(w) Pooling of Interests; Reorganization. As of the date of
this Agreement, the Company has no reason to believe that the Merger will not
qualify as a "pooling of interests" for accounting purposes or as a
"reorganization" under Section 368(a) of the Code.
(x) Derivatives. If the Company and its Subsidiaries had
adopted Statement of Financial Accounting Standards No. 133 ("SFAS 133") as of
the date of this
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<PAGE> 35
Agreement, each financial instrument or other financial contract held by the
Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party and that would constitute a "derivative instrument" for
the purposes of SFAS 133 would properly be accounted for by the Company under
SFAS 133 as a "fair value hedge", "cash flow hedge" or "foreign currency hedge"
with respect to the assets or liabilities of the Company or one of its
Subsidiaries.
5.2. Representations and Warranties of Parent. Except as set
forth in the disclosure letter delivered to the Company by Parent on or prior to
entering into this Agreement (the "Parent Disclosure Letter"), Parent hereby
represents and warrants to the Company that (it being understood that the words
"to the Knowledge of Parent" or "Parent's Knowledge" and any words of similar
import shall mean the actual knowledge of the persons whose names are set forth
in Section 5.2(a) of the Parent Disclosure Letter; provided, however, when such
representations and warranties are given as of the Closing Date as conditions to
Closing, such words shall mean to the actual knowledge of such persons after
reasonable inquiry of others within Parent and its Subsidiaries):
(a) Organization, Good Standing and Qualification. Each of
Parent and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in such good standing, when taken together
with all other such failures, is not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect (as defined below).
Parent has made available to the Company a complete and correct copy of the
certificate of incorporation and bylaws or other comparable governing
instruments of Parent, each as amended to date. Parent's certificate of
incorporation and bylaws so delivered are in full force and effect.
As used in this Agreement, the term "Parent Material Adverse
Effect" means a material adverse effect on the financial condition, operations,
properties, business or results of operations of Parent and its Subsidiaries
taken as a whole or an effect which is reasonably likely to prevent, materially
delay or materially impair the ability of Parent to consummate the transactions
contemplated by this Agreement.
(b) Capital Structure. The authorized capital stock of Parent
consists of 2,000,000,000 shares of Parent Common Stock, of which 1,050,001,900
shares outstanding as of the close of business on June 30, 1998 (as adjusted to
reflect the stock split effected as a stock dividend paid July 31, 1998), and
6,000,000 shares of Serial Preferred Stock, par value $5.00 per share (the
"Parent Preferred Stock"), none of which was outstanding as of the close of
business on July 31, 1998. All of the outstanding
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<PAGE> 36
shares of Parent Common Stock are duly authorized, validly issued, fully paid
and nonassessable.
(c) Corporate Authority.
(i) Parent has all requisite corporate power and authority and
has taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate, subject only to
approval of the Merger by the holders of at least a majority of the outstanding
shares of Parent Common Stock (the "Parent Requisite Vote"), the Merger. This
Agreement is a valid and binding agreement of Parent enforceable against Parent
in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(ii) The Board of Directors of Parent (A) has unanimously
adopted the plan of merger set forth herein and approved this Agreement and the
other transactions contemplated hereby, (B) has declared that the Merger and
this Agreement and the other transactions contemplated hereby are advisable, and
(C) has received the opinion of its financial advisor, Morgan Stanley & Co.,
Incorporated, to the effect that as of the date hereof, the Exchange Ratio is
fair to Parent from a financial point of view.
(iii) Prior to the Effective Time, Parent will have taken all
necessary action to permit it to issue the number of shares of Parent Common
Stock required to be issued pursuant to Article IV. The Parent Common Stock,
when issued, will be validly issued, fully paid and nonassessable, and no
shareholder of Parent will have any preemptive right of subscription or purchase
in respect thereof. The Parent Common Stock, when issued, will be registered
under the Securities Act and Exchange Act and registered or exempt from
registration under any applicable state securities or "blue sky" laws.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the HSR Act, the Securities Act, the Exchange Act and the
Advisers Act, (C) to comply with state securities or "blue sky" laws, (D)
required to be made with the NYSE, the NASD, the Pacific Exchange, Inc. and
other applicable self-regulatory organizations, applicable state banking
authorities and applicable federal agencies including the Federal Deposit
Insurance Corporation and the Office of Thrift Supervision, and (E) the filing
of appropriate documents with, and, to the extent necessary, approval of, the
respective Commissioners of Insurance of the states of Arizona, California, New
York and the insurance authorities of the Cayman Islands and such notices and
consents as may be required under the insurance laws of any jurisdiction in
which the Company, Parent or any of their respective subsidiaries is domiciled
or does business, no filings, reports or notices are required to be made by
Parent with, nor are any consents, registrations,
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approvals, permits or authorizations required to be obtained by Parent from, any
Governmental Entity, in connection with the execution and delivery of this
Agreement by Parent and the consummation by Parent of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement
by Parent do not, and the consummation by Parent of the Merger and the other
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, or a default under, the certificate of incorporation or bylaws
of Parent or the comparable governing instruments of any of Parent's
Subsidiaries, (B) a breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of Parent or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to, any Contract binding upon Parent or
any of its Subsidiaries (provided, as to consummation, the filings, reports and
notices are made, and approvals are obtained, as referred to in Section
5.2(e)(i)) or any Law or governmental or non-governmental permit or license to
which Parent or any of its Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any Contract, except, in the case of
clause (B) or (C) above, for breach, violation, default, acceleration, creation
or change that, individually or in the aggregate, is not reasonably likely to
have a Parent Material Adverse Effect.
(e) Parent Reports; Financial Statements; Undisclosed
Liabilities.
(i) Parent has delivered or made available to the Company each
registration statement, report, proxy statement or information statement
prepared by it since December 31, 1995, including (A) Parent's Annual Report on
Form 10-K for the year ended December 31, 1997 (the "Parent Audit Date"), and
(B) Parent's Quarterly Reports on Form 10-Q for the periods ended March 31, 1998
and June 30, 1998, each in the form (including exhibits, annexes and any
amendments thereto) filed with the SEC (collectively, including any such reports
filed subsequent to the date hereof, the "Parent Reports"). As of their
respective dates, the Parent Reports did not, and any Parent Reports filed with
the SEC subsequent to the date hereof will not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Parent Reports (including the
related notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of Parent and its Subsidiaries as of its date
and each of the consolidated statements of income and of changes in financial
position included in or incorporated by reference into the Parent Reports
(including any related notes and schedules) fairly presents, or will fairly
present, the results of operations, retained earnings and changes in financial
position, as the case may be, of Parent and its Subsidiaries for the periods set
forth therein
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(subject, in the case of unaudited statements, to notes and normal year-end
audit adjustments that will not be material in amount or effect), in each case
in accordance with U.S. GAAP consistently applied during the periods involved,
except as may be noted therein.
(ii) Except for those liabilities that are fully reflected or
reserved against on the consolidated balance sheet of Parent included in the
Parent's Quarterly Report on Form 10-Q for the period ended June 30, 1998, and
for liabilities incurred in the ordinary course of business consistent with past
practice since June 30, 1998, neither Parent nor any of its Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) that individually or
in the aggregate, has had or is reasonably likely to have a Parent Material
Adverse Effect.
(f) Absence of Certain Changes. Except as disclosed in the
Parent Reports filed prior to the date hereof, since the Parent Audit Date
Parent and its Subsidiaries have conducted the business of Parent and its
Subsidiaries, taken as a whole, only in, and have not engaged in any transaction
material to the Company and its Subsidiaries, taken as a whole, other than
according to, the ordinary and usual course of such business, consistent with
past practice and there has not been (i) any change in the financial condition,
operations, properties, business or results of operations of Parent and its
Subsidiaries or any development or combination of developments of which Parent
has Knowledge that, individually or in the aggregate, has had or is reasonably
likely to have a Parent Material Adverse Effect; (ii) any damage, destruction or
other casualty loss with respect to any material asset or property owned, leased
or otherwise used by Parent or any of its Subsidiaries, whether or not covered
by insurance or that, individually or in the aggregate, has had or is reasonably
likely to have a Parent Material Adverse Effect; or (iii) any material change by
Parent in accounting principles, practices or methods other than as required by
U.S. GAAP or as disclosed in the Parent Reports filed prior to the date hereof.
(g) Litigation and Liabilities. Except as disclosed in the
Parent Reports filed prior to the date hereof, there are no (i) civil, criminal
or administrative actions, suits, claims, hearings, investigations, inquiries or
proceedings pending or, to the Knowledge of Parent, threatened against Parent or
any of its Subsidiaries or (ii) obligations or liabilities of any nature,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to environmental and occupational safety
and health matters, or any other facts or circumstances of which Parent has
Knowledge that is reasonably likely to result in any claims against, or
obligations or liabilities of, Parent or any of its affiliates, except for those
that are not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect.
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(h) Compliance with Laws.
(i) The business and operations of each Subsidiary of Parent
through which Parent conducts its insurance operations (collectively, the
"Parent Insurance Subsidiaries") have been conducted in compliance with all
applicable Insurance Laws, except where the failure to so conduct such business
and operations would not individually or in the aggregate have a Parent Material
Adverse Effect. Notwithstanding the generality of the foregoing, except where
the failure to do so would not, individually or in the aggregate, be reasonably
likely to have a Parent Material Adverse Effect, each Parent Insurance
Subsidiary and, to Parent's Knowledge, its agents have marketed, sold and issued
insurance products in compliance, in all material respects, with all Insurance
Laws applicable to the business of such Parent Insurance Subsidiary and such
activities and in the respective jurisdictions in which such products have been
sold, including, without limitation, in compliance with (A) all applicable
prohibitions against withdrawal of business lines, (B) all applicable
requirements relating to the disclosure of the nature of insurance products as
policies of insurance and (C) all applicable requirements relating to insurance
product projections and illustrations. In addition, (X) there is no pending or,
to the Knowledge of Parent, threatened charge by any insurance regulatory
authority that any of the Parent Insurance Subsidiaries has violated, nor any
pending or, to the Knowledge of Parent, threatened investigation by any
insurance regulatory authority with respect to possible violations of, any
applicable Insurance Laws where such violations would, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect; (Y)
none of the Parent Insurance Subsidiaries is subject to any order or decree of
any insurance regulatory authority relating specifically to such Parent
Insurance Subsidiary (as opposed to insurance companies generally) which would,
individually or in the aggregate, be reasonably likely to have a Parent Material
Adverse Effect; and (Z) the Parent Insurance Subsidiaries have filed all reports
required to be filed with any insurance regulatory authority on or before the
date hereof as to which the failure to file such reports would, individually or
in the aggregate, be reasonably likely to have a Parent Material Adverse Effect.
(ii) Except in each case as is not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect: (A) In
addition to Insurance Laws, except as set forth in the Parent Reports filed
prior to the date hereof, the businesses of each of Parent and its Subsidiaries
have not been, and are not being, conducted in violation of any Laws; (B) Except
as set forth in the Parent Reports filed prior to the date hereof, no
investigation or review by any Governmental Entity with respect to Parent or any
of its Subsidiaries is pending or, to the Knowledge of Parent, threatened, nor
has any Governmental Entity indicated an intention to conduct the same; (C) To
the Knowledge of Parent, no material change is required in Parent's or any of
its Subsidiaries' processes, properties or procedures in connection with any
such Laws, and Parent has not received any written notice or communication of
any material noncompliance with any such Laws that has not been cured as of the
date hereof; and
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(D) Parent and its Subsidiaries each has all permits, licenses, trademarks,
patents, trade names, copyrights, service marks, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct its business as presently conducted.
(i) Year 2000 Compliance. The software and hardware operated
by Parent and the Parent Insurance Subsidiaries are capable of providing or are
being adapted or replaced to provide uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after January 1,
2000 and date-dependent data in substantially the same manner and with the same
functionality as such software records, stores, processes and presents such
calendar dates and date-dependent data as of the date hereof, except for the
failure to have such capability which would not, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect.
(j) Takeover Statutes. No Takeover Statute or any restrictive
provision of any applicable anti-takeover provision in Parent's certificate of
incorporation and bylaws is, or at the Effective Time will be, applicable to
Parent, the Merger or the other transactions contemplated by this Agreement.
(k) Pooling of Interests; Reorganization. As of the date of
this Agreement, Parent has no reason to believe that the Merger will not qualify
as a "pooling of interests" for accounting purposes or as a "reorganization"
under Section 368(a) of the Code.
(l) Separate Operating Company. As of the date hereof, Parent
intends to cause the business of the Company (as operated immediately prior to
the Effective Time) to be operated separately from other Subsidiaries of Parent
following the Effective Time.
ARTICLE VI
Covenants
6.1. Company Interim Operations. The Company covenants and
agrees as to itself and each of its Subsidiaries that, after the date hereof and
prior to the Effective Time (unless Parent shall otherwise approve in writing
and except as otherwise expressly contemplated by this Agreement) or as
disclosed in Section 6.1 of the Company Disclosure Letter:
(a) its and its Subsidiaries' business shall be conducted in
the ordinary and usual course, consistent with past practice (it being
understood and agreed that
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nothing contained herein shall permit the Company to enter into or engage in
(through acquisition, product extension or otherwise) the business of selling
any products or services materially different from existing products or services
of the Company and its Subsidiaries or entering into or engaging in new lines of
business without Parent's prior written approval), and, to the extent consistent
therewith, it and its Subsidiaries shall use their respective best efforts to
preserve its business organization intact and maintain its existing relations
and goodwill with customers, suppliers, reinsurers, distributors, agents,
regulators, creditors, lessors, employees and business associates;
(b) it shall not (i) issue, sell, pledge, dispose of or
encumber any capital stock owned by it in any of its Subsidiaries except in
connection with the conversion of (x) the Preferred Shares (and the simultaneous
conversion of the Depositary Shares), (y) the Security Units and (z) the Class B
Shares, as described in Section 6.14, Section 6.15, and the Voting Agreement,
respectively; (ii) amend its charter or bylaws or comparable governing
instruments; (iii) split, combine or reclassify its outstanding shares of stock;
(iv) authorize, declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than dividends from its direct or
indirect wholly-owned Subsidiaries and other than regular quarterly cash
dividends paid by the Company not in excess of $0.15 per share and regular
dividends and distributions on the Preferred Shares and the Security Units
pursuant to the terms thereof; or (v) repurchase, redeem or otherwise acquire,
except in connection with the Stock Plans and the conversions referred to in
clause (i) of this Section 6.1(b), or permit any of its Subsidiaries to purchase
or otherwise acquire, any shares of its stock or any securities convertible into
or exchangeable or exercisable for any shares of its stock;
(c) neither it nor its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights or agreements of any kind to acquire, any shares of its capital stock of
any class or any Voting Debt or any other property or assets (other than Shares
issuable pursuant to options outstanding on the date hereof under the Stock
Plans or upon conversion of the Preferred Shares (and the simultaneous
conversion of the Depositary Shares), the Security Units or the Class B Shares,
as described in Section 6.14, Section 6.15 and the Voting Agreement,
respectively; or (ii) other than in the ordinary and usual course of business,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness or other liability;
or (iii) incur any long-term indebtedness (other than replacement debt as it
matures) in excess of $250 million, incur any short-term indebtedness which is
reflected on the Company's balance sheet (as determined in accordance with U.S.
GAAP) at the end of the financial quarter in which such short-term indebtedness
was incurred; or (iv) make or authorize or commit for any capital expenditures
other than in amounts less than $25 million in the aggregate or, by any means,
make any acquisition of, or investment in, assets or stock of any other Person
or
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entity (other than in the ordinary course of business) in excess of $50 million;
provided, however, that no such acquisition shall be of a controlling interest
in any other Person;
(d) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new, or accelerate the vesting or payment
of any existing, grants or awards under, amend or otherwise modify, any
Compensation and Benefit Plans except in the ordinary course of business
consistent with past practice or as may be required by law, or contractual
obligations in effect as of the date of this Agreement, or as contemplated by
this Agreement, or increase the salary, wage, bonus or other compensation of any
employees other than normal base wage and base salary increases in the ordinary
and usual course of business;
(e) neither it nor any of its Subsidiaries shall (i) settle or
compromise any material claims or litigation; (ii) pay, discharge, settle or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of claims, liabilities or obligations in the ordinary
and usual course of business and within the amounts reflected or reserved on the
most recent consolidated financial statements contained in the Company Reports
prior to the date hereof; or (iii) except in the ordinary and usual course of
business, modify, amend or terminate any of its material Contracts or waive,
release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any
material Tax election or permit any insurance policy naming it as a beneficiary
or loss-payable payee to be canceled or terminated except in the ordinary and
usual course of business;
(g) neither it nor any of its Subsidiaries shall enter into
any agreement containing any provision or covenant limiting in any material
respect the ability of the Company or any Subsidiary or affiliate to (i) sell
any products or services of or to any other person, (ii) engage in any line of
business or (iii) compete with or to obtain products or services from any person
or limiting the ability of any person to provide products or services to the
Company or any of its Subsidiaries or affiliates;
(h) neither it nor any of its Subsidiaries shall take any
action that would cause any representation or warranty of the Company herein to
become untrue in any material respect; and
(i) neither it nor any of its Subsidiaries shall authorize or
enter into an agreement to do any of the foregoing.
6.2. Acquisition Proposals. The Company will not, and will not
permit or cause any of its Subsidiaries or any of the officers and directors of
it or its Subsidiaries to, and shall direct and cause its and its Subsidiaries'
employees, agents and
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representatives (including any advisor, investment banker, attorney or
accountant retained by it or any of its Subsidiaries) ("Representatives") not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of 50% or more of the assets or voting securities of, the
Company and its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company will not, and will not
permit or cause any of its Subsidiaries or any of the officers and directors of
it or its Subsidiaries to and shall direct and cause its and its Subsidiaries'
employees, agents and Representatives not to, directly or indirectly, engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any Person relating to an Acquisition Proposal,
whether made before or after the date of this Agreement, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal; provided,
however, that the Company may, and may authorize and permit its employees,
agents and Representatives to, furnish or cause to be furnished confidential
information and may participate in such negotiations and discussions if the
Board of Directors of the Company determines in good faith (after having
consulted with and considered the advice of outside legal counsel) that such
action is necessary in order for its directors to comply with their respective
fiduciary duties under applicable law. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. The
Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.2 and in the Confidentiality Agreement.
The Company will notify Parent immediately if any such inquiries, proposals or
offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its officers, directors or its Representatives indicating, in connection with
such notice, the name of such Person and the material terms and conditions of
any proposals or offers. The Company also will promptly request each Person that
has heretofore executed a confidentiality agreement in connection with its
consideration of an Acquisition Proposal to return all confidential information
heretofore furnished to such Person by or on behalf of it or any of its
Subsidiaries.
6.3. Information Supplied. The Company and Parent each agrees,
as to itself and its Subsidiaries, that none of the information supplied or to
be supplied by it or its Subsidiaries for inclusion or incorporation by
reference in (i) the Registration Statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (including the joint proxy statement and prospectus (the "Joint Proxy
Statement/Prospectus") constituting a part thereof) (the "S-4 Registration
Statement") will, at the time the S-4 Registration Statement becomes effective
under the Securities Act or (ii) the Joint Proxy Statement/Prospectus and any
amendment or supplement thereto will, at the date of mailing to stockholders and
at the times of the meetings of stockholders of Parent and the Company to be
held in connection
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with the Merger, in either such case contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
6.4. Stockholders Meeting. Each of Parent and the Company will
take, in accordance with applicable law and its charter and bylaws, all action
necessary to convene a meeting of its respective stockholders (the "Stockholders
Meeting") as promptly as practicable after the S-4 Registration Statement is
declared effective to consider and vote upon the approval of the Merger. Subject
to fiduciary obligations under applicable Law, the Board of Directors of each of
Parent and the Company shall recommend such approval and shall take all lawful
action to solicit such approval.
6.5. Filings; Other Actions; Notification.
(a) Parent and the Company shall promptly prepare and file
with the SEC the Joint Proxy Statement/Prospectus, and Parent shall prepare and
file with the SEC the S-4 Registration Statement as promptly as practicable.
Parent and the Company each shall use all reasonable efforts to have the S-4
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing, and promptly thereafter mail the Joint Proxy
Statement/Prospectus to its respective stockholders. Parent shall also use all
reasonable efforts to obtain prior to the effective date of the S-4 Registration
Statement all necessary state securities law or "blue sky" permits and approvals
required in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
(b) The Company and Parent shall cooperate with each other and
use (and shall cause their respective Subsidiaries to use) all reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement and as soon as practicable,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports, applications and other filings and to
obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement; provided, however, that
nothing in this Section 6.5 shall require, or be construed to require, Parent or
the Company, in connection with the receipt of any regulatory approval, to
proffer to, or agree to (i) sell or hold separate and agree to sell, divest or
to discontinue to or limit, before or after the Effective Time, any assets,
businesses, or interest in any assets or businesses of Parent, the Company or
any of their respective affiliates (or to consent to any sale, or agreement to
sell, or discontinuance or limitation by Parent or the Company, as the case may
be, of any of its assets or
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businesses) or (ii) agree to any conditions relating to, or changes or
restriction in, the operations of any such asset or businesses which, in either
case, is reasonably likely to materially and adversely impact the economic or
business benefits to such party of the transactions contemplated by this
Agreement. Subject to applicable Laws relating to the exchange of information,
Parent and the Company shall have the right to review in advance, and to the
extent practicable each will consult the other with respect to all the
information relating to Parent or the Company, as the case may be, and any of
their respective Subsidiaries, that appear in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(c) The Company and Parent each shall, upon request by the
other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with the Joint Proxy
Statement/Prospectus, the S-4 Registration Statement or any other statement,
filing, notice or application made by or on behalf of Parent, the Company or any
of their respective Subsidiaries to any third party and/or any Governmental
Entity in connection with the Merger and the transactions contemplated by this
Agreement.
(d) The Company and Parent each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
The Company and Parent each shall give prompt notice to the other of any change
that, individually or in the aggregate, is reasonably likely to result in a
Company Material Adverse Effect or Parent Material Adverse Effect, respectively.
6.6. Pooling. From and after the date hereof and until the
Effective Time, none of Parent, the Company, or any of their respective
Subsidiaries or other affiliates over which they exercise control, shall
knowingly take any action, or knowingly fail to take any action, that is
reasonably likely to jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes.
6.7. Access. Upon reasonable notice, and except as may
otherwise be required by applicable law, the Company shall (and shall cause its
Subsidiaries to) afford Parent's officers, directors or Representatives access,
during normal business hours throughout the period prior to the Effective Time,
to the Company's and its Subsidiaries' properties, books, contracts and records
and, during such period, shall (and shall cause its
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Subsidiaries to) furnish promptly to the other all information concerning the
Company's and its Subsidiaries' business, properties and personnel as may
reasonably be requested, provided that no investigation pursuant to this Section
shall affect or be deemed to modify any representation or warranty made by the
Company and provided, further, that the foregoing shall not require the Company
to permit any inspection, or to disclose any information, that in the reasonable
judgment of the Company would result in the disclosure of any trade secrets of
third parties or violate any of its obligations with respect to confidentiality
if the Company shall have used all reasonable efforts to obtain the consent of
such third party to such inspection or disclosure. All requests for information
made pursuant to this Section shall be directed to an executive officer of the
Company or such Person as may be designated by either of the Company's officers.
All such information shall be governed by the terms of the Confidentiality
Agreement (as defined in Section 9.7).
6.8. Affiliates. Not later than the fifteenth day prior to the
mailing of the Joint Proxy Statement/Prospectus, (i) the Company shall deliver
to Parent a list of names and addresses of those Persons who are, in the opinion
of the Company, as of the time of the Stockholders Meeting referred to in
Section 6.4, "affiliates" of the Company within the meaning of Rule 145 under
the Securities Act and for the purposes of applicable interpretations regarding
the pooling of interests method of accounting, and (ii) Parent shall deliver to
the Company a list of names and addresses of those Persons who are, in the
opinion of Parent, as of the time of the Stockholders Meeting referred to in
Section 6.4, "affiliates" of Parent for the purposes of applicable
interpretations regarding the pooling of interests method of accounting. There
shall be added to such list the names and addresses of any other Person
subsequently identified by either Parent or the Company, as the case may be, as
a Person who may be deemed to be such an affiliate; provided, however, that no
such Person identified by Parent or the Company, as the case may be, shall
remain on such list of affiliates if Parent or the Company, as the case may be,
shall receive from the other party, on or before the date of the Stockholders
Meeting, an opinion of counsel reasonably satisfactory to Parent or the Company,
as the case may be, to the effect that such Person is not such an affiliate.
Parent or the Company, as the case may be, shall exercise its best efforts to
deliver or cause to be delivered to the other party, prior to the date of the
Stockholders Meeting, from each such affiliate identified in the foregoing lists
(as the same may be supplemented as aforesaid) a letter dated as of the
Stockholders Meeting substantially in the form attached as Exhibit A-1 in the
case of clause (i) above and in the form attached as Exhibit A-2 in the case of
clause (ii) above (collectively, the "Affiliates Letter"). Parent shall use its
reasonable best efforts to publish, not later than 45 days after the end of the
month in which the Effective Time occurs, financial results covering at least 30
days of post-Merger combined operations as contemplated by and in accordance
with the terms of SEC Accounting Series Release 135. Parent shall not be
required to maintain the effectiveness of the S-4 Registration Statement or any
other registration statement under the Securities Act for the purposes of resale
of Parent Common Stock by such affiliates received in the Merger and the
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certificates representing Parent Common Stock received by such affiliates shall
bear a customary legend regarding applicable Securities Act restrictions and the
provisions of this Section.
6.9. Stock Exchange Listing and De-listing. Parent shall use
its best efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date. The Surviving Corporation shall use its
best efforts to cause the Common Shares, the Depositary Shares and the Security
Units to be de-listed from the NYSE and the Pacific Exchange, Inc. and
de-registered under the Exchange Act as soon as practicable following the
Effective Time.
6.10. Publicity. The initial press release shall be a joint
press release and thereafter the Company and Parent each shall consult with each
other prior to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and prior to making any filings with any third party and/or
any Governmental Entity (including any national securities exchange) with
respect thereto, except as may be required by law or by obligations pursuant to
any listing agreement with or rules of any national securities exchange.
6.11. Benefits.
(a) Stock Options and Other Awards.
(i) At the Effective Time, each Company Option whether vested
or unvested, shall be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable under such Company Option, the same
number of shares of Parent Common Stock as the holder of such Company Option
would have been entitled to receive pursuant to the Merger had such holder
exercised such option in full immediately prior to the Effective Time (rounded
to the nearest whole number), at a price per share (rounded to the nearest whole
cent) equal to (y) the aggregate exercise price for the Common Shares otherwise
purchasable pursuant to such Company Option divided by (z) the number of full
shares of Parent Common Stock deemed purchasable pursuant to such Company Option
in accordance with the foregoing; provided, however, that in the case of any
Company Option to which Section 422 of the Code applies, the option price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in accordance with the
foregoing, subject to such adjustments as are necessary in order to satisfy the
requirements of Section 424(a) of the Code. At or prior to the Effective Time,
the Company shall make all necessary arrangements with respect to the Stock
Plans to permit the assumption of the unexercised Company Options by Parent
pursuant to this Section.
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(ii) Effective at the Effective Time, Parent shall assume each
Company Option in accordance with the terms of the relevant Stock Plan under
which it was issued and the stock option agreement by which it is evidenced. At
or prior to the Effective Time, Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Company Options assumed by it in accordance with this
Section. As soon as practicable after the Effective Time, Parent shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), or another appropriate form (or shall
cause such Company Option to be deemed to be an option issued pursuant to a
Parent Stock Plan for which shares of Parent Common Stock have previously been
registered pursuant to an appropriate registration form) with respect to the
Parent Common Stock subject to such Company Options, and shall use its best
efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Company Options remain outstanding.
(iii) At the Effective Time, each other right with respect to
the Common Shares (a "Company Award"), whether vested or unvested, shall be
deemed to constitute a right to receive or acquire, on the same terms and
conditions as were applicable under the Company Award, the same number of shares
of Parent Common Stock as the holder of such Company Award would have been
entitled to receive pursuant to the Merger had such holder received such Company
Award in full immediately prior to the Effective Time (rounded to the nearest
whole number). Effective at the Effective Time, Parent shall assume each Company
Award in accordance with the terms of the relevant Stock Plan under which it was
issued and the award agreement by which it is evidenced. At or prior to the
Effective Time, Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock with respect to
the Company Awards assumed by it in accordance with this Section 6.11(a).
(b) Employee Benefits.
(i) Parent agrees that, during the period commencing at the
Effective Time and ending on the first anniversary thereof, the employees of the
Company and its Subsidiaries (the "Company Employees") will continue to be
provided with benefits under employee benefit plans (other than plans involving
the issuance of Shares) that are substantially similar in the aggregate than
those currently provided by the Company and its Subsidiaries to such employees.
(ii) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, recognize each Company Employee's
service with the Company and any of its Subsidiaries, including any service
credit with other entities acquired by the Company and its Subsidiaries (to the
extent recognized under the Compensation and Benefit Plans), prior to the
Effective Time, as service with the
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Surviving Corporation in connection with (A) any welfare benefit plan for all
purposes (other than benefit levels or amounts) and (B) any pension plan for
purposes of eligibility, vesting and benefit entitlement (but not benefit
accruals or the amount or level of employer contributions), in which such
Company Employee is eligible to participate following the Effective Time. From
and after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, (Y) cause any pre-existing condition or limitation and any
eligibility waiting periods (to the extent such limitations or waiting periods
did not apply to the Company Employees under the Compensation and Benefit Plans)
under any group health plans of Parent or any of its Subsidiaries to be waived
with respect to Company Employees and their eligible dependents and (Z) to give
each Company Employee credit for the plan year in which the Effective Time
occurs towards applicable deductibles and annual out-of-pocket limits for
expenses incurred prior to the Effective Time (or such later date on which
participation commences) during the applicable plan year.
(iii) Parent shall, and shall cause the Surviving Corporation
to, honor all employee benefit obligations to current and former employees under
the Compensation and Benefit Plans and all employee severance plans (or
policies) in existence on the date hereof, all employment or severance
agreements entered into by the Company or adopted by the Board of Directors of
the Company prior to the date hereof and all employment agreements and
amendments thereto authorized by the Board of Directors on or prior to the date
hereof and set forth on Section 5.1(h) of the Company Disclosure Letter and the
other actions set forth on or permitted by Section 5.1(h) of the Company
Disclosure Letter. Nothing herein shall prevent Parent from terminating any
Compensation and Benefit Plan (other than any Company severance plan or policy
prior to the first anniversary of the Effective Time) in accordance with their
terms and subject to applicable law.
(iv) Prior to the Effective Time, the Company shall take such
actions as may be necessary such that each outstanding limited stock
appreciation right under the Stock Plans does not become exercisable with
respect to the transactions contemplated by this Agreement.
(v) The Company agrees to take such actions as may be
necessary to provide that the exercise date in respect of the offering period
under the Company's 1997 Employee Stock Purchase Plan (the "1997 ESPP") in which
falls the Effective Time shall be accelerated, and all unexercised options
granted in respect of such offering period shall be exercised immediately prior
to the Effective Time. The Company further agrees to take all such actions as
may be necessary to terminate the 1997 ESPP as of the Effective Time and in
connection therewith cease all further offerings and payroll deductions under
the 1997 ESPP.
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6.12. Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Exchange Agent, in connection with
the transactions contemplated in Article IV. Except as otherwise provided in
Section 8.4(b), whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for the S-4 Registration Statement and printing and mailing the Joint Proxy
Statement/Prospectus and the S-4 Registration Statement shall be shared equally
by Parent and the Company.
6.13. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Parent agrees that it
will (to the fullest extent permitted by Delaware law and the Charter) indemnify
and hold harmless each present and former director and officer of the Company
(when acting in such capacity) determined as of the Effective Time (the
"Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company would have been permitted under
Maryland law and its charter or bylaws in effect on the date hereof to indemnify
such Person (and Parent shall also advance expenses as incurred to the fullest
extent permitted under applicable law provided the Person to whom expenses are
advanced provides (i) a written affirmation of his or her good faith belief that
the standard of conduct necessary for indemnification has been met, and (ii) an
undertaking to repay such advances if it is ultimately determined that such
Person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 6.13, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent thereof,
but the failure to so notify shall not relieve Parent of any liability it may
have to such Indemnified Party if such failure does not materially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right to assume the defense thereof
and Parent shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Parent or the Surviving Corporation elects not to assume such defense or counsel
for the Indemnified Parties advises that there are issues which raise conflicts
of interest between Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Parent or the Surviving Corporation shall pay all
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reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Parent
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction unless the use of one
counsel for such Indemnified Parties would present such counsel with a conflict
of interest, (ii) the Indemnified Parties will cooperate in the defense of any
such matter and (iii) Parent shall not be liable for any settlement effected
without its prior written consent, which Parent will not unreasonably withhold;
and provided, further, that Parent shall not have any obligation hereunder to
any Indemnified Party if and when a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(c) The Surviving Corporation shall maintain a policy of
officers' and directors' liability insurance for acts and omissions occurring
prior to the Effective Time with coverage in amount and scope at least as
favorable as the Company's existing directors' and officers' liability insurance
coverage ("D&O Insurance") for a period of four years after the Effective Time
so long as the annual premium therefor is not in excess of 150% of the last
annual premium paid prior to the date hereof (the "Current Premium"); provided,
however, if the existing D&O Insurance expires, is terminated or cancelled
during such four year period, the Surviving Corporation will use all reasonable
efforts to obtain D&O Insurance for the remainder of such period for a premium
not in excess (on an annualized basis) of 150% of the Current Premium.
(d) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
6.14. Preferred Shares and Depositary Shares. The Company
shall take all necessary action to call for redemption all of the outstanding
Preferred Shares and Depositary Shares (and shall comply with all provisions
relating thereto, including the notice provisions thereof) so that such
securities are redeemed prior to or on October 31, 1998 and shall deliver to the
holders thereof in exchange therefor Common Shares in accordance with the terms
thereof.
6.15. Security Units. The Company shall take all necessary
action to call for redemption all of the outstanding Security Units (and shall
comply with all provisions relating thereto, including the notice provisions
thereof) so that such securities are redeemed prior to or on the day prior to
the Effective Time and shall deliver to the holders thereof in exchange therefor
Common Shares in accordance with the terms thereof.
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6.16. Other Actions by the Company and Parent.
(a) Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement or the Voting Agreement, each of Parent and the Company and its Board
of Directors shall grant such approvals and take such actions as are necessary
so that such transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement, or the Voting Agreement or by the Merger,
as the case may be, and otherwise act to eliminate or minimize the effects of
such statute or regulation on such transactions.
(b) Dividends. The Company shall coordinate with Parent the
declaration, setting of record dates and payment dates of dividends on Common
Shares so that holders of Common Shares do not receive dividends on both Common
Shares and Parent Common Stock received in the Merger in respect of any calendar
quarter or fail to receive a dividend on either Common Shares or Parent Common
Stock received in the Merger in respect of any calendar quarter.
6.17. Compliance with 1940 Act Section 15.
(a) Prior to the Closing, the Company shall use all
commercially reasonable efforts to ensure compliance with Section 15(f) of the
1940 Act, so that the transactions contemplated by this Agreement will be in
compliance at the Closing with Section 15(f) of the 1940 Act, including, to
assure that at the time of the Closing at least 75% of the Board of Directors or
Trustees of each Fund Client are not "interested persons" (as such term is
defined in the 1940 Act) of the Surviving Corporation or the Company.
(b) Parent will use all commercially reasonable efforts to
assure compliance with the conditions of Section 15(f) of the 1940 Act as it
applies to the transactions contemplated by the Agreement. From and after the
Closing, Parent shall conduct the business of the Surviving Corporation, so as
to assure that, insofar as within the control of Parent:
(i) for a period of three years after the Closing Date, at
least 75% of the members of the Board of Directors or Trustees of each
Fund Client which enters into a replacement Investment Contract with an
Advisory Entity that constitutes an investment advisory agreement are
not (A) "interested persons" of the Surviving Corporation, or (B)
"interested persons" of the Company; and
(ii) there is not imposed on any Fund Client an "unfair
burden" (within the meaning of Section 15(f) of the 1940 Act) as a
result of the transactions contemplated by this Agreement, or any
express or implied terms, conditions or understandings applicable
thereto.
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6.18. Fund Client Contracts. The Company shall use its best
efforts to cause (a) the consideration and due approval by the Board of
Directors of each Fund Client, (b) to the extent required by the 1940 Act, the
consideration and due approval by such Fund Client's securityholder, of a new
Investment Contract (or, where permitted, approval of continuation of the
existing Investment Contract) with the same Advisory Entity (or in the case of
the Company, the Surviving Corporation) to become effective upon the Closing, in
each case, on the same material terms as in effect on the date hereof under such
Investment Contract for the performance by the relevant Advisory Entity of
investment management, investment advisory, investment subadvisory, distribution
or administration services and (c) to the extent necessary, the preparation and
filing of an application with the SEC for exemptive relief under Section 15(a)
of the 1940 Act to permit each Fund Client to operate under such new Investment
Contract prior to such securityholder approval.
6.19. Non-Fund Advisory Contracts. The Company or relevant
Advisory Entity shall notify each Client other than Fund Clients (an "Advisory
Client") of the transactions contemplated by this Agreement and use its best
efforts to obtain, prior to the Closing, the consent of each Advisory Client to
the "assignment" (as such term is used in the Advisers Act) of its Investment
Contract involving investment advisory services as a result of the transactions
contemplated hereby in a form reasonably satisfactory to Parent. The Company and
Advisory Entity shall consult with Parent regarding all written communications
with Advisory Clients concerning the obtaining of such assignments.
6.20. Qualification of the Fund Clients; Fund Client Boards.
Subject to applicable fiduciary duties to the Fund Clients, the Company will use
its best efforts to cause the Fund Clients to take no action (i) that would
prevent any Fund Client from qualifying as a "regulated investment company",
within the meaning of Section 851 of the Code, or (ii) that would be
inconsistent with any Fund Client's prospectus and other offering, advertising
and marketing materials.
6.21. Board of Directors of Parent. At the Effective Time,
Parent shall cause to be elected to the Board of Directors of Parent two (2)
persons to be designated by the Company and reasonably acceptable to Parent.
6.22. Delivery of Disclosure Information. As promptly as
practicable following the date of this Agreement, the Company will deliver to
Parent those Sections of the Company Disclosure Letter as contemplated in
Section 5.1 and, in each case, such disclosure shall be identified by the
corresponding sections or subsections of Section 5.1 to which such disclosure
relates, it being hereby agreed by the parties hereto that such disclosure
information shall not modify any of the Company's representations set forth in
Section 5.1 and shall not be taken into account for purposes of determining
whether Section 7.2(a) has been satisfied.
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6.23. SunAmerica Inc. The Company shall cooperate with Parent
and take all steps reasonably necessary to protect and if necessary to assign to
Parent, all of the Company's right, title and interest in and to, the
Intellectual Property associated with SunAmerica Inc.
6.24. Thrift Application. At the request of Parent, the
Company shall promptly withdraw any applications made to any applicable
regulatory authority to convert Resources Trust Company to a thrift.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
adopted and the Merger shall have been duly approved by the holders of Common
Shares and Class B Shares constituting the Company Requisite Vote and by the
holders of Parent Common Stock constituting the Parent Requisite Vote.
(b) NYSE Listing. The shares of Parent Common Stock issuable
to the Company stockholders pursuant to this Agreement shall have been
authorized for listing on the NYSE upon official notice of issuance.
(c) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act and applicable Insurance Laws shall
have expired or been terminated, and, other than the filing provided for in
Section 1.3, all notices, reports and other filings required to be made prior to
the Effective Time by the Company or Parent or any of their respective
Subsidiaries with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries or affiliates (as such
term is defined in the Exchange Act) from any Governmental Entity (collectively,
"Governmental Consents"), in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby shall have been made or obtained (as the case may be).
(d) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise
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prohibits consummation of the Merger (collectively, an "Order"), and no
Governmental Entity shall have instituted any proceeding or threatened to
institute any proceeding seeking any such Order.
(e) S-4. The S-4 Registration Statement shall have become
effective under the Securities Act. No stop order suspending the effectiveness
of the S-4 Registration Statement shall have been issued, and no proceeding for
that purpose shall have been initiated or be threatened, by the SEC.
(f) Blue Sky Approvals. Parent shall have received all state
securities and "blue sky" permits and approvals, if any, necessary to consummate
the transactions contemplated hereby.
(g) Pooling of Interests. The Company and Parent shall each
have received a letter from their respective independent accountants addressed
to the Company or Parent, as the case may be, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
(h) Affiliates Letters. Each of Parent and the Company shall
have received an Affiliates Letter from each Person identified as an affiliate
of the other pursuant to Section 6.8.
7.2. Conditions to Obligations of Parent. The obligations of
Parent to effect the Merger are also subject to the satisfaction or waiver by
Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
(without giving effect to any qualifications as to "Company Material Adverse
Effect", "material" or similar qualifications) as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (except
to the extent any such representation or warranty expressly speaks as of an
earlier date) except, in either case, where the failure of such representations
and warranties to be so true and correct (without giving effect to any
qualifications as to "Company Material Adverse Effect", "material" or similar
qualifications) would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect, and Parent shall have received
a certificate signed on behalf of the Company by the Chairman and Chief
Executive Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a
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certificate signed on behalf of the Company by the Chairman, President and Chief
Executive Officer of the Company to such effect.
(c) Consents. The Company shall have obtained the consent or
approval of each Person whose consent or approval shall be required under any
Contract to which the Company or any of its Subsidiaries is a party, except
those for which the failure to obtain such consents or approvals, is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect; and no such consent or approval, and no Governmental Consent
shall impose any condition or conditions relating to, or requiring changes or
restrictions in, the operations of any asset or businesses of the Company,
Parent or their respective Subsidiaries which is reasonably likely to materially
and adversely impact the economic or business benefits to Parent and its
Subsidiaries of the transactions contemplated by this Agreement.
(d) Tax Opinion. Parent shall have received the opinion of
Sullivan & Cromwell, counsel to Parent, dated the Closing Date, to the effect
that (i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) each of
Parent and the Company will be a party to that reorganization within the meaning
of Section 368(b) of the Code, and (iii) no gain or loss will be recognized by
the stockholders of the Company who exchange all of their Common Shares solely
for shares of Parent Common Stock pursuant to the Merger (except with respect to
any cash received in lieu of a fractional share interest in Parent Common
Stock). In rendering such opinion, Sullivan & Cromwell may rely upon and require
such certificates of the Company and Parent and/or their officers or principal
stockholders as are customary for such opinions.
(e) Client Approvals. The approvals contemplated in Sections
6.18 and 6.19 shall have been obtained for Fund Clients and Advisory Clients
representing at least 80% of the total assets, as of the date hereof, subject to
Investment Contracts with all of the Company's Fund Clients and Advisory
Clients.
7.3. Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct
(without giving effect to any qualifications as to "Parent Material Adverse
Effect", "material" or similar qualifications) as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (except
to the extent any such representation or warranty expressly speaks as of an
earlier date) except, in either case, where the failure of such representations
and warranties to be so true and correct (without giving effect to any
qualifications as to "Parent Material Adverse Effect", "material" or similar
qualifications)
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would not, individually or in the aggregate, be reasonably likely to have a
Parent Material Adverse Effect, and the Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent to such
effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Parent by an executive officer
of Parent to such effect.
(c) Consents Under Agreements. Parent shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the transactions contemplated by this Agreement under any
Contract to which Parent or any of its Subsidiaries is a party, except those for
which failure to obtain such consents or approvals is not, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect.
(d) Tax Opinion. The Company shall have received the opinion
of Wachtell, Lipton, Rosen & Katz, counsel to the Company, dated the Closing
Date, to the effect that (i) the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
(ii) each of Parent and the Company will be a party to that reorganization
within the meaning of Section 368(b) of the Code, and (iii) no gain or loss will
be recognized by the stockholders of the Company who exchange all of their
Common Shares solely for shares of Parent Common Stock pursuant to the Merger
(except with respect to any cash received in lieu of a fractional share interest
in Parent Common Stock). In rendering such opinion, Watchell, Lipton, Rosen &
Katz may rely upon and require such certificates of the Company and Parent
and/or their officers or principal stockholders as are customary for such
opinions.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company and
Parent referred to in Section 7.1(a), by mutual written consent of the Company
and Parent by action of their respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned (i) by action of the
Board of Directors of either Parent or the Company if the Merger shall not have
been consummated by June 30, 1999, whether such date is before or after the date
of approval by the
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stockholders of the Company (the "Termination Date"), (ii) by action of the
Board of Directors of either Parent or the Company if the Company Requisite Vote
shall not have been obtained at a meeting duly convened therefor or at any
adjournment or postponement thereof, (iii) by action of the Board of Directors
of either Parent or the Company if the Parent Requisite Vote shall not have been
obtained at a meeting duly convened therefore or at any adjournment or
postponement thereof, (iv) at any time prior to the Effective Time (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), by action of the Board
of Directors of either Parent or the Company, as the case may be, in the event
of any of (A) a breach by the other party of any representation or warranty
contained herein (subject to the standard set forth in Section 7.2(a) or 7.3(a),
as the case may be), which breach cannot be or has not been cured within 20 days
after the giving of written notice to the breaching party of such breach; (B) a
material breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within 20 days
after the giving of written notice to the breaching party of such breach; or (C)
a Company Material Adverse Effect exists (in which case Parent may terminate
this Agreement) or a Parent Material Adverse Effect exists (in which case the
Company may terminate this Agreement), or (v) by action of the Board of
Directors of either Parent or the Company if any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Merger shall become final
and non-appealable (whether before or after the approval by the stockholders of
the Company or Parent); provided, that the right to terminate this Agreement
pursuant to clause (i) above shall not be available to any party that has
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
of the Merger to be consummated.
8.3. Termination by Parent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by the stockholders of Parent referred to in
Section 7.1(a), by action of the Board of Directors of Parent if the Board of
Directors of the Company shall have withdrawn or adversely modified its
approval or recommendation of this Agreement contemplated by Section 6.4 or
failed to reconfirm such recommendation of this Agreement within five business
days after a written request by Parent to do so.
8.4. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement (other
than as set forth in Section 9.1) shall become void and of no effect with no
liability on the part of any party hereto (or of any of its directors, officers,
employees, agents, legal and financial advisors or other representatives);
provided, however, except as otherwise provided herein, no such termination
shall relieve any party hereto of any liability or damages resulting from any
breach of this Agreement.
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(b) In the event that this Agreement is terminated by Parent
or the Company pursuant to Section 8.2(i), Section 8.2(ii) or Section 8.3 and,
prior to the date of such termination, any Person (other than Parent) has made
to the Company or any of its Subsidiaries a bona fide Acquisition Proposal or
shall have publicly announced an intention (whether or not conditional) to make
a proposal or offer relating to an Acquisition Proposal, then the Company shall
pay Parent, no later than two days after the earlier to occur of (i) the date of
entrance by the Company or any of its Subsidiaries into an agreement concerning
a transaction that constitutes an Acquisition Proposal or (ii) the date any
Person (other than Parent) purchases 50% or more of the assets or any voting
securities of the Company and its Subsidiaries (provided that the entering of
any definitive agreement referred to in clauses (i) and (ii) of this sentence is
entered into by the Company or any of its Subsidiaries, or if there is no such
agreement with respect to a purchase contemplated by clause (ii), any tender,
exchange or other offer or arrangement for the Company's voting securities is
first publicly disclosed, within 18 months of such termination of this
Agreement), a termination fee of $500 million. In the event that this Agreement
is terminated by Parent or the Company pursuant to Section 8.2(iii), then Parent
shall pay the Company, no later than two days after this Agreement has been
terminated, a termination fee of $500 million.
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX and the agreements of the
Company and Parent contained in Sections 6.9 (Stock Exchange Listing and
De-listing), 6.11 (Benefits) and 6.13 (Indemnification; Directors' and Officers'
Insurance) shall survive the consummation of the Merger. This Article IX, the
agreements of the Company and Parent contained in Section 6.12 (Expenses),
Section 8.4 (Effect of Termination and Abandonment) and the Confidentiality
Agreement shall survive the termination of this Agreement. All other
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of
the applicable law, at any time prior to the Effective Time, the parties hereto
may modify or amend this Agreement, by written agreement executed and delivered
by duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
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9.4. Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of New York and the Federal courts of the United States of America
located in the State of New York solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated hereby, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a New York State or Federal court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 9.6 or in such other manner as may be permitted by law shall be valid
and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER
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THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile:
if to Parent
70 Pine Street,
New York, New York 10270.
Attention: General Counsel
facsimile: (212) 514-6894
(with a copy to Neil T. Anderson, Esq.,
Sullivan & Cromwell,
125 Broad Street, New York, NY 10004.
facsimile: (212) 558-3588.)
if to the Company
1999 Avenue of the Stars, 38th Floor,
Los Angeles, California 90067.
Attention: General Counsel
facsimile: (310) 772-6565
(with a copy to Craig Wasserman, Esq.,
Wachtell, Lipton, Rosen & Katz,
51 West 52nd Street,
New York, New York 10019.
facsimile: (212) 403-2000)
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement; No Other Representations. This
Agreement (including any exhibits hereto), the Company Disclosure Letter, the
Parent Disclosure Letter, the Confidentiality Agreement, dated July 27, 1998,
between Parent and the Company (the "Confidentiality Agreement") constitute the
entire agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.
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<PAGE> 62
9.8. No Third Party Beneficiaries. Except as provided in
Section 6.13 (Indemnification; Directors' and Officers' Insurance), this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section or
Exhibit, such reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
9.12. Assignment. This Agreement shall not be assignable by
operation of law or otherwise.
9.13. Right to Revise Form of Merger. Notwithstanding anything
to the contrary contained in this Agreement, the parties may mutually agree to
revise the form of the Merger to the extent they determine such a change to be
desirable to provide for a forward or reverse merger of the Company with a newly
formed wholly owned subsidiary of Parent provided any such change does not
affect the consideration to be received by holders of the Common Shares, cause
any material delay in the consummation of the Merger or adversely affect the
ability of the Merger to qualify as a reorganization under the provisions of
Section 368(a) of the Code.
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<PAGE> 63
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
SUNAMERICA INC.
By: /s/ Eli Broad
Name: Eli Broad
Title: Chairman, President and Chief
Executive Officer
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ M. R. Greenberg
Name: M. R. Greenberg
Title: Chairman and Chief Executive Officer
<PAGE> 64
EXHIBIT A
[INTENTIONALLY OMITTED]
<PAGE> 65
EXHIBIT A-1
[FORM OF AFFILIATE LETTER]
[Date]
American International Group, Inc.
70 Pine Street
New York, New York 10270
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be
deemed to be an "affiliate" of SunAmerica Inc., a Maryland corporation (the
"Company"), as such term is 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 "Securities Act") and as such term is defined for
purposes of Accounting Series Release Nos. 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of August 19, 1998, as it may be amended, supplemented or modified from time to
time (the "Merger Agreement"), between the Company and American International
Group, Inc., a Delaware corporation ("Parent"), the Company will be merged with
and into Parent (the "Merger"). Capitalized terms used herein but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
In consideration of the agreements contained herein, Parent's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, I hereby represent, warrant and agree that (i) I will
not make any sale, transfer or other disposition of Common Stock, par value
$1.00 per share, of the Company (the "Company Common Stock"), of
Non-Transferable Class B Stock, par value $1.00 per share, of the Company (the
"Non-Transferable Class B Stock") or of any Transferable Class B Stock, par
value $1.00 per share, of the Company (the "Transferable Class B Stock" and,
together with the Non-Transferable Class B Stock, the "Class B Stock") into
which such Non-Transferable Class B Stock converts, from the period beginning on
the date that is 30 days prior to the date of the Closing (as defined in the
Merger Agreement) and ending at the earlier of the Effective Time (as defined in
the Merger Agreement) or the termination of the Merger Agreement and (ii) I will
not make any sale, transfer or other disposition of any shares of Common Stock,
par value $2.50 per share, of Parent (the "Parent Common Stock") received by me
pursuant to the Merger in violation of the Securities Act or the rules and
regulations thereunder. I have been advised that the issuance of the shares of
Parent Common Stock pursuant to the Merger will have been
A-1
<PAGE> 66
registered with the Commission under the Securities Act on a Registration
Statement on Form S-4. I have also been advised, however, that since I may be
deemed to be an affiliate of the Company at the time the Merger is submitted for
a vote of the shareholders of the Company, the Parent Common Stock received by
me may be disposed by me only (i) pursuant to an effective registration under
the Securities Act, (ii) in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Securities Act, or (iii) in
reliance upon an exemption from registration that is available under the
Securities Act.
I also understand that instructions will be given to Parent's
transfer agent with respect to the Parent Common Stock to be received by me
pursuant to the Merger and that there may be placed on the certificates
representing such shares of Parent Common Stock, or any substitutes therefor, a
legend stating in substance as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY
BE SOLD OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE
REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION
STATEMENT UNDER THAT ACT OR AN EXEMPTION FROM SUCH
REGISTRATION."
It is understood and agreed that the legend set forth above
shall be removed upon surrender of certificates bearing such legend by delivery
of substitute certificates without such legend if I shall have delivered to
Parent an opinion of counsel, in form and substance reasonably satisfactory to
Parent, to the effect that (i) the sale or disposition of the shares represented
by the surrendered certificates may be effected without registration of the
offering, sale and delivery of such shares under the Securities Act, and (ii)
the shares to be so transferred may be publicly offered, sold and delivered by
the transferee thereof without compliance with the registration provisions of
the Securities Act.
I further understand and agree that Parent is under no
obligation to register the sale, transfer or other disposition of the Parent
Common Stock by me or on my behalf under the Securities Act or to take any other
action necessary in order to make compliance with an exemption from such
registration available.
I further hereby represent, warrant and agree that I will not,
from and after the 30 days prior to the Effective Time, make any sale, transfer
or other disposition of, or reduce any risk relative to the Parent Common Stock,
or any other shares of the capital stock of the Company, until after such time
as financial results covering at least 30 days of post-Merger operations of
Parent (including the combined operations of the Company
A-2
<PAGE> 67
and Parent) have been published by Parent 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 results of operations.
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.
This letter agreement constitutes the complete understanding
between Parent and me concerning the subject matter hereof. The undersigned
acknowledges that it has carefully reviewed this letter agreement and
understands the requirements hereof and the limitations imposed upon the sale,
transfer or other disposition of Company Common Stock, Class B Stock and Parent
Common Stock. Any notice required to be sent to either party hereunder shall be
sent by registered or certified mail, return receipt requested, using the
addresses set forth herein or such other address as shall be furnished in
writing by the parties. This letter agreement shall be governed by and construed
and interpreted in accordance with, the laws of the State of New York.
If you are in agreement with the foregoing, please so indicate
by signing below and returning a copy of this letter to the undersigned, at
which time this letter shall become a binding agreement between us.
Very truly yours,
By:_______________________
Name:
Address:
Accepted this ___ day
of _________, 1998
AMERICAN INTERNATIONAL
GROUP, INC.
By:_______________________
Name:
Title:
A-3
<PAGE> 68
EXHIBIT A-2
FORM OF POOLING AFFILIATE LETTER
[Date]
American International Group, Inc.
70 Pine Street
New York, New York 10270
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be
deemed to be an "affiliate" of American International Group, Inc., a Delaware
corporation (the "Parent"), as such term is defined for purposes of Accounting
Series Release Nos. 130 and 135, as amended, of the Securities and Exchange
Commission (the "Commission"). Pursuant to the terms of the Agreement and Plan
of Merger dated as of August 19, 1998, as it may be amended, supplemented or
modified from time to time (the "Merger Agreement"), between SunAmerica Inc., a
Maryland corporation (the "Company") and Parent, the Company will be merged with
and into Parent (the "Merger"). Capitalized terms used herein but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
In consideration of the agreements contained herein, Parent's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, I hereby represent, warrant and agree that I will not,
from and after the 30 days prior to the Effective Time, make any sale, transfer
or other disposition of, or reduce any risk relative to, the Common Stock, par
value $2.50 per share, of Parent (the "Parent Common Stock"), or any other
shares of the capital stock of the Company, until after such time as financial
results covering at least 30 days of post-Merger operations of Parent (including
the combined operations of the Company and Parent) have been published by Parent
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 results of
operations.
I further understand and agree this letter agreement shall
apply to all Parent Common Stock that I am deemed to beneficially own pursuant
to applicable federal securities law.
A-1
<PAGE> 69
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Parent 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.
This letter agreement constitutes the complete understanding
between Parent and me concerning the subject matter hereof. The undersigned
acknowledges that it has carefully reviewed this letter agreement and
understands the requirements hereof and the limitations imposed upon the sale,
transfer or other disposition of Parent Common Stock. Any notice required to be
sent to either party hereunder shall be sent by registered or certified mail,
return receipt requested, using the addresses set forth herein or such other
address as shall be furnished in writing by the parties. This letter agreement
shall be governed by and construed and interpreted in accordance with, the laws
of the State of New York.
If you are in agreement with the foregoing, please so indicate
by signing below and returning a copy of this letter to the undersigned, at
which time this letter shall become a binding agreement between us.
Very truly yours,
By:_______________________
Name:
Address:
Accepted this ___ day
of _________, 1998
AMERICAN INTERNATIONAL GROUP, INC.
By:_______________________
Name:
Title:
A-2
