<PAGE>
As filed with the Securities and Exchange Commission on November 24, 1999
Registration No.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
JEFFERSON-PILOT CORPORATION
(Exact name of registrant as specified in its charter)
----------------
North Carolina 6311 56-0896180
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
100 North Greene Street
Greensboro, North Carolina 27401
(336) 691-3000
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
----------------
ROBERT A. REED
Vice President, Secretary and Associate General Counsel
Jefferson-Pilot Corporation
100 North Greene Street
Greensboro, North Carolina 27401
(336) 691-3691
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
Copies to:
E. WILLIAM BATES, II JAMES C. SCOVILLE JOE E. ARMSTRONG
King & Spalding Debevoise & Plimpton Kutak Rock
1185 Avenue of the 875 Third Avenue 1650 Farnam Street
Americas New York, New York 10022 Omaha, Nebraska 68102
New York, New York 10036 (212) 909-6000 (402) 346-6000
(212) 556-2100
----------------
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable following the effectiveness of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Title of Each Class of Amount Maximum Maximum
Securities to be to be Offering Price Aggregate Amount of
Registered Registered(1) Per Unit(2) Offering Price(2) Registration Fee(3)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.25 par
value per share........ 2,750,000 N/A $149,964,844.00 $41,690.50
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
(1) This amount is based upon the maximum number of shares that could be
issued pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of September 19, 1999, as amended and restated as of October 14,
1999 among Jefferson-Pilot Corporation, LG Merger Corp. and The Guarantee
Life Companies Inc.
(2) Computed in accordance with Rule 457(f) under the Securities Act of 1933,
as amended, based on the market value of the securities to be received by
Jefferson-Pilot Corporation in exchange for the securities registered
hereby.
(3) No amount is due with this filing, as a fee of $65,687.87 was paid upon
the initial filing of Schedule 14A.
----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
registration statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a) may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this document is not complete and may be changed. +
+Jefferson-Pilot Corporation may not issue the securities described in this +
+document until the registration statement filed with the Securities and +
+Exchange Commission is effective. This document is not an offer to sell these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
Dated: November 24, 1999
[LOGO OF COMPANY]
THE GUARANTEE LIFE COMPANIES INC.
PROPOSED MERGER--YOUR VOTE IS IMPORTANT
The board of directors of The Guarantee Life Companies Inc. has approved a
merger agreement under which Jefferson-Pilot Corporation will acquire Guarantee
through a merger transaction. If Guarantee's shareholders adopt the merger
proposal and we satisfy or waive all other closing conditions, then you will
receive, for each share of Guarantee common stock you own:
(1) if the merger is an all cash merger, $32.00 in cash or
(2) if the merger is a stock election merger, subject to your election and
the allocation provisions:
. $32.00 in cash,
. Jefferson Pilot common stock worth approximately $32.00, or
. a combination of cash and stock worth approximately $32.00.
The merger will be an all cash merger if the average of the high and low
sales prices of Jefferson Pilot common stock during a 10-day measurement period
before completion of the merger is:
(1) greater than $75 per share,
(2) less than $65 per share and Jefferson Pilot elects to pay cash, or
(3) is higher than the last closing price on the NYSE and, as a result,
counsel does not deliver any required tax opinion.
Jefferson Pilot expects to pay total merger consideration of approximately
$296 million in cash, stock or a combination of cash and stock to Guarantee's
shareholders.
We have scheduled a special meeting of Guarantee's shareholders on December
30, 1999 at the Omaha Marriott Hotel, 10220 Regency Circle, Omaha, Nebraska,
9:00 a.m., Central time, to vote on the merger proposal. Whether or not you
plan to attend the special meeting, please vote by completing and mailing the
enclosed proxy card to us or call the toll-free number in the proxy to vote by
telephone.
We have also enclosed an election form/letter of transmittal. If you want to
make an election to receive cash, Jefferson Pilot common stock or a combination
of cash and stock in the merger, you must complete the form and deliver it to
the exchange agent before the election deadline. If you do not deliver a valid
election form/letter of transmittal before the election deadline, we will
determine the form of your merger consideration under the merger agreement.
The board of directors of Guarantee has approved, and unanimously recommends
that you vote for, the merger proposal.
See "Risk Factors" beginning on page 10 for a discussion of the material
risks that you should consider before deciding how to vote your shares or what
election to make.
Neither the Securities and Exchange Commission nor any state securities
regulator has approved the shares of Jefferson Pilot common stock to be issued
under this proxy statement-prospectus or has determined whether this proxy
statement-prospectus is accurate or adequate. Any representation to the
contrary is a criminal offense.
Proxy statement-prospectus dated November 24, 1999 and first mailed to
Guarantee shareholders on November 30, 1999.
<PAGE>
[LOGO OF JEFFERSON PILOT]
Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Date: December 30 1999
Time: 7:00 a.m.
Place: Omaha Marriott Hotel
10220 Regency Circle
Omaha, Nebraska
We are holding the special meeting for the following purposes:
(1) to vote upon a merger proposal to:
. adopt the Amended and Restated Agreement and Plan of Merger, dated
as of September 19, 1999, as amended and restated as of October 14,
1999, among Jefferson-Pilot Corporation, a North Carolina
corporation, LG Merger Corp., a Delaware corporation and a wholly
owned subsidiary of Jefferson Pilot, and The Guarantee Life
Companies Inc., a Delaware corporation, which we have attached to
the accompanying proxy statement-prospectus as Appendix A,
. approve the merger contemplated by the merger agreement, and
. authorize the acquisition of Guarantee's common stock by Jefferson
Pilot under the Nebraska Shareholders Protection Act, and
(2) to transact such other business properly brought before the special
meeting or any adjournment of the special meeting.
If you were a shareholder of record on November 15, 1999, you may vote at
the special meeting or any adjournment of the special meeting.
If you object to the merger, you can demand to be paid the fair value of
your Guarantee common stock. In order to do this, you must follow the
procedures required by Delaware law, including filing notices and not voting
your shares in favor of the merger. We have attached the provisions of
Delaware law relating to your appraisal rights to the accompanying proxy
statement-prospectus as Appendix C and have described these provisions under
the caption "Additional Information--Dissenters' Appraisal Rights" beginning
on page 59.
By order of the Board of Directors,
[/s/ RICHARD A SPELLMAN]
Richard A. Spellman
Secretary
Omaha, Nebraska
November 24, 1999
The board of directors of Guarantee has approved, and unanimously recommends
that you vote for, the merger proposal.
YOUR VOTE IS VERY IMPORTANT.
To Vote Your Shares, Please Sign, Date and Complete
the Enclosed Proxy Card and Mail it
Promptly in the Enclosed Return
Envelope or Vote by
Telephone.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY................................................................... 1
RISK FACTORS.............................................................. 9
SELECTED CONSOLIDATED FINANCIAL DATA...................................... 11
COMPARATIVE UNAUDITED PER COMMON SHARE DATA............................... 13
COMPARATIVE PER SHARE MARKET PRICE........................................ 16
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................................. 16
THE SPECIAL MEETING....................................................... 17
General................................................................. 17
Record Date............................................................. 17
Vote Required........................................................... 17
Share Ownership of Directors and Executive Officers..................... 17
Recommendation of the Guarantee Board................................... 17
Voting and Revocation of Proxies........................................ 18
Solicitation of Proxies................................................. 18
Compliance With the Nebraska Shareholders Protection Act................ 18
THE MERGER................................................................ 19
Background of the Merger................................................ 19
Recommendation of Guarantee Board of Directors and Guarantee's Reasons
for the Merger......................................................... 22
Opinion of Goldman Sachs, Financial Advisor to Guarantee................ 24
Interests of Directors and Officers of Guarantee in the Merger.......... 30
THE MERGER AGREEMENT...................................................... 34
The Stock Election Merger and the All Cash Merger....................... 34
Conversion of Guarantee Shares.......................................... 35
Elections............................................................... 35
Allocation of Stock Consideration and Cash Consideration; Proration..... 35
Tax Treatment........................................................... 37
Election Procedure...................................................... 37
Exchange of Stock Certificates; Book Entry Shares....................... 37
Representations and Warranties.......................................... 38
Covenants of Guarantee.................................................. 40
Covenants of Jefferson Pilot............................................ 43
Other Covenants......................................................... 43
Conditions to the Merger................................................ 44
Employee Incentive and Benefit Plans.................................... 45
Termination and Termination Fee......................................... 46
Amendment and Waiver Provisions......................................... 48
REGULATORY APPROVALS...................................................... 49
RESTRICTIONS ON RESALES BY AFFILIATES..................................... 49
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.................... 50
Information Reporting and Backup Withholding............................ 51
THE COMPANIES............................................................. 51
Jefferson Pilot's Business.............................................. 51
Guarantee's Business.................................................... 52
COMPARISON OF SHAREHOLDER RIGHTS.......................................... 53
Amendments to Charter and Bylaws........................................ 54
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Director Liability....................................................... 54
Indemnification of Directors, Officers and Other Agents.................. 55
Removal of Directors..................................................... 55
Call of Shareholders Meetings............................................ 55
Shareholder Action by Written Consent.................................... 56
Shareholder Proposals and Nominations for Directors...................... 56
Proxy Requirement........................................................ 56
Derivative Actions....................................................... 56
Rights of Dissenting Shareholders........................................ 56
Provisions Affecting Business Combinations............................... 57
Shareholder Rights Agreements............................................ 58
ADDITIONAL INFORMATION..................................................... 59
Dissenters' Appraisal Rights............................................. 59
Legal Matters............................................................ 62
Experts.................................................................. 62
Independent Public Accountants........................................... 62
Other Matters............................................................ 62
WHERE YOU CAN FIND MORE INFORMATION........................................ 63
Documents Incorporated by Reference...................................... 64
</TABLE>
Appendix A Amended and Restated Agreement and Plan of Merger among Jefferson-
Pilot Corporation, LG Merger Corporation and The Guarantee Life
Companies Inc. dated as of September 19, 1999, as amended
Appendix B Opinion of Goldman, Sachs & Co.
Appendix C Dissenters' Appraisal Rights under Delaware General Corporation Law
Appendix D Information Statement from Jefferson-Pilot Corporation under the
Nebraska Shareholders Protection Act
This proxy statement-prospectus incorporates important business and financial
information about Jefferson Pilot and Guarantee from other documents not
included in or delivered with this proxy statement-prospectus. We will provide
this information without charge to shareholders upon written or oral request.
You can obtain those documents incorporated by reference in this proxy
statement-prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses and telephone numbers:
Investor Relations The Guarantee Life Companies Inc.
Jefferson-Pilot Corporation 8801 Indian Hills Drive
100 North Greene Street Omaha, NE 68114
Greensboro, North Carolina 27401 Telephone: (402) 361-7300
Telephone: (336) 691-3379
Fax: (336) 691-3283
E-mail:
[email protected]
If you would like to request documents, please do so by December 24, 1999 in
order to receive them before the special meeting.
ii
<PAGE>
SUMMARY
This brief summary highlights selected information from this proxy statement-
prospectus. It does not contain all of the information that may be important to
you. You should read carefully the entire proxy statement-prospectus and the
other documents to which this document refers to fully understand the merger.
See "Where You Can Find More Information" on page 63. We refer to the matters
you will vote on at the special meeting, which we described in the attached
notice of special meeting, collectively in this proxy statement-prospectus as
the merger proposal.
Questions and Answers
Q: What am I voting on?
A: We ask you to adopt the merger proposal. Under the merger proposal,
Jefferson Pilot will acquire Guarantee.
Q: Why is Guarantee proposing to merge with Jefferson Pilot? How will I
benefit?
A: We recommend that you adopt the merger proposal because:
. the merger consideration of approximately $32.00 per share will give you
a premium over the price at which shares of Guarantee common stock
generally traded before we announced the merger;
. we believe that the merger will maximize shareholder value better than
other strategic alternatives, including remaining a stand-alone company
which involves risks such as a possible rating downgrade and insufficient
capital for future growth; and
. we believe that Jefferson Pilot's financial strength and strong credit
position will enable Guarantee's principal businesses to grow and become
more profitable, which may benefit you if you receive Jefferson Pilot
common stock in the merger.
For further discussion of the background of and reasons for the merger, see
"The Merger--Background of the Merger" beginning on page 19.
Q: How do I know whether I will receive Jefferson Pilot common stock or cash in
the merger?
A: Three factors will determine whether you receive Jefferson Pilot common
stock or cash or a combination of both in the merger:
. whether the merger is an all cash merger or a stock election merger,
. what you elect, and
. what other Guarantee shareholders elect.
If the merger is an all cash merger, you will receive $32.00 in cash for
each share of Guarantee common stock you own. The average of the high and
low sales prices of Jefferson Pilot common stock on each of the 10
consecutive trading days ending on November 23, 1999, the last practicable
date before this document was printed, was $75.56 per share. If this was
the 10-day average price used to calculate the merger consideration,
Jefferson Pilot would pay the merger consideration entirely in cash and you
would receive $32.00 in cash for each share of Guarantee common stock you
own.
If the merger is a stock election merger, you will receive either $32.00 in
cash, Jefferson Pilot common stock worth approximately $32.00 or a
combination of cash and stock worth approximately $32.00, depending on what
you and the other Guarantee shareholders elect. See "The Merger Agreement--
Allocation of Stock Consideration and Cash Consideration; Proration"
beginning on page 35 for a description of what will happen if there are too
many or too few cash and/or stock elections.
Because Jefferson Pilot will not issue fractional shares in the merger, you
would need to own at least three Guarantee shares in order to receive at
least one whole Jefferson Pilot share unless the 10-day average price used
to calculate the merger consideration is $64.00 or less. You
will receive cash for any fractional share in an amount equal to the
fractional share multiplied by the 10-day average price used to calculate
the merger consideration.
1
<PAGE>
The table below shows various Jefferson Pilot 10-day average prices, the
exchange ratio at such prices and the corresponding merger consideration
that you would receive if:
. you own 100 shares of Guarantee common stock,
. you elect to receive only Jefferson Pilot common stock for all 100
shares, and
. we do not have to prorate and can deliver what you elect.
See page 6 for additional discussion of proration. The total merger
consideration in each case is worth approximately $32.00 per Guarantee
share. If the 10-day average price used to calculate the merger
consideration is greater than $75.00, Jefferson Pilot will pay the merger
consideration entirely in cash. If the 10-day average price used to
calculate the merger consideration is less than $65.00, Jefferson Pilot can
elect to pay cash. The data in the table assumes that Jefferson Pilot does
not make this election, but we cannot assure you that this will be the
case.
<TABLE>
<CAPTION>
Jefferson
Pilot
Average Shares Cash
10-day Delivered Per Delivered Per
Closing Exchange 100 100
Price Ratio Guarantee Shares Guarantee Shares
------- -------- ---------------- ----------------
<S> <C> <C> <C>
$76.00 N/A N/A $3,200.00
75.00 0.426667 42 50.00
73.00 0.438356 43 61.00
71.00 0.450704 45 5.00
69.00 0.463768 46 26.00
67.00 0.477612 47 51.00
65.00 0.492308 49 15.00
64.00 0.500000 50 --
</TABLE>
Q: If I elect to receive Jefferson Pilot common stock in the merger, will I
receive a different value for my Guarantee common stock than if I elect to
receive cash?
A: Possibly. For each share of Guarantee common stock you own, if you receive
cash, you will receive $32.00, and if you receive Jefferson Pilot common
stock, you will receive Jefferson Pilot common stock worth approximately
$32.00 under the exchange ratio in the merger agreement. However, we will
calculate the exchange ratio four trading days before we complete the
merger based on the average high and low sales prices over the 10-day
period ending that day. Because we cannot predict how the market price of
Jefferson Pilot common stock may fluctuate after we calculate the exchange
ratio, the shares that you receive for your Guarantee shares may actually
be worth more or less than $32.00.
Q: When will the merger be completed?
A: We hope to complete the merger before the end of December 1999. We expect
the closing of the merger to occur on the day of the special meeting.
Q: What do I need to do now? How do I vote?
A: Indicate on your proxy card how you want to vote and sign and mail it in
the enclosed return envelope as soon as possible, or direct your broker or
banker to do so as discussed below, so that we may vote your shares at the
special meeting. If you prefer, you can call the toll-free number set forth
in your proxy to vote by telephone. You may also vote in person at the
special meeting.
Q: If I hold my shares in "street name," will my broker or banker vote my
shares or make an election for me?
A: No, unless you provide instructions to your broker or banker on how to vote
and what election to make. You should follow the directions provided by
your broker or banker. Without instructions, we will not vote your shares
at the special meeting, which will have the effect of a vote against the
merger proposal.
Q: Is there anything I need to do now besides vote?
A: Yes, you need to deliver your properly completed election form/letter of
transmittal to the exchange agent as soon as possible to make an election
regarding the form of merger consideration you prefer to receive. You must
also deliver your stock certificates with the election form/letter of
transmittal, unless your shares are uncertificated and held in book-entry
form with Guarantee's transfer agent. The exchange agent must receive your
properly completed election form/letter of transmittal before the election
deadline for your election to be valid. See page 37 for a more complete
explanation of the election procedures.
2
<PAGE>
Q: When is the election deadline?
A: We expect that you must make your election by December 24, 1999. If the
election deadline changes, we will issue a press release:
. five business days before the new election deadline if we set an earlier
date; or
. two business days before the new election deadline if we set a later
date.
Q: If I have stock certificates that represent my Guarantee shares, what do I
do?
A: You should deliver your stock certificate(s) to the exchange agent with
your election form/letter of transmittal. If the exchange agent does not
receive your stock certificate(s) and election form/letter of transmittal
before the election deadline, you may not receive the form of consideration
you prefer. Also, you will not receive any merger consideration until you
deliver your stock certificate(s) together with an appropriate election
form/letter of transmittal to the exchange agent.
Q: If I receive Jefferson Pilot common stock in the merger, will I receive a
certificate representing these shares?
A: Yes, but only if you indicate on the election form/letter of transmittal
that you wish to receive a physical stock certificate. Otherwise, Jefferson
Pilot will issue your shares in book-entry form with Jefferson Pilot's
transfer agent. You will receive a notice from the transfer agent upon
issuance of these shares. If you decide after completion of the merger that
you would like a stock certificate for your shares, you may request a
certificate from the transfer agent.
Q: If I hold my Guarantee common stock in book-entry form and fail to make a
valid election before the election deadline, what will I receive in the
merger?
A: If you fail to make an election, you will receive the merger consideration
based on the allocation procedures in the merger agreement. If you receive
any of the merger consideration in cash, we will mail the cash payment to
you at your address reflected in the records of Guarantee's transfer agent.
If you receive any of the merger consideration in Jefferson Pilot common
stock, we will issue your Jefferson Pilot shares in book-entry form with
Jefferson Pilot's transfer agent.
Q: Can I change or revoke my election once I have delivered my signed election
form/letter of transmittal?
A: Yes. You can change or revoke your election at any time before the
election deadline by submitting a new properly completed election
form/letter of transmittal to the exchange agent. The exchange agent must
receive this new form before the election deadline.
Q: What will happen if I do not, or my broker or banker does not, submit an
election form/letter of transmittal?
A: If you do not submit a properly completed election form/letter of
transmittal with your stock certificates, if any, before the election
deadline you will have no choice regarding the form of merger consideration
that you will receive. You could receive cash, Jefferson Pilot common stock
or a combination of cash and stock, even if you preferred a different form
of consideration. The exact allocation of the consideration will depend in
part on what other Guarantee shareholders elect. See "The Merger
Agreement--Allocation of Stock Consideration and Cash Consideration;
Proration" beginning on page 35.
Q: Can I immediately sell Jefferson Pilot common stock received in the merger?
A: Yes, unless you are an affiliate, meaning that you control, are controlled
by, or are under common control with, Guarantee or Jefferson Pilot. If you
think you may fall within this restriction, you should consult with your
legal advisor.
Q: What are the federal tax consequences of the merger to me?
A: It depends on whether you receive cash, stock or a combination of cash and
stock.
3
<PAGE>
. If you receive all cash, you may have to pay taxes in connection with the
merger. Generally, you will recognize capital gain or loss equal to the
difference between the amount of cash you receive and your adjusted basis
in your Guarantee common stock.
. If you receive all Jefferson Pilot common stock and no cash, you will not
have to pay taxes in connection with the merger.
. If you receive a combination of cash, in addition to cash for any
fractional share of Jefferson Pilot common stock, and Jefferson Pilot
common stock, you will recognize gain in most cases, but not loss. You
will recognize gain equal to the lesser of:
(1) the amount of gain on your Guarantee common stock, and
(2) the amount of cash received.
You generally will recognize this gain as a capital gain, although in
extraordinary cases you could recognize dividend income instead of capital
gain.
. If you receive cash for a fractional share of Jefferson Pilot common
stock, you will generally recognize capital gain or loss as if you had
received and then sold the fractional share.
You should consult with your tax advisor about the tax consequences of the
merger to you. See "Material United States Federal Income Tax Consequences"
beginning on page 50.
Q: What is my tax basis in Guarantee common stock I received as a policyholder
in the demutualization, which occurred when Guarantee converted from a
company owned by its policy holders to a company owned by public
shareholders?
A: Generally, the common stock you received in the demutualization has a basis
of zero. Accordingly, the full amount of any cash you receive may be
taxable.
Q: What other matters will we vote on at the special meeting?
A: Guarantee does not expect any other matter to arise for a vote at the
special meeting.
Q: If I am a Guarantee policyholder, will the merger change my policy?
A: No. The merger will not affect your policy or policyholder rights in any
way.
Q: Who can I call to find out the exchange ratio so that I may determine the
amount of cash and the number of shares of Jefferson Pilot common stock I
may receive for each share of Guarantee common stock I own?
A: We will calculate the exchange ratio based on a 10-day measurement period
ending four trading days before we complete the merger. Beginning as soon as
practicable after that day, which we hope will be three trading days before
the special meeting, you can call 1-888-257-9919 to find out what form of
merger consideration Jefferson Pilot will pay and the exchange ratio we will
use to calculate the merger consideration. We expect the election deadline
to fall on the sixth day before the day we expect to complete the merger. As
a result, you will not receive this information before you must make an
election regarding the form of merger consideration you prefer. You also may
not receive this information prior to the time you must vote on the merger
proposal unless you vote by telephone or in person.
Q: Who can help answer my questions?
A: If you have questions about the merger or would like additional copies of
this document, contact:
ChaseMellon Consulting Services, L.L.C.
450 West 33rd Street, 14th Floor
New York, NY 10001
1-888-566-4472
4
<PAGE>
The Companies--page 51
Jefferson-Pilot Corporation
100 North Greene Street
Greensboro, NC 27401
Telephone: (336) 691-3000
Jefferson Pilot's businesses include life insurance, annuity and investment
products, and communications. Jefferson Pilot conducts operations through its
wholly owned subsidiaries. Jefferson Pilot's largest subsidiaries include
Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance
Company, Jefferson Pilot LifeAmerica Insurance Company, Alexander Hamilton Life
Insurance Company of America, Jefferson Pilot Securities Corporation, a full
service NASD registered broker/dealer, and Jefferson-Pilot Communications
Company. Jefferson-Pilot Life began operations in 1903. Jefferson Pilot
generates over 80% of its revenues from life insurance and annuity products.
The Guarantee Life Companies Inc.
8801 Indian Hills Drive
Omaha, NE 68114
Telephone: (402) 361-7300
Guarantee markets group life and health insurance products to employers and
other groups, and life insurance and annuities to individuals through its
wholly owned subsidiary, Guarantee Life Insurance Company. Guarantee Life
incorporated in Nebraska in 1901. On December 26, 1995, it converted from a
mutual insurance company to a stock life insurance company. At that time it
changed its name to Guarantee Life Insurance Company and became a wholly owned
subsidiary of Guarantee.
The Guarantee Special Meeting--page 17
Guarantee will hold the special meeting of its shareholders on December 30,
1999, 9:00 a.m., Central time at the Omaha Marriott Hotel, 10220 Regency
Circle, Omaha, Nebraska 68114. At the special meeting, we will ask you to vote
to adopt the merger proposal.
Record Date. You can vote at the special meeting if you owned Guarantee
common stock of record at the close of business on November 15, 1999, the
record date. On that date, 9,283,234 shares of Guarantee common stock were
outstanding and held of record by 48,932 shareholders. At the special meeting,
you can cast one vote for each share of Guarantee common stock you owned on the
record date.
Vote Required. The holders of a majority of the outstanding shares of
Guarantee common stock entitled to vote must vote in favor of adopting the
merger agreement and approving the merger in order to adopt the merger
agreement and approve the merger. The holders of a majority of the shares of
Guarantee common stock entitled to vote, excluding shares owned by Jefferson
Pilot, must vote in favor of the acquisition of Guarantee's common stock by
Jefferson Pilot in order to approve the acquisition. If you vote to adopt the
merger proposal, you will be approving all of these matters.
Share Ownership of Directors and Management. As of the record date, directors
and executive officers of Guarantee beneficially owned 285,024 shares of
Guarantee common stock. This represented 3.07% of the shares outstanding on the
record date. We currently expect that the directors and executive officers will
vote their Guarantee common stock for the merger proposal.
5
<PAGE>
Recommendation of the Guarantee Board--page 17
The board of directors of Guarantee has approved, and unanimously recommends
that you vote for, the merger proposal.
The Merger--page 19
General. We have attached the merger agreement to this document as Appendix
A. Please read the merger agreement. It is the legal document that governs the
merger. We will complete the merger if Guarantee's shareholders vote for the
merger proposal and we satisfy or waive each of the other conditions to the
merger.
All Cash Merger. If the merger is an all cash merger, you will receive $32.00
in cash for each share of Guarantee common stock you own. Jefferson Pilot will
pay the merger consideration entirely in cash if the average of the high and
low sales prices of Jefferson Pilot common stock for each of the 10 consecutive
trading days ending on the fourth trading day before completion of the merger:
. is greater than $75 per share;
. is less than $65 per share and Jefferson Pilot decides to pay the merger
consideration in cash; or
. is higher than the NYSE closing price of Jefferson Pilot common stock on
the trading day before we complete the merger and, as a result, counsel
does not deliver any required tax opinion.
Stock Election Merger. If none of the bullets above applies, Jefferson Pilot
will pay some or all of the merger consideration in shares of its common stock.
In this case, depending on what you and the other Guarantee shareholders elect,
you will receive for each share of your Guarantee common stock:
. $32.00 in cash;
. Jefferson Pilot common stock worth approximately $32.00 based on the
average high and low sales price per share of Jefferson Pilot common
stock during a 10-day measurement period before we complete the merger;
or
. a combination of cash and stock worth approximately $32.00 determined on
the basis described in the preceding bullet.
If the merger is a stock election merger, Jefferson Pilot will pay
approximately 50% of the total merger consideration in shares of Jefferson
Pilot common stock. If you elect to receive some or all of the merger
consideration in the form of Jefferson Pilot common stock, but Guarantee
shareholders elect in the aggregate to receive more than 50% of the total
merger consideration in shares of Jefferson Pilot common stock, then you will
receive less stock and more cash than you elected. We will generally make this
reduction pro rata among all Guarantee shareholders receiving Jefferson Pilot
common stock.
Similarly, if you elect to receive some or all of the merger consideration in
cash, but the Guarantee shareholders elect in the aggregate to receive more
than 50% of the total merger consideration in cash, then you will receive less
cash and more Jefferson Pilot common stock than you elected. We will also
generally make this reduction pro rata among all Guarantee shareholders
receiving cash.
Insufficient Cash and Stock Elections. Generally, if neither the stock
elections nor the cash elections exceed 50% of the outstanding Guarantee common
stock, then you will receive the form of merger consideration that you elected.
If you do not make a valid election:
. You will receive only cash if you hold a small number of shares of
Guarantee common stock. The lowest number of Guarantee shares that you
can hold without triggering this provision will generally depend on the
amount of cash available after allocating cash to Guarantee shares
covered by cash elections. This provision will not apply if you hold at
least 100 Guarantee shares.
6
<PAGE>
. If the above bullet does not apply to you, you will receive Jefferson
Pilot common stock and a relatively small amount of cash, pro rata with
other non-electing Guarantee shareholders other than small shareholders.
See "The Merger Agreement--Allocation of Stock Consideration and Cash
Consideration; Proration" beginning on page 35.
Elections and Election Procedures. We have sent an election form/letter of
transmittal with this proxy statement-prospectus. Please use the election
form/letter of transmittal to:
. elect to receive Jefferson Pilot shares for all of your shares,
. elect to receive $32.00 in cash per share for all of your shares,
. elect to receive cash for a portion of your shares and Jefferson Pilot
shares for a portion of your shares, or
. indicate that you have no preference as to receiving cash or Jefferson
Pilot shares for your shares.
If you do not submit a valid election form/letter of transmittal before the
election deadline, we will treat your shares of Guarantee common stock as
shares subject to a non-election. Non-election shares will receive merger
consideration in the form determined under the allocation provisions in the
merger agreement.
Opinion of Financial Advisor--page 24
Goldman, Sachs & Co., financial advisor to Guarantee, delivered to the
Guarantee board of directors its opinion to the effect that, as of October 14,
1999, the merger consideration that holders of Guarantee common stock will
receive pursuant to the merger agreement was fair from a financial point of
view to the Guarantee shareholders. We have attached this opinion to this
document as Appendix B. You should read it completely to understand the
assumptions made, matters considered and limitations of the review made by
Goldman Sachs in providing its opinion.
Management and Operations After the Merger
The directors of LG Merger Corp. and the officers of Guarantee upon
completion of the merger will serve as the directors and officers of the
combined company after the merger. Mr. Robert D. Bates, the current chairman,
president and chief executive officer of Guarantee, will serve as an executive
vice president and president-group life operations of Jefferson Pilot after the
merger, and will lead the group operations from Omaha.
Termination of the Agreement--page 46
Guarantee and Jefferson Pilot may mutually agree at any time to terminate the
merger agreement even if the shareholders of Guarantee have adopted the merger
proposal. Either Guarantee or Jefferson Pilot may also terminate the merger
agreement under some circumstances. If Guarantee and Jefferson Pilot terminate
the merger agreement other than by mutual agreement, Guarantee may have to pay
Jefferson Pilot a $9 million fee.
Amendment and Waiver--page 48
We may amend or supplement the merger agreement before we complete the
merger. However, after approval by Guarantee's shareholders, we may not,
without further shareholder approval, amend the merger agreement to:
. change the amount or form of the merger consideration;
7
<PAGE>
. amend the certificate of incorporation of the surviving corporation; or
. make any change to the merger agreement that adversely affects the rights
of Guarantee's shareholders.
Before we complete the merger, Guarantee and Jefferson Pilot may:
. extend the time for performance under the merger agreement;
. waive any inaccuracies in the representations and warranties; or
. waive compliance with any of the agreements or conditions contained in
the merger agreement.
Interests of Directors and Officers in the Merger That Are Different From Your
Interests--page 30
Some of Guarantee's directors and officers have interests in the merger that
differ from yours as a shareholder of Guarantee. These interests exist because
of agreements that these persons have with Guarantee, including employment
agreements, severance plans and restoration of back pay, as well as the
accelerated vesting and cash out of stock options and performance shares and
the accelerated vesting of restricted Guarantee common stock and other
arrangements. We have quantified these interests on page 31 in "The Merger--
Interests of Directors and Officers of Guarantee in the Merger." Some of these
agreements will provide officers with severance benefits if the combined
company terminates their employment after the merger. Jefferson Pilot will
provide indemnification to present and former officers and directors of
Guarantee and will maintain directors' and officers' liability insurance for
the directors and officers covered by Guarantee's policy for six years. The
Guarantee board of directors knew about these interests and considered them in
approving the merger agreement and the transactions contemplated thereby.
Appraisal Rights--page 59
You may dissent from the merger and have a court appraise the fair value of
your Guarantee common stock and have the value paid to you in cash. If you
dissent, you must follow the procedures required by Delaware law, including
filing notices and not voting your shares in favor of the merger. You will not
receive any Jefferson Pilot common stock or cash pursuant to the merger
agreement if you dissent and follow all of the required procedures. Instead,
you will receive in cash the fair value of your Guarantee common stock as
determined under applicable law. If you dissent and submit an election
form/letter of transmittal, we will reject your form. We have attached the
provisions of Delaware law governing your right to dissent to this document as
Appendix C and have described these provisions in "Additional Information--
Dissenters' Appraisal Rights" beginning on page 59.
Certain Differences in the Rights of Shareholders--page 53
Delaware law and Guarantee's certificate of incorporation and bylaws
currently govern the rights of Guarantee's shareholders. North Carolina law and
Jefferson Pilot's articles of incorporation and bylaws govern the rights of
Jefferson Pilot shareholders. If Jefferson Pilot delivers its shares in the
merger, North Carolina law and Jefferson Pilot's articles of incorporation and
bylaws will govern the rights of Guarantee shareholders who become Jefferson
Pilot shareholders.
Accounting Treatment
Jefferson Pilot will account for the merger under the "purchase" method of
accounting. Jefferson Pilot will allocate the aggregate consideration paid by
Jefferson Pilot in the merger to Guarantee's assets and liabilities based on
their fair market values. Jefferson Pilot will treat any excess consideration
as goodwill.
8
<PAGE>
RISK FACTORS
You should consider the following risks in determining whether to adopt the
merger proposal and what election to make, along with the other information
contained in this proxy statement-prospectus.
You may not receive the merger consideration you elect, and you may receive
all cash.
Under the merger agreement, Jefferson Pilot may only deliver a limited number
of its shares in the merger. If you elect to receive some or all of the merger
consideration in shares of Jefferson Pilot common stock, but Guarantee
shareholders elect in the aggregate to receive more than 50% of the total
merger consideration in shares of Jefferson Pilot common stock, then you will
receive less stock and more cash than you elected. Similarly, if you elect to
receive some or all of the merger consideration in cash, you may have to accept
more Jefferson Pilot common stock and less cash than you elected. In addition,
if Jefferson Pilot pays the merger consideration entirely in cash, then you
will not receive any of the merger consideration in Jefferson Pilot common
stock, regardless of your election.
The average of the high and low sales prices of Jefferson Pilot common stock
on each of the 10 consecutive trading days ending on November 23, 1999, the
latest practicable date before this document was printed, was $75.56 per share.
If the average price used to determine the merger consideration is more than
$75, Jefferson Pilot will pay the merger consideration entirely in cash. Also,
if the 10-day average price used to determine the merger consideration is less
than $65, Jefferson Pilot may elect to pay the merger consideration in cash.
Because the market price of Jefferson Pilot's common stock fluctuates, we
cannot predict what the stock price will be when we determine the form of
merger consideration.
Because of market fluctuations, you may receive shares of Jefferson Pilot
common stock that are worth more or less than $32.00 per share.
The value of the Jefferson Pilot common stock that you receive in a stock
election merger may be more or less than $32.00 per Guarantee share when you
receive it. This is because you will receive Jefferson Pilot common stock with
a value based on an exchange ratio that we will calculate four trading days
before completion of the merger, based on the average high and low sales prices
of Jefferson Pilot common stock for each of the 10 consecutive trading days
ending on that day. Because we cannot predict how the market price of Jefferson
Pilot common stock may change after we calculate the exchange ratio, the
Jefferson Pilot common stock that you receive in the merger for each of your
Guarantee shares may have a value of more or less than $32.00. Also, we cannot
predict the market price of Jefferson Pilot common stock after the merger.
Guarantee's shareholders will have no control over Jefferson Pilot's future
operations.
Guarantee's shareholders own 100% of the Guarantee common stock and, in the
aggregate, have the power to elect the board of directors and approve or reject
any other matter requiring the approval of shareholders under Delaware law and
Guarantee's certificate of incorporation. If Jefferson Pilot delivers its
shares in the merger, Guarantee's shareholders, in the aggregate, likely will
hold less than 3% of the outstanding shares of Jefferson Pilot common stock. If
all of the former Guarantee shareholders voted together on all matters
presented to Jefferson Pilot's shareholders from time to time, this number of
Jefferson Pilot shares, without a substantial number of other holders voting
the same way, will not affect whether Jefferson Pilot shareholders approve or
reject proposals.
If Guarantee's shareholders do not adopt the merger proposal, Guarantee may
have inadequate capital to finance its operations and could face a ratings
downgrade, which would make it harder to obtain necessary capital.
If Guarantee's shareholders do not adopt the merger proposal, Guarantee will
face risks as a stand-alone company. These risks include a possible rating
agency downgrade and the possibility that Guarantee will not have adequate
access to the capital it needs for long-term operations. Guarantee competes in
a rapidly consolidating industry against companies that have greater financial
resources and higher ratings. Guarantee will not compete effectively with these
companies if it can not expand its business operations and increase its
profitability. If Guarantee does not achieve this growth, it could face a
rating downgrade. Such a downgrade
9
<PAGE>
could have a material adverse effect on Guarantee's ability to distribute
insurance products and to access and raise additional capital to fund its
operations and expand its business. Guarantee believes that, without further
action, the current amortization of its term loan, which is $3.75 million per
quarter, and a lack of sustained earnings growth could increase its need for
capital beyond 1999.
You will not know whether you will have taxable gain in connection with the
merger until after you vote and make your election. If you have taxable gain,
you may not have offsetting losses and will have to pay taxes in connection
with the merger.
We do not know whether the merger will be a stock election merger or an all
cash merger. If the merger is an all cash merger, then all Guarantee
shareholders will receive cash and will immediately recognize taxable gain or
loss for federal income tax purposes. Even if the merger is a stock election
merger, because Guarantee shareholders may receive a different amount of cash
and Jefferson Pilot common stock than they elect to receive in the merger, we
cannot predict the specific consequences for each shareholder at the time of
the special meeting. See "Material United States Federal Income Tax
Consequences" beginning on page 50.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
We have provided the following historical financial data to aid you in your
analysis of the financial aspects of the proposed merger. Guarantee derived its
data from its financial statements for its fiscal years ended December 31, 1994
through 1998, which were audited by KPMG LLP, independent auditors of
Guarantee, and Guarantee's financial statements for the nine months ended
September 30, 1998 and 1999, which were unaudited. Jefferson Pilot derived its
data from its financial statements for its fiscal year ended December 31, 1995,
1994 and 1993, which were audited by McGladrey & Pullen, and for its fiscal
years ended December 31, 1996 through 1998, which were audited by Ernst & Young
LLP, independent auditors of Jefferson Pilot, and Jefferson Pilot's financial
statements for the nine months ended September 30, 1998 and 1999, which were
unaudited.
This data is only a summary and you should read it in conjunction with the
historical financial statements and related notes that have been filed with the
SEC. See "Where You Can Find More Information" on page 63.
Jefferson Pilot
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
-------------------------------------- ---------------
1994 1995 1996 1997 1998 1998 1999
------ ------- ------- ------- ------- ------- -------
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Life insurance.......... $ 854 $ 1,051 $ 1,370 $ 1,698 $ 1,737 $ 1,323 $ 1,236
Annuities and investment
products............... 102 217 442 499 506 382 379
Communications.......... 173 164 189 190 195 137 143
Corporate and other..... 79 87 77 80 79 62 88
------ ------- ------- ------- ------- ------- -------
Revenues before
investment gains....... 1,208 1,519 2,078 2,467 2,517 1,904 1,846
Realized investment
gains.................. 61 49 47 111 93 93 98
------ ------- ------- ------- ------- ------- -------
Total Revenues......... $1,269 $ 1,568 $ 2,125 $ 2,578 $ 2,610 $ 1,997 $ 1,944
====== ======= ======= ======= ======= ======= =======
Net Income:
Life insurance.......... $ 98 $ 127 $ 150 $ 194 $ 245 $ 180 $ 195
Annuities and investment
products............... 19 29 55 63 71 53 52
Communications.......... 22 23 28 28 32 21 25
Corporate and other..... 52 42 27 12 12 11 25
------ ------- ------- ------- ------- ------- -------
Net income before
investment gains....... 191 221 260 297 360 265 297
Realized investment
gains, net of taxes.... 39 34 31 73 58 57 64
------ ------- ------- ------- ------- ------- -------
Net income, continuing
operations............. 230 255 291 370 418 322 361
Discontinued
operations............. 9 18
------ ------- ------- ------- ------- ------- -------
Net Income Available to
Common Stockholders... $ 239 $ 273 $ 291 $ 370 $ 418 $ 322 $ 361
====== ======= ======= ======= ======= ======= =======
Per Share Information:
Net income, continuing
operations available to
common stockholders.... $ 2.10 $ 2.37 $ 2.73 $ 3.49 $ 3.94 $ 3.03 $ 3.42
Net income, continuing
operations available to
common stockholders
assuming full
dilution............... 2.10 2.36 2.72 3.47 3.91 3.01 3.38
Cash dividend paid...... 0.75 0.83 0.93 1.04 1.16 0.86 0.96
Balance Sheet Data (at
period end):
Total assets............ $6,140 $16,478 $17,562 $23,131 $24,338 $23,682 $24,159
Debt, capital securities
and mandatorily
redeemable preferred
stock.................. 29 417 423 969 919 784 894
Stockholder's equity.... 1,733 2,156 2,297 2,732 3,052 3,026 2,886
</TABLE>
11
<PAGE>
Guarantee
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
------- -------- -------- -------- -------- -------- --------
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data:
Premiums and
policyholder
assessments, net....... $ 158.6 $ 208.6 $ 181.7 $ 230.9 $ 322.0 $ 237.6 $ 291.5
Investment income, net.. 70.4 74.6 54.4 58.4 74.7 54.4 63.4
Realized investment
gains (losses)......... (1.2) 2.4 0.1 1.3 2.0 1.5 (0.6)
Other income............ -- -- (0.1) (0.1) -- -- 1.8
Contribution from Closed
Block(1)............... 3.1 4.1 4.7 3.4 3.0
------- -------- -------- -------- -------- -------- --------
Total revenues......... 227.8 285.6 239.2 294.6 403.4 296.9 359.1
Total policyholder
benefits, expenses and
dividends.............. 200.4 265.7 216.6 268.9 389.0 288.0 339.4
------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before
income taxes........... 27.4 19.9 22.6 25.7 14.4 8.9 19.7
Income tax expense...... 11.7 9.1 7.9 9.1 5.1 3.1 6.9
------- -------- -------- -------- -------- -------- --------
Net income from
continuing operations.. 15.7 10.8 14.7 16.6 9.3 5.8 12.8
Net income (loss) from
discontinued
operations(2).......... (1.9) (1.7) 0.3 (0.2) (0.3) (0.1) 0.1
------- -------- -------- -------- -------- -------- --------
Extraordinary charge for
demutualization
expense, net........... 8.1 7.7
------- -------- -------- -------- -------- -------- --------
Net income............. $ 5.7 $ 1.4 $ 15.0 $ 16.4 $ 9.0 $ 5.7 $ 12.9
======= ======== ======== ======== ======== ======== ========
Per Share Information:
Basic earnings per
share(4)............... $ -- $ -- $ 1.51 $ 1.74 $ 1.00 $ 0.64 $ 1.40
------- -------- -------- -------- -------- -------- --------
Diluted earnings per
share(4)............... $ -- $ -- $ 1.49 $ 1.70 $ 0.98 $ 0.62 $ 1.37
======= ======== ======== ======== ======== ======== ========
Dividends per share..... $ -- $ -- $ 0.16 $ 0.26 $ 0.28 $ 0.21 $ 0.21
======= ======== ======== ======== ======== ======== ========
Consolidated Balance
Sheet Data (at period
end):
Total invested
assets(5).............. $ 985.6 $1,056.1 $1,094.3 $1,211.5 $1,567.2 $1,578.5 $1,517.9
======= ======== ======== ======== ======== ======== ========
Total assets(1)(5)...... 1,188.0 1,280.8 1,305.2 1,519.0 1,992.2 1,977.8 1,987.7
Notes payable(5)........ -- -- -- 40.0 112.5 130.0 116.3
Total
liabilities(1)(5)...... 1,055.1 1,074.5 1,096.5 1,309.8 1,762.2 1,739.9 1,780.0
Total shareholders'
equity(3)(4)........... 132.9 206.3 208.7 209.2 230.0 237.9 207.7
</TABLE>
- --------
(1) The results of the Closed Block subsequent to December 31, 1995 are
reported on one line in Guarantee's Consolidated Statements of Earnings.
Accordingly, the line-by-line income statements are not comparable for all
periods presented. Total assets and total liabilities include the assets
and liabilities of the Closed Block, respectively, and therefore amounts
are comparable for all periods presented. See Note 7 of Notes to
Consolidated Financial Statements of Guarantee incorporated in this
document by reference. See "Where You Can Find More Information" on page
63.
(2) Guarantee decided to withdraw from its Special Risk segment in 1994. The
operations of this segment have been reflected on a net basis and
classified as discontinued operations. See Note 15 of Notes to Consolidated
Financial Statements of Guarantee incorporated in this document by
reference. See "Where You Can Find More Information" on page 63.
(3) Excluding the unrealized appreciation or depreciation of invested assets
within accumulated other comprehensive income, total shareholders' equity
would have been $221.7 million and $207.5 million at September 30, 1999 and
1998, and $210.3 million, $196.2 million, and $204.8 million as of December
31, 1998, 1997, and 1996, respectively.
(4) During 1997, Guarantee initiated three voluntary stock buyback programs.
Guarantee repurchased approximately 1.1 million shares at a cost of $23.6
million in 1997, and completed the last programs in 1998 with the purchase
of an additional 0.1 million shares at a cost of $3.2 million.
(5) Guarantee acquired a block of universal life policies in August 1996, PFG,
Inc. and subsidiaries in December 1997, and a block of excess loss policies
in December 1997. Effective May 1998, Guarantee Life acquired Westfield
Life Insurance Company. See Note 1 of Notes to Consolidated Financial
Statements of Guarantee incorporated in this document by reference. See
"Where You Can Find More Information" on page 63.
12
<PAGE>
COMPARATIVE UNAUDITED PER COMMON SHARE DATA
The table below shows selected per share data for Jefferson Pilot and
Guarantee on a historical basis, and on an unaudited pro forma basis giving
effect to the merger. Jefferson Pilot will account for the merger under the
purchase method of accounting. Under the SEC's rules, Guarantee does not
qualify as a significant subsidiary of Jefferson Pilot. As a result, we have
not presented pro forma combined financial statements giving effect to the
merger because the SEC's rules do not require these statements.
This table does not forecast the results of future operations of the combined
companies, or the results that the combined company would have achieved if we
had completed the merger before the periods covered in the table. Jefferson
Pilot expects to realize $30 million pretax in annual system wide expense
savings by 2002 through the integration of the operations of Guarantee and
Jefferson Pilot. The table does not reflect these anticipated expense savings.
This statement regarding expense savings constitutes a forward-looking
statement under the federal securities laws, and is subject to risks and
uncertainties that could cause actual expense savings to differ materially from
the amount Jefferson Pilot expects. The assumptions and risks that apply to
expense savings include, among others, assumptions regarding the timing and
amount of expense savings and the integration of the businesses, and the risks
that Jefferson Pilot might fail to successfully complete strategies for expense
reductions and for anticipated operating efficiencies.
The pro forma data in the table under Scenario 1, stock election merger,
assumes that Jefferson Pilot delivers its common stock for 50% of the merger
consideration. Under Scenario 2, an all cash merger, Jefferson Pilot will not
deliver any of its common stock and thus there is no Guarantee pro forma
equivalents per share because Guarantee shareholders will receive all cash.
If Jefferson Pilot delivers common stock in the merger, many Guarantee
shareholders will receive these shares in exchange for their Guarantee shares.
The data in the table under Guarantee pro forma equivalents show the fractional
interest they would receive for each Guarantee share that they exchange for
Jefferson Pilot common stock. We calculated this data by multiplying the pro
forma combined data by an exchange ratio. We determined this ratio in
accordance with the merger agreement by dividing $32.00 by the average high and
low sales prices of Jefferson Pilot common stock for the 10 consecutive trading
days ending on November 23, 1999, the last practicable date before this
document was printed. This 10-day average price was $75.56. If this was the 10-
day average price used to calculate the merger consideration, Jefferson Pilot
would pay the merger consideration entirely in cash. For purposes of the data
in the table, under Scenario 1, stock election merger, we have assumed that
this 10-day price was $74.00. To determine the actual exchange ratio, we will
use the average high and low sales prices for the 10 consecutive trading days
ending four trading days before we complete the merger. Thus the exchange ratio
in the merger is likely to differ from the ratio used in the table. Note 1
below the table shows this data at other average prices.
We calculated the pro forma data in the table below as follows:
Number of Jefferson Pilot Shares. For purposes of calculating the pro forma
number of Jefferson Pilot shares outstanding after giving effect to the merger,
we assumed that Jefferson Pilot had repurchased all the Jefferson Pilot common
stock delivered in the merger. Jefferson Pilot has previously announced that it
plans to repurchase in the open market a number of shares of its common stock
equal to the number of shares that it might deliver in connection with the
merger. Through November 23, 1999, Jefferson Pilot had repurchased 1,899,400 of
its shares. The exchange ratio used in the table would require delivery of
1,998,000 shares.
Book Value. The Jefferson Pilot pro forma combined book value per share
represents Jefferson Pilot's actual per share stockholders' equity
.minus the cost of the Jefferson Pilot common stock repurchased as
described above,
. plus, in the stock election merger scenario, the new equity recorded in
the merger for the Jefferson Pilot shares delivered,
.divided by the total number of Jefferson Pilot shares that would be
outstanding after the merger.
The pro forma equivalent book value per Guarantee share equals this Jefferson
Pilot pro forma combined book value multiplied by the exchange ratio.
13
<PAGE>
Dividends. The Jefferson Pilot pro forma combined dividends per share
represent the actual historical dividends. The pro forma equivalent dividends
per Guarantee share equal these actual Jefferson Pilot dividends multiplied by
the exchange ratio.
Earnings. The Jefferson Pilot pro forma combined earnings per share assume
the merger and the repurchase of Jefferson Pilot common stock described above
had occurred at the beginning of 1998. They include Jefferson Pilot's and
Guarantee's actual income, minus:
. interest expense on debt,
. the assumed opportunity cost on securities sold to provide a portion of
the cash required, and
. amortization of goodwill related to the merger.
Interest expense would be higher in the all cash merger because Jefferson Pilot
would borrow more than it would if it paid a portion of the merger
consideration in its common stock.
Jefferson Pilot intends to perform a valuation of certain Guarantee tangible
and intangible assets, to establish their fair value. Jefferson Pilot will
classify the excess of the merger consideration over the values assigned to
Guarantee's assets and liabilities as goodwill. Because we do not yet have this
valuation, we estimated goodwill as the aggregate merger consideration minus
Jefferson Pilot's estimate of Guarantee's book value as of December 31, 1999.
In preparing the table, we assumed this goodwill would be amortized over 35
years.
The pro forma combined earnings per share represent the average number of
Jefferson Pilot shares outstanding and the dilutive effect of Jefferson Pilot
stock options, minus the shares repurchased plus in Scenario 1 the shares
delivered in the merger. The pro forma equivalent earnings per Guarantee share
in Scenario 1 equals this pro forma combined earnings per share multiplied by
the exchange ratio.
<TABLE>
<CAPTION>
Jefferson Pilot Guarantee
-------------------------- --------------------------
Nine Months Nine Months
Ended Year Ended Ended Year Ended
or as of or as of or as of or as of
September 30, December 31, September 30, December 31,
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Historical Basis:
Book value per share... $27.56 $28.82 $22.42 $24.93
Cash dividends per
share................. 0.96 1.18 0.21 0.28
Earnings per share from
continuing
operations--diluted... 3.38 3.91 1.37 1.01
<CAPTION>
Scenario 1-- Scenario 2--
Stock Election Merger All Cash Merger
-------------------------- --------------------------
Nine Months Nine Months
Ended Year Ended Ended Year Ended
or as of or as of or as of or as of
September 30, December 31, September 30, December 31,
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Pro Forma Combined:
Book value per share... $27.98 $28.98 $27.14 $28.16
Cash dividends per
share................. 0.98 1.18 0.96 1.18
Earnings per share from
continuing
operations--diluted... 3.40 3.86 3.39 3.87
Guarantee Pro Forma
Equivalents(1):
Book value per share... $12.10 $12.53 N/A N/A
Cash dividends per
share................. 0.42 0.51 N/A N/A
Earnings per share from
continuing
operations--diluted... 1.47 1.67 N/A N/A
</TABLE>
14
<PAGE>
- --------
(1) The following table shows Guarantee pro forma equivalent data for scenario
1, stock election merger, prepared as described above, at a variety of
average prices for Jefferson Pilot common stock. If the average high and
low sales prices range from $65 to $75, Jefferson Pilot will likely deliver
its shares in the merger. Note also that, below $65, Jefferson Pilot might
deliver its shares. Otherwise, Jefferson Pilot will pay all cash in the
merger. You should compare this information with the last three lines in
the table above to see what happens when the price of Jefferson Pilot
common stock changes.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jefferson Pilot Average
Share Price............ $ 64.00 $ 65.00 $ 67.00 $ 69.00 $ 71.00 $ 73.00 $ 75.00 $76.00
Fractional Jefferson
Pilot Share Received
for Each Guarantee
Share.................. 0.500000 0.492308 0.477612 0.463768 0.450704 0.438356 0.426667 N/A
Guarantee Pro Forma
Equivalent:
Book value per share:
September 30, 1999..... $ 13.90 $ 13.70 $ 13.30 $ 12.93 $ 12.59 $ 12.26 $ 11.95 N/A
December 31, 1998...... 14.40 14.19 13.78 13.40 13.04 12.69 12.37 N/A
Cash dividends per
share:
Nine months ended
September 30, 1999.... $ 0.48 $ 0.47 $ 0.46 $ 0.45 $ 0.43 $ 0.42 $ 0.41 N/A
Year ended December 31,
1998.................. 0.59 0.58 0.56 0.55 0.53 0.52 0.50 N/A
Earnings per share from
continuing
operations--diluted:
Nine months ended
September 30, 1999.... $ 1.70 $ 1.67 $ 1.62 $ 1.57 $ 1.53 $ 1.49 $ 1.45 N/A
Year ended December 31,
1998.................. 1.93 1.90 1.84 1.79 1.74 1.69 1.65 N/A
</TABLE>
The information in this section is based upon the consolidated historical
financial statements of Jefferson Pilot and Guarantee, including the related
notes, which are incorporated by reference. You should read the table in
conjunction with those historical financial statements and notes. See "Where
You Can Find More Information" on page 63.
15
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE
Jefferson Pilot common stock is listed on the NYSE and certain other U.S.
exchanges and trades under the symbol "JP." Guarantee common stock trades on
the Nasdaq National Market under the symbol "GUAR." On September 17, 1999, the
business day immediately preceding the public announcement of the execution of
the merger agreement, and on November 23, 1999, the latest practicable date
before the printing of this document, the closing market prices of Jefferson
Pilot common stock and Guarantee common stock were as follows:
<TABLE>
<CAPTION>
Jefferson Pilot Guarantee
--------------- ---------
<S> <C> <C>
September 17, 1999................................. $67.50 $29.75
November 23, 1999.................................. $71.63 $31.38
</TABLE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The following table shows, for the periods indicated, the high and low bid
prices per share of Guarantee common stock on the Nasdaq National Market and
the high and low sales prices per share of Jefferson Pilot common stock as
reported in the consolidated transaction reporting system, and the cash
dividends declared per share of Guarantee common stock and Jefferson Pilot
common stock. On November 15, 1999, the record date for the special meeting,
there were approximately 48,932 record holders of Guarantee common stock and
approximately 10,330 record holders of Jefferson Pilot common stock.
<TABLE>
<CAPTION>
Jefferson Pilot Guarantee
---------------------- ------------------------
High Low Dividend High Low Dividend
------ ------ -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Calendar 1997
First Quarter................ $41.00 $36.25 $0.24 $21.500 $18.250 $0.06
Second Quarter............... 47.44 34.31 0.27 25.125 18.375 0.06
Third Quarter................ 53.50 44.88 0.27 29.250 23.500 0.07
Fourth Quarter............... 57.81 48.25 0.27 30.750 24.750 0.07
Calendar 1998
First Quarter................ 60.06 48.69 0.27 31.250 24.750 0.07
Second Quarter............... 62.13 54.88 0.30 33.000 19.750 0.07
Third Quarter................ 64.06 55.06 0.30 22.875 17.750 0.07
Fourth Quarter............... 78.38 55.38 0.30 20.250 13.625 0.07
Calendar 1999
First Quarter................ 77.38 66.06 0.30 20.750 15.875 0.07
Second Quarter............... 71.25 68.63 0.33 25.625 16.000 0.07
Third Quarter................ 75.63 61.50 0.33 35.000 22.750 0.07
Fourth Quarter (through
November 23, 1999).......... 79.63 62.69 0.33 31.75 30.50 0.07
</TABLE>
The timing and amount of any future Jefferson Pilot dividends will depend
upon earnings, cash requirements, the financial condition of Jefferson Pilot
and its subsidiaries and other factors considered relevant by the board of
directors of Jefferson Pilot. The timing and amount of any future Guarantee
dividends, if we do not complete the merger, will depend upon earnings, cash
requirements, the financial condition of Guarantee and its subsidiaries,
applicable government regulations and other factors considered relevant by the
board of directors of Guarantee. Pending the consummation of the merger, the
merger agreement restricts the ability of Guarantee to pay dividends on its
common stock, except as consistent with past practice and in per share amounts
not greater than $0.07 per share per quarter.
16
<PAGE>
THE SPECIAL MEETING
General
We furnish this proxy statement-prospectus to the Guarantee shareholders as
part of the solicitation of proxies by Guarantee's board of directors for use
at (1) the special meeting of shareholders of Guarantee on December 30, 1999 at
the Omaha Marriott Hotel, 10220 Regency Circle, Omaha, Nebraska, 68114, 9:00
a.m., Central time, and (2) any adjournment of the meeting.
At the special meeting, you will consider and vote upon a merger proposal to:
. adopt the Amended and Restated Agreement and Plan of Merger, dated as of
September 19, 1999, as amended and restated as of October 14, 1999 among
Jefferson-Pilot Corporation, a North Carolina corporation, LG Merger
Corp., a Delaware corporation and a wholly owned subsidiary of Jefferson
Pilot, and The Guarantee Life Companies Inc., a Delaware corporation,
. approve the merger, and
. authorize the acquisition of Guarantee's common stock by Jefferson Pilot
under the Nebraska Shareholders Protection Act.
Record Date
Guarantee has fixed the close of business on November 15, 1999 as the record
date for determining shareholders entitled to notice of and to vote at the
special meeting. On that date, 9,283,234 shares of Guarantee common stock were
outstanding and held of record by 48,932 shareholders. At the special meeting,
you can cast one vote, either in person or by proxy, for each share of
Guarantee common stock you owned on the record date.
Vote Required
Delaware law requires the affirmative vote of the holders of a majority of
the outstanding shares of Guarantee common stock entitled to vote to adopt the
merger agreement and approve the merger. The Nebraska Shareholders Protection
Act also requires the affirmative vote of the holders of a majority of the
shares of Guarantee common stock entitled to vote, excluding shares owned by
Jefferson Pilot, to authorize the acquisition of Guarantee's common stock by
Jefferson Pilot. Currently, Jefferson Pilot does not own any Guarantee common
stock. If you adopt the merger proposal, you will be approving all of these
matters.
A majority of the issued and outstanding shares of Guarantee common stock
entitled to vote at the special meeting must be present to constitute a quorum.
Shares held by Guarantee shareholders who abstain from voting will count as
shares present and entitled to vote at the meeting. Brokers who hold Guarantee
common stock in nominee or "street name" for beneficial owners may not give a
proxy to vote those shares at the special meeting unless they receive specific
instructions from those customers. Shares represented by proxies returned by a
broker holding those shares in "street name" will count for purposes of
determining whether a quorum exists, even if the beneficial owner does not vote
those shares. These shares are known as broker nonvotes.
Under applicable law, abstentions and broker nonvotes will have the same
effect as votes against the merger proposal. Thus, the Guarantee board of
directors urges you to complete, date and sign the enclosed proxy card and
return it promptly in the enclosed, prepaid envelope or vote by telephone.
Share Ownership of Directors and Executive Officers
As of November 15, 1999, directors and executive officers of Guarantee
beneficially owned 285,024 shares of Guarantee common stock. This represented
3.07% of the shares outstanding on the record date. We currently expect that
directors and executive officers will vote the Guarantee common stock
beneficially owned by them for the merger proposal.
Recommendation of the Guarantee Board
The board of directors of Guarantee has approved, and unanimously recommends
that you vote for, the merger proposal.
17
<PAGE>
Voting and Revocation of Proxies
If you execute and return the enclosed proxy card or vote by telephone, the
persons named in the proxy card will vote the Guarantee common stock
represented by that proxy at the special meeting. If you specify a choice in
the proxy card, the persons named in the proxy will vote your Guarantee shares
as you requested. If you do not specify a choice in your proxy, other than in
the case of broker nonvotes, then the persons named in the proxy will vote your
shares for the merger proposal.
You may change your vote at any time before we vote your proxy at the special
meeting. You can do so by following the voting instructions on your proxy card
or you can attend the special meeting and vote in person.
You should know that simply attending the special meeting will not revoke
your proxy.
You should send any written notice revoking your proxy, or any request for a
new proxy card, to the following address:
ChaseMellon Consulting Services L.L.C.
450 West 33rd Street, 14th Floor
New York, NY 10001
Solicitation of Proxies
Guarantee is soliciting proxies by and on behalf of its board of directors.
Guarantee will pay all expenses of soliciting proxies, except that Guarantee
and Jefferson Pilot will pay equally the cost of printing and mailing this
proxy statement-prospectus. In addition to solicitation of proxies by mail,
Guarantee will request banks, brokers and other record holders to send proxies
and proxy materials to the beneficial owners of Guarantee common stock and
secure their voting instructions, if necessary. In addition, directors,
officers and employees of Guarantee or its affiliates may solicit proxies from
Guarantee shareholders in person or by telephone, facsimile, telegram, or other
means of communication. Those directors, officers and employees of Guarantee or
its affiliates will not receive additional compensation, but may be reimbursed
for reasonable out-of-pocket expenses in connection with any solicitation.
Guarantee has also made arrangements with ChaseMellon Consulting Services,
L.L.C. to assist it in soliciting proxies from banks, brokers, nominees and
individuals. Guarantee has agreed to pay ChaseMellon $7,500 plus expenses for
those services.
Compliance With the Nebraska Shareholders Protection Act
Under the Nebraska Shareholders Protection Act, the shares of Guarantee
common stock acquired by Jefferson Pilot in the merger will not have full
voting rights unless the holders of a majority of the shares of Guarantee
common stock entitled to vote, excluding shares owned by Jefferson Pilot, vote
to approve the acquisition. On the record date for the special meeting,
Jefferson Pilot did not own any Guarantee common stock. This proxy statement-
prospectus and the accompanying notice of special meeting constitutes the
notice to Guarantee's shareholders for the special meeting required under the
Nebraska Shareholders Protection Act. We have attached the information
statement submitted by Jefferson Pilot under the Nebraska Shareholders
Protection Act as Appendix D to this document.
The Nebraska Shareholders Protection Act also prohibits business combinations
by Guarantee with an interested shareholder for a period of five years after
the shareholder becomes an interested shareholder, unless the board of
directors of the corporation approves the transaction before the date the
interested shareholder first becomes an interested shareholder. The board of
directors of Guarantee voted on September 19, 1999 to make this prohibition
inapplicable to the merger agreement and the transactions contemplated by the
merger agreement.
The board of directors of Guarantee has approved, and unanimously recommends
that you vote for, the merger proposal. A vote for the merger proposal will
constitute an affirmative vote to approve Jefferson Pilot's acquisition of all
of Guarantee's outstanding common stock with the same voting rights as other
shares of Guarantee's common stock.
18
<PAGE>
THE MERGER
Background of the Merger
Beginning in May 1998, Guarantee's board of directors, with the assistance of
Guarantee's management and legal counsel, began evaluating strategies to
enhance shareholder value and monitoring Guarantee's position in the
consolidating insurance industry. Guarantee retained Goldman Sachs on June 18,
1998 as financial advisor to assist the Guarantee board in this evaluation.
During this period, the Guarantee board of directors considered various
strategic alternatives to maximize shareholder value through both internal
operating initiatives and restructuring strategies, including strategic
alliances. In the course of its deliberations, the Guarantee board took into
account, among other factors, the price of Guarantee's common stock, current
and projected earnings, prevailing market conditions and industry consolidation
activities. The Guarantee board carefully considered the risks of remaining a
stand-alone company, including a possible rating agency downgrade and the
possibility that Guarantee would have inadequate access to capital required for
long-term operating initiatives.
On March 25, 1999, the Guarantee board of directors met with members of
Guarantee's management and advisors, including Goldman Sachs, and discussed
presentations made by Guarantee's management regarding strategic alternatives.
Following the portion of the meeting at which advisors were present, the
Guarantee board authorized Mr. Robert D. Bates, chairman, president and chief
executive officer of Guarantee, to explore possible strategic initiatives,
including the evaluation and selection of potentially suitable strategic
partners. On May 13, 1999, Mr. Bates reported to the Guarantee board on
strategic planning activities since the March 1999 board meeting. These
activities included an informal analysis of four potential strategic partners,
including Jefferson Pilot, selected based on the extent to which a transaction
with those companies might enhance shareholder value and whether the companies
would be interested in a strategic transaction with Guarantee, as well as other
factors. The Guarantee board then authorized Mr. Bates to engage in discussions
with those companies in an effort to determine whether any of them might be a
potential transaction partner.
In June 1999, Mr. Bates met with the chief executive officers of each of the
four potential acquisition partners and scheduled and participated in further
senior management discussions with these possible partners. One company
indicated that it did not wish to participate in further discussions.
On June 18, 1999, Guarantee retained Goldman Sachs as financial advisor to
assist and advise it in soliciting and evaluating potential strategic partners
in an effort to enhance shareholder value. Shortly thereafter, Guarantee
authorized Goldman Sachs to contact the three companies, including Jefferson
Pilot, with which Guarantee's management was already involved in discussions,
as well as five additional companies to solicit their interest in a possible
transaction with Guarantee. These additional five companies were identified by
Goldman Sachs and Guarantee based upon, among other things, the possible value
to Guarantee shareholders of a strategic transaction and a determination as to
whether they were companies which might consider Guarantee an attractive
acquisition candidate given their mix of business, strategies and potential
synergies.
Of the eight potential partners, seven, including Jefferson Pilot, expressed
interest in receiving confidential information. Following execution of
confidentiality and standstill agreements, these potential acquirors were sent
financial and other information relating to Guarantee and its insurance
subsidiaries. Guarantee participated in management meetings and discussions
with the potential partners throughout June and July 1999.
In July 1999, Goldman Sachs, on behalf of Guarantee, invited the companies to
submit preliminary written, non-binding indications of interest to acquire
Guarantee. Five companies, including Jefferson Pilot, submitted formal
indications of interest. The Guarantee board of directors met on July 29, 1999
to review the indications of interest with the assistance of its financial and
legal advisors. Goldman Sachs and Guarantee's legal counsel discussed with the
Guarantee board the differences among the proposals. Guarantee's counsel also
outlined the legal considerations for the Guarantee board in discharging its
fiduciary responsibilities in connection with its deliberations. The Guarantee
board selected three companies, including Jefferson Pilot, to
19
<PAGE>
continue in the process based upon the value of the merger consideration in
such companies' initial indications of interest. Thereafter, the three
continuing bidders conducted detailed due diligence with respect to Guarantee's
business, including meeting with Guarantee's management and reviewing
documentation relating to Guarantee's business and operations.
On September 7, 1999, Jefferson Pilot submitted a definitive bid to acquire
Guarantee. The bid included a markup of Guarantee's proposed merger agreement
showing Jefferson Pilot's requested changes to the agreement. One other
company, a major industrial company listed on the NYSE, also submitted a
definitive bid for Guarantee's insurance operations, including a markup of
Guarantee's proposed merger agreement. The final remaining bidder did not
submit a definitive bid.
On September 10, 1999, the Guarantee board of directors met with members of
Guarantee's management, Goldman Sachs and legal counsel, to discuss the results
of the solicitation process and the two definitive bids received. At this
meeting, the Guarantee board reviewed with Goldman Sachs and legal counsel the
proposed terms and conditions of the two definitive proposals. The Jefferson
Pilot proposal was an all cash transaction valued at $31.00 per share of
Guarantee common stock. Jefferson Pilot's proposal included a statement that
the executive committee of the Jefferson Pilot board of directors had already
approved the transaction and that Jefferson Pilot could finalize and execute
the merger agreement and the related agreements and consummate the merger with
no further corporate action. The other bidder's proposal was an all stock
transaction valued at $30.88 per share of Guarantee common stock and included
conditions that would have to be met prior to entering into a definitive
agreement and completing a transaction, including the completion of a full
actuarial appraisal and additional due diligence prior to signing, that
Jefferson Pilot's bid did not include.
The material factors the Guarantee board considered in determining how to
proceed were the form and amount of consideration proposed, the conditions to
the execution of a definitive merger agreement and closing of the transaction
contained in the proposals, and such companies' respective financial strengths
and prospects. The Guarantee board also considered Jefferson Pilot's intent to
combine its group life and disability operations with Guarantee's group life
and disability operations and Jefferson Pilot's plan that the combined
operations remain in Omaha, Nebraska for the indefinite future. Additionally,
the Guarantee board considered strategic alternatives that might be available
to Guarantee if it did not pursue either of the definitive bids received,
including continuing on a stand-alone basis and the associated risks.
Guarantee's counsel outlined the legal considerations for the Guarantee board
in discharging its fiduciary responsibilities in connection with its
deliberations. Based upon all such considerations, the Guarantee board
determined that, given the execution risks and closing schedule contained in
the other bidder's proposal, Mr. Bates should encourage Jefferson Pilot to
raise the value of the consideration in its bid and add stock as consideration.
It further determined that, if Jefferson Pilot revised its bid to meet these
criteria and the other bidder did not remove the conditions contained in its
proposal and offer a value higher than that contained in Jefferson Pilot's bid,
Guarantee's management should proceed to negotiate a definitive merger
agreement with Jefferson Pilot.
Over the following weekend, Mr. Bates and Goldman Sachs held telephone
conferences with Jefferson Pilot. Mr. Bates also met personally with Mr. David
A. Stonecipher, chairman, president and chief executive officer of Jefferson
Pilot. Goldman Sachs held telephone conferences with the other remaining bidder
during which Goldman Sachs communicated that, because Guarantee had received
another bid, the bidder should consider increasing the value of the
consideration and removing some of the conditions in its proposal. Each bidder
communicated its final bid. Under Jefferson Pilot's revised proposal, each
share of Guarantee common stock would convert into the right to receive $32.00
in cash and/or Jefferson Pilot common stock, at the election of the
shareholder, prorated to ensure that an equal portion of cash and stock
consideration was paid in the aggregate as merger consideration. The Jefferson
Pilot proposal also included a mechanism whereby all consideration to be paid
in the merger could be cash. Additionally, because the revised Jefferson Pilot
proposal involved the issuance of Jefferson Pilot common stock, it would
require the approval of the Jefferson Pilot board of directors. The other
bidder increased the value of the merger consideration it would pay to $31.00
in stock and removed the condition relating to the completion of a full
actuarial appraisal and modified the diligence required prior to signing,
although its bid remained subject to conditions not included in the Jefferson
Pilot bid.
20
<PAGE>
Based on these revised final bids, Guarantee pursued further negotiations
with Jefferson Pilot. On September 14 and 15, 1999, representatives of
Guarantee's management, including Mr. William L. Bauhard, senior vice president
and chief financial officer of Guarantee and Mr. Richard A. Spellman, senior
vice president and general counsel of Guarantee; representatives of Jefferson
Pilot's management, including Mr. Dennis R. Glass, executive vice president,
chief financial officer and treasurer and president--financial operations of
Jefferson Pilot and Mr. John D. Hopkins, executive vice president and general
counsel of Jefferson Pilot; their respective legal advisors and Goldman Sachs
met in person in New York and by telephone to negotiate the terms and
conditions of the definitive merger agreement and related agreements.
On September 15, 1999, the finance committee of Guarantee's board of
directors held a special meeting during which Guarantee's management, Goldman
Sachs and Guarantee's legal counsel discussed with the committee members
developments in the negotiations with Jefferson Pilot. On September 16, 1999
the Jefferson Pilot board of directors held a special meeting during which it
approved the proposed merger agreement and related matters, including the
merger and the issuance of Jefferson Pilot common stock as a portion of the
merger consideration. From September 16 through September 19, 1999, the parties
continued discussing the details of the merger agreement.
On September 19, 1999, the Guarantee board of directors held a special
meeting to review, with the advice and assistance of Guarantee's management and
financial and legal advisors, the merger and the proposed merger agreement and
related agreements, including agreements relating to the compensation and
continued employment of Mr. Bates, and to compare the terms communicated by the
other company that had submitted a revised final bid to those contained in the
proposed merger agreement. Goldman Sachs and legal counsel summarized the terms
of the proposed transaction and discussed the provisions of the merger
agreement and related agreements in detail. Mr. Spellman reported on the
results of Guarantee's due diligence review of Jefferson Pilot. Guarantee's
counsel reviewed the legal considerations for the Guarantee board in
discharging its fiduciary responsibilities in connection with the proposed
transaction. Goldman Sachs summarized the differences between the terms
communicated by the other company that had submitted a revised final bid and
those in Jefferson Pilot's bid, presented an analysis of the merger
consideration proposed to be paid by Jefferson Pilot, provided data on
comparable companies, and presented a profile of Jefferson Pilot and its stock
ownership. Additionally, Goldman Sachs rendered to the Board its oral opinion,
which it later confirmed in writing, to the effect that, as of such date, the
merger consideration to be received by the holders of Guarantee common stock
pursuant to the merger agreement was fair from a financial point of view to
such holders.
Following the Guarantee board's review of the proposed merger agreement, the
related agreements and related matters, including the merger, the Guarantee
board approved the proposed merger agreement and related matters, including the
merger, determined that the merger agreement and the merger were in the best
interests of the Guarantee shareholders, declared the advisability of the
merger agreement and the merger, and recommended that the Guarantee
shareholders vote for the merger agreement and the merger. At the meeting, the
Guarantee board also approved a noncompetition, nonsolicitation and
cancellation agreement with Mr. Bates pursuant to which Mr. Bates would receive
the lump sum payments described on page 30 in "The Merger--Interests of
Directors and Officers of Guarantee in the Merger" in settlement of all of his
rights under his existing employment agreement and as payment for his agreement
to certain restrictive covenants for the benefit of Guarantee and Jefferson
Pilot. The Guarantee board did not appoint a special committee to consider the
merger agreement or the related agreements, including the noncompetition,
nonsolicitation and cancellation agreement, because such agreements were
negotiated on an arms-length basis and there were no directors that had
conflicting interests in the transaction that would make a special committee of
the board necessary under applicable laws and regulations.
On the evening of Sunday, September 19, 1999, the parties executed and
delivered the merger agreement and related agreements. On September 20, 1999,
Guarantee and Jefferson Pilot issued a joint press release announcing the
merger agreement.
21
<PAGE>
On October 14, 1999, the Guarantee board of directors held a special meeting
to review, with the advice and assistance of Guarantee's legal and financial
advisors, an amendment to the merger agreement. The amendment provides that, in
the event that neither the stock consideration nor the cash consideration is
oversubscribed, Guarantee's small shareholders who do not make an election will
receive only cash consideration and the other Guarantee shareholders who do not
make an election will receive principally Jefferson Pilot common stock under
the proration formula in the merger agreement.
At the meeting, Goldman Sachs advised the Guarantee board that, based on the
information available at that time, it had no reason to believe that it would
not be able to update its opinion that the merger consideration to be received
by the holders of outstanding shares of Guarantee common stock pursuant to the
merger agreement was fair from a financial point of view to such holders.
Thereafter, the Guarantee board renewed its resolutions of September 19, 1999
with respect to the merger agreement as amended. The approval of Jefferson
Pilot's board was not required. On October 14, 1999, the parties executed and
delivered the amendment and the merger agreement which was amended and restated
to reflect the amendment. Goldman Sachs delivered an updated written fairness
opinion dated October 14, 1999.
Recommendation of Guarantee Board of Directors and Guarantee's Reasons for the
Merger
In reaching its determination to recommend adoption of the merger agreement,
the Guarantee board of directors consulted with Guarantee's management as well
as its legal and financial advisors, including Goldman Sachs, and considered
the following material factors and concluded that each of such factors weighed
in favor of the merger:
(1) The Guarantee board of directors' review of Guarantee's business,
operations, financial condition, earnings and prospects, which the
Guarantee board analyzed in its consideration of Guarantee's strategic
alternative of continuing on a stand-alone basis.
(2) The fact that the merger consideration provides Guarantee
shareholders a premium over the prices at which Guarantee common stock
generally traded before the announcement of the merger.
(3) The Guarantee board of directors' consensus that the merger was
preferable to other strategic alternatives to maximize shareholder value,
including remaining as a stand-alone company, and the related risks, such
as a rating downgrade and insufficient capital for future growth.
(4) The belief that Jefferson Pilot's financial strength and strong
credit position will provide enhanced opportunities to market Guarantee's
financial products and less costly access to the capital markets relative
to Guarantee on a stand-alone basis.
(5) The belief that Jefferson Pilot's financial strength and market
presence will enable Guarantee's employee benefit group life and disability
insurance business to continue its growth and to achieve the critical mass
necessary to constitute a stable, profitable business.
(6) The business, operations, financial condition, earnings and prospects
of Jefferson Pilot, which the Guarantee board believed would provide a
solid foundation for Guarantee's continuing operations going forward. In
making its determination, the Guarantee board of directors took into
account the fact that senior management of Guarantee had performed a due
diligence review of Jefferson Pilot's business.
(7) Jefferson Pilot's intent to combine its group life and disability
operations with Guarantee's group life and disability operations and plans
that the combined operations will remain in Omaha, Nebraska for the
indefinite future.
(8) The presentation by Goldman Sachs with respect to the merger and the
opinion of Goldman Sachs that the merger consideration, as of the date that
the merger agreement was signed, was fair to Guarantee's shareholders from
a financial point of view.
22
<PAGE>
(9) The opportunity for Guarantee shareholders who receive shares of
Jefferson Pilot common stock in the merger to continue their investment in
Guarantee's business and to participate in a larger, more diversified
financial services company.
(10) The history of Guarantee's discussions with other parties, including
Guarantee's efforts in exploring strategic initiatives to enhance
shareholder value, the fair and ample opportunity provided to other parties
to submit proposals to Guarantee and the arm's-length negotiations between
Guarantee and Jefferson Pilot.
(11) The structure of the merger and the terms of the merger agreement,
including the fact that Guarantee shareholders will not recognize any gain
or loss for federal income tax purposes to the extent that they receive
Jefferson Pilot common stock in the merger. See "Material United States
Federal Income Tax Consequences" beginning on page 50.
(12) The likelihood of the merger being approved by the appropriate state
insurance department and state regulatory authorities with Jefferson Pilot
as the acquiring company. See "Regulatory Approvals" beginning on page 49.
(13) The Guarantee board of directors' review of the "no-shop" and
termination fee provisions of the merger agreement, and the Guarantee board
of directors' belief that these provisions did not preclude a superior
offer from another party.
The material negative factors relating to the merger, which Guarantee's board
of directors determined did not outweigh the positive factors, were as follows:
(1) The fact that following the merger, some or all of Guarantee
shareholders will no longer participate in the future earnings growth, if
any, of the combined company or benefit from the increase, if any, in the
value of the combined company.
(2) The fact that Guarantee will have no control over whether the merger
is a stock election merger or an all cash merger, and the fact that an all
cash merger would be fully taxable to Guarantee shareholders.
(3) The fact that, because of the cap on the amount of merger
consideration that can be paid in shares of Jefferson Pilot common stock,
some Guarantee shareholders may receive some cash in the merger even though
they elected to receive stock or may receive some stock even though they
elected to receive cash.
(4) The interests of officers and directors of Guarantee in connection
with the merger in addition to their interests as Guarantee shareholders
generally. See "The Merger--Interests of Directors and Officers of
Guarantee in the Merger" on page 30.
(5) The fact that Guarantee shareholders who receive any cash in the
merger will recognize a taxable gain upon completion of the merger in an
amount not in excess of the cash received.
(6) The risk that shares of Jefferson Pilot common stock will not perform
well in the future.
The Guarantee board of directors also took into account that Mr. Bates, who
is the chairman, president and chief executive officer of Guarantee, as well as
other officers, had interests in the merger in addition to yours as a
shareholder of Guarantee. These interests arise from payments to be made and
options to be granted to Mr. Bates under and in connection with his new
employment agreement and the noncompetition, nonsolicitation and cancellation
agreement, the vesting of stock options previously granted to Mr. Bates and
other members of management, benefits under Guarantee's executive severance
plan, and provisions of the merger agreement providing for the continuation of
certain indemnification rights and benefit plans. The Guarantee board believed
that such payments and inducements:
. acted to align the interests of management with those of Guarantee in
negotiating and effectuating the merger,
. provided the necessary incentives for the key members of Guarantee's
management team to continue with Guarantee through the closing date and
for a period of time after the merger is consummated, and
23
<PAGE>
. after consultation with its advisors, were reasonable and consistent with
industry standards.
See "The Merger--Interests of Directors and Officers of Guarantee in the
Merger" beginning on page 30, for a discussion of these interests.
This discussion has addressed the material factors considered by the
Guarantee board of directors in its consideration of the merger. Because of
the variety of factors and the complex considerations involved in determining
whether a transaction like the merger is in the best interests of Guarantee
and its shareholders, the Guarantee board of directors did not quantify or
otherwise assign relative weights to the factors considered in making its
decision. Individual members of Guarantee's board of directors may have
assigned different weights to different factors.
Opinion of Goldman Sachs, Financial Advisor to Guarantee
On September 19, 1999, Goldman Sachs delivered its oral opinion to the board
of directors of Guarantee to the effect that as of such date, the merger
consideration to be received by the holders of Guarantee common stock pursuant
to the merger agreement was fair from a financial point of view to such
holders. Goldman Sachs confirmed its oral opinion by delivery of its written
opinion dated the same date. On October 14, 1999, the parties executed and
delivered an amendment to the merger agreement. Goldman Sachs delivered an
updated fairness opinion dated October 14, 1999.
The full text of the written opinion of Goldman Sachs, dated October 14,
1999, which lays out assumptions made, matters considered and limitations on
the review undertaken in connection with its opinion, is attached as Appendix
B and is incorporated by reference in this proxy statement-prospectus. You
should read the opinion in its entirety.
In connection with its opinion, Goldman Sachs reviewed, among other things:
. the merger agreement;
. annual reports to shareholders and annual reports on Form 10-K of
Guarantee and Jefferson Pilot for the five years ended December 31, 1998;
. quarterly statutory financials as of June 30, 1999 and March 31, 1999 as
well as the annual statutory information as of December 31, 1998,
December 31, 1997 and December 31, 1996 for
(1) First Alexander Hamilton Life Insurance Company,
(2) Jefferson-Pilot Life Insurance Company,
(3) Jefferson Pilot Financial Insurance Company,
(4) Alexander Hamilton Life Insurance Company of America, and
(5) Jefferson Pilot LifeAmerica Insurance Company;
. quarterly reports on Form 10-Q as of June 30, 1999, March 31, 1999 and
annual reports on Form 10-K as of December 31, 1998, December 31, 1997
and December 31, 1996 for Jefferson Pilot;
. proxy statement dated May 3, 1999 for Jefferson Pilot;
. other communications from Guarantee and Jefferson Pilot to their
respective shareholders;
. annual and quarterly statements for each of Guarantee's insurance
subsidiaries as filed with the applicable insurance regulatory
authorities for the three years ended December 31, 1998 and the quarterly
periods ended March 31, 1999 and June 30, 1999;
. annual and quarterly statements for each of Jefferson Pilot's principal
insurance subsidiaries as filed with the applicable insurance regulatory
authorities for the three years ended December 31, 1998 and the quarterly
periods ended March 31, 1999 and June 30, 1999;
. internal financial analyses and forecasts for Guarantee prepared by its
management; and
. a preliminary actuarial appraisal prepared by an independent actuarial
firm.
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<PAGE>
Goldman Sachs also held discussions with members of the senior management of
Guarantee and Jefferson Pilot regarding the strategic rationale for, and the
potential benefits of, the transaction contemplated by the merger agreement and
the past and current business operations, financial condition and future
prospects of their respective companies. In addition, Goldman Sachs:
. reviewed the reported price and trading activity of Guarantee common
stock and Jefferson Pilot common stock;
. compared financial and stock market information for Guarantee and
Jefferson Pilot with similar information for other selected companies
whose securities are publicly traded;
. reviewed the financial terms of recent business combinations in the life
insurance industry specifically and in other industries generally; and
. performed other studies and analyses as Goldman Sachs considered
appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information it reviewed and assumed the accuracy and
completeness of such for purposes of rendering its opinion. Jefferson Pilot did
not make available to Goldman Sachs its projections of expected future
performance. As a consequence, Goldman Sachs' review of such expected
performance was limited to discussions with members of the senior management of
Jefferson Pilot of the estimates published by research analysts regarding
Jefferson Pilot. Additionally, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities, including the reserves
for their respective insurance businesses, of Guarantee or Jefferson Pilot or
any of their respective subsidiaries and Goldman Sachs was not furnished with
any such evaluation or appraisal, other than a preliminary actuarial appraisal
of Guarantee supplied by an independent actuarial firm. Goldman Sachs is not an
actuary and therefore its services did not include actuarial determinations or
evaluations or an attempt to evaluate actuarial assumptions with respect to all
matters related to the reserve adequacy for Guarantee or Jefferson Pilot. In
that regard Goldman Sachs expressed no opinion as to the adequacy of reserves
for Guarantee or Jefferson Pilot. Goldman Sachs assumed, for purposes of its
opinion, that all material governmental, regulatory or other consents and
approvals necessary for the consummation of the transactions contemplated by
the merger agreement would be obtained without any adverse effect on Guarantee
or Jefferson Pilot or on the potential benefits of the transaction contemplated
by the merger agreement. Goldman Sachs was requested to contact only a limited
number of third parties regarding a potential merger with Guarantee. The
advisory services and opinion of Goldman Sachs referred to in this proxy
statement-prospectus were provided for the information and assistance of the
board of directors of Guarantee in connection with its consideration of the
transaction contemplated by the merger agreement, and the opinion does not
constitute a recommendation as to how any shareholders should vote with respect
to the merger or whether they should elect to receive stock consideration or
cash consideration.
The following summary discloses the material elements of the financial
analyses performed by Goldman Sachs in connection with its opinion to the
Guarantee board of directors dated October 14, 1999. The following summaries of
financial analyses include information presented in tabular format. In order to
understand fully the financial analyses used by Goldman Sachs, you should read
these tables together with the text of each summary.
25
<PAGE>
Implied Transaction Premiums and Multiples. Goldman Sachs reviewed the
closing stock price of Guarantee common stock from December 19, 1995 through
September 16, 1999. Goldman Sachs also calculated the premium on various dates
over the closing Guarantee common stock price implied by the $32.00 price per
share to be received by Guarantee shareholders in the merger, as described in
the following table:
<TABLE>
<CAPTION>
Date Closing Market Price Transaction Premium
---- -------------------- -------------------
<S> <C> <C>
April 30, 1999...................... $20.00 60.0%
July 20, 1999....................... $23.75 34.7%
August 20, 1999..................... $25.13 27.4%
September 16, 1999.................. $28.63 11.8%
October 13, 1999.................... $30.81 3.9%
</TABLE>
Using a price per share of $32.00, Goldman Sachs calculated the proposed
transaction consideration as multiples of Guarantee's:
. diluted earnings per share based on net income from continuing
operations, excluding realized investment gains and losses ("EPS");
. book value per share; and
. statutory surplus, which represents net worth as determined under
statutory accounting principles.
The analysis indicated that the proposed transaction consideration
represented a multiple of:
. 22.4x latest twelve months ("LTM") EPS;
. 17.3x estimated 1999 EPS, based on the median EPS estimate taken from the
Institutional Brokers Estimate System, or "IBES";
. 15.6x IBES estimated 2000 EPS;
. 16.6x estimated 1999 EPS based on projections supplied by Guarantee's
management as of May 1999 (the "Management Projections");
. 13.2x estimated 2000 EPS based on the Management Projections;
. 18.5x estimated 1999 EPS based on analyses supplied by Guarantee's
management in September 1999 following its analysis of the sensitivity of
the Management Projections to various assumptions (the "Sensitivity
Analyses");
. 16.2x estimated 2000 EPS based on the Sensitivity Analyses;
. 1.4x stated book value per share, excluding unrealized gains, as computed
using generally accepted accounting principles;
. 1.4x tangible book value per share, excluding unrealized gains, as
computed using generally accepted accounting principles; and
. 1.9x statutory surplus as of December 31, 1998.
Selected Companies Analysis. To examine the valuations of Guarantee and
Jefferson Pilot in the public market as compared to the valuation in the public
market of other selected publicly traded companies, Goldman Sachs reviewed and
compared selected financial information, based on the commonly used valuation
measurements described below, for each of Guarantee and Jefferson Pilot to
corresponding financial information for selected life insurance companies.
Goldman Sachs selected the following companies for comparison because they are
publicly traded companies in the life insurance industry with operations that
for the purposes of this analysis may be considered similar, in varying
degrees, to operations of Guarantee and Jefferson Pilot:
. seven small-capitalization life insurance companies: The Liberty
Corporation, American Annuity Group, Inc., StanCorp Financial Group,
Inc., AmerUs Life Holdings, Inc., Delphi Financial Group, Inc.,
Presidential Life Corporation, and Kansas City Life Insurance Company;
26
<PAGE>
. six mid-capitalization life insurance companies: Nationwide Financial
Services, Inc., Torchmark Corporation, ReliaStar Financial Corp.,
Protective Life Corporation, The MONY Group, Inc. and Liberty Financial
Companies, Inc.; and
. eight large-capitalization life insurance companies: American General
Corporation, The Equitable Companies Incorporated, AFLAC Incorporated,
Lincoln National Corporation, UNUMProvident Corporation, Conseco, Inc.,
Jefferson Pilot and Hartford Life, Inc.
Goldman Sachs calculated and compared various financial information for the
companies listed above, including:
. closing share price on October 13, 1999 as a percentage of 52-week high
closing share price;
. 1999 and 2000 price-to-earnings ratios, based on median EPS estimates
from IBES;
. projected EPS growth rates, from estimated 1999 to estimated 2000, based
on median IBES estimates;
. five year earnings per share growth rate, based on median IBES estimates;
. ratio of 1999 estimated price-to-earnings ratio to the IBES five year
growth estimate;
. closing share price to book value per share, excluding unrealized gains;
. LTM return on average common equity, excluding unrealized gains;
. debt to total capital ratio, with preferred stock and capital securities
given 50% debt credit; and
. dividend yield.
The results of this analysis are summarized as follows:
<TABLE>
<CAPTION>
Selected Small- Selected Selected
Cap Mid-Cap Large-Cap Life
Life Insurance Life Insurance Insurance
Companies Companies Companies
------------------ ------------------ ------------------- Guarantee Guarantee Jefferson
Ratio/Multiple Range Median Range Median Range Median (9/16/99) (10/13/99) Pilot
- -------------- ---------- ------ ---------- ------ ----------- ------ --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Price as a
Percentage of
52-Week High........... 52%- 84% 74% 58%-76% 68% 55%-80% 69% 82% 88% 80%
Estimated 1999
Price/Earnings Ratio... 7.4x-18.7x 10.2x 8.2x-12.8x 10.7x 6.8x-22.9x 12.6x 15.5x 16.7x 16.8x
Estimated 2000
Price/Earnings Ratio... 6.6x-16.7x 9.2x 7.2x-11.3x 9.8x 7.2x-19.8x 11.3x 13.1x 15.0x 15.0x
Estimated 1999 to 2000
Growth Rate............ 4.6%-12.8% 11.3% 4.3%-13.3% 12.6% (6.3%)-21.5% 12.7% 17.8% 10.8% 12.0%
Estimated Five Year
Growth Rate............ 5.0%-17.0% 11.5% 10.0%-15.0% 12.5% 11.5%-15.0% 13.9% 12.8% 12.8% 11.5%
Estimated 1999
Price/Earnings Ratio to
Estimated Five Year
Growth Rate............ 0.4x-3.7x 0.9x 0.8x-1.1x 0.8x 0.5x-1.5x 0.9x 1.2x 1.3x 1.5x
Share Price/ Book Value
Ratio.................. 0.84x-1.78x 1.04x 0.71x-2.06x 1.62x 1.00x-5.12x 1.90x 1.23x 1.33x 2.69x
LTM Return on Average
Common Equity.......... 5.5%-16.9% 8.4% 7.0%-16.6% 13.6% 6.5%-23.3% 15.6% 6.8% 6.8% 16.4%
Debt/Capital Ratio...... 0.0%-36.1% 21.0% 15.3%-29.1% 26.6% 22.1%-36.2% 28.0% 34.6% 34.6% 24.7%
Dividend Yield.......... 0.0%-2.6% 1.9% 1.1%-2.5% 1.6% 0.4%-3.0% 2.0% 1.0% 0.9% 2.1%l
</TABLE>
As a result of the foregoing procedures, Goldman Sachs noted that the
multiples for Guarantee fell generally within the range of multiples for the
small-capitalization life insurance companies, and that the multiples for
Jefferson Pilot fell generally within the range of multiples for the large-
capitalization companies.
27
<PAGE>
Selected Transactions Analysis. Goldman Sachs reviewed the financial terms,
to the extent publicly available, of 45 pending or completed acquisitions in
the life insurance industry which were announced since January 1, 1996, and
had a transaction value of at least $100 million. Goldman Sachs calculated
various financial multiples for each of the transactions, including:
. the multiple of aggregate equity consideration to LTM net income;
. the multiple of aggregate equity consideration to tangible book value, as
computed using generally accepted accounting principles;
. the multiple of aggregate equity consideration to statutory surplus; and
. the premium over market price, based on the target's closing stock price
one month prior to announcement.
Goldman Sachs compared these multiples to corresponding financial
information for the merger. The results of this analysis are summarized as
follows:
<TABLE>
<CAPTION>
Multiple of Previous Premium to Price
Multiple of LTM Multiple of Tangible Year Statutory One Month Prior
Net Income Book Value Surplus to Announcement
--------------- -------------------- -------------------- ----------------
<S> <C> <C> <C> <C>
Range................... 7.6x-37.4x 0.5x-5.2x 1.1x-13.2x 0.1%-101.2%
Mean.................... 19.2x 2.0x 4.3x 32.1%
Median.................. 16.8x 1.6x 3.7x 31.2%
The Merger.............. 22.4x 1.4x 1.9x 27.4%
</TABLE>
As a result of the foregoing procedures, Goldman Sachs noted that the
multiples for the merger fell within the range of multiples for the selected
transactions.
Present Value Analysis. Goldman Sachs performed a present value analysis by
calculating a range of assumed values for Guarantee common stock based on
estimates of Guarantee's future dividend stream over a four-year period and
estimates of terminal values per share of Guarantee common stock at the end of
this period. Goldman Sachs assumed a range of 2002 EPS multiples, as of June
30, 2002, from 9.0 to 13.0 times and performed its calculations using both the
Management Projections and the Sensitivity Analyses. Future values, including
the terminal values and projected dividends, were discounted to present value
at assumed rates of 10.0%, 12.5% and 15.0%.
Based on the above assumptions, the range of present values per Guarantee
share calculated by Goldman Sachs using the Management Projections was $25.38
to $41.20, and the range of present values per Guarantee share using the
Sensitivity Analyses was $21.11 to $34.22.
Goldman Sachs noted that the merger consideration of $32.00 per Guarantee
share was within these valuation ranges.
Pro Forma Merger Analysis. Goldman Sachs calculated the pro forma financial
impact of the merger on the projected EPS of Jefferson Pilot. Based on median
EPS estimates from IBES and the closing price of Jefferson Pilot common stock
on October 13, 1999 of $62.94, this analysis indicated that, on a pro forma
basis:
. if the merger consideration is 100% cash consideration, the merger would
increase Jefferson Pilot's estimated EPS by 2.3% and 2.5% in 2000 and
2001, respectively; and
. if the merger consideration is 50% cash consideration and 50% stock
consideration, the merger would increase Jefferson Pilot's estimated EPS
by 1.6% and 1.7% in 2000 and 2001, respectively.
Other Analyses. Goldman Sachs also prepared a summary of the historical
quarterly and annual EPS of Guarantee and reviewed, among other things,
certain historical financial data for Guarantee and Jefferson Pilot, selected
investment research reports on, and earnings estimates for, Guarantee and
Jefferson Pilot and the closing price of Jefferson Pilot common stock in the
one year period prior to the announcement of the merger.
28
<PAGE>
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses and did not attribute
any particular weight to any analysis or factor considered by Goldman Sachs,
nor, except as described above, did it draw any conclusions with respect to
fairness based on any particular analysis. No company or transaction used in
the above analyses as a comparison is directly comparable to Guarantee or
Jefferson Pilot or the contemplated transaction.
The analyses were prepared for purposes of providing an opinion to the
Guarantee board as to the fairness from a financial point of view to the
holders of Guarantee common stock of the merger consideration to be received by
the holders of Guarantee common stock pursuant to the merger agreement. The
analyses do not purport to be appraisals or necessarily reflect the prices at
which businesses or securities actually may be sold. Analyses based upon
forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties
or their respective advisors, none of Guarantee, Jefferson Pilot, Goldman Sachs
or any other person assumes responsibility if future results are materially
different from those forecast.
As described above, Goldman Sachs' opinion to the Guarantee board of
directors was one of many factors the Guarantee board of directors took into
consideration in making its determination to approve the merger agreement and
the merger and to recommend that Guarantee shareholders approve and adopt the
merger agreement and the merger. The foregoing summary describes the material
elements of the analyses performed by Goldman Sachs.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with Guarantee, having provided certain investment banking services to
Guarantee from time to time, including having acted as financial advisor to
Guarantee Mutual Life Company in connection with its conversion from a mutual
life insurance company to a stock life insurance company in December 1995 (the
"Demutualization") and as lead managing underwriter of a public offering of
2,500,000 shares issued by Guarantee in connection with the Demutualization,
and having acted as financial advisor in connection with, and having
participated in certain negotiations leading to, the merger agreement. Goldman
Sachs has also provided certain investment banking services to Jefferson Pilot
from time to time, including having acted as financial advisor to Jefferson
Pilot in its acquisition of Alexander Hamilton Life Insurance Company of
America in October 1995 and lead managing underwriter in the public offering of
Automatic Common Exchange Securities by Jefferson Pilot in November 1995.
Goldman Sachs provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of Guarantee or Jefferson Pilot for its own account and for the accounts of
customers. Goldman Sachs may provide investment banking services to Jefferson
Pilot and its subsidiaries in the future.
Pursuant to an engagement letter dated June 18, 1999, Goldman Sachs was
retained by Guarantee in connection with the possible sale of Guarantee.
Pursuant to the terms of this engagement letter, Guarantee has agreed to pay
Goldman Sachs for its services, including the fairness opinion, a fee of 0.80%
of the total consideration paid for Guarantee common stock, including amounts
paid to holders of options for Guarantee common stock. The amount of this fee
is approximately $2.5 million and payment is contingent upon consummation of
the merger. The Guarantee board of directors was aware of the contingent nature
of Goldman Sachs' fee in determining to approve the merger agreement and the
merger, and understood that this arrangement could be viewed as giving the
financial advisor a financial interest in the successful completion of the
merger. Guarantee has also agreed to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses, including the fees and disbursements of its counsel,
and to indemnify Goldman Sachs against certain liabilities
29
<PAGE>
arising under federal securities laws. Prior to its engagement in connection
with the merger, Goldman Sachs had received an aggregate amount of $20,000 from
Guarantee for financial advisory services performed in the previous year.
Interests of Directors and Officers of Guarantee in the Merger
The directors and officers of Guarantee have interests in the merger that
differ from yours as a shareholder of Guarantee. The Guarantee board of
directors was aware of these interests and considered them in approving the
merger agreement and the transactions contemplated by the merger agreement.
Employment Agreements. The current employment agreement between Guarantee and
Mr. Robert D. Bates, chairman of the board, president and chief executive
officer of Guarantee, established the terms and conditions of Mr. Bates'
employment with Guarantee, including establishing his minimum base salary and
his title, duties and responsibilities for Guarantee. The agreement also
established the termination payments that would have been made to Mr. Bates for
an involuntary termination of his employment with Guarantee and a voluntary or
constructive termination of Mr. Bates' employment following a "change of
control."
As a condition to its entering into the merger agreement, Jefferson Pilot
requested that Mr. Bates agree to enter into a new employment agreement with
Jefferson Pilot and reach a settlement with Guarantee of his rights under the
existing employment agreement with Guarantee. Mr. Bates agreed to these
conditions in order to induce Jefferson Pilot to enter into the merger
agreement. Under his new employment agreement with Jefferson Pilot, which has
been entered into and will take effect only if and when the merger has been
completed, Mr. Bates will serve as an executive vice president of Jefferson
Pilot.
The table below compares Mr. Bates' maximum and projected, based on
Guarantee's performance to date, cash compensation under his current employment
agreement with his new employment agreement with Jefferson Pilot. Because Mr.
Bates' bonus opportunity under this existing employment depends on Guarantee's
performance, the occurrence of any event that negatively impacted Guarantee's
performance would cause Mr. Bates' bonus to be less than it would otherwise
have been if such event had not occurred. Such an event could include a rating
agency downgrade.
<TABLE>
<CAPTION>
Maximum Projected Maximum
under existing under existing under Jefferson
Guarantee Agreement Guarantee Agreement Pilot Agreement
------------------- ------------------- ---------------
<S> <C> <C> <C>
Base salary............ $ 578,333 $578,333 $400,000
Cash bonus............. 578,333 404,833 400,000
---------- -------- --------
Total................ $1,156,666 $983,166 $800,000
========== ======== ========
</TABLE>
Mr. Bates' projected 1999 base salary in the table assumes that Mr. Bates'
salary is retroactively increased as described in "Restoration of Back Pay" on
page 32. Mr. Bates' projected 1999 cash bonus assumes that Mr. Bates' salary is
retroactively increased as described in "Restoration of Back Pay" on page 32
and that Mr. Bates is entitled to receive 70% of his bonus opportunity based
upon Guarantee's 1999 performance.
In addition, under the employment agreement with Jefferson Pilot, Mr. Bates
will receive the following compensation:
. $3.5 million, payable in stock and cash, to induce Mr. Bates to enter
into the employment agreement and commit to work for at least three
years following the merger; if Mr. Bates voluntarily terminates his
employment with Jefferson Pilot prior to the third anniversary of the
merger, he must repay a pro-rata portion of this payment;
. options to purchase shares of Jefferson Pilot common stock worth
approximately $2.1 million based on the closing price per share of
Jefferson Pilot common stock on the closing date of the merger, to
provide Mr. Bates with incentives to perform; these options will only
become exercisable upon
30
<PAGE>
achievement of earnings targets over a three-year period by the combined
group life business of Guarantee and Jefferson Pilot; and
. additional options for Jefferson Pilot common stock upon achievement of
earnings targets over a one and two year period following the merger.
Noncompetition, Nonsolicitation and Cancellation Agreement. To accommodate
Jefferson Pilot's request that Mr. Bates and Guarantee cancel his existing
employment agreement, and that he enter into agreements limiting his ability to
compete with Guarantee and Jefferson Pilot following the merger, Guarantee, Mr.
Bates and Jefferson Pilot entered into a noncompetition, nonsolicitation and
cancellation agreement, which will become effective when we complete the
merger. This agreement would extinguish the rights and obligations of both Mr.
Bates and Guarantee under existing employment agreement and create new
obligations under which Mr. Bates could not compete with the combined business
and could not solicit the business of customers of the combined business for a
two year period following the termination of his employment. In consideration
of canceling his existing employment agreement and entering into these
additional covenants, Mr. Bates would receive the following payments from
Guarantee:
. $1,362,000, in full satisfaction of his rights and entitlements,
including his accrued benefits through the closing date of the merger,
under Guarantee's non-qualified retirement plans;
. $300,000 bonus for services rendered to Guarantee during 1999; and
. $1,450,000 in consideration of the additional noncompetition and
nonsolicitation covenants.
This agreement does not affect Guarantee's obligations to Mr. Bates under any
elective deferred compensation plan, any equity based compensation program or
any qualified plan maintained by Guarantee.
Mr. Bates will also receive a payment of $1,085,490 of vested amounts under
the terms of Guarantee's Deferred Compensation Plan at or about the time we
complete the merger.
Stock Options, Performance Shares and Restricted Shares. In the merger, each
option to purchase shares of Guarantee's common stock granted under Guarantee's
option plans and outstanding when we complete the merger will be cashed out for
a cash payment in an amount equal to the excess of $32.00 over the exercise
price of the option. This will occur regardless of whether the option was
exercisable absent a change of control. In addition, each performance share or
restricted share granted under Guarantee's 1994 Long-Term Incentive Plan which
has not otherwise become vested at the time we complete the merger will become
vested at the time we complete the merger. Each of Guarantee's executive
officers, including Mr. Bates, holds unvested options, and Mr. Bates holds
20,192 shares of unvested restricted stock and 20,000 unvested performance
shares. In addition, under the terms of Guarantee's early option exercise
incentive program, the cash settlement of the outstanding options in the merger
will be treated as the exercise of such options, allowing the holder to receive
a cash payment from Guarantee in an amount equal to the number of shares of
restricted stock that would have been issued under such program upon exercise
of such options times $32.00. See "Estimates of Amounts Payable" on page 32 for
aggregate amounts payable to Guarantee's executive officers for these stock
options, performance shares and restricted shares, together with amounts
payable with respect to any contingent salary increase payable by reason of the
merger, amounts accrued under Guarantee's phantom stock plan and for the
portion of voluntarily deferred compensation account balances deemed invested
in common stock.
Executive Severance Plan. Guarantee maintains an Executive Severance Plan
under which 20 officers are eligible to participate, not including Mr. Bates.
In general, under this plan, each covered officer will receive payments within
two years after the merger if the officer is terminated for any reason other
than death, disability, voluntary normal retirement or for "cause" or resigns
without "good reason." An officer would have "good reason" to resign if
Guarantee or its successor:
(1) assigns him duties materially and adversely inconsistent with his
duties prior to the change in control or if there is an adverse change in
his title or responsibilities;
31
<PAGE>
(2) reduces his base compensation;
(3) fails to maintain its officers' incentive compensation plan or a
comparable plan;
(4) fails after the change in control to provide employee benefits that
were provided at the time of the change in control; or
(5) fails to obtain the assumption of the obligations under the plan by
any successor to Guarantee.
Upon a qualifying termination, each officer will receive a payment equal to
either one or two times the officer's base salary depending on the officer's
position in Guarantee's management team. In addition, any other item of
deferred or incentive compensation shall fully vest and become fully earned by
the officer. Guarantee will also pay for the cost of all reasonable
outplacement services rendered to the officer for one year after the
termination or resignation. See "Estimates of Amounts Payable" below for the
aggregate amounts payable to Guarantee's executive officers in the event those
officers were terminated in a manner giving rise to severance benefits.
Restoration of Back Pay. Eight of Guarantee's senior officers, including Mr.
Bates, received no payments with respect to merit salary increases in 1999;
however, they were granted such increases, ranging from 3.9% to 15.5%, under a
program whereby such salary increases would be paid retroactive to April 1,
1999 upon the achievement of performance objectives for 1999. Seven of these
senior officers, including Mr. Bates, expected to meet their performance
objectives in 1999. The program also specifically provided that, regardless of
performance, such amounts would also be reinstated upon the occurrence of a
change of control of Guarantee. One executive officer received a contingent
additional bonus commitment of $15,000, instead of a contingent salary
increase, which is also payable in the event of a change of control. See
"Estimates of Amounts Payable" below for the aggregate amounts payable to
Guarantee's executive officers with respect to any contingent salary increase
payable by reason of the merger, together with amounts payable with respect to
stock options, performance shares, restricted shares, amounts accrued under
Guarantee's phantom stock plan and for the portion of voluntarily deferred
compensation account balances deemed invested in common stock.
Estimates of Amounts Payable. Each of the non-employee directors holds vested
and unvested stock options which, in the aggregate, will provide each such
director with a gain of less than $100,000. The gain related to the unvested
options is less than $41,000 in all cases. Two of the directors also have
elected to have their vested deferred compensation deemed invested in
Guarantee's common stock. As of October 31, 1999, the value of the portion of
the deferral accounts of these two directors was less than $120,000 in the
aggregate.
The following table shows, as to each of the five highest paid executive
officers of Guarantee, including Mr. Bates, and as to all of the other
executive officers as a group, the aggregate amounts payable in connection with
the merger for (1) outstanding benefits and (2) severance benefits that would
be payable if the employment of the officers were terminated for the reasons
stated under "Executive Severance Plan" on page 31. For purposes of the table,
outstanding benefits include
. vested and unvested stock options,
. any contingent salary increase payable by reason of the merger,
. any performance shares or restricted shares deemed vested by reason of
the merger, including the cash out of restricted shares that are deemed
issuable under the early option exercise program,
. accrued account balances under Guarantee's phantom stock plan, and
. the portion of voluntarily deferred compensation account balances deemed
invested in common stock.
32
<PAGE>
The amounts shown in the table for Mr. Bates are in addition to (1) amounts
payable with respect to the new employment agreement Mr. Bates has entered into
with Jefferson Pilot described under "Employment Agreements" on page 30 and (2)
amounts payable under the noncompetition, nonsolicitation and cancellation
agreement described under "Noncompetition, Nonsolicitation and Cancellation
Agreement" on page 31. The amounts shown in the table as severance benefits do
not include the pro-rated bonus for the year of termination that would be
payable based on the executive officer's target bonus opportunity. The amount
of such bonus cannot be quantified until the date, if any, of the officer's
termination.
<TABLE>
<CAPTION>
Outstanding Benefits Severance Benefits
-------------------- ------------------
<S> <C> <C>
Robert Bates....................... $4,900,000 N/A
Theodore Cooley.................... $987,000 $526,000
William Bauhard.................... $924,000 $438,000
Gary Rittenhouse................... $971,000 $436,000
Richard Spellman................... $1,071,000 $422,000
Other Executive Officers as a
Group--6 people................... $3,166,000 $1,756,000
</TABLE>
Indemnification of Officers and Directors. In the merger agreement, Jefferson
Pilot has agreed to provide indemnification to the present and former officers
and directors of Guarantee and to maintain directors' and officers' liability
insurance for the directors and officers covered by Guarantee's directors' and
officers' liability insurance for six years after the merger.
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THE MERGER AGREEMENT
This is a brief summary of the material terms of the merger agreement and the
merger. This summary is not a complete description and is qualified by
reference to the merger agreement, which is attached as Appendix A.
The Stock Election Merger and the All Cash Merger
The merger agreement provides for the acquisition of Guarantee by Jefferson
Pilot through a merger of Guarantee with LG Merger Corp. Jefferson Pilot formed
LG Merger Corp., a wholly owned subsidiary of Jefferson Pilot, in connection
with the merger.
We will complete the merger if Guarantee's shareholders adopt the merger
proposal.
The merger agreement provides that Guarantee shareholders may elect to
receive, in exchange for their shares of Guarantee common stock, cash of
$32.00, shares of Jefferson Pilot common stock worth approximately $32.00 based
on a formula related to its trading price or a combination of cash and stock
worth approximately $32.00. Jefferson Pilot can pay up to 50% of the total
merger consideration in shares of its common stock.
However, the merger will be an all cash merger if any of the following three
events occurs:
. the average high and low sales prices of Jefferson Pilot common stock on
each of the 10 consecutive trading days ending on the fourth trading day
before completion of the merger is less than $65.00 per share, and
Jefferson Pilot timely elects to pay cash consideration for all
outstanding shares of Guarantee common stock; or
. the average price of Jefferson Pilot common stock as calculated in the
preceding bullet is more than $75.00 per share; or
. the NYSE closing price of Jefferson Pilot common stock on the trading day
before the anticipated closing date is less than the average price of
Jefferson Pilot common stock as calculated above and, as a result,
counsel for either Jefferson Pilot or Guarantee does not deliver its
opinion that the merger would qualify as a reorganization pursuant to
Section 368(a) of the Internal Revenue Code.
The closing will take place no later than the second business day after the
satisfaction or waiver of all of those conditions. However, if the merger is an
all cash merger under the third bullet above, we may delay the closing by two
business days. In any case, the closing will not occur earlier than December
15, 1999 unless Jefferson Pilot and Guarantee otherwise agree.
Unless Jefferson Pilot pays the merger consideration entirely in cash,
Guarantee will merge with and into LG Merger Corp. Then, LG Merger Corp. will
continue as the combined company, operating under the certificate of
incorporation and bylaws of LG Merger Corp. in effect at the time of the
merger.
If Jefferson Pilot pays the merger consideration entirely in cash, LG Merger
Corp. will merge with and into Guarantee, and Guarantee will continue as the
combined company, operating under the certificate of incorporation and bylaws
of Guarantee in effect at the time of the merger.
Whether or not Jefferson Pilot pays the merger consideration entirely in
cash, the directors of LG Merger Corp. and the officers of Guarantee upon
completion of the merger will serve as the directors and officers of the
combined company, until the earlier of their death, resignation or removal or
until their respective successors are duly elected and qualified.
Jefferson Pilot plans to finance the cash portion of the merger consideration
with cash from operations and proceeds from the issuance of commercial paper
and/or debt.
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Conversion of Guarantee Shares
If Jefferson Pilot delivers its shares in the merger, each share of Guarantee
common stock will convert, based on the election of that shareholder into the
right to receive merger consideration as cash. The allocation provisions
described under the heading "The Merger Agreement--Allocation of Stock
Consideration and Cash Consideration; Proration" below, will apply to such a
conversion.
. $32.00 in cash; or
. stock consideration consisting of a number of shares of Jefferson Pilot
common stock equal to:
(1) $32.00 divided by
(2) the average of the high and low sales price, regular way, of
Jefferson Pilot common stock as reported in The Wall Street Journal
on each of the 10 consecutive NYSE trading days ending on and
including the fourth trading day prior to completion of the merger;
or
. a combination of stock consideration and cash consideration worth
approximately $32.00 based on the average price calculated as described
in the preceding bullet.
If Jefferson Pilot pays the merger consideration entirely in cash, each share
of Guarantee common stock will convert into the right to receive $32.00 in cash
consideration, and Jefferson Pilot will not issue any shares of its common
stock.
We will cancel for no consideration all shares of Guarantee common stock held
in treasury by Guarantee or any of its subsidiaries.
Elections
We are sending an election form/letter of transmittal with this proxy
statement-prospectus. Please use the election form/letter of transmittal to:
.elect to receive Jefferson Pilot shares for all of your shares;
.elect to receive $32.00 in cash per share for all of your shares;
.elect to receive cash for a portion of your shares and Jefferson Pilot
shares for a portion of your shares;
. indicate that you have no preference as to receiving cash or Jefferson
Pilot common stock for your shares.
If you fail to make an election, or fail to submit a valid election form/letter
of transmittal before the election deadline, we will treat your shares of
Guarantee common stock as shares subject to a non-election. Shares subject to a
non-election will receive merger consideration based on the proration formulas
described in the next section below. See "The Merger Agreement--Election
Procedure" beginning on page 37.
If you properly submit a mixed election, we will treat your election as a
separate cash election and stock election for the shares that you specify as
such in applying the allocation and proration procedures described below.
You should carefully consider the tax consequences of making an election. We
urge you to consult with your tax advisor to determine your specific tax
consequences. See "Material United States Federal Income Tax Consequences"
beginning on page 50.
Allocation of Stock Consideration and Cash Consideration; Proration
Jefferson-Pilot will deliver at least 50% of the total merger consideration
in cash, including the cash used to pay holders of the dissenting shares, which
we will treat as non-election shares, and cash paid in lieu of fractional
Jefferson Pilot shares. Jefferson-Pilot will deliver 50% of the total merger
consideration in Jefferson Pilot shares, unless the merger is an all cash
merger.
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<PAGE>
Stock Oversubscription. If holders of more than 50% of all Guarantee shares
elect to receive Jefferson Pilot common stock, then all Guarantee shares
covered by a cash election and all Guarantee shares covered by non-elections
will convert into the right to receive cash. In this case, each Guarantee share
covered by a stock election will convert into the right to receive:
. a number of shares of Jefferson Pilot common stock equal to the product
of
(1) the stock consideration multiplied by
(2) a fraction,
. the numerator of which is 50% of all outstanding shares of
Guarantee common stock, and
. the denominator of which is the total number of Guarantee shares
covered by a stock election; and
. an amount in cash, without interest, equal to the product of
(1) the cash consideration multiplied by
(2) a fraction equal to one minus the fraction described in clause (2)
under the preceding bullet above.
Cash Oversubscription. If holders of more than 50% of all Guarantee shares
elect to receive cash, then all Guarantee shares covered by stock elections and
non-elections will convert into the right to receive Jefferson Pilot common
stock. In this case, each Guarantee share covered by a cash election will
convert into the right to receive:
. an amount in cash equal to
(1) $32.00 multiplied by
(2) a fraction
. the numerator of which is the maximum number of shares of
Guarantee shares that can convert into the right to receive cash,
and
. the denominator of which is the aggregated number of Guarantee
shares under a cash election; and
. a number of shares of Jefferson Pilot common stock equal to the product
of
(1) the stock consideration multiplied by
(2) a fraction equal to one minus the fraction described in clause (2)
under the preceding bullet above.
Insufficient Cash and Stock Subscriptions. If neither the Guarantee shares
covered by stock elections nor the Guarantee shares covered by cash elections
exceeds 50% of the outstanding Guarantee shares, then all Guarantee shares
covered by cash elections will convert into the right to receive cash and all
Guarantee shares covered by stock elections will convert into the right to
receive Jefferson Pilot stock. All non-election Guarantee shares will convert
into the right to receive cash, Jefferson Pilot stock or a combination of cash
and stock according to the following criteria.
Guarantee shares held by small shareholders will convert into the right to
receive cash. This will avoid the inconvenience and costs to small shareholders
and Jefferson Pilot of creating a potentially large number of holders of small
numbers of Jefferson Pilot shares. A small shareholder is a holder of not more
than the largest whole number of Guarantee shares that would result in the sum
of:
. all Guarantee shares held by small shareholders, and
. all cash election Guarantee shares, fractional shares and certain
dissenting shares,
not exceeding the maximum number of Guarantee shares that can convert into the
right to receive cash. However, a Guarantee shareholder holding 100 or more
Guarantee shares is not a small shareholder.
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<PAGE>
Each non-election share held by a holder other than a small shareholder will
convert into the right to receive
. a number of shares of Jefferson Pilot common stock equal to the product
of
(1) the stock consideration multiplied by
(2) a fraction,
. the numerator of which is (A) the maximum number of Guarantee
shares that can be converted into the right to receive cash minus
(B) the total number of stock election Guarantee shares, and
. the denominator of which is the total number of non-election
Guarantee shares held by holders other than small shareholders;
and
. an amount in cash, without interest, equal to the product of
(1) the cash consideration multiplied by
(2) a fraction equal to one minus the fraction described in clause (2)
of the preceding bullet above.
Tax Treatment
Jefferson Pilot and Guarantee have agreed to use their reasonable efforts to
cause the merger, if Jefferson Pilot delivers any of its common stock, to
qualify as a reorganization pursuant to Section 368(a) of the Internal Revenue
Code.
Election Procedure
We are sending an election form/letter of transmittal, which includes
instructions, with this proxy statement-prospectus. To make a valid election,
you must deliver your election form/letter of transmittal to the exchange agent
by 5:00 p.m., New York City time, on the election deadline. We expect the
election deadline to be December 24, 1999. If the election deadline changes, we
will issue a press release
.five business days before the new election deadline if we set an earlier
deadline or
.two business days before the new election deadline if we set a later
deadline.
Any Guarantee shareholder may revoke or change his or her election by written
notice received by the exchange agent before the election deadline.
You should complete the election form/letter of transmittal and return it to
the exchange agent so it is received before the election deadline. You should
include your share certificates or an appropriate guarantee of delivery of your
share certificates unless your shares of Guarantee common stock are
uncertificated book-entry shares. If you do not properly complete and return
the enclosed election form/letter of transmittal and your Guarantee stock
certificate, if any, before the election deadline, we will treat your Guarantee
common stock as non-election shares. This means that we will determine the form
of merger consideration you will receive under the non-election allocation
provisions of the merger agreement described above.
Exchange of Stock Certificates; Book-Entry Shares
As soon as practicable after the merger, Jefferson Pilot will deposit into
the exchange fund held by the exchange agent the merger consideration plus
additional cash for any dividends declared but not paid before completion of
the merger. Within 15 days after the election deadline, or if the time when we
complete the merger is later, as soon as practicable after we complete the
merger, Jefferson Pilot will cause the exchange agent to allocate the Jefferson
Pilot shares and/or the cash that you are entitled to receive as consideration.
To receive the merger consideration, however, you must first deliver your
stock certificates with the election form/letter of transmittal, unless your
shares are uncertificated and held in book-entry form with
37
<PAGE>
Guarantee's transfer agent. If your Guarantee shares are uncertificated and
held in book-entry form with Guarantee's transfer agent, you must still deliver
the election form/letter of transmittal to make an election regarding the form
of merger consideration you prefer to receive. If the exchange agent does not
receive your stock certificates and election form/letter of transmittal before
the election deadline, you may not receive the form of consideration you
prefer.
If you had a stock certificate but it has been lost, stolen or destroyed, you
may submit an affidavit of that fact in lieu of surrendering the certificate
itself. Jefferson Pilot may condition your receipt of merger consideration in
the case of a lost certificate on the posting of bond as indemnity against any
claim made with respect to that share certificate. For further details, call
ChaseMellon, the information agent, at the number listed on your Election
Form/Letter of Transmittal.
If Jefferson Pilot pays any portion of the merger consideration in Jefferson
Pilot common stock, you will receive a stock certificate representing the
shares only if you indicate on the election form/letter of transmittal that you
wish to receive a physical stock certificate. Otherwise, Jefferson Pilot will
issue you shares of Jefferson Pilot common stock in book-entry form with
Jefferson Pilot's transfer agent. You will receive a notice from the transfer
agent upon issuance of these shares in book-entry form. If you decide after we
complete the merger that you would like a stock certificate for your shares,
you may request a certificate from the transfer agent.
No Fractional Shares. If you are to receive a number of Jefferson Pilot
shares that includes a fractional share, you will receive the value of the
fractional share in cash instead of a fraction of a Jefferson Pilot share. You
will also receive any dividends declared but not paid out before we complete
the merger. Once you have surrendered your Guarantee shares, you will have no
further ownership rights in the Guarantee shares.
Transfer Taxes. If you are the registered holder of Guarantee shares but
would like your merger consideration paid or issued to someone else, you must
complete the section titled "Special Payment Instruction" in the election
form/letter of transmittal and properly endorse any stock certificates owned by
you and ensure that you have paid all taxes arising from issuance of Jefferson
Pilot shares.
Withholding Tax. Jefferson Pilot or the exchange agent may deduct and
withhold from the merger consideration that they pay to you the amount
necessary to cover any required federal, state, local or foreign withholding
taxes with respect to issuing the merger consideration. Jefferson Pilot will
treat these amounts as having been paid to you.
Investment and Termination of the Exchange Fund. The exchange agent will
invest all cash held in the exchange fund as Jefferson Pilot directs. Jefferson
Pilot will receive any interest or other income accruing from investments.
The exchange agent will deliver any portion of the exchange fund that it has
not distributed six months after the merger to Jefferson Pilot upon demand. At
this point, any Guarantee shareholder who has not received the appropriate
merger consideration must look to Jefferson Pilot for payment.
Adjustments. If at any time before we complete the merger there is any change
in the outstanding shares of Guarantee or Jefferson Pilot as the result of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares or any dividend, we will equitably adjust the merger
consideration.
Representations and Warranties
The merger agreement contains representations and warranties of each of the
parties to the other. Guarantee represents and warrants as to, among other
things:
. the corporate organization, standing and power of Guarantee and its
subsidiaries;
. Guarantee's capitalization;
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<PAGE>
. the authorization, execution, delivery, performance and enforceability of
the merger agreement, except for shareholder approval and approval by
insurance regulatory authorities;
. the accuracy of Guarantee's financial statements and other matters in
connection with Guarantee's filings with the SEC;
. the absence of any undisclosed liabilities;
. compliance with applicable laws by Guarantee and its subsidiaries,
including environmental laws and regulations and insurance laws;
. matters relating to the Employee Retirement Income Security Act of 1974
as amended (ERISA), and other employment and labor relations matters;
. since June 30, 1999, the conduct of the businesses of Guarantee and its
subsidiaries in the ordinary course and the absence of any event or
occurrence that would have a material adverse effect on the business,
results of operations, prospects or financial condition of Guarantee and
its subsidiaries;
. since June 30, 1999, the absence of any action by Guarantee or its
subsidiaries that would, if taken after the date of the merger agreement,
violate Guarantee's covenants in the merger agreement relating to the
conduct of its business. See "Covenants of Guarantee" on page 40.
. pending or threatened litigation, investigations or governmental reviews;
. the accuracy of information that Guarantee supplies for inclusion in this
proxy statement-prospectus and in other filings with the SEC;
. no ownership of Jefferson Pilot common stock;
. the accuracy and timely filing of tax returns;
. required vote of Guarantee shareholders;
. material contracts;
. ownership and use of computer software and intellectual property;
. year 2000 matters;
. no violation of any state takeover statute;
. employment of finders or brokers;
. the amendment of the Guarantee shareholder rights agreement to allow for
the merger;
. operation of the insurance business;
. activities of agents of Guarantee;
. separate accounts maintained by the insurance subsidiaries of Guarantee;
. derivative financial instruments;
. investments of Guarantee;
. due authorization and delivery of the cancellation agreement with Mr.
Bates;
. compliance with obligations under the service agreement with Ohio Farmers
Insurance Company; and
. matters relating to the real estate owned by Guarantee and its
subsidiaries.
Guarantee also made representations and warranties related to the fairness
opinion from Goldman Sachs.
Jefferson Pilot and LG Merger Corp. represent and warrant as to, among other
things:
. the corporate organization, standing and power of Jefferson Pilot and its
subsidiaries;
. Jefferson Pilot's capitalization;
. the authorization, execution, delivery, performance and enforceability of
the merger agreement, except for approval by insurance regulatory
authorities;
39
<PAGE>
. the accuracy of Jefferson Pilot's financial statements and other matters
in connection with Jefferson Pilot's filings with the SEC;
. the absence of any undisclosed liabilities;
. noncontravention of laws, agreements and regulatory authorities;
. since June 30, 1999, the absence of any event, occurrence, development or
state of circumstances or facts that has or would have a material adverse
effect on the business, results of operations, prospects or financial
condition of Jefferson Pilot and its subsidiaries;
. pending or threatened litigation, investigations or governmental reviews;
. the accuracy of information to be supplied by Jefferson Pilot for
inclusion in this proxy statement- prospectus and in other filings with
the SEC;
. no ownership of Guarantee common stock;
. no shareholder vote required;
. employment of finders or brokers;
. sufficient resources available to pay the merger consideration; and
. due authorization and delivery of employment agreement with Mr. Bates.
None of the representations and warranties survive consummation of the
merger.
Covenants of Guarantee
Conduct of Business. The merger agreement requires that Guarantee and its
subsidiaries generally carry on their business in the ordinary course as
currently conducted and use reasonable best efforts to preserve intact their
current business organization and goodwill. Guarantee and its subsidiaries must
also comply in all material respects with all applicable governmental and
regulatory laws and orders, keep available the services of their current
officers and other key employees and preserve their relationships with those
having business dealings with it, including brokers, agents, insureds and
customers. At Jefferson Pilot's reasonable request, Guarantee must confer with
Jefferson Pilot regarding material operational matters and report on the
general status of ongoing operations and transition plans.
Guarantee generally must not, and must not permit any of its subsidiaries to,
do any of the following without the prior written consent of Jefferson Pilot:
. declare or pay any dividend, other than regular quarterly dividends of
$.07 per share, on or make any distribution with respect to outstanding
shares of common stock;
. split, combine or reclassify any of its capital stock, or authorize or
propose the issuance of any other securities in respect of or in
substitution for shares of its capital stock, except for any transaction
with a wholly owned subsidiary;
. enter into or amend any employment, severance or similar agreement with
directors or executive officers;
. sell or otherwise encumber or dispose of any of its assets, other than in
the ordinary course of business consistent with past practice,
transactions effected by Guarantor's insurance subsidiaries under their
respective investment policies and those transactions where the fair
market value of the consideration paid or received does not exceed
$1,000,000 for any one transaction and $5,000,000 in the aggregate, other
than those sales previously disclosed to Jefferson Pilot;
. amend its corporate organizational documents;
. issue or sell any shares of capital stock other than under option plans
or grant, confer or award any options, warrants, commitments, conversion
rights, subscriptions or other rights not already existing to acquire any
shares of capital stock;
40
<PAGE>
. purchase or redeem any shares of its stock or any rights, warrants or
options to acquire any shares;
. amend the terms of employee benefit plans, programs or other similar
arrangements or agreements or adopt any new employee benefit plans,
increase any salaries except in the ordinary course of business
consistent with past practice or pay any bonus to Mr. Bates, chairman,
president and chief executive officer of Guarantee, except as
contemplated under the cancellation agreement;
. incur, assume or prepay any indebtedness or any other material
liabilities other than in the ordinary course of business consistent with
past practice;
. make any loans, advances or capital contributions to or investments in
any person other than investments by Guarantee's insurance subsidiaries
under their respective investment policies, pay, discharge or satisfy any
claims, liabilities or obligations other than those claims incurred or
committed to in the ordinary course of business consistent with past
practice;
. sell, lease, license, mortgage or otherwise encumber any of its
properties, other than investments by Guarantee's insurance subsidiaries
under their respective investment policies or in the ordinary course of
business consistent with past practice;
. make any tax election or settle or compromise any tax liability or change
its fiscal year;
. change methods of accounting except as required by generally accepted
accounting principles or a governmental body or authority;
. enter into any new quota share or other reinsurance transaction which
does not contain standard cancellation and termination provisions or
which, except in the ordinary course of business, materially increases or
reduces the Guarantee insurance subsidiaries' consolidated ratio of new
written premiums to gross written premiums;
. alter or amend existing underwriting, claims management, reserving or
investment guidelines or policies;
. take any action that would have a material adverse effect on the
business, results of operation, prospects or financial condition of
Guarantee and its subsidiaries;
. directly or indirectly through an outside money manager, make or commit
to any mortgage loan, private placement, real estate acquisition, common
or preferred stock acquisition, partnership interest acquisition,
derivative investment, except in connection with hedging for the equity
index annuity product, or below investment grade investment, except for
commitments existing on the date of the merger agreement, unless
Jefferson Pilot consents to such investment in advance, or enter into any
new agreements to outsource any investment or investment accounting
functions; or
. take any action or knowingly fail to take any action that would cause any
of representations or warranties contained in the merger agreement to be
untrue in any material respect or result in any of the conditions to the
merger not being satisfied.
The merger agreement also requires that Guarantee furnish to Jefferson Pilot
upon receipt:
(1) copies of monthly management reports prepared for senior management,
(2) copies of all monthly financial statements and reports,
(3) copies of any reports filed with any insurance regulatory authority and
(4) copies of any reports or statements filed with the SEC.
No Solicitation. Guarantee has agreed not to solicit or encourage any
inquiries or proposals or, except as described below, engage in discussions
with any person related to any takeover proposal. A takeover proposal is:
(1) any inquiry, proposal or offer from any person relating to any direct
or indirect acquisition of 15% or more of any class of equity securities of
Guarantee or any of its subsidiaries, other than PFG, Inc., Guarantee's
wholly owned subsidiary that is in the process of selling its subsidiaries;
or
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<PAGE>
(2) any tender or exchange offer that, if consummated, would result in a
person beneficially owning 15% or more of any class of equity securities of
Guarantee or any of its subsidiaries, other than PFG, Inc.; or
(3) any merger or other business combination or reorganization involving
Guarantee or any of its subsidiaries.
Guarantee has also represented in the merger agreement that it had ended any
discussions or negotiations with persons other than Jefferson Pilot that were
begun prior to the date of the merger agreement. Guarantee agreed to promptly
notify Jefferson Pilot of any takeover proposals and to update Jefferson Pilot
with respect to any takeover proposal.
Guarantee may provide information to, or enter into negotiations with, a
person presenting a takeover proposal only if the proposal was not solicited
and the Guarantee board of directors provides prior written notice to Jefferson
Pilot of its decision to take the action. To act on a takeover proposal, the
Guarantee board of directors must also have determined it is reasonably likely
to constitute a superior proposal. A superior proposal is any proposal:
(1) to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, or other similar transaction,
for consideration consisting of cash and/or securities more than 50% of the
combined voting power of the shares of Guarantee common stock then
outstanding or at least 50% of the assets of Guarantee and its
subsidiaries;
(2) that is on terms that the board of directors of Guarantee determines
in its good faith judgment, based on the advice of a nationally recognized
outside financial advisor, to be more favorable to Guarantee's shareholders
than the merger with Jefferson Pilot and for which financing, to the extent
required, is then committed or which, in the good faith judgment of the
Guarantee board of directors, is reasonably capable of being obtained; and
(3) with respect to which the Guarantee board of directors determines, in
good faith and after consultation with its outside counsel, that the
failure to
. furnish information to the proposing party,
. participate in discussions or negotiations with respect to the
proposal,
. withdraw or modify its recommendation with respect to the merger
agreement,
. recommend the proposal, or
. terminate the merger agreement, as applicable
would constitute a breach of the Guarantee board of directors' fiduciary duty
under applicable law.
After the Guarantee board has made its determinations and notified Jefferson
Pilot, Guarantee may furnish information about Guarantee to the third party
pursuant to a customary confidentiality agreement with terms substantially
similar to those of the agreement to which Guarantee is a party with Jefferson
Pilot.
Guarantee must advise Jefferson Pilot orally, within one business day, and in
writing, as promptly as practicable, of the receipt of any takeover proposal or
inquiry relating to the takeover proposal, disclosing the material terms and
conditions of such proposal and the identity of the party making the proposal.
Guarantee must inform Jefferson Pilot as promptly as practicable and within 36
hours of any determination that a superior proposal has been made. If Guarantee
receives a superior proposal, it may terminate the merger agreement if and only
if four business days have elapsed following delivery of written notice to
Jefferson Pilot that the Guarantee board has determined to terminate the merger
agreement, during which time Guarantee has disclosed the terms and conditions
of the superior proposal and the identity of the person making it to Jefferson
Pilot and has cooperated with Jefferson Pilot to modify the terms of the merger
agreement so that the merger may be consummated, and the superior proposal
continues to qualify as such.
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Covenants of Jefferson Pilot
Conduct of Business. Generally, Jefferson Pilot, must not, and must not
permit any of its subsidiaries to, do any of the following without the prior
written consent of Guarantee:
. take any action or knowingly fail to take any action that would cause any
of its representations or warranties contained in the merger agreement to
be untrue in any material respect or result in any of the conditions to
the merger not being satisfied; and
. change its methods of accounting, including, make any material write-off
or reduction in the carrying value of any assets, in effect at June 30,
1999, except as required by generally accepted accounting principles.
Indemnification and Insurance. Jefferson Pilot will indemnify each current or
prior officer or director of Guarantee against any costs or expenses,
judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, in which that officer or director
may be involved, or be threatened to be involved, as a party or otherwise by
reason of or in connection with his status as a director or officer of
Guarantee before completion of the merger, including, in connection with the
merger and the other transactions contemplated by the merger agreement. For a
period of six years after we complete the merger, Jefferson Pilot will maintain
Side A of the current policies of the directors' and officers' liability
insurance maintained by Guarantee, or its equivalent, with respect to claims
arising from facts or events which occurred before completion of the merger.
Under the merger agreement, Jefferson Pilot need not incur any annual premium
in excess of 250% of the last annual estimated aggregate premium paid prior to
the date of the merger agreement for Side A of all current policies maintained
by Guarantee.
Other Covenants
The merger agreement also contains other agreements of Guarantee and
Jefferson Pilot, including:
. the parties' agreement to cooperate in promptly making their respective
filings and any other required submissions under the Securities Act and
any other applicable regulatory authorities and in determining whether
any filings with respect to consents, permits, authorizations or
approvals are required from any third party or governmental or regulatory
bodies and doing everything necessary, proper or advisable to consummate
the merger;
. Guarantee's and Jefferson Pilot's cooperation and use of their reasonable
best efforts to contest and resist any administrative or judicial action
or proceeding challenging any transaction contemplated by the merger
agreement;
. Guarantee's agreement not to modify, amend or supplement the Rights
Agreement dated as of November 18, 1996 by and between Guarantee and
ChaseMellon Shareholder Services, L.L.C. without prior written consent of
Jefferson Pilot other than Amendment No. 1 to the Rights Agreement which
was entered into between Guarantee and ChaseMellon as of September 19,
1999 to permit the merger;
. Jefferson Pilot's intent to combine its group life and disability
operations with Guarantee's group life and disability operations and its
plan that the combined operation will remain in Omaha for the indefinite
future; and
. Jefferson Pilot's contemplation that Guarantee Life Insurance Company
will maintain its Nebraska domicile, with no plan to change that
domicile.
43
<PAGE>
Conditions to the Merger
The parties to the merger agreement must meet or waive a number of conditions
for the merger to be completed.
Conditions to the Obligations of the Parties. The conditions to all of the
parties' obligations to complete the merger are:
. the obtaining of all required approvals of Guarantee's shareholders;
. the expiration or termination of the waiting period and any extension
applicable to the merger under the Hart-Scott-Rodino Act;
. the obtaining of all governmental and private third party consents or
filings required to complete the merger, other than consents and filings
the failure of which to be obtained or made would not have a material
adverse effect on Jefferson Pilot and its subsidiaries or the company
surviving the merger and its subsidiaries or on the ability of the
parties to complete the merger and related transactions;
. the absence of any statute, rule, regulation, executive order, decree,
ruling or injunction that would prohibit the closing of the merger
substantially on the terms contemplated by the merger agreement; and
. if Jefferson Pilot delivers its common stock in the merger, the stock
having been listed or authorized for listing on the NYSE.
Conditions to Guarantee's Obligations. Guarantee's obligations in the merger
depend upon the satisfaction of the following conditions:
. each of the representations and warranties of Jefferson Pilot in the
merger agreement must be true and correct in all respects other than
failures to be true and correct that would not in the aggregate have a
material adverse effect on the business, results of operations, prospects
or financial condition of Jefferson Pilot and its subsidiaries;
. Jefferson Pilot must have performed in all material respects all
obligations and complied with all covenants required by the merger
agreement to be performed or complied with by it and Jefferson Pilot
having delivered a certificate of certain officers to that effect; and
. unless the merger is an all cash merger, Guarantee must have received an
opinion from its counsel, Kutak Rock, dated the date we complete the
merger, to the effect that for federal income tax purposes the merger
will qualify as a reorganization pursuant to Section 368(a) of the
Internal Revenue Code.
Conditions to Jefferson Pilot's and LG Merger Corp.'s Obligations. Jefferson
Pilot's and LG Merger Corp.'s obligations in the merger depend upon the
satisfaction of the following conditions:
. each of the representations and warranties of Guarantee in the merger
agreement must be true and correct in all respects other than failures to
be true and correct that would not in the aggregate have a material
adverse effect on the business, results of operations, prospects or
financial condition of Guarantee and its subsidiaries;
. Guarantee must have performed in all material respects all obligations
and complied with all covenants required by the merger agreement to be
performed or complied with by it and Jefferson Pilot having delivered a
certificate of certain officers to that effect;
. unless the merger is an all cash merger, Jefferson Pilot must have
received an opinion from its counsel, King & Spalding, dated the date we
complete the merger, to the effect that for federal income tax purposes
the merger will qualify as a reorganization pursuant to Section 368(a) of
the Internal Revenue Code; and
. the receipt by Guarantee of all governmental and third party consents
required to complete the merger and related transactions, other than
consents which, if not obtained, would not individually or in the
aggregate have a material adverse effect on the business, results of
operations, prospects or financial condition of Guarantee and its
subsidiaries.
44
<PAGE>
Employee Incentive and Benefit Plans
Jefferson Pilot has agreed to take the following actions with respect to
Guarantee's employee benefit plans:
. honor each existing Guarantee employee or executive benefit plan, program
or agreement, with the right to amend any such plans provided that the
amendment does not reduce any benefits accrued as of the time we complete
the merger, or reduce severance benefits for any Guarantee employees
terminated within one year after completion of the merger;
. for twelve months following completion of the merger, make available to
all persons employed by Guarantee when we complete the merger, employee
benefit plans which in the aggregate are as favorable as the plans such
employees participated in immediately before completion of the merger,
with the exception of health and welfare plans which may be changed to
make them comparable to Jefferson Pilot's home office plans;
. recognize and honor service under plans in effect immediately prior to
completion of the merger in determining each employee's eligibility for
and vesting under Jefferson Pilot plans; and
. waive any preexisting condition limitation under welfare benefit plans
offered by Jefferson Pilot with respect to employees of Guarantee and
credit against any deductible or copayment that is with a maximum out-of-
pocket limitation for any costs incurred by Guarantee employees during
the comparable period under the terms of their corresponding benefit
arrangement.
45
<PAGE>
Termination and Termination Fee
The merger agreement may be terminated under any of the circumstances
summarized in the following table:
<TABLE>
<CAPTION>
Agreement Damages Available/
Event Terminable By Termination Fee Payable
----- ------------- -----------------------
<S> <C> <C>
Mutual written consent Mutual agreement of None
of Jefferson Pilot and Jefferson Pilot and
Guarantee Guarantee
The merger is not Jefferson Pilot or $9 million payable to
completed by March 31, Guarantee Jefferson Pilot if the
2000 and the party merger has not occurred due
seeking termination has to the failure of the
not materially breached Guarantee shareholders to
an obligation in a approve the merger,
manner that contributed Guarantee terminates the
to the failure of the merger agreement, and before
merger to occur the termination a takeover
proposal has been made or
publicly announced and at
the time of, or within 12
months of, termination
either (1) the takeover
proposal is completed or (2)
an agreement with respect to
a takeover proposal has been
entered into; otherwise none
Any statute, rule, Jefferson Pilot or None
regulation or executive Guarantee
order prohibits
consummation of the
merger, or a final
nonappealable injunction
or order is entered by a
court or governmental
authority prohibiting
consummation of the
merger and party seeking
termination has used its
reasonable best efforts
to remove such
restriction
Guarantee's shareholders Guarantee $9 million payable to
fail to adopt the merger Jefferson Pilot if before
agreement at a duly held the termination a takeover
meeting of shareholders proposal has been made or
publicly announced and at
the time of or within 12
months of termination either
(1) the takeover proposal is
consummated or (2) an
agreement with respect to a
takeover proposal has been
entered into; otherwise none
Guarantee's board of Guarantee $9 million payable to
directors properly Jefferson Pilot
exercises its right to
accept a superior
proposal from a third
party, including the
delivery of notice to
Jefferson Pilot at least
four business days prior
to termination that the
Guarantee board has
determined to terminate
the merger agreement and
cooperate with Jefferson
Pilot to modify the
merger agreement so that
the merger could be
effected
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Agreement Damages Available/
Event Terminable By Termination Fee Payable
----- ------------- -----------------------
<S> <C> <C>
Guarantee's board of Jefferson Pilot $9 million payable to
directors withdraws or Jefferson Pilot if prior to
adversely changes its termination a takeover
recommendation in favor proposal has been commenced
of the transactions or publicly announced and at
contemplated by the the time of or within 12
merger agreement or months of termination either
approves or recommends (1) the takeover proposal is
any takeover proposal consummated or (2) an
agreement with respect to a
takeover proposal has been
entered into; otherwise none
Guarantee's board of Jefferson Pilot $9 million payable to
directors fails to Jefferson Pilot if prior to
recommend against termination a takeover
acceptance of a tender proposal has been commenced
or exchange offer for or publicly announced and at
more than 50% of the time of or within 12
Guarantee Common Stock months of termination either
that is commenced before (1) the takeover proposal is
the special meeting to consummated or (2) an
vote on the merger agreement with respect to a
agreement takeover proposal has been
entered into; otherwise none
A material breach of a Jefferson Pilot Any damages available under
representation, or Guarantee applicable law
warranty, covenant or
agreement occurs that is
either not capable of
being cured or is not
cured within 30 days
after notice is received
by the party alleged to
be in breach and which
would, by closing of the
merger, if it is a
breach of a
representation or
warranty, cause a
material adverse effect
on the business, results
of operations, prospects
or financial condition
of the breaching party
and its subsidiaries or,
if it is a breach of a
covenant or agreement,
cause the breaching
party not to have
materially complied with
its covenants and
agreements under the
merger agreement
</TABLE>
47
<PAGE>
Amendment and Waiver Provisions
Jefferson Pilot and Guarantee may amend or supplement the merger agreement
before we complete the merger. However, after approval by Guarantee's
shareholders, Jefferson Pilot and Guarantee may not, without further
shareholder approval, amend the merger agreement to:
. change the amount or form of the merger consideration,
. amend the certificate of incorporation of the surviving corporation, or
. make any change to the merger agreement that adversely affects the rights
of Guarantee's shareholders.
At any time before completion of the merger, Guarantee and Jefferson Pilot may
. extend the time for performance under the merger agreement,
. waive any inaccuracies in the representations and warranties, or
. waive compliance with any of the agreements or conditions contained in
the merger agreement.
Agreements relating to extensions or waivers must be in writing and signed on
behalf of the party seeking such extension or waiver.
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<PAGE>
REGULATORY APPROVALS
Insurance. The insurance statutes of the jurisdictions in which Guarantee's
insurance subsidiaries are domiciled and the jurisdictions in which they are
licensed, and the insurance holding company laws in those jurisdictions govern
Guarantee's insurance subsidiaries. These laws and statutes require prior
approval for persons acquiring control of insurance companies domiciled or
commercially domiciled in the state, whether directly or indirectly, through
merger or acquisition or otherwise. Accordingly, in connection with the merger,
on September 20, 1999 Jefferson Pilot filed a joint application and Form A
statement to acquire control of Guarantee under the Nebraska Insurance Holding
Company Act and the Nebraska Demutualization Act (a "Form A") in Nebraska.
The insurance laws and regulations of Nebraska require a public hearing
before closing of the acquisition of control described in the Form A filing.
The hearing occurred on October 19, 1999 and the Nebraska Director of Insurance
entered an order approving the joint application on October 29, 1999.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules promulgated by the U.S. Federal Trade Commission, we may
not complete the merger until both of Jefferson Pilot and Guarantee have made
certain filings with the Antitrust Division of the U.S. Department of Justice
and the U.S. Federal Trade Commission and certain waiting periods have expired.
On October 1, 1999 we submitted the required filings to the Antitrust Division
and the Federal Trade Commission. We received notice of early termination of
the waiting period under the Hart-Scott-Rodino Act on October 14, 1999. At any
time before or after consummation of the merger, the U.S. government, any state
governmental authority or others could take action under the antitrust laws to
seek to prevent the merger. Based on information available to us, we believe
that the merger will not violate federal or state antitrust laws. However, we
cannot assure you that the merger will remain unchallenged on antitrust
grounds. Also, if the merger is challenged on antitrust grounds, we cannot
assure you that we would prevail or would not be required to accept conditions
before the merger could be completed, possibly including certain divestitures
or agreements to separately hold portions of Jefferson Pilot's or Guarantee's
business for future sale. These conditions could result in the termination of
the merger agreement.
RESTRICTIONS ON RESALES BY AFFILIATES
If Jefferson Pilot delivers its shares in the merger, we will have registered
such shares under the Securities Act. Shareholders not deemed to be affiliates,
as that term is defined under the Securities Act, of Guarantee or Jefferson
Pilot may trade their shares of Jefferson Pilot common stock freely and without
restriction. Generally, an affiliate of Guarantee or Jefferson Pilot is a
person or entity that controls, is controlled by or is under common control
with Guarantee or Jefferson Pilot. Any subsequent transfer of shares by any
person who is an affiliate of Guarantee at the time the merger is submitted for
vote of the shareholders of Guarantee will, under existing law, require:
(1) the further registration under the Securities Act of the shares of
Jefferson Pilot common stock to be transferred;
(2) compliance with Rule 145 or Rule 144 under the Securities Act, which
permits limited sales under certain circumstances; or
(3) the availability of another exemption from registration.
We expect that these restrictions apply to the directors and executive
officers of Guarantee. The same restrictions apply to certain relatives or the
spouse of those persons and any trusts, estates, corporations or other entities
in which those persons have a 10% or greater beneficial or equity interest.
Jefferson Pilot will give stop transfer instructions to the transfer agent
covering any shares of Jefferson Pilot common stock these persons receive, and
transfer agent will appropriately legend the share certificates. Guarantee has
agreed in the merger agreement to use its reasonable best efforts to obtain
from each person who may be an affiliate of Guarantee for purposes of Rule 145
under the Securities Act a written agreement intended to ensure compliance with
the Securities Act.
49
<PAGE>
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of King & Spalding, counsel to Jefferson Pilot, the material
United States federal income tax consequences of the merger to holders of
Guarantee common stock who hold their shares as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code are as follows.
This summary is for general information only and is based upon the Internal
Revenue Code, its legislative history, existing and proposed regulations and
published rulings and decisions, all as currently in effect. The tax
consequences described in this summary may change, possibly with retroactive
effect. This summary does not attempt to describe the tax consequences under
state, local or foreign laws. In addition, this summary does not describe
special tax consequences that may apply to particular classes of taxpayers,
such as financial institutions, insurance companies, tax-exempt organizations,
qualified retirement plans, broker-dealers, traders in securities that elect to
mark to market, persons that hold common stock as part of a straddle or
conversion transaction, persons who are not citizens or residents of the United
States, shareholders who acquired their common stock through the exercise of
incentive stock options, and persons who own (actually or constructively under
Section 318 of the Internal Revenue Code) significant amounts of Jefferson
Pilot common stock or who exercise control over the affairs of Jefferson Pilot.
All shareholders should consult with their own tax advisors as to the
particular tax consequences of the merger, including the applicability and
effect of the alternative minimum tax and any state, local or foreign income
and other tax laws and of changes in such tax laws.
If you receive cash for all of your Guarantee shares, including cash received
because of the exercise of dissenter's rights, in either a stock election
merger or an all cash merger, you will recognize capital gain or loss in an
amount equal to the difference between the cash received and your tax basis in
your Guarantee shares. This gain or loss will generally be long-term or short-
term capital gain or loss, depending upon whether you held your Guarantee
shares for more than one year upon completion of the merger.
If you receive solely Jefferson Pilot shares in exchange for all of your
Guarantee shares in a stock election merger, you will not recognize gain or
loss, and will hold the Jefferson Pilot shares you receive with a tax basis
equal to your tax basis in the Guarantee shares exchanged in the merger. Your
holding period, for tax purposes, of your Jefferson Pilot shares will include
the time period you held your Guarantee shares.
If you receive a combination of Jefferson Pilot shares and cash, other than
cash in lieu of a fractional Jefferson Pilot share, which is discussed in a
separate paragraph below, in exchange for your Guarantee shares in a stock
election merger, your tax consequences will be more complicated. If you realize
a loss in the exchange, you may not recognize the loss for federal income tax
purposes and your tax basis in the Jefferson Pilot shares you receive will be
the same as the tax basis in your Guarantee shares exchanged, less the amount
of cash you receive. If you realize a gain in the transaction, which will occur
if the fair market value of the Jefferson Pilot shares and amount of cash you
receive exceeds your tax basis in your Guarantee shares, you will recognize
gain equal to the lesser of (1) the amount of cash received and (2) the total
amount of gain realized on your Guarantee shares. Your tax basis in the
Jefferson Pilot shares you receive will be equal to your tax basis in your
Guarantee shares exchanged plus the gain recognized, less the cash received.
For example, assume that your tax basis in your Guarantee shares is $4,000 and
you receive $5,000 in Jefferson Pilot shares and $5,000 in cash in the merger.
In that case you would realize a gain of $6,000 in the exchange, but would be
required to recognize only $5,000 of that gain, and your tax basis in the
Jefferson Pilot shares you receive would be $4,000. In contrast, if the facts
are the same except that the tax basis in your Guarantee shares is $6,000, you
would realize a gain of $4,000, all of which would be recognized, and you would
have a tax basis in the Jefferson Pilot shares of $5,000. Any gain you
recognize generally would be long-term or short-term capital gain, depending
upon whether you held your Guarantee shares for more than one year as of the
time we complete the merger.
50
<PAGE>
In certain extraordinary circumstances, some or all of the cash you receive
in the merger could be taxed as a dividend. This treatment could only apply if
you, or a person related to you, acquire stock, or options to acquire stock, of
Jefferson Pilot prior to or in connection with the merger, in addition to the
shares which will be received in exchange for shares of Guarantee stock. If you
are in this situation, it will be particularly important that you consult your
tax advisor.
Cash you receive in lieu of a fractional Jefferson Pilot share in a stock
election merger will be treated as received in a sale of the fractional share
interest. You will recognize capital gain or loss equal to the difference
between the cash you receive and the tax basis allocable to the fractional
share interest. This capital gain or loss generally will be long-term or short-
term, depending upon your holding period for your Guarantee shares.
In order for Jefferson Pilot to issue shares in the merger, Jefferson Pilot
must receive an opinion of its counsel, King & Spalding, and Guarantee must
receive an opinion of its counsel, Kutak Rock, expressing the view that the
merger will constitute a reorganization under Section 368(a) of the Internal
Revenue Code. Those opinions, if delivered, will be based upon representation
letters from Jefferson Pilot and Guarantee and will assume that the merger will
be completed as a stock election merger in the manner described in this proxy
statement-prospectus and in the merger agreement. In addition, Kutak Rock has
indicated that it will deliver its opinion only if the fair market value of all
the Jefferson Pilot shares to be delivered in the merger, based on the closing
price of the New York Stock Exchange on the last trading day before completion
of the merger, is at least 45 percent of the fair market value of the total
consideration received by the Guarantee shareholders in the merger. If this
requirement is not met, the merger will be completed as an all cash merger.
We have not sought and will not seek a ruling from the Internal Revenue
Service on the United States federal income tax consequences of the stock
election merger or the all cash merger.
Information Reporting and Backup Withholding
Payments of cash to a shareholder surrendering Guarantee common stock will be
subject to information reporting and "backup" withholding, whether or not the
shareholder also receives Jefferson Pilot common stock, at a rate of 31% of the
cash payable to the shareholder, unless the shareholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions. Any
amounts withheld from payments to a holder under the backup withholding rules
will be allowed as a refund or credit against the holder's United States
federal income tax liability, provided that you furnish the required
information to the Internal Revenue Service.
The preceding discussion is not a complete analysis or discussion of all
potential tax effects relevant to the stock election merger and the all cash
merger. Thus, you are urged to consult your own tax advisor as to the specific
tax consequences to you of the stock election merger and the all cash merger,
including tax return reporting requirements, the applicability and effect of
federal, state, local and other applicable tax laws and the effect of any
proposed changes in the tax laws.
THE COMPANIES
Jefferson Pilot's Business
Jefferson Pilot's businesses are life insurance, annuity and investment
products, and communications. Jefferson Pilot conducts operations through its
wholly owned subsidiaries. Jefferson Pilot's largest subsidiaries include
Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance
Company, Jefferson-Pilot LifeAmerica Insurance Company, Alexander Hamilton Life
Insurance Company of America, Jefferson Pilot Securities Corporation, a full
service NASD registered broker/dealer, and Jefferson-Pilot Communications
Company. Jefferson-Pilot Life began operations in 1903. Jefferson Pilot
generates over 80% of its revenues from life insurance and annuity products.
51
<PAGE>
Jefferson Pilot has grown substantially in the past five years both
internally and through acquisitions. In May 1995, Jefferson-Pilot Life acquired
certain life insurance and annuity business of Kentucky Central Life Insurance
Company in an assumption reinsurance transaction. In October 1995, Jefferson
Pilot acquired Alexander Hamilton Life from a subsidiary of Household
International, Inc. In connection with the acquisition, certain blocks of
Alexander Hamilton Life's existing business were 100% coinsured with affiliates
of Household. In May 1997, Jefferson Pilot acquired Jefferson Pilot Financial,
Jefferson Pilot LifeAmerica and a full service broker/dealer from The Chubb
Corporation.
Life Insurance Products. Jefferson Pilot subsidiaries have authorization to
write insurance in 50 states, the District of Columbia and four U.S.
possessions/territories. They offer a wide variety of individual and group
insurance policies through a career agency force, independent agents recruited
through independent marketing organizations and a regional marketing network,
home service agents, financial institutions and workplace marketing
representatives.
Individual life insurance products include traditional life products, as well
as universal life and variable universal life.
Group insurance products include life and disability products sold through
employers, primarily in the southeastern United States. Jefferson Pilot is
exiting the group health business. The existing block of medical policies are
selectively underwritten by a national managed care company as policy renewal
dates arise during 1999.
Annuity and Investment Products. Jefferson Pilot's annuity and investment
products segment offers its fixed and variable annuity products through
financial institutions, independent agents, career agents, investment
professionals, annuity marketing organizations and broker/dealers. This segment
also includes the securities brokerage operations.
Communications. Jefferson Pilot operates television and radio broadcast
facilities and produces and syndicates sports programming. Jefferson Pilot's
communications facilities are located in growth markets in the southeastern and
western United States. Jefferson Pilot owns and operates three television
stations:
. WBTV, Channel 3, Charlotte, North Carolina, a CBS affiliate;
. WWBT, Channel 12, Richmond, Virginia, an NBC affiliate; and
. WCSC, Channel 5, Charleston, South Carolina, a CBS affiliate.
Jefferson Pilot also owns and operates AM and FM radio stations in Atlanta,
Georgia, Charlotte, North Carolina, Denver, Colorado, Miami, Florida and San
Diego, California.
Jefferson Pilot is incorporated in North Carolina and its executive offices
are located at 100 North Greene Street, Greensboro, North Carolina 27401. Its
telephone number is (336) 691-3000. Jefferson Pilot documents filed with the
SEC contain additional information concerning Jefferson Pilot. These documents
are incorporated by reference. See "Where You Can Find More Information" on
page 63.
Guarantee's Business
Guarantee markets group life and health insurance products to employers and
other groups, and life insurance and annuities to individuals through its
wholly owned subsidiary, Guarantee Life Insurance Company. Guarantee Life
incorporated in Nebraska in 1901. On December 26, 1995, it converted from a
mutual life insurance company to a stock life insurance company. At that time
it changed its name to Guarantee Life Insurance Company and became a wholly
owned subsidiary of Guarantee. Guarantee, a Delaware corporation, incorporated
on November 28, 1994, in anticipation of and for the purpose of facilitating
the demutualization of Guarantee Life.
52
<PAGE>
Guarantee Life Insurance Company, which is authorized to transact life and
health insurance in 48 states and the District of Columbia, conducts
Guarantee's principal business operations. Guarantee Life operates in three
business segments:
. the Employee Benefits Division,
. the Group Special Markets Division, and
. the Individual Insurance Division.
The Employee Benefits Division markets group non-medical coverages, including
term life, long-term and short-term disability, dental and vision, primarily
through regional group sales offices. The Group Special Markets Division
markets specialty medical products, such as excess loss, medical reimbursement
insurance for business executives, and related group non-medical products
through additional distribution systems such as third party administrators,
managing general underwriters and Blue Cross/Blue Shield organizations.
Guarantee Life's Individual Insurance Division markets traditional life and
annuity products primarily through regional marketing organizations and
independent insurance agents.
Guarantee acquired Westfield Life Insurance Company from Ohio Farmers
Insurance Company effective May 31, 1998. Westfield Life, originally
incorporated as Colonial Heritage Life Insurance Company in 1963, offered a
portfolio of individual life products and fixed annuities in 47 states and the
District of Columbia before its acquisition by Guarantee. Agents from
Westfield's previous distribution system currently offer the Guarantee Life
portfolio of individual products.
Guarantee acquired PFG, Inc. and its subsidiaries on December 23, 1997. PFG,
Inc.'s wholly owned subsidiaries included AGL Life Assurance Company,
Philadelphia Financial Group, Inc., PFG Distribution Company, Philadelphia
Financial Group Agency of Ohio, Inc., and Philadelphia Financial Insurance
Agency of Massachusetts, Inc. On October 29, 1999, Guarantee Life assumed the
term life insurance and fixed annuity business of AGL Life and sold
Philadelphia Financial Group, Inc., PFG Distribution Company, Philadelphia
Financial Group Agency of Ohio, Inc., Philadelphia Financial Insurance Agency
of Massachusetts, Inc. and AGL Life Assurance Company with its remaining
variable life and variable annuity business. The sale included the assets and
liabilities of AGL Life Assurance Company's separate account business.
Guarantee is incorporated in Delaware, and its executive offices are located
at 8801 Indian Hills Drive, Omaha, Nebraska 68114. Its telephone number is
(402) 361-7300. Guarantee documents filed with the SEC contain additional
information concerning Guarantee. These documents are incorporated by
reference. See "Where You Can Find More Information" beginning on page 63.
COMPARISON OF SHAREHOLDER RIGHTS
This is a summary of the material differences between the rights of Guarantee
shareholders and Jefferson Pilot shareholders which arise from variations among
Delaware and North Carolina law, Guarantee's certificate of incorporation and
Jefferson Pilot's articles of incorporation, Guarantee's bylaws and Jefferson
Pilot's bylaws, and other documents. Delaware law and Guarantee's certificate
of incorporation and bylaws currently govern the rights of Guarantee's
shareholders. North Carolina law and Jefferson Pilot's articles of
incorporation and bylaws govern the rights of Jefferson Pilot shareholders. If
Jefferson Pilot delivers its shares in the merger, North Carolina law and
Jefferson Pilot's articles of incorporation and bylaws will govern the rights
of Guarantee shareholders who become Jefferson Pilot shareholders. Guarantee
shareholders should read the full text of Jefferson Pilot's articles of
incorporation and bylaws as the following summary of their provisions is
qualified by reference to those documents. See "Where You Can Find More
Information" on page 63.
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<PAGE>
Amendments to Charter and Bylaws
Charter Amendments. Under Delaware law, amendments to a corporation's
certificate of incorporation require a resolution of the board of directors,
followed by a majority vote of the holders of the outstanding stock entitled to
vote on such amendment and, in certain circumstances, of the holders of a
majority of the outstanding stock of each class entitled to vote on such
amendment as a class, unless a greater number or proportion is specified in the
certificate of incorporation or by other provisions of Delaware law.
Under North Carolina law, amendments to a corporation's certificate of
incorporation require board approval and that the votes cast in favor of the
amendment within each voting group entitled to vote exceed the votes cast
against the amendment, unless the articles of incorporation or other provisions
of North Carolina law specify a greater number or proportion. Further, if the
amendment gives rise to dissenters' rights for any voting group, in addition to
the vote specified above, a majority of the votes entitled to be cast on the
amendment by the voting group entitled to dissenters' rights must approve the
amendment.
Guarantee's certificate of incorporation requires the affirmative vote of the
holders of at least 75% of the outstanding shares to amend articles V, VI, VII,
VIII, IX, XI, XII, XIII, which relate to:
. the issuance of rights by the board;
. supermajority voting requirements for certain bylaw amendments;
. the board of directors, including the number and classes of directors,
vacancies on the board and nomination of directors;
. the elimination of personal liability of directors;
. factors for directors to consider in determining the best interests of
shareholders;
. the prohibition against cumulative voting for directors;
. the elimination of the ability of shareholders to take action by written
consent; and
. supermajority voting requirements to amend certain provisions of the
certificate of incorporation.
Jefferson Pilot's articles of incorporation require the affirmative vote of
the holders of 80% of the outstanding shares to amend Article IX, which relates
to the number, classification, nomination, including advance notice, vacancies
and removal of directors, or Article X, which relates to business combinations.
Bylaw Amendments. Under Delaware law and Guarantee's certificate of
incorporation, the board of directors of Guarantee has the right to adopt,
repeal, alter or amend the bylaws by majority vote of the entire board. Under
Guarantee's certificate of incorporation, Guarantee's shareholders may adopt,
repeal alter or amend the bylaws only upon the affirmative vote of the holders
of 75% or more of the outstanding shares entitled to vote generally in the
election of directors.
Under North Carolina law, Jefferson Pilot's board of directors may amend or
repeal the bylaws upon the affirmative vote of a majority of directors present
at the meeting, and its shareholders may amend or repeal the bylaws provided
that the votes cast in favor of such action exceed the votes cast against such
action. Notwithstanding the foregoing, under Jefferson-Pilot's bylaws, in
addition to any other vote required, Sections 1, 2, 7, 8, 9, 10 and 11 of
Article II, which relate to matters regarding the board of directors, the board
of directors may not amend without the affirmative vote of the holders of 80%
or more of the outstanding Jefferson Pilot shares. In addition, under North
Carolina law, the board of directors may not readopt, amend or repeal a bylaw
adopted, amended or repealed by the shareholders unless the corporation's
articles of incorporation or a bylaw adopted by the shareholders authorizes
such action by the board.
Director Liability
Under both North Carolina and Delaware law, corporations may adopt provisions
in their charter documents reducing or eliminating the liability of a director
to the corporation or its shareholders for monetary
54
<PAGE>
damages for breach of fiduciary duty as a director. Under Guarantee's
certificate of incorporation, directors cannot be held personally liable to
Guarantee or its shareholders unless the liability arises from:
. a breach of the director's duty of loyalty;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. liability for payment of an improper dividend or repurchase of Guarantee
common stock under Section 174 of the Delaware General Corporation Law;
or
. any transaction from which the director derives an improper personal
benefit.
Jefferson Pilot's articles of incorporation contain a provision eliminating
the personal liability of each director for monetary damages to the maximum
extent permitted by law. As a result, directors of Jefferson Pilot may not be
held personally liable for breach of any duty as a director except with respect
to:
. acts or omissions that the director at the time of the breach knew or
believed were clearly in conflict with the best interests of the
corporation;
. any liability for an unlawful distribution under Section 55-8-33 of the
North Carolina Business Corporation Act; or
. any transaction from which the director derived an improper personal
benefit.
Indemnification of Directors, Officers and Other Agents
North Carolina law and Delaware law have substantially similar provisions and
limitations regarding indemnification by a corporation of its officers,
directors, employees and other agents. For example, North Carolina law and
Delaware law both
. permit the corporation to advance expenses to a person seeking
indemnification upon receipt of an undertaking to repay the expenses if
indemnity is not ultimately granted, and
. provide that statutory indemnifications are not exclusive of other rights
a person seeking indemnification may be entitled to under any bylaw or
contract or resolution adopted by a corporation subject to the limits
imposed by North Carolina law and Delaware law.
Guarantee's bylaws implement the statutory framework for indemnification,
requiring that Guarantee provide indemnity to officers, directors, employees
and agents where permitted by statute and providing procedural mechanisms for
directors and officers to enforce this right. Jefferson Pilot's bylaws contain
no specific provisions relating to indemnification. However, by board and
shareholder resolution, Jefferson Pilot has provided indemnification to
directors and officers against certain liabilities to the extent permitted by
North Carolina law.
Removal of Directors
Guarantee's certificate of incorporation allows removal of directors only for
cause by the affirmative vote of a majority of the Guarantee shares then
entitled to vote for directors generally. Jefferson Pilot's articles of
incorporation and bylaws allow removal of directors, with or without cause, by
the affirmative vote of the holders of 80% of the outstanding Jefferson Pilot
shares.
Call of Shareholders Meetings
Guarantee's bylaws provide that only the chairman of the board of directors,
the board of directors pursuant to a resolution adopted by a majority of the
entire board, the president or the holders of not less than 25% of the
outstanding Guarantee shares may call a special meeting of shareholders.
Jefferson Pilot's bylaws provide that only the board of directors may call a
special meeting of shareholders. Under North Carolina law, shareholders of a
public company, such as Jefferson Pilot, may not call a special meeting of
shareholders.
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Shareholder Action by Written Consent
Guarantee's certificate of incorporation specifically denies shareholders the
ability to take any action by written consent. Under North Carolina law, the
shareholders of Jefferson Pilot can take action by unanimous written consent.
Shareholder Proposals and Nominations for Directors
Under Guarantee's bylaws, shareholders may nominate directors and make other
proposals at an annual shareholders meeting if they give written notice of the
proposal at least 35 days before the meeting, but if less than 35 days notice
of the meeting is given to shareholders, then within seven days following
mailing of the notice. For a special meeting, Guarantee shareholders must give
written notice of their proposal no later than 10 days following the date on
which Guarantee mailed the notice of the meeting. Similarly, Jefferson Pilot's
articles of incorporation allow shareholders to nominate directors and make
other proposals if they give written notice of the proposal, in the case of an
annual meeting, 90 days in advance of the meeting. In the case of a special
meeting, shareholders must give notice by the close of business on the seventh
day following the date on which Jefferson Pilot gave notice of the meeting.
Proxy Requirement
Under Delaware law, proxies are valid for up to three years unless otherwise
specified in the proxy itself. Under North Carolina law, proxies are valid for
an eleven-month period unless a different period is expressly provided for in
the appointment form.
Derivative Actions
Both Delaware law and North Carolina law permit shareholders to bring
derivative actions on behalf of the corporation. Unlike Delaware law, however,
under North Carolina law:
. a demand on directors is a prerequisite in every action, even if futile,
. a shareholder must obtain court approval if he or she wishes to settle,
compromise or discontinue a derivative action, and
. if the court finds that shareholders bought the derivative action without
reasonable cause, the court may require the plaintiff to pay the
defendant's reasonable expenses.
Rights of Dissenting Shareholders
Delaware law grants appraisal rights only in the case of certain mergers and
consolidations. In general, Delaware law does not allow appraisal rights in a
merger for the holders of shares of any class or series of stock which is:
. listed on a national securities exchange or designated as a national
market system security, or
. held of record by more than 2,000 shareholders unless the terms of an
agreement of merger or consolidation require shareholders to accept for
their shares anything except shares of stock of the surviving or another
corporation that are so listed, designated or widely held.
North Carolina law grants shareholders the right to dissent from certain
fundamental corporate changes and demand payment for the appraised fair market
value of their shares. These fundamental corporate changes include certain
mergers, consolidations and other business combinations, and certain charter
amendments. North Carolina law does not allow dissenters' rights in a merger
for the holders of shares of any class of stock listed on a national securities
exchange, designated for trading in the NASDAQ National Market System or held
by more than 2,000 shareholders unless, in case of a merger or share exchange,
the merger agreement or share exchange requires any shareholders to accept for
their shares consideration other than cash or shares that are so listed,
designated or widely held.
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Provisions Affecting Business Combinations
Section 203 of the Delaware General Corporation Law provides generally that
any person who acquires 15% or more of a corporation's voting stock, thus
becoming an "interested shareholder", may not engage in a wide range of
"business combinations" with the corporation for a period of three years
following the date the person became an interested shareholder, unless:
. the board of directors of the corporation has approved, before that
acquisition date, either the business combination or the transaction that
resulted in the person becoming an interested shareholder;
. upon consummation of the transaction that resulted in the person becoming
an interested shareholder, that person owns at least 85% of the
corporation's voting shares outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and also
officers and shares owned by employee stock plans in which participants
do not have the right to determine confidentially whether shares will be
tendered in a tender or exchange offer; or
. the business combination is approved by the corporation's board of
directors and authorized by the affirmative vote of at least 66 2/3% of
the outstanding voting shares not owned by the interested shareholder.
Before the merger, the Nebraska Shareholders Protection Act applies to
Guarantee because Guarantee fits the definition of "issuing public
corporation." Following the merger, however, the Nebraska Shareholder
Protection Act will not apply to former Guarantee shareholders who will then
hold Jefferson Pilot stock because Jefferson Pilot is not an issuing public
corporation under Nebraska law. An issuing public corporation can be a foreign
corporation having:
. 100 or more shareholders;
. principal executive offices within Nebraska;
. assets in Nebraska with a market value of at least $10 million;
. 10% or more of its shareholders resident in Nebraska or 10% or more of
its shares owned by Nebraska residents; and
. at least 500 employees in Nebraska.
An issuing public corporation under Nebraska law may not engage in a business
combination with any person who owns 10% or more of the corporation's
outstanding common stock absent prior board of director approval unless one of
six scenarios, which do not apply to Guarantee, exist.
Nebraska law also causes the shares of an issuing public corporation acquired
in a control-share acquisition to lose certain voting rights as stock held by
the acquiring corporation unless a majority of the shares, or in the case of
shares entitled to vote as a class, a majority of the shares of such class,
approves the transaction. A control-share acquisition is a direct or indirect
acquisition of ownership of the voting stock of an issuing public corporation
that would, when added to all other shares owned by the acquiring person, give
the acquiring person at least 20% to 33%, 33% to 50%, or greater than 50% of
the voting power of the issuing public corporation.
Article 9 of the North Carolina Business Corporation Act provides that the
affirmative vote of the holders of 95% of the voting shares of a corporation is
required for the authorization of a business combination with any entity which
is the beneficial owner of more than 20% of the voting shares of the
corporation, unless:
. the cash or value to be received per share by the holders in the business
combination bears the same or a greater ratio to the market price of the
corporation's common stock as the highest per share price that such other
entity paid for the shares that it already owns bears to the market price
of the stock;
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. the cash or value paid to shareholders per share is not less than the
highest per share price paid by the interested party in acquiring any of
the shares of the corporation's shares and is not less than the earnings
per share of the corporation's common stock for the four full consecutive
fiscal quarters immediately preceding the record date for the
solicitation of votes, multiplied by the then price/earnings multiple;
. if, after acquiring a 20% interest in the corporation, the owner of such
interest has:
(1) ensured that the corporation's board of directors included
representation proportionate to the outstanding shares,
(2) not reduced the rate of dividends, except by unanimous vote of the
board of directors,
(3) not acquired any newly issued shares of the corporation's capital
stock, and
(4) not acquired any shares of the corporation's outstanding common stock
except as part of the initial transaction which resulted in the
beneficial ownership;
. the beneficial owner did not get the benefit, except proportionately, of
any loans, advances, etc. or did not make any major change in the
corporation's business or equity capital structure, except by unanimous
vote of the board of directors; and
. a proxy statement is mailed to all public shareholders to solicit their
approval.
Article X of Jefferson Pilot's articles of incorporation identifies certain
additional scenarios, defined as business combinations, that require a
supermajority vote, similar to the vote required under the North Carolina
Shareholder Protection Act. Holders of at least 80% of the voting power of the
outstanding shares of common stock entitled to vote generally in the election
of directors must vote in favor of the following transactions:
. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with any interested shareholder or affiliate having an
aggregate fair market value of $50,000,000 or more; or
. issuance or transfer of any securities to any interested shareholder in
exchange for cash, securities or other property having an aggregate fair
market value of $50,000,000 or more; or
. the adoption of any plan or proposal for the liquidation or dissolution
of the corporation proposed by or on behalf of an interested shareholder
or affiliate; or
. any transaction which has the effect of increasing the proportionate
share of the outstanding shares of any class of equity or convertible
securities of the corporation or any subsidiary which is directly or
indirectly owned by an interested shareholder.
The articles further provide that this 80% vote is not required in the case
of any of the above transactions if, along with those exceptions contained in
North Carolina law,
. a majority of the disinterested directors approved the business
combination and
. the consideration paid was fair.
Shareholder Rights Agreements
Guarantee's shareholder rights agreement grants registered holders of
Guarantee common stock the right to purchase from Guarantee one one-thousandth
of a share of preferred stock at a price of $80.00 per share. This right
triggers upon the earlier to occur of:
. 10 days following a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 15%
or more of the outstanding shares of Guarantee common stock, or
. 10 business days after the announcement or commencement of a tender offer
or exchange offer, which would result in the beneficial ownership by a
person or group of 15% or more of the outstanding shares of Guarantee
common stock.
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The rights granted under the agreement expire on November 18, 2006. In the
event Guarantee is acquired in a merger or other business combination
transaction or Guarantee sells 50% or more of its consolidated assets or
earnings power, each holder of a right can purchase for the rights exercise
price, shares of common stock of the acquiring company having a market value of
twice the exercise price. In the event that a person or group acquires 15% or
more of the outstanding shares of Guarantee stock, each holder of a right can
purchase for the exercise price, shares of Guarantee common stock having a
value of twice the market value. Guarantee amended its rights agreement in
connection with the merger to provide that the merger with Jefferson Pilot
would not trigger any of the rights of Guarantee shareholders under the rights
agreement.
Jefferson Pilot's shareholder rights agreement is similar in operation to
Guarantee's. Each right granted to holders of Jefferson Pilot common stock
entitles the holder to purchase from Jefferson Pilot one common share at a
price of $235.00 per share. Shareholders may exercise this right upon the
occurrence of the same events as those triggering the exercise of Guarantee's
rights. The rights expire on February 8, 2009. Jefferson Pilot's rights
agreement grants the same rights with respect to mergers or other business
combination transactions, or acquisitions of 15% or more of Jefferson Pilot's
outstanding shares, as does Guarantee's rights agreement.
ADDITIONAL INFORMATION
Dissenters' Appraisal Rights
Guarantee Shareholders. Guarantee is a Delaware corporation. Section 262 of
the Delaware General Corporation Law provides appraisal rights, sometimes
referred to as "dissenters' rights", under certain circumstances to
shareholders of a Delaware corporation that is involved in a merger. Record
holders of Guarantee common stock that follow the appropriate procedures are
entitled to appraisal rights under Section 262 in connection with the merger.
The following discussion is not a complete statement of the law pertaining to
appraisal rights under the Delaware general corporation law and is qualified in
its entirety by the full text of Section 262, which is reprinted in its
entirety as Appendix C to this proxy statement-prospectus. All references in
Section 262 to a "stockholder" and in this discussion to a "record holder" or a
"holder of Guarantee common stock" are to the record holder of the shares of
Guarantee common stock immediately before completion of the merger as to which
appraisal rights are asserted. A person having a beneficial interest in shares
held of record in the name of another person, such as a broker or nominee, must
act promptly to cause the record holder to follow the steps summarized below
properly and in a timely manner to perfect appraisal rights.
Under the Delaware General Corporation Law, record holders of Guarantee
common stock that follow the procedures set forth in Section 262 and that have
not voted in favor of the approval and adoption of the merger agreement and the
merger are entitled to have the Delaware Court of Chancery appraise their
shares of Guarantee common stock and to receive payment of the "fair value" of
such shares, exclusive of any element of value arising from the accomplishment
or expectation of the merger, together with a fair rate of interest, if any, as
determined by the Delaware Court of Chancery.
Under Section 262, when a board of directors submits a merger agreement and
merger for approval and adoption at a meeting of shareholders, as in the case
of the Guarantee special meeting, not less than 20 days before the meeting,
Guarantee must notify each of its shareholders entitled to appraisal rights
that they have such appraisal rights and include in each such notice a copy of
Section 262. This proxy statement-prospectus constitutes such notice to the
holders of Guarantee common stock. Any holder of Guarantee common stock who
wishes to exercise appraisal rights or wishes to preserve such holder's right
to do so should review the following discussion and Appendix C carefully
because the failure to timely and properly comply with the procedures specified
in Section 262 will result in the loss of appraisal rights under the Delaware
General Corporation Law.
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A holder of Guarantee common stock wishing to exercise such holder's
appraisal rights must deliver to Guarantee, before the vote on the approval and
adoption of the merger agreement and the merger at the Guarantee special
meeting, a written demand for appraisal of such holder's Guarantee common stock
and must reasonably inform Guarantee of the identity of the holder of record as
well as the intention of the holder to demand an appraisal of the fair value of
the shares held. In addition, a holder of Guarantee common stock wishing to
exercise appraisal rights or wishing to preserve such holder's right to do so
must hold of record such shares on the date the written demand for appraisal is
made, must continue to hold such shares through the completion of the merger
and must either vote against or abstain from voting on the approval and
adoption of the merger agreement and the merger.
Only a holder of record of Guarantee common stock may assert appraisal rights
for Guarantee common stock, registered in such holder's name. A demand for
appraisal should be executed by or on behalf of the holder of record, fully and
correctly, as such holder's name appears on such holder's stock certificates,
and must state that such holder intends thereby to demand appraisal of such
holder's shares of Guarantee common stock. A proxy or vote against the approval
and adoption of the merger agreement and the merger will not constitute a
demand for appraisal.
If the shares of Guarantee common stock are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the demand
should be made in that capacity, and, if the shares of Guarantee common stock
are owned of record by more than one person, as in a joint tenancy or tenancy
in common, the demand should be executed by or on behalf of all joint owners.
An authorized agent, including one or more joint owners, may execute a demand
for appraisal on behalf of all joint owners. An authorized agent, including one
or more joint owners, may execute a demand for appraisal on behalf of a holder
of record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, the agent is agent
for such owner or owners. A record holder, such as a broker who holds Guarantee
common stock as nominee for several beneficial owners, may exercise appraisal
rights with respect to the shares of Guarantee common stock held for one or
more beneficial owners while not exercising such rights with respect to the
shares of Guarantee common stock held for other beneficial owners. In such
case, however, the written demand should set forth the number of shares of
Guarantee common stock as to which a shareholder seeks appraisal. If a
shareholder does not specify a number of shares of Guarantee common stock, the
Delaware Court of Chancery will presume that the demand covers all Guarantee
common stock held in the name of the record owner. We urge holders of Guarantee
common stock who hold their shares in brokerage accounts or other nominee forms
and who wish to exercise appraisal rights to consult with their brokers to
determine the appropriate procedures for making of a demand for appraisal by
such nominee.
Shareholders should mail or deliver all written demands for appraisal of
Guarantee common stock to Guarantee at 8801 Indian Hills Drive, Omaha, Nebraska
68114, Attention: Secretary, so Guarantee may receive the demand before the
vote on the approval and adoption of the merger proposal at the Guarantee
special meeting.
Within 10 days after we complete the merger, Guarantee, or LG Merger Corp. if
the merger is an all cash merger, as the surviving corporation in the merger,
must send a notice as to completion of the merger to each person that satisfied
the appropriate provisions of Section 262. Within 120 days after we complete
the merger, but not thereafter, the surviving corporation, or any holder of
Guarantee common stock entitled to appraisal rights under Section 262 and who
has complied with the foregoing procedures, may file a petition in the Delaware
Court of Chancery demanding a determination of the fair value of the shares of
Guarantee common stock held by all such shareholders. Neither Guarantee nor LG
Merger Corp. is under any obligation, and has no present intention, to file a
petition with respect to the appraisal of the fair value of the Guarantee
common stock. Accordingly, it is the obligation of the holders of the shares of
Guarantee common stock to initiate all necessary action to perfect their
appraisal rights within the time prescribed in Section 262.
Within 120 days of completion of the merger, any record holder of Guarantee
common stock that has complied with the requirements for exercise of appraisal
rights can request in writing a statement from the
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surviving corporation setting forth the aggregate number of shares of Guarantee
common stock not voted in favor of the merger and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. The surviving corporation must mail such statement within 10 days after
it has received the written request or within 10 days after expiration of the
period for delivery of demands for appraisal, whichever is later.
If a holder of Guarantee common stock timely files a petition for appraisal
and serves a copy of such petition upon the surviving corporation, the
surviving corporation is then obligated, within 20 days, to file with the
Delaware Register in Chancery a duly verified list containing the names and
addresses of all shareholders who have demanded an appraisal of their shares
and with whom the surviving corporation has not reached agreements as to the
value of their shares. After notice to such shareholders as required by the
Delaware Court of Chancery, the Delaware Court of Chancery may conduct a
hearing on such petition to determine those shareholders that have complied
with Section 262 and that have become entitled to appraisal rights. The
Delaware Court of Chancery may require the holders of shares of Guarantee
common stock that demanded payment for their shares to submit their share
certificates to the Delaware Register in Chancery for notation of the pendency
of the appraisal proceeding. If any shareholder fails to comply with such
direction, the Delaware Court of Chancery may dismiss the proceedings as to
such shareholder.
After determining the holders of Guarantee common stock who are entitled to
appraisal, the Delaware Court of Chancery will appraise the fair value of their
shares of Guarantee common stock exclusive of any element of value arising from
the accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
Holders considering seeking appraisal should be aware that the fair value of
their Guarantee common stock as determined under Section 262 could be more
than, the same as or less than the value of the consideration that they would
otherwise receive in the merger if they did not seek appraisal of their
Guarantee common stock, and that investment banking opinions as to fairness
from a financial point of view are not necessarily opinions as to fair value
under Section 262. The Delaware Supreme Court has stated that the Delaware
Court of Chancery should consider "proof of value by any techniques or methods
that are generally considered acceptable in the financial community and
otherwise admissible in court" in the appraisal proceedings. More specifically,
the Delaware Supreme Court has stated that: "Fair value, in an appraisal
context, measures "that which has been taken from the shareholder, viz., his
proportionate interest in a going concern.' " In the appraisal process, the
Delaware Court of Chancery values the corporation "as an entity,' not merely as
a collection of assets or by the sum of the market price of each share of its
stock. Moreover, the Delaware Court of Chancery must view a corporation as an
on-going enterprise, occupying a particular market position in the light of
future prospects." In addition, Delaware courts have decided that the statutory
appraisal remedy, depending on factual circumstances, may or may not be a
shareholder's exclusive remedy. The Delaware Court of Chancery will also
determine the amount of interest, if any, to be paid upon the amounts to be
received by persons whose shares of Guarantee common stock have been appraised.
The Delaware Court of Chancery may determine the costs of the action and tax
these costs upon the parties as the Delaware Court of Chancery deems equitable.
The Delaware Court of Chancery may also order that all or a portion of the
expenses incurred by any holder of Guarantee common stock in connection with an
appraisal, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts utilized in the appraisal proceeding, be charged
pro rata against the value of all of the shares of Guarantee common stock
entitled to appraisal.
Any holder of Guarantee common stock that has duly demanded an appraisal in
compliance with Section 262 will not, after completion of the merger, be
entitled to vote such shareholder's shares of Guarantee common stock subject to
such demand for any purpose or be entitled to the payment of dividends or other
distributions on those shares, except dividends or other distributions payable
to holders of record of Guarantee common stock as of a date before we
consummate the merger.
If any holder of Guarantee common stock that demands appraisal of such
holder's shares of Guarantee common stock under Section 262 fails to perfect,
or effectively withdraws or loses such holder's right to appraisal, as provided
in the Delaware General Corporation Law, the holder will be treated as if he or
she made
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a non-election and the holder's Guarantee common stock will convert either into
Jefferson Pilot common stock or cash in accordance with the merger agreement
(without interest). See "The Merger Agreement--Allocation of Stock
Consideration and Cash Consideration; Proration" beginning on page 35. A holder
of Guarantee common stock will fail to perfect, or will effectively lose, the
right to appraisal if the holder does not file a petition for appraisal within
120 days after we complete the merger. A holder may withdraw a demand for
appraisal by delivering to the surviving corporation a written withdrawal of
the demand for appraisal and an acceptance of the merger. Any such attempt to
withdraw made more than 60 days after we complete the merger will, however,
require the written approval of Jefferson Pilot. Further, once a petition for
appraisal is filed, the appraisal proceeding may not be dismissed as to any
holder absent court approval.
Failure to follow the steps required by Section 262 for perfecting appraisal
rights may result in the loss of such rights, in which event a holder of
guarantee common stock will be entitled to receive only the consideration set
forth in the Merger Agreement for each share of guarantee common stock issued
and outstanding immediately before the effective time of the merger owned by
such holder.
The foregoing is a summary of certain of the provisions of Section 262 and is
qualified in its entirety by reference to the full text of such Section 262, a
copy of which is attached as Appendix C to this proxy statement-prospectus.
Jefferson Pilot Shareholders. Jefferson Pilot shareholders will not be
entitled to dissenters' appraisal rights under Delaware law or otherwise in
connection with the merger.
Legal Matters
Richard T. Stang, Deputy General Counsel of Jefferson Pilot will pass on the
validity of the Jefferson Pilot common stock issued in connection with the
merger. King & Spalding will pass on federal income tax matters relating to the
merger for Jefferson Pilot. Kutak Rock will pass on federal income tax matters
relating to the merger for Guarantee.
Experts
Ernst & Young LLP, Jefferson Pilot's independent auditors, have audited the
consolidated financial statements and schedules of Jefferson Pilot included in
its Annual Report on Form 10-K/A for the year ended December 31, 1998, as set
forth in their report, which is incorporated by reference in this proxy
statement-prospectus. Jefferson Pilot's consolidated financial statements and
schedules are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
KPMG LLP, independent public accountants, have audited the financial
statements and schedules of Guarantee incorporated by reference in this proxy
statement-prospectus as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
Independent Public Accountants
Representatives of KPMG LLP will be present at the special meeting. Those
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
Other Matters
As of the date of this proxy statement-prospectus, the Guarantee board of
directors knows of no other matter that it will present for consideration at
the special meeting. If any other matter shall properly come before the special
meeting or any adjournment or postponement thereof and be voted upon, the
enclosed proxies will be deemed to confer discretionary authority on the
individuals named as proxies as to that matter.
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The individuals named as proxies intend to vote or not vote in accordance with
the recommendation of Guarantee's management.
Shareholder Proposals
Jefferson Pilot. Shareholders submitting proposals for consideration at the
2000 annual meeting of Jefferson Pilot shareholders pursuant to Rule 14a-8
under the Exchange Act must reach the Secretary of Jefferson Pilot no later
than November 29, 1999, in order to be included in the proxy materials sent by
Jefferson Pilot management for the annual meeting. Shareholder proposals
intended for presentation at the 2000 annual meeting of Jefferson Pilot
shareholders but not for inclusion in management's proxy materials under Rule
14a-8 must reach the Secretary of Jefferson Pilot on or before February 1, 1999
to be considered at the 2000 annual meeting.
Guarantee Life. Shareholders submitting proposals for consideration at the
2000 annual meeting of Guarantee Life shareholders pursuant to Rule 14a-8 under
the Exchange Act must reach the Secretary of Guarantee Life no later than
December 13, 1999, in order to be included in the proxy materials sent by
Guarantee Life management for the annual meeting. Shareholder proposals
intended for presentation at the 2000 annual meeting of Guarantee Life
shareholders but not for inclusion in management's proxy materials under Rule
14a-8 must reach the Secretary of Guarantee Life on or before April 6, 2000, in
order to be considered at the 2000 annual meeting.
WHERE YOU CAN FIND MORE INFORMATION
Jefferson Pilot and Guarantee file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy
reports, statements or other information filed by Jefferson Pilot and Guarantee
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at (800) SEC-0330 for further
information about the public reference rooms. You can also find copies of the
SEC filings made by Jefferson Pilot and Guarantee on commercial document
retrieval services and, on a delayed basis, at the world wide web site
maintained by the SEC at http://www.sec.gov. You can also inspect reports,
proxy statements and other information about Jefferson Pilot at the offices of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005.
Jefferson Pilot has filed a registration statement under the Securities Act
with the SEC that registers the shares of Jefferson Pilot common stock that may
be issued in the merger. This document is a part of that registration
statement. The registration statement, including the attached exhibits and
schedules, contains additional relevant information about Jefferson Pilot. The
rules and regulations of the SEC allow us to omit from this document some of
the information included in the registration statement. You may inspect copies
of the registration statement, including exhibits, without charge at the
offices of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you
may obtain copies from the SEC at prescribed rates. The registration statement
is also available from the SEC's web site, http://www.sec.gov.
In addition to serving as a proxy statement of Guarantee for the special
meeting of Guarantee's shareholders, this document also serves as a prospectus
for the shares of Jefferson Pilot common stock that Jefferson Pilot may issue
in the merger.
The SEC allows Jefferson Pilot and Guarantee to "incorporate by reference"
information into this document. This means that companies can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is part of
this proxy statement-prospectus, except to the extent information included in
this document or in a document subsequently filed with the SEC that is
incorporated by reference supersedes it.
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This proxy statement-prospectus incorporates by reference the documents
listed below that Jefferson Pilot and Guarantee have previously filed with the
SEC. These documents contain important information about Jefferson Pilot and
Guarantee and their financial condition.
Documents Incorporated by Reference
Jefferson Pilot SEC Filings (SEC File Number 1-5955).
1. Jefferson Pilot's Annual Report on Form 10-K for the year ended
December 31, 1998;
2. Jefferson Pilot's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1999, June 30, 1999 and September 30, 1999;
3. Jefferson Pilot's Current Reports on Form 8-K filed with the SEC on
February 18, 1999 and September 20, 1999; and
4. The description of Jefferson Pilot's common stock set forth in the
registration statement filed with the SEC under Section 12 of the Exchange
Act, including any amendment or report filed with the SEC for the purpose
of updating the description.
Guarantee SEC Filings (SEC File Number 0-26788).
1. Guarantee's Annual Report on Form 10-K for the year ended December 31,
1998, including all amendments thereto;
2. Guarantee's Quarterly Reports on Form 10-Q for the periods ended March
31, 1999, June 30, 1999 and September 30, 1999, including all amendments
thereto;
3. Guarantee's Current Reports on Form 8-K, filed with the SEC on
September 22, 1999 and November 24, 1999; and
4. The description of Guarantee's common stock set forth in the
registration statement filed with the SEC under Section 12 of the Exchange
Act, including any amendment or report filed with the SEC for the purpose
of updating the description.
We are also incorporating by reference any additional documents that either
Jefferson Pilot or Guarantee may file with the SEC after the date of this
document and before the special meeting. These documents include periodic
reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K, as well as proxy statements.
Jefferson Pilot has supplied all information contained or incorporated by
reference in this proxy statement-prospectus relating to Jefferson Pilot.
Guarantee has supplied all information contained or incorporated by reference
in this proxy statement-prospectus relating to Guarantee.
You can obtain any of the documents incorporated by reference in this
document through Jefferson Pilot or Guarantee, as appropriate, or from the SEC
through the SEC web site referred to above. Documents incorporated by reference
are available from the applicable company without charge, excluding any
exhibits to those documents unless the exhibit is specifically incorporated by
reference as an exhibit in this proxy statement-prospectus. You can obtain
documents incorporated by reference in this proxy statement-prospectus by
requesting them from the applicable company as follows:
Jefferson-Pilot Corporation: 100 North Greene Street
Greensboro, NC 27401
Attention: Investor Relations
Telephone: (336) 691-3379
Fax: (336) 691-3283
e-mail: [email protected]
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The Guarantee Life Companies Inc.:
8801 Indian Hills Drive
Omaha, NE 68114
Attention: Secretary
Telephone: (402) 361-7300
If you would like to request documents, please do so by December 24, 1999 so
you can receive them before the special meeting. Requested documents will be
mailed to you by first-class mail, or another equally prompt means, as promptly
as practicable after receipt of your request.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this proxy statement-prospectus or in any of the
materials that we have incorporated into this document. If anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the shares of Jefferson Pilot common stock offered by
this document or the solicitation of proxies is unlawful, or if you are a
person to whom it is unlawful to direct these types of activities, then the
offer presented in this document does not extend to you. This document is dated
November 24, 1999. You should not assume that the information contained in this
document is accurate as of any other date unless the information specifically
indicates that another date applies.
65
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APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER
among
JEFFERSON-PILOT CORPORATION
LG MERGER CORP.
and
THE GUARANTEE LIFE COMPANIES INC.
Dated as of September 19, 1999,
as amended and restated as of October 14, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE I
THE MERGER
<C> <S> <C>
Section 1.1 The Merger................................................ 1
Section 1.2 Closing................................................... 1
Section 1.3 Effective Time............................................ 1
Section 1.4 Effects of the Merger..................................... 1
Section 1.5 Certificate of Incorporation and By-Laws of the Surviving
Corporation.............................................. 2
Section 1.6 Directors................................................. 2
Section 1.7 Officers.................................................. 2
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Stock........................................... 2
Section 2.2 Election Procedure........................................ 3
Section 2.3 Issuance of Parent Common Stock and Payment of Cash
Consideration; Proration................................. 4
Section 2.4 Appraisal Rights.......................................... 6
Section 2.5 Exchange of Certificates.................................. 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Qualification, Etc.......................... 8
Section 3.2 Capital Stock............................................. 9
Section 3.3 Corporate Authority Relative to this Agreement; No
Violation................................................ 10
Section 3.4 Reports and Financial Statements.......................... 11
Section 3.5 No Undisclosed Liabilities................................ 12
Section 3.6 No Violation of Law....................................... 12
Section 3.7 Environmental Laws and Regulations........................ 12
Section 3.8 No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements................................... 12
Section 3.9 Absence of Certain Changes or Events...................... 13
Section 3.10 Investigations; Litigation................................ 13
Section 3.11 Proxy Statement; Registration Statement; Other
Information.............................................. 13
Section 3.12 Lack of Ownership of Parent Common Stock.................. 14
Section 3.13 Tax Matters............................................... 14
Section 3.14 Opinion of Financial Advisor.............................. 15
Section 3.15 Required Vote of the Company Stockholders................. 15
Section 3.16 Material Contracts........................................ 15
Section 3.17 Intellectual Property Rights.............................. 15
Section 3.18 Year 2000 Matters......................................... 16
Section 3.19 Takeover Statute.......................................... 16
Section 3.20 Finders or Brokers........................................ 16
Section 3.21 Rights Agreement.......................................... 16
Section 3.22 Insurance Laws............................................ 16
Section 3.23 Insurance Business........................................ 17
Section 3.24 Agents.................................................... 18
Section 3.25 Separate Accounts......................................... 18
Section 3.26 Derivatives............................................... 18
Section 3.27 Investments............................................... 19
Section 3.28 Ohio Farmers Compliance................................... 19
Section 3.29 Real Estate............................................... 19
</TABLE>
i
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<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
<C> <S> <C>
Section 4.1 Organization, Qualification, Etc.......................... 19
Section 4.2 Capital Stock............................................. 19
Section 4.3 Corporate Authority Relative to this Agreement; No
Violation................................................ 20
Section 4.4 Reports and Financial Statements.......................... 20
Section 4.5 No Undisclosed Liabilities................................ 21
Section 4.6 No Violation of Law....................................... 22
Section 4.7 Absence of Certain Changes or Events...................... 22
Section 4.8 Investigations; Litigation................................ 22
Section 4.9 Proxy Statement; Registration Statement; Other
Information.............................................. 22
Section 4.10 Lack of Ownership of the Company Common Stock............. 22
Section 4.11 Vote of Parent Stockholders............................... 22
Section 4.12 Finders or Brokers........................................ 22
Section 4.13 Financing................................................. 22
Section 4.14 Employment Agreement...................................... 23
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by the Company or Parent.............. 23
Section 5.2 Investigation............................................. 25
Section 5.3 Proxy Material; Registration Statement.................... 26
Section 5.4 Affiliate Agreements...................................... 27
Section 5.5 Employee Incentive and Benefit Plans...................... 27
Section 5.6 Filings; Other Action..................................... 27
Section 5.7 Further Assurances........................................ 28
Section 5.8 Takeover Statute.......................................... 28
Section 5.9 No Solicitation........................................... 28
Section 5.10 Public Announcements...................................... 29
Section 5.11 Indemnification and Insurance............................. 29
Section 5.12 Accountants' "Comfort" Letters............................ 30
Section 5.13 Additional Reports and Information........................ 30
Section 5.14 Company Rights Plan....................................... 31
Section 5.15 Control of Other Party's Business......................... 31
Section 5.16 Omaha Operations.......................................... 31
Section 5.17 Nebraska Domicile......................................... 31
Section 5.18 Tax Matters............................................... 31
Section 5.19 Financing................................................. 31
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger................................................... 31
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger................................................... 32
Section 6.3 Conditions to Obligation of Parent to Effect the Merger... 32
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE VII
TERMINATION
<C> <S> <C>
Section 7.1 Termination or Abandonment................................ 33
Section 7.2 Termination Fee........................................... 34
Section 7.3 Amendment or Supplement................................... 34
Section 7.4 Extension of Time, Waiver, Etc............................ 34
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties............. 35
Section 8.2 Expenses.................................................. 35
Section 8.3 Counterparts; Effectiveness............................... 35
Section 8.4 Governing Law............................................. 35
Section 8.5 Jurisdiction.............................................. 35
Section 8.6 Notices................................................... 35
Section 8.7 Assignment; Binding Effect................................ 36
Section 8.8 Severability.............................................. 36
Section 8.9 Enforcement of Agreement.................................. 36
Section 8.10 Entire Agreement; No Third-Party Beneficiaries............ 36
Section 8.11 Headings.................................................. 37
Section 8.12 Definitions............................................... 37
Exhibit A Form of Affiliate Letter
Exhibit B Actions Regarding Employee Benefit Plans
Exhibit C Amendment to Rights Plan
Exhibit D Form of Noncompetition, Nonsolicitation and Cancellation
Agreement with Robert D. Bates
Exhibit E Form of Employment Agreement with Robert D. Bates
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Agent.............................................................. 3.24(a)
Agreement................................................... Opening Clause
All Cash Transaction................................................ 2.3(c)
Applicable Insurance Laws............................................. 3.22
Average Parent Price................................................ 2.1(b)
Cancellation Agreement.............................................. 3.8(c)
Cash Consideration.................................................. 2.1(b)
Cash Election....................................................... 2.2(a)
Cash Election Number................................................ 2.3(a)
Cash Election Shares................................................ 2.3(b)
Cash Fraction....................................................... 2.3(b)
Certificate of Merger.................................................. 1.3
Certificates........................................................ 2.1(b)
Closing Date........................................................... 1.2
Code.............................................................. Preamble
Common Stock Consideration.......................................... 2.1(b)
Company..................................................... Opening Clause
Company Actuarial Analyses......................................... 3.23(b)
Company Affiliated Group........................................... 3.13(a)
Company Common Stock................................................ 2.1(a)
Company Disclosure Schedule..................... Article III, 1st Paragraph
Company Insurance Subsidiaries...................................... 3.1(b)
Company Material Contracts............................................ 3.16
Company Meeting..................................................... 5.3(d)
Company Option Plans................................................ 3.2(a)
Company Preferred Stock............................................. 3.2(a)
Company Representatives............................................. 5.9(a)
Company Required Approvals.......................................... 3.3(b)
Company Rights Plan................................................. 3.2(a)
Company SAP Statements.............................................. 3.4(b)
Company SEC Reports................................................. 3.4(a)
Company Stockholder Approval.......................................... 3.15
Company Stockholder Rights.......................................... 3.2(a)
Confidentiality Agreement.............................................. 5.2
Costs.............................................................. 5.11(a)
Current Company Group.............................................. 3.13(a)
Current Premium.................................................... 5.11(c)
D&O Insurance...................................................... 5.11(c)
DGCL.............................................................. Preamble
Dissenting Share....................................................... 2.4
Distribution Date..................................................... 3.21
Effective Time......................................................... 1.3
Election............................................................ 2.2(a)
Election Deadline................................................... 2.2(c)
Election Form....................................................... 2.2(b)
Employment Agreement.................................................. 4.14
Environmental Claims................................................... 3.7
Environmental Laws..................................................... 3.7
ERISA............................................................... 3.8(a)
Exchange Act........................................................ 3.3(b)
Exchange Agent...................................................... 2.5(a)
Exchange Fund....................................................... 2.5(a)
Exchange Ratio...................................................... 2.1(b)
GAAP................................................................ 3.4(a)
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
HSR Act................................................................. 3.3(b)
Indemnified Parties.................................................... 5.11(a)
Intellectual Property..................................................... 3.17
Knowledge.............................................................. 8.12(b)
Lien.................................................................... 3.1(a)
Mailing Date............................................................ 2.2(b)
Material Adverse Effect................................................. 3.1(a)
Material State......................................................... 3.13(e)
Merger................................................................ Preamble
Merger Consideration.................................................... 2.1(b)
Merger Price............................................................ 2.1(b)
Merger Sub...................................................... Opening Clause
Nebraska Insurers Demutualization Act.................................. 8.12(c)
Nebraska Shareholders Protection Act................................... 8.12(d)
Non-Electing Shares..................................................... 2.3(b)
Non-Election............................................................ 2.2(a)
Non-Election Fraction................................................... 2.3(d)
NYSE.................................................................... 2.1(b)
Option Amount........................................................... 2.1(c)
Parent.......................................................... Opening Clause
Parent Common Stock..................................................... 2.1(b)
Parent Disclosure Schedule........................... Article IV, 1st Paragraph
Parent Preferred Stock.................................................. 4.2(a)
Parent Required Approvals............................................... 4.3(b)
Parent Rights Agreement................................................. 2.1(b)
Parent SAP Statements................................................... 4.4(b)
Parent SEC Reports...................................................... 4.4(a)
Parent Stockholder Rights............................................... 2.1(b)
Past Company Group..................................................... 3.13(a)
Proxy Statement........................................................... 3.11
Registration Statement.................................................. 5.3(a)
Regulatory Law.......................................................... 5.6(c)
SEC..................................................................... 3.4(a)
Securities Act.......................................................... 3.3(b)
Separate Accounts...................................................... 3.25(a)
Shares..................................................................... 2.2
Small Stockholder....................................................... 2.3(d)
Small Stockholder Amount................................................ 2.3(d)
Stock Election.......................................................... 2.2(a)
Stock Election Number................................................... 2.3(a)
Stock Election Shares................................................... 2.3(b)
Stock Fraction.......................................................... 2.3(c)
Subsidiaries........................................................... 8.12(a)
Superior Proposal....................................................... 5.9(a)
Surviving Corporation...................................................... 1.1
Takeover Proposal....................................................... 5.9(a)
Tax Return............................................................. 3.13(e)
Taxes.................................................................. 3.13(e)
Termination Date........................................................... 5.1
Termination Fee............................................................ 7.2
Trading Average......................................................... 2.1(b)
Trading Day............................................................. 2.1(b)
Triggering Event........................................................... .21
</TABLE>
v
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of October
14, 1999 (the "Agreement"), restates the Merger Agreement, dated as of
September 19, 1999, among JEFFERSON-PILOT CORPORATION, a North Carolina
corporation ("Parent"), LG MERGER CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and THE GUARANTEE LIFE COMPANIES
INC., a Delaware corporation (the "Company"), as amended by Amendment No. 1 to
Agreement and Plan of Merger, dated as of even date herewith, among Parent,
Merger Sub and the Company.
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the acquisition of the Company by Parent upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared the advisability of this Agreement and the
merger of the Company with Merger Sub (the "Merger") in accordance with the
General Corporation Law of the State of Delaware ("DGCL") and upon the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, except in the event of an All Cash Transaction, for United States
federal income tax purposes, the Merger is intended to qualify as a
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is
hereby adopted as a plan of reorganization for purposes of Section 368 of the
Code;
NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company agree as follows:
ARTICLE I
The Merger
Section 1.1 The Merger. Upon the terms and subject to Section 2.3(g) and the
conditions set forth in this Agreement and in accordance with the DGCL, the
Company shall be merged with and into Merger Sub at the Effective Time of the
Merger. Following the Merger, the separate corporate existence of the Company
shall cease, and Merger Sub shall continue as the surviving corporation (the
"Surviving Corporation").
Section 1.2 Closing. The closing of the Merger shall, subject to Section
2.3(f), take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date") which (except as set forth herein) shall be no later than the
second business day after the satisfaction or waiver of the conditions set
forth in Article VI at the offices of King & Spalding, 1185 Avenue of the
Americas, New York, unless another date or place is agreed to in writing by the
parties hereto, provided the Closing Date shall not take place prior to
December 15, 1999, unless otherwise agreed to in writing by the parties hereto.
Section 1.3 Effective Time. On the Closing Date, the parties shall execute
and file in the office of the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance with
the DGCL and shall make all other filings or recordings, if any, required under
the DGCL. The Merger shall become effective at the time of filing of the
Certificate of Merger, or at such later time as is agreed upon by the parties
hereto and set forth therein (such time as the Merger becomes effective is
referred to herein as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in applicable provisions of the DGCL.
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<PAGE>
Section 1.5 Certificate of Incorporation and By-Laws of the Surviving
Corporation. (a) Subject to Section 2.3(g), the Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time shall become
the Certificate of Incorporation of the Surviving Corporation after the
Effective Time, until thereafter amended as provided by the DGCL and such
Certificate of Incorporation.
(b) Subject to Section 2.3(g), the By-laws of Merger Sub as in effect
immediately prior to the Effective Time shall become the By-laws of the
Surviving Corporation after the Effective Time, until thereafter amended as
provided by the DGCL, the Certificate of Incorporation of the Surviving
Corporation and such By-laws.
Section 1.6 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall become the directors of the Surviving Corporation, until
the earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified.
Section 1.7 Officers. The officers of the Company immediately prior to the
Effective Time shall become the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified.
ARTICLE II
Conversion of Shares; Exchange of Certificates
Section 2.1 Effect on Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the Company, Merger Sub or the holders of
any securities of the Company or Merger Sub:
(a) Each share of common stock, par value $.01 per share, of the Company
(together with the associated Company Stockholder Rights, the "Company
Common Stock") issued and held, immediately prior to the Effective Time, in
the Company's treasury or by any of the Company's direct or indirect wholly
owned subsidiaries, and each share of Company Common Stock that is owned by
Parent, Merger Sub or any other wholly owned subsidiary of Parent (except
for shares held in a separate account or any mutual fund of any Subsidiary
of Parent), shall automatically be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding share of Company Common Stock (other than
shares to be cancelled in accordance with Section 2.1(a) and Dissenting
Shares) shall, at the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right
to receive a fraction of a duly authorized, validly issued, fully paid and
nonassessable share of common stock of Parent, par value $1.25 (together
with the associated common share purchase rights (the "Parent Stockholder
Rights") issued pursuant to the Amended and Restated Rights Agreement dated
as of November 7, 1994 between Parent and First Union National Bank as
Rights Agent (as amended from time to time, the "Parent Rights Agreement"),
the "Parent Common Stock"), or cash, or a combination of Parent Common
Stock and cash, in accordance with the following:
(i) a fraction of a duly authorized, validly issued, fully paid and
nonassessable share of Parent Common Stock (the "Common Stock
Consideration"), calculated by dividing (x) $32.00 (the "Merger Price")
by (y) the Average Parent Price, rounded to four decimal places (such
fraction being referred to herein as the "Exchange Ratio"). As used
herein, the "Average Parent Price" shall mean the average of the high
and low sales prices, regular way, per share of Parent Common Stock as
reported in The Wall Street Journal on each of the 10 consecutive New
York Stock Exchange ("NYSE") trading days (each, a "Trading Day")
ending on (and including) the fourth Trading Day prior to the Effective
Time (the "Trading Average"); or
(ii) $32.00 in cash, without any interest thereon (the "Cash
Consideration"; the Common Stock Consideration and the Cash
Consideration, collectively, the "Merger Consideration");
A-2
<PAGE>
in each case as the holder thereof shall have elected or be deemed to have
elected, in accordance with and subject to the limitations set forth in Section
2.2 hereof determined as provided in Section 2.3 hereof.
As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") shall cease to have any rights with
respect thereto, except as otherwise provided herein or by law.
(c) Each option granted under the Company's option plans held by
employees and directors outstanding at the Effective Time to acquire a
share of Company Common Stock shall be converted into the right to receive
an amount in cash (the "Option Amount") equal to the Cash Consideration
less the exercise price therefor. As promptly as practicable following the
Effective Time, the Surviving Corporation shall pay to each holder of one
or more options the applicable Option Amount (less any applicable
withholding taxes). On the Closing Date, the Company shall deposit in a
bank account not within the Company's control an amount of cash equal to
the aggregate payments to be made pursuant to the prior sentence together
with instructions that such cash be promptly distributed following the
Effective Time to the holders of such options in accordance with this
Section.
(d) Each issued and outstanding share of common stock, par value $100 per
share, of Merger Sub shall be converted into one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
(e) The calculations of the computations required by this Article II
shall be prepared by Parent prior to the Closing Date and shall be set
forth in a statement furnished to the Company showing in reasonable detail
the manner of calculation.
(f) At the Effective Time, the stock transfer books of the Company shall
be closed as to holders of the Company Common Stock immediately prior to
the Effective Time and no transfer of the Company Common Stock by any such
holder shall thereafter be made or recognized. If, after the Effective
Time, Certificates are properly presented in accordance with this Article
II to the Exchange Agent, such Certificates shall be canceled and exchanged
for certificates representing the number of shares of Parent Common Stock,
and/or a check representing the amount of cash, if any, into which the
Company Common Stock represented thereby was converted in the Merger.
Section 2.2 Election Procedure. Each holder (or beneficial owner through
appropriate and customary documentation and instructions) of shares of Company
Common Stock ("Shares") (other than holders of Shares to be canceled as set
forth in Section 2.1(a)) shall have the right to submit a request specifying
the number of Shares that such holder desires to have converted into shares of
Parent Common Stock in the Merger and the number of Shares that such holder
desires to have converted into the right to receive Cash Consideration in the
Merger in accordance with the following procedure:
(a) Subject to Section 2.3, each holder of Shares may specify in a
request made in accordance with the provisions of this Section 2.2 (herein
called an "Election") (i) the number of Shares owned by such holder that
such holder desires to have converted into Parent Common Stock in the
Merger (a "Stock Election") and (ii) the number of Shares owned by such
holder that such holder desires to have converted into the right to receive
the Cash Consideration in the Merger (a "Cash Election") and (iii) the
number of Shares owned by such holder as to which such holder has no
preference as to the receipt of Cash Consideration or Parent Common Stock
for such shares (a "Non-Election").
(b) An election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
such Certificates to the Exchange Agent) in such form as Parent and the
Company shall mutually agree (the "Election Form") shall be mailed thirty
days prior to the anticipated Effective Time or
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<PAGE>
on such other date as Parent and the Company shall mutually agree (the
"Mailing Date") to each holder of record of Company Common Stock as of five
business days prior to the Mailing Date.
(c) Any Election shall have been made properly only if the Exchange Agent
shall have received, by 5:00 p.m. local time in the city in which the
principal office of such Exchange Agent is located, on the fifth day prior
to the anticipated Effective Time (or such other time and date as Parent
and the Company shall mutually agree) (the "Election Deadline"), an
Election Form properly completed and signed and accompanied by Certificates
for the Shares to which such Election Form relates (or customary affidavits
and indemnification regarding the loss or destruction of such Certificate
or Certificates or by an appropriate guarantee of delivery of such
Certificates, as set forth in such Election Form, from a member of any
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the
United States provided such certificates are in fact delivered to the
Exchange Agent by the time required in such guarantee of delivery). Failure
to deliver Shares covered by such a guarantee of delivery within the time
set forth on such guarantee shall be deemed to invalidate any otherwise
properly made Election.
(d) Any Company stockholder may at any time prior to the Election
Deadline revoke or change his or her Election by written notice received by
the Exchange Agent prior to the Election Deadline accompanied by a properly
completed and signed, revised Election Form or by withdrawal of his or her
Certificates for Shares, or of the guarantee of delivery of such
Certificates, previously deposited with the Exchange Agent. In the event an
Election Form is revoked prior to the Election Deadline, the Shares
represented by such Election Form shall (except in the case of an All Cash
Transaction) be promptly returned without charge to the person submitting
the Election Form upon written request to that effect from the holder who
submitted the Election Form. The Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in the Election
Forms, and any good faith decisions of the Exchange Agent regarding such
matters shall be binding and conclusive. The Exchange Agent shall be under
no obligation to notify any person of any defect in an Election Form. All
Elections shall be revoked automatically in the event of an All Cash
Transaction or if the Exchange Agent is notified in writing by Parent or
the Company that this Agreement has been terminated.
(e) Within fifteen calendar days after the Election Deadline, unless the
Effective Time has not yet occurred, in which case as soon thereafter as
practicable, Parent shall cause the Exchange Agent to effect the allocation
among the holders of Company Common Stock of rights to receive Parent
Common Stock or Cash Consideration in the Merger in accordance with Section
2.3.
Section 2.3 Issuance of Parent Common Stock and Payment of Cash
Consideration; Proration. The manner in which each Share (other than Shares to
be canceled as set forth in Section 2.1(a) and Dissenting Shares) shall be
converted into Parent Common Stock or the right to receive the Cash
Consideration at the Effective Time shall be as set forth in this Section 2.3.
All references to "outstanding" Shares in this Section 2.3 shall mean (i) all
Shares outstanding immediately prior to the Effective Time, less (ii) Shares to
be cancelled as set forth in Section 2.1(a).
(a) As is more fully set forth below, the number of Shares to be
converted into the right to receive the Cash Consideration pursuant to the
Merger shall be equal to 50% of all outstanding Shares less the sum of (i)
the number of Dissenting Shares, if any, which are not to be treated as
Non-Electing Shares pursuant to Section 2.4 and (ii) the number of Shares
to be exchanged for cash in lieu of fractional shares pursuant to Section
2.5(e) (the "Cash Election Number"). The number of Shares to be converted
into the right to receive Parent Common Stock in the Merger shall be equal
to 50% of all outstanding Shares (the "Stock Election Number").
(b) If the aggregate number of Shares covered by Cash Elections (the
"Cash Election Shares") exceeds the Cash Election Number, all Shares
covered by Stock Elections (the "Stock Election Shares") and all Shares
covered by Non-Elections (the "Non-Electing Shares") shall be converted
into the right to
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receive Parent Common Stock, and the Cash Election Shares shall be
converted into the right to receive Parent Common Stock and cash in the
following manner:
each Cash Election Share shall be converted into the right to receive
(i) an amount in cash, without interest, equal to the product of (x)
the Cash Consideration and (y) a fraction (the "Cash Fraction"), the
numerator of which shall be the Cash Election Number and the
denominator of which shall be the total number of Cash Election Shares,
and (ii) a number of shares of Parent Common Stock equal to the product
of (x) the Common Stock Consideration and (y) a fraction equal to one
minus the Cash Fraction.
(c) If the aggregate number of Stock Election Shares exceeds the Stock
Election Number, all Cash Election Shares and all Non-Electing Shares shall
be converted into the right to receive cash, and all Stock Election Shares
shall be converted into the right to receive Parent Common Stock and cash
in the following manner:
each Stock Election Share shall be converted into the right to receive
(i) a number of shares of Parent Common Stock equal to the product of
(x) the Common Stock Consideration and (y) a fraction (the "Stock
Fraction"), the numerator of which shall be the Stock Election Number
and the denominator of which shall be the total number of Stock
Election Shares, and (ii) an amount in cash, without interest, equal to
the product of (x) the Cash Consideration and (y) a fraction equal to
one minus the Stock Fraction.
(d) If neither Section 2.3(b) nor 2.3(c) is applicable, each Cash
Election Share shall be converted into the right to receive cash, each
Stock Election Share shall be converted into the right to receive Parent
Common Stock and each Non-Electing Share shall be converted into the right
to receive cash, Parent Common Stock or a combination of cash and Parent
Common Stock in the following manner:
each Non-Electing Share held by a Small Stockholder shall be converted
into the right to receive cash, without interest, and each Non-Electing
Share held by a holder that is not a Small Stockholder shall be
converted into the right to receive (i) a number of shares of Parent
Common Stock equal to the product of (x) the Common Stock Consideration
and (y) a fraction (the "Non-Election Fraction"), the numerator of
which shall be (A) the Stock Election Number minus (B) the total number
of Stock Election Shares, and the denominator of which shall be the
total number of Non-Electing Shares held by holders other than Small
Stockholders, and (ii) an amount in cash, without interest, equal to
the product of (x) the Cash Consideration and (y) a fraction equal to
one minus the Non-Election Fraction.
For purposes of this Section 2.3, the term "Small Stockholder" shall mean
a holder of a number of Shares that is less than or equal to the Small
Stockholder Amount; and the "Small Stockholder Amount" shall mean the
largest integral number of Shares that would result in the sum of (x) all
Shares held by all such Small Stockholders and (y) all Cash Election
Shares, not exceeding the Cash Election Number, provided that the Small
Stockholder Amount shall in no event exceed 99 Shares.
(e) For the purposes of this Section 2.3, outstanding Shares as to which
an Election is not in effect at the Election Deadline shall be considered
Non-Electing Shares. If Parent and the Company shall determine that any
Election is not properly made with respect to any Shares, such Election
shall be deemed to be not in effect, and the Shares covered by such
Election shall, for purposes hereof, be deemed to be Non-Electing Shares.
(f) Notwithstanding any provision of this Agreement to the contrary, all
outstanding Shares shall be converted in the Merger into Cash Consideration
(i) in the event that the Average Parent Price is less than $65.00 per
Share, and Parent elects to pay the Cash Consideration for all outstanding
Shares by delivering written notice to the Company of such election within
two (2) business days following determination of the Average Parent Price;
(ii) in the event that the Average Parent Price exceeds $75.00 per Share;
and (iii) in the event that the closing price of Parent Common Stock on the
NYSE on the Trading Day immediately
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preceding the Closing Date scheduled in accordance with Section 1.2
(without taking account the last sentence of this subsection) is less than
the Average Parent Price, and as a result, the opinion required by either
Section 6.2(b) or Section 6.3(b) is not delivered (in any of the events
described under this subsection (e), the Merger shall be an "All Cash
Transaction"). In the event that the Merger is an All Cash Transaction
because of clause (iii) above, the Closing Date shall be extended by two
business days, but the Average Parent Price shall not be recalculated as a
result of such extension.
(g) Notwithstanding any provision of this Agreement to the contrary, in
the event that the Merger is an All Cash Transaction, then the transaction
will be treated as an acquisition by Parent of all of the stock of the
Company, and the structure of the Merger will change, such that the Merger
Sub will merge with and into the Company, the separate existence of Merger
Sub will cease and the Company will continue as the Surviving Corporation
and the Certificate of Incorporation and By-laws of the Company will become
the Certificate of Incorporation and By-laws of the Surviving Corporation.
Section 2.4 Appraisal Rights. Notwithstanding any provision of this Agreement
to the contrary, each outstanding share of Company Common Stock the holder of
which has not voted in favor of the Merger, has perfected such holder's right
to an appraisal of such holder's shares in accordance with the applicable
provisions of the DGCL and has not effectively withdrawn or lost such right to
appraisal (a "Dissenting Share") shall not be converted into or represent a
right to receive the Merger Consideration, but the holder thereof shall be
entitled only to such rights as are granted by the applicable provisions of the
DGCL; provided, however, that any Dissenting Share held by a person at the
Effective Time who shall, after the Effective Time, withdraw the demand for
appraisal within 60 days after the Effective Time or shall lose the right of
appraisal, in either case pursuant to the DGCL, shall be treated as a Non-
Electing Share for purposes of Section 2.3. The Company shall give Parent (i)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other instruments served pursuant to the applicable
provisions of the DGCL relating to the appraisal process received by the
Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company will not
voluntarily make any payment with respect to any demands for appraisal and will
not, except with the prior written consent of Parent, settle or offer to settle
any such demands. Notwithstanding anything to the contrary in this Section 2.4,
if (A) the Merger is rescinded or abandoned or (B) the stockholders of the
Company revoke the authority to effect the Merger, the right of any stockholder
of the Company to be paid the fair value of such stockholder's Dissenting
Shares pursuant to the DGCL shall cease.
Section 2.5 Exchange of Certificates. (a) Exchange Agent. As of the Effective
Time, Parent shall enter into an agreement with First Union National Bank or
such other bank or trust company as may be designated by Parent and as shall be
reasonably satisfactory to the Company (the "Exchange Agent"), which shall
provide that Parent shall deposit with the Exchange Agent as promptly as
practicable following the Effective Time, for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this Article
II, through the Exchange Agent, the aggregate Merger Consideration plus
additional cash for dividends and fractional shares. The aggregate Merger
Consideration (together with any dividends or distributions with respect
thereto with a record date after the Effective Time) and any cash payable in
lieu of any fractional shares of Parent Common Stock are hereinafter referred
to as the "Exchange Fund."
(b) Exchange Procedures. Upon surrender of a Certificate for cancellation to
the Exchange Agent, the holder of such Certificate shall be entitled to receive
in exchange therefor the applicable Merger Consideration, certain dividends or
other distributions in accordance with Section 2.5(c) and cash in lieu of any
fractional share in accordance with Section 2.5(e), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, the applicable Merger Consideration may be issued to a
person other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other non-income taxes required by reason of the issuance of shares
of Parent Common Stock to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that any such tax has
been paid or
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is not applicable. Parent or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Stock such amounts as Parent or the Exchange Agent
are required to withhold or deduct under the Code or any provision of state,
local or foreign tax law with respect to the making of such payment. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Company Common Stock in respect of whom such
deduction and withholding were made by Parent or the Exchange Agent. Until
surrendered as contemplated by this Section 2.5, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the applicable Merger Consideration, certain
dividends or other distributions in accordance with Section 2.5(c) and cash in
lieu of any fractional share in accordance with Section 2.5(e). No interest
will be paid or will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.5(e), and all such dividends, other distributions and
cash in lieu of fractional shares of Parent Common Stock shall be paid by
Parent to the Exchange Agent and shall be included in the Exchange Fund, in
each case until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable escheat or similar laws and
laws with respect to the withholding of Taxes, following surrender of any such
Certificate there shall be paid to the holder of shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Stock and the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
Parent shall make available to the Exchange Agent cash for these purposes.
(d) No Further Ownership Rights in Company Common Stock. The payment of the
applicable Merger Consideration upon the surrender for exchange of Certificates
in accordance with the terms of this Article II (including distributions and
dividends paid pursuant to Section 2.5(c) and any cash paid in lieu of
fractional shares pursuant to Section 2.5(e)) shall be deemed payment in full
satisfaction of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been authorized or made by the Company on such shares of Company Common Stock
which remain unpaid at the Effective Time.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution of Parent shall relate to
such fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time, the Surviving
Company shall pay to each holder of Company Common Stock an amount in cash, if
any, equal to the product obtained by multiplying the fractional interest in a
share of Parent Common Stock to which such holder (after taking into account
all shares of Company Common Stock held at the Effective Time by such holder)
would otherwise be entitled by the Average Parent Price.
(iii) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Company Common Stock with respect to any
fractional share interests, the Exchange Agent will make available such amounts
to such holders of Company Common Stock subject to the terms of Section 2.5(c).
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(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Parent upon demand, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Merger
Consideration, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions with respect to Parent Common Stock.
(g) No Liability. None of the Company, Parent, Merger Sub, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest all cash
included in the Exchange Fund, as directed by Parent. Any interest and other
income resulting from such investments shall be paid to Parent.
(i) Lost Certificates. If 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 the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration and, if applicable, any cash in lieu of fractional shares,
and unpaid dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof, pursuant to this Agreement.
(j) Adjustments. If at any time during the period between the date of this
Agreement and the Effective Time any change in the outstanding shares of
capital stock of the Company or Parent shall occur as a result of any
reclassification, recapitalization, stock split (including a reverse stock
split) or combination, exchange or readjustment of shares or any stock dividend
or stock distribution with a record date during such period, the Merger
Consideration shall be equitably adjusted.
ARTICLE III
Representations and Warranties of the Company
Except as specifically set forth, by reference to a particular section of
this Agreement, on the Disclosure Schedule delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
the Company represents and warrants to Parent and Merger Sub as follows:
Section 3.1 Organization, Qualification, Etc. (a) The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect (as hereinafter defined) on the
Company. As used in this Agreement, any reference to any state of facts, event,
change or effect having a "Material Adverse Effect" on or with respect to the
Company or Parent, as the case may be, means such state of facts, event, change
or effect that has had, or would reasonably be expected to have, a material
adverse effect on the business, results of operations, prospects or financial
condition of the Company and its Subsidiaries (as defined in Section 8.12),
taken as a whole, or Parent and its Subsidiaries, taken as a whole, as the case
may be, other than any change, circumstance or effect relating to (i) the
economy or securities markets in general, (ii) the industries in which the
entity and its Subsidiaries operate and not specifically relating to the
entity, (iii) the announcement, pendency or consummation of the Merger or any
other transaction contemplated by this Agreement, or (iv) any action required
to be taken by the entity or any of its Subsidiaries by the terms hereof; or,
with respect to any such entity, any change, circumstance or event that would
prevent, materially hinder or materially and unreasonably delay the
consummation of the transactions
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contemplated by this Agreement by such entity. The copies of the Company's and
each Company Insurance Subsidiary's certificate of incorporation and by-laws
which have been delivered to Parent are complete and correct and in full force
and effect. Each of the Company's Subsidiaries is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate power and
authority to own its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. Except as set
forth in Section 3.1(a) of the Company Disclosure Schedule, all the outstanding
shares of capital stock of, or other ownership interests in, the Company's
Subsidiaries which are corporations are validly issued, fully paid and non-
assessable and all the outstanding shares of capital stock of, or other
ownership interests in, the Company's Subsidiaries are owned by the Company,
directly or indirectly, free and clear of all liens, claims, mortgages,
encumbrances, pledges, security interests, equities or charges of any kind
(each, a "Lien"). Except as set forth in Section 3.1(a) of the Company
Disclosure Schedule, there are no existing options, rights of first refusal,
preemptive rights, calls, claims or commitments of any character relating to
the issued or unissued capital stock or other securities of, or other ownership
interests in, any Subsidiary of the Company.
(b) The Company conducts its insurance operations through the Subsidiaries
set forth on Section 3.1(b) of the Company Disclosure Schedule (collectively,
the "Company Insurance Subsidiaries"). Each of the Company Insurance
Subsidiaries is (i) duly licensed or authorized as an insurance company and,
where applicable, a reinsurer in its jurisdiction of incorporation, (ii) duly
licensed or authorized as an insurance company and, where applicable, a
reinsurer in each other jurisdiction where it is required to be so licensed or
authorized, and (iii) duly authorized in its jurisdiction of incorporation and
each other applicable jurisdiction to write each line of business reported as
being written in the Company SAP Statements (as hereinafter defined), except,
in any such case, where the failure to be so licensed or authorized,
individually or in the aggregate, does not constitute and could not be
reasonably expected to have a Material Adverse Effect on the Company. The
Company has made all required filings under applicable insurance holding
company statutes except where the failure to file, individually or in the
aggregate, is not having and could not be reasonably expected to have a
Material Adverse Effect on the Company.
(c) Except as set forth in Section 3.1(c) of the Company Disclosure Schedule,
the minutes of the Board of Directors, any investment committees, any
compensation committees, and stockholders' meetings and the stock books of the
Company and the Company Insurance Subsidiaries, in each case since January 1,
1997, all of which have been previously made available to Parent, are true and
complete in all material respects.
Section 3.2 Capital Stock. (a) The authorized stock of the Company consists
of 30,000,000 shares of Company Common Stock and 30,000 shares of preferred
stock, par value $1.00 per share ("Company Preferred Stock"). As of September
14, 1999, 10,315,785 shares of Company Common Stock were issued, of which
1,063,041 shares were held in the treasury of the Company, and a total of
1,555,828 shares were reserved for issuance under the Company Long Term
Incentive Plan, the Company's Directors Stock Incentive Plan and the 1997
Associates Stock Incentive Plan ("Company Option Plans"). Thirty thousand
shares of Company Preferred Stock are designated Series A Junior Participating
Cumulative Preferred Stock ("Company Junior Participating Preferred Stock"),
none of which are outstanding as of the date hereof, and are reserved for
issuance in accordance with the Rights Agreement dated as of November 18, 1996
by and between the Company and ChaseMellon Shareholder Services, L.L.C, as
Rights Agent (the "Company Rights Plan"), pursuant to which the Company has
issued rights (the "Company Stockholder Rights") to purchase shares of Company
Junior Participating Preferred Stock. All of the issued and outstanding shares
of Company Common Stock are, and all shares reserved for issuance will be, upon
issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, validly issued and are fully
paid and non-assessable. Except as set forth in Section 3.2(a) of the Company
Disclosure Schedule, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem, or otherwise acquire
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any shares of capital stock of the Company or any of its Subsidiaries, and
there are no outstanding subscriptions, options, warrants, rights or other
arrangements or commitments obligating the Company to issue any shares of its
stock, or to pay to any Person any amount based upon or derived from a formula
utilizing its stock price or performance, other than:
(i) the Company Stockholder Rights;
(ii) options to acquire a total of 1,011,861 shares of Company Common
Stock as of September 14, 1999 pursuant to the Company's Option Plans,
which options are completely and accurately listed by optionee, price per
share, date of grant and number of shares covered thereby on Section 3.2(a)
of the Company Disclosure Schedule;
(iii) restricted stock awards (as to which the restrictions have not
lapsed) relating to a total of 44,895 shares of Company Common Stock
pursuant to the Company's Option Plan and the Company's Directors Stock
Incentive Plan, which awards are completely and accurately listed by
grantee, date of grant and number of shares covered thereby in Section
3.2(a) of the Company Disclosure Schedule; and
(iv) "phantom stock" units equivalent to a total of 78,882.4 shares of
Company Common Stock awarded through August 31, 1999 (the most recent
withholding date) pursuant to the Guarantee Mutual Life Company Amended and
Restated Phantom Stock Plan, the Guarantee Life Insurance Company Deferred
Compensation Plan and the Guarantee Life Insurance Company Board of
Directors Deferred Compensation Plan, which units are completely and
accurately listed by grantee and number of shares covered thereby on
Section 3.2(a) of the Company Disclosure Schedule, it being understood that
the actual number of such units to be awarded pursuant to such Plans will
reflect deferrals, under such Plans as in effect at August 31, 1999, and
dividends paid on the Company Common Stock, through the Effective Time.
(b) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any matters on which
stockholders may vote are issued or outstanding.
Section 3.3 Corporate Authority Relative to this Agreement; No
Violation. (a) The Company has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of the Company, no other corporate proceedings on the part
of the Company, other than obtaining Stockholder approval pursuant to Section
3.15, are necessary to authorize the consummation of the transactions
contemplated hereby. The Board of Directors of the Company has taken all
necessary and appropriate action so that Section 203 of the DGCL will be
inapplicable to this Agreement and the transactions contemplated hereby. The
Board of Directors of the Company has determined that the transactions
contemplated by this Agreement are in the best interest of the Company and its
stockholders, has declared the advisability of this Agreement and has
determined to recommend to such stockholders that they approve and adopt this
Agreement. Subject to the foregoing, this Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes
a valid and binding agreement of the other parties hereto, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) Except as set forth in Section 3.3(b) of the Company Disclosure Schedule,
the Company is not subject to or obligated under any charter, by-law or
contract provision or any license, franchise or permit, or subject to any order
or decree or to the Knowledge of the Company any law or regulation, which, by
its terms, would be breached or violated or would accelerate any payment or
obligation, trigger any right of first refusal or other purchase right, result
in the loss of any material benefit thereunder, or result in the creation of a
lien, pledge, security interest, charge or other encumbrance on any assets as a
result of the Company executing or, subject to the adoption of this Agreement
by its stockholders, carrying out the transactions contemplated by this
Agreement, except for any breaches or violations which would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. Other than
in connection with or in compliance with (i) the provisions of DGCL, (ii) the
Securities Act of 1933, as amended (the "Securities Act"), (iii) the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), (iv) the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (v)
Section 4043 of ERISA (as defined in Section 3.8), (vi) the Nebraska Insurers
Demutualization Act, the Nebraska Insurance Holding Company System Act, the
Pennsylvania Insurance Holding Company Act and any other applicable laws,
rules, regulations, practices and orders of any state insurance regulatory
authority, (vii) any applicable United States competition, antitrust and
investment laws, (viii) the securities or blue sky laws of the various states
and (ix) the Nebraska Shareholder Protection Act (collectively, the "Company
Required Approvals"), no authorization, consent or approval of, or filing with,
any governmental body or authority is necessary for the consummation by the
Company of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings, the failure to obtain or make
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
Section 3.4 Reports and Financial Statements. (a) The Company has previously
furnished or made available to Parent true and complete copies of:
(i) the Company's Annual Reports on Form 10-K filed with the Securities
and Exchange Commission (the "SEC") for each of the years ended December
31, 1996, 1997 and 1998;
(ii) each definitive proxy statement filed by the Company with the SEC
since December 31, 1996;
(iii) each final prospectus filed by the Company with the SEC since
December 31, 1996, except any final prospectus on Form S-8; and
(iv) all Current Reports on Form 8-K and Quarterly Reports on Form 10-Q
filed by the Company with the SEC since December 31, 1998.
As of their respective dates, such reports, proxy statements and prospectuses
(collectively, the "Company SEC Reports") (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Company SEC Reports (including any related
notes and schedules) fairly present the financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods or as of the dates then ended
(subject, in the case of the unaudited interim financial statements, to normal
recurring year-end adjustments), in each case in accordance with generally
accepted accounting principles in the United States ("GAAP") consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto). The Company has also previously furnished to Parent all audit reports
and letters to management regarding accounting controls received since January
1, 1997 from the auditors of the Company and its Subsidiaries and all responses
thereto from the Company and its Subsidiaries. Since December 31, 1996, the
Company has timely filed all reports, registration statements and other filings
required to be filed by it with the SEC under the rules and regulations of the
SEC. None of the Company's Subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) The Company has made available to Parent true and complete copies of the
annual and quarterly statements of each of the Company Insurance Subsidiaries
as filed with the applicable insurance regulatory authorities for the years
ended December 31, 1996, 1997 and 1998 and the quarterly periods ended March
31, 1999 and June 30, 1999, including all exhibits, interrogatories, notes,
schedules and any actuarial opinions, affirmations or certifications or other
supporting documents filed in connection therewith (collectively, the "Company
SAP Statements"). The Company SAP Statements 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 Subsidiaries as at the respective dates thereof and the results of
operations of such Subsidiaries for the respective periods then ended. Section
3.4(b) of the Company Disclosure Schedules sets forth the permitted exceptions
from statutory accounting practices received from any regulatory authorities.
The Company SAP
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Statements complied in all material respects with all applicable laws, rules
and regulations when filed, and, to the Knowledge of the Company, 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.
The annual statutory balance sheets and income statements included in the
Company SAP Statements have been audited by KPMG Peat Marwick LLP, and the
Company has made available to Parent true and complete copies of all audit
opinions related thereto. The Company has made available to Parent true and
complete copies of all examination reports of insurance departments and any
insurance regulatory agencies since January 1, 1996 relating to the Company
Insurance Subsidiaries. To the Knowledge of the Company, the amounts shown in
the Company SAP Statements as reserves and liabilities for past and future
insurance policy benefits, losses, claims and expenses under insurance policies
as of the end of each such reporting period were fairly stated in accordance
with generally accepted actuarial principles consistently applied, were based
on actuarial assumptions which were in accordance with those called for in the
policy provisions and met the requirements of the insurance laws of the
applicable insurance authority, with such exceptions as would not, individually
or in the aggregate, reasonably be likely to have a Material Adverse Effect.
Such amounts shown on the Company SAP Statements filed after the date hereof
and on or prior to the Closing Date will be so computed and based and will meet
all such requirements.
Section 3.5 No Undisclosed Liabilities. Except as set forth in Section 3.5 of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, and there is no existing condition, situation
or set of circumstances which would reasonably be expected to result in such a
liability or obligation, except (a) liabilities or obligations adequately
accrued or reserved for in the Company SEC Reports filed on or prior to the
date hereof, (b) liabilities and obligations that would not be required by GAAP
to be reflected in the financial statements of the Company and (c) liabilities
or obligations which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.6 No Violation of Law. Except as set forth in Section 3.6 of the
Company Disclosure Schedule, the businesses of the Company and its Subsidiaries
are not being conducted in violation of any law, ordinance or regulation of any
governmental body or authority (provided that no representation or warranty is
made in this Section 3.6 with respect to Environmental Laws (as hereinafter
defined)) except (a) as described in the Company SEC Reports and (b) for
violations or possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.7 Environmental Laws and Regulations. (a) The Company and each of
its Subsidiaries is in compliance with all applicable international, federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), which compliance includes, but is not
limited to, the possession by the Company and its Subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof,
except for non-compliance which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company; (b) neither the Company nor any
of its Subsidiaries has received written notice of, or is the subject of, any
actions, causes of action, claims, investigations, demands or notices by any
person asserting an obligation to conduct investigations or clean-up activities
under Environmental Law or alleging liability under or non-compliance with any
Environmental Law (collectively, "Environmental Claims") which would,
individually or in the aggregate, have a Material Adverse Effect on the
Company; and (c) there are no facts, circumstances or conditions in connection
with the operation of its business or any currently or formerly owned, leased
or operated facilities that are reasonably likely to lead to any Environmental
Claims in the future which would, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.8 No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements. (a) All "employee benefit plans," as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained or contributed to by the Company or its Subsidiaries are in
compliance
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with all applicable provisions of each of the Code and ERISA and the rules and
regulations thereunder, except where failure to comply with the terms of any
such plans or any such provision of applicable law would not have a Material
Adverse Effect on the Company. Except as set forth in Section 3.8(a) of the
Company Disclosure Schedule, no employee of the Company will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any employee incentive or benefit plan, program or
arrangement as a result of the transactions contemplated by this Agreement.
(b) Any amount or other entitlement that could be received (whether in cash
or property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employee benefit plan or other compensation arrangement currently in effect
would not be characterized as an "excess parachute payment" or a "parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
(c) The Company, Parent and Robert D. Bates have entered into a
noncompetition, nonsolicitation and cancellation agreement, the form of which
is attached hereto as Exhibit D (the "Cancellation Agreement") and which shall
become effective immediately prior to the Effective Time. Such agreement has
been duly authorized, executed and delivered by the Company and Robert D.
Bates, and upon satisfaction of the conditions set forth therein, shall be
enforceable against the Company and Robert D. Bates in accordance with its
terms.
Section 3.9 Absence of Certain Changes or Events. Other than the transactions
contemplated or permitted by this Agreement or as disclosed in the Company SEC
Reports, since June 30, 1999, the businesses of the Company and its
Subsidiaries have been conducted in the ordinary course consistent with past
practice, there has not been any event, occurrence, development or state of
circumstances or facts that has had, or would have, a Material Adverse Effect
on the Company, and neither the Company nor any of its Subsidiaries has taken
any action that, if taken after the date hereof, except as set forth in Section
3.9 of the Company Disclosure Schedule, would have violated any of Subsections
5.1(a)(i), (ii) or (iv) through (xix) hereof.
Section 3.10 Investigations; Litigation. Except as set forth in Section 3.10
of the Company Disclosure Schedule:
(a) there is no investigation or review pending by any governmental body
or authority with respect to the Company or any of its Subsidiaries which
would, individually or in the aggregate, have a Material Adverse Effect on
the Company, nor has any governmental body or authority notified the
Company of an intention to conduct the same; and
(b) there is no action, suit or proceeding pending (or, to the Company's
Knowledge, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign governmental or regulatory body
or authority, which would reasonably be expected to result in costs or
losses in excess of $1,000,000 in any single instance against or on behalf
of the Company or any Subsidiary, or any officer, employee or director
thereof in such individual's capacity as officer, employee or director of
the Company or any Subsidiary or involving any of their properties or
businesses, whether at law or in equity. None of such matters (singly or in
the aggregate) could reasonably be expected to result in a Material Adverse
Effect on the Company. Further, except as previously disclosed in writing
to Parent, there are no outstanding judgments, orders, decrees,
stipulations or awards (whether rendered by court or administrative agency,
or by arbitration, pursuant to a grievance or other procedures) against or
relating to the Company or any of its Subsidiaries which contain any
remaining material restrictions or obligations to perform.
Section 3.11 Proxy Statement; Registration Statement; Other Information. The
Proxy Statement (as defined below), or any amendment thereof or supplement
thereto, at the date mailed to the Company's stockholders and at the time of
the Company Meeting, will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements
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therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by the Company with respect
to statements made therein based on information supplied by Parent or Merger
Sub in writing for inclusion in the Proxy Statement. None of the information
supplied by the Company for inclusion or incorporation by reference in the
Registration Statement (as defined in Section 5.3(a)(i)), or any amendment
thereof or supplement thereto, will, at the date it becomes effective and at
the time of the Company Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply in all material respects with the provisions of the Exchange Act
and the rules and regulations promulgated thereunder. The letter to
stockholders, notice of meeting, proxy statement and form of proxy to be
distributed to stockholders in connection with the Merger and any schedules
required to be filed with the SEC in connection therewith are collectively
referred to herein as the "Proxy Statement."
Section 3.12 Lack of Ownership of Parent Common Stock. Neither the Company
nor any of its Subsidiaries owns any shares of Parent Common Stock or other
securities convertible into shares of Parent Common Stock (exclusive of any
shares owned by the Company's employee benefit plans).
Section 3.13 Tax Matters. (a) All federal, state, local and foreign Tax
Returns required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries (i) is a member (a "Current
Company Group") or (ii) has been a member within six years prior to the date
hereof but is not currently a member, but only insofar as any such Tax Return
relates to a taxable period ending on a date within the last six years during
which the Company or any of its Subsidiaries was a member (a "Past Company
Group," together with Current Company Groups, a "Company Affiliated Group")
have been timely filed, and all such Tax Returns are complete and accurate
except to the extent any failure to file or any inaccuracies in filed returns
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company (it being understood that the representations made in this Section,
to the extent that they relate to Past Company Groups, are made to the
Knowledge of the Company). All Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Affiliated Group have been timely
paid, or adequately reserved for, except to the extent any failure to pay or
reserve would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. There is no audit examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company, any Subsidiary of the Company or any
Affiliated Group which would, individually or in the aggregate, have a Material
Adverse Effect on the Company. All assessments for Taxes due and owing by the
Company, any Subsidiary of the Company or any Company Affiliated Group with
respect to completed and settled examinations or concluded litigation have been
paid. Prior to the date of this Agreement, the Company has provided Parent with
written schedules of (i) the taxable years of the Company for which the
statutes of limitations with respect to federal income Taxes have not expired,
and (ii) with respect to federal income Taxes, for all taxable years for which
the statute of limitations has not yet expired, those years for which
examinations have been completed, those years for which examinations are
presently being conducted, and those years for which examinations have not yet
been initiated. Except as set forth in Section 3.13 of the Company Disclosure
Schedule, the Company and each of its Subsidiaries have complied in all
material respects with all rules and regulations relating to tax information
reporting and the payment and withholding of Taxes, except to the extent any
such failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Subsidiaries knows of any fact or has
taken any action that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(c) Neither the Company nor any of its Subsidiaries is a party to or bound by
(or has any obligation under) any Tax sharing, allocation, indemnity, or
similar contract.
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(d) Neither the Company nor any of its Subsidiaries has entered into any
agreement with or requested relief from the IRS concerning the qualification of
any life insurance or annuity policy under or compliance with Sections 72,
101(f), 401(a), 403(b), 408, 457, 817, 7702 or 7702A or the Code, and the IRS
has not asserted in writing that any such policy fails to so qualify. The
assets of any separate account are adequately diversified within the meaning of
Section 817(h) of the Code, and each Company Insurance Subsidiary is treated
for federal tax purposes as the owner of the assets underlying the respective
life insurance policies and annuity contracts issued, entered into or sold by
it, with such exceptions as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on the Company.
(e) For purposes of this Agreement: (i) "Taxes" means any and all federal,
state, local, foreign, provincial, territorial or other taxes, imposts, rates,
levies, assessments and other charges of any kind whatsoever whether imposed
directly or through withholding (together with any and all interest, penalties,
additions to tax and additional amounts applicable with respect thereto),
including, without limitation, income, franchise, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation, net worth,
excise, withholding, ad valorem and value added taxes; (ii) "Tax Return" means
any declaration, return, report, schedule, certificate, statement or other
similar document (including relating or supporting information) required to be
filed or, where none is required to be filed with a taxing authority, the
statement or other document issued by a taxing authority in connection with any
Tax, including, without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax; and (iii) "Material State"
means any state for which the average allocation percentage of the Company and
its Subsidiaries for the past three years exceeds ten percent (10%).
Section 3.14 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Goldman, Sachs & Co., dated the date of
this Agreement, substantially to the effect that, as of such date, the Merger
Consideration is fair to the holders of the Company Common Stock from a
financial point of view.
Section 3.15 Required Vote of the Company Stockholders. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
(the "Company Stockholder Approval") is required to approve and adopt this
Agreement. The Company Stockholder Approval is sufficient to approve the
"control-share acquisition" under the Nebraska Shareholders Protection Act,
provided that neither Parent nor Merger Sub owns any shares of Company Common
Stock. No other vote of the stockholders of the Company, or of the holders of
any other securities of the Company (equity or otherwise), is required by law,
the certificate of incorporation or by-laws of the Company or otherwise in
order for the Company to consummate the Merger and the transactions
contemplated hereby.
Section 3.16 Material Contracts. Except as set forth in Section 3.16 of the
Company Disclosure Schedule or in the Company SEC Reports, neither the Company
nor any of its Subsidiaries is a party to or bound by any "material contract"
(as such term is defined in item 601(b)(10) of Regulation S-K of the SEC) (all
contracts of the type described in this Section 3.16 being referred to herein
as "Company Material Contracts"). Each Company Material Contract is valid and
binding on the Company and is in full force and effect, and the Company and
each of its Subsidiaries have performed all obligations required to be
performed by them to date under each Company Material Contract, except where
such noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
knows of, or has received notice of, any violation or default under any Company
Material Contract except for such violations or defaults as would not in the
aggregate have a Material Adverse Effect on the Company.
Section 3.17 Intellectual Property Rights. The Company and its Subsidiaries
have all right, title and interest in, or a valid and binding license to use,
all Intellectual Property (as defined below) individually or in the aggregate
material to the conduct of the businesses of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any Subsidiary of the Company is in
default (or with the giving of notice or lapse of time or both, would be in
default) under any license to use such Intellectual Property, such Intellectual
Property
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is not being infringed by any third party, and neither the Company nor any
Subsidiary of the Company is infringing any Intellectual Property of any third
party, except for such defaults and infringements which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
Material Adverse Effect on the Company. For purposes of this Agreement,
"Intellectual Property" means patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
mark rights, service names and service name rights, copyrights and copyright
rights and other proprietary intellectual property rights and all pending
applications for and registrations of any of the foregoing, and computer and
network software programs. There is no pending or, to the Knowledge of the
Company, threatened significant claim or dispute regarding the ownership of, or
use by, the Company or any Subsidiary of any Intellectual Property.
Consummation of the transactions contemplated hereby will not result in the
loss of use of any software material to the Company's business.
Section 3.18 Year 2000 Matters. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, each hardware, software and firmware product (including embedded
microcontrollers in computer equipment which are owned or licensed and used by
the Company or any Subsidiary and which are involved in electronic data
interchange and integration with third parties) owned or licensed and used by
the Company or any of its Subsidiaries will, when required to do so, correctly
differentiate between the years in different centuries and will accurately
process date/time data (including, but not limited to, calculating, comparing
and sequencing) from, into, and between the twentieth and twenty-first
centuries, including leap year calculations; provided, however, that the
Company makes and has made no representation or warranty to Parent as to the
state of readiness, with respect to the year 2000 issue, of its vendors and its
independent agents and brokers, although to the Knowledge of the Company there
is no known lack of readiness of any such third party that would reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.19 Takeover Statute. The Board of Directors of the Company has
approved this Agreement and the transactions contemplated hereby and, assuming
the accuracy of the representation and warranty contained in Section 4.10, such
approval constitutes approval of the Merger and the other transactions
contemplated hereby by the Board of Directors of the Company under the
provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
Knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby other than the Nebraska
Shareholders Protection Act. Provided that neither Parent nor Merger Sub owns
any shares of Company Common Stock, upon receipt of the Company Stockholder
Approval, no other actions are required to achieve compliance with the Nebraska
Shareholders Protection Act.
Section 3.20 Finders or Brokers. Except for Goldman, Sachs & Co., a copy of
whose engagement agreement has been or will be provided to Parent, neither the
Company nor any of its Subsidiaries has employed any investment banker, broker,
finder or intermediary in connection with the transactions contemplated hereby
who might be entitled to any fee or any commission in connection with or upon
consummation of the Merger.
Section 3.21 Rights Agreement. The Company has taken all necessary action to
avoid the triggering of the provisions of the Company Rights Plan in connection
with the entry into, the announcement of and the performance of the
transactions contemplated by this Agreement (including the Merger), with
respect to the Company Stockholder Rights issued pursuant to the Company Rights
Plan.
Section 3.22 Insurance Laws. The business and operations of the Company
Insurance Subsidiaries (including, without limitation, business, marketing,
operations, sales and issuances conducted by or through Agents (as defined in
Section 3.24)) have been conducted in compliance with applicable laws
(including the filing of any required reports) regulating the business and
products of insurance and all applicable orders and directives of insurance
regulatory authorities (including federal authorities with respect to variable
or other registered insurance and annuity products) and market conduct
recommendations resulting from market conduct
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examinations of insurance regulatory authorities (including federal authorities
with respect to variable or other registered insurance and annuity products)
(collectively, "Applicable Insurance Laws"), except as set forth in Section
3.22 of the Company Disclosure Schedule and except where the failure to so
conduct such business and operations would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Company. In addition, except as would otherwise not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Company: (i) there is no pending or, to the Knowledge of the Company,
threatened, charge by any insurance regulatory authority that any of the
Company Insurance Subsidiaries has violated, nor any pending or, to the
Knowledge of the Company, threatened investigation by any insurance regulatory
authority with respect to possible violations of, any Applicable Insurance
Laws; (ii) each Company Insurance Subsidiary has been duly authorized by the
relevant state insurance regulatory authorities to issue the policies and/or
contracts of insurance that it is currently writing and in the states in which
it conducts its business; and (iii) the Company Insurance Subsidiaries have
filed all reports required to be filed with any insurance regulatory authority.
None of the Company Insurance Subsidiaries is subject to any order or decree of
any insurance regulatory authority relating to such Company Insurance
Subsidiary which either (A) would, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on the Company, or (B)
relates to marketing, sales, trade or underwriting practices (other than
routine correspondence) from and after January 1, 1997, and neither the Company
nor any Company Insurance Subsidiary has engaged in any activity which would
reasonably be expected to cause revocation or suspension of any such license or
other permit and no action or proceeding looking to or contemplating the
revocation or suspension of any such license or permit is pending or, to the
Knowledge of the Company, threatened.
Section 3.23 Insurance Business. (a) Except as set forth in Section 3.23(a)
of the Company Disclosure Schedule, and except as would otherwise not,
individually or in the aggregate, have a Material Adverse Effect on the
Company, to the Knowledge of the Company, since January 1, 1997, all insurance
policy forms and all applications, riders and other forms and rates required to
be filed with insurance regulatory authorities have been duly filed by the
Company Insurance Subsidiaries and all required approvals have been duly
obtained, and all such forms and rates and all marketing materials comply in
all material respects with applicable insurance laws and regulations.
(b) The Company has delivered to Parent true and complete copies of the
following actuarial reports (collectively, the "Company Actuarial Analyses"):
(i) the February 18, 1999 Tillinghast-Towers Perrin report as corrected and
supplemented by the June 30, 1999 report, and (ii) the 1998 Asset Adequacy
Analyses by each of the Company Insurance Subsidiaries' appointed actuaries,
prepared in conjunction with the 1998 SAP Statement. The information and data
furnished to Tillinghast or the appointed actuaries in connection with the
preparation of the Company Actuarial Analyses were accurate in all material
respects, provided that no representation or warranty is made with respect to
projections of future events, including future expenses, new production levels
or future management actions. The assumptions utilized in making such
projections were arrived at in good faith and the Company believes they were
reasonable when made. Further, the 1998 Asset Adequacy Analyses referenced in
(ii) above were prepared in conformity with generally accepted actuarial
standards consistently applied.
(c) Except as would not be, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the Company, (i) all insurance
contracts, arrangements, treaties and agreements to which any Company Insurance
Subsidiary is a party on the date hereof are valid and binding on such Company
Insurance Subsidiary, enforceable in accordance with their terms, and such
Company Insurance Subsidiary is not in material breach of its obligations
thereunder, (ii) except as provided for in the Company SAP Statements, all
reinsurance represented by any such reinsurance treaties represents an admitted
asset or reduction of loss reserves of the Company Insurance Subsidiary in the
respective Company SAP Statements and their carrying values have been described
in conformity with statutory accounting practices and in accordance with values
described by the National Association of Insurance Commissioners, when
appropriate, consistent with the prior reporting practices of the Company
Insurance Subsidiaries, and (iii) the termination of any reinsurance treaty
between or among any Company Insurance Subsidiary will not result in adverse
tax consequences to any Company Insurance Subsidiary.
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(d) Each of the Company Insurance Subsidiaries has complied in all material
respects with its respective underwriting standards and, with respect to
Insurance Contracts reinsured in whole or in part, such Insurance Contracts
conform in all respects to the standards agreed to with the reinsurer in the
related reinsurance, coinsurance or other similar contracts.
(e) To the Knowledge of the Company, all insurance and annuity contracts
marketed or issued for use in connection with any employee benefit plan (as
defined in ERISA) or for any individual retirement plan (as defined in Sections
403(b), 408, or 457 of the Code) have been designed, qualified (if applicable),
and administered in compliance with all applicable rules and regulations,
except where such noncompliance would not have a Material Adverse Effect on the
Company.
Section 3.24 Agents. (a) To the Knowledge of the Company, 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 Subsidiaries was duly licensed for such business, 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
Subsidiary, except for such failures to be licensed or such violations which
individually or in the aggregate, have not had or are not reasonably likely to
have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.24(b) of the Company Disclosure
Schedule, no Agent has binding authority on behalf of any Company Insurance
Subsidiary.
(c) To the Knowledge of the Company, the announcement of and completion of
the transactions contemplated herein should not reasonably be expected to
materially adversely affect the production for the Company Insurance
Subsidiaries by their Agents.
Section 3.25 Separate Accounts. (a) Each separate account maintained by a
Company Insurance Subsidiary (collectively, the "Separate Accounts") is duly
and validly established and maintained under the laws of its state of formation
and is either excluded from the definition of an investment company pursuant to
Section 3(c)(11) of the 1940 Act or is duly registered as an investment company
under the 1940 Act. If registered, each such Separate Account 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 would
otherwise reasonably be expected to have a Material Adverse Effect on the
Company. The Insurance Contracts under which Separate Account 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 Subsidiary to receive contributions
under such policies.
(b) To the Knowledge of the Company, each registration statement, 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, 1997, (i) as of their respective mailing dates or dates of use
(or in the case of a registration statement, at the time that such registration
statement became effective), 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 at the time
that each become effective, and (ii) complied with applicable law including,
but not limited to, state insurance laws, state securities laws, rules of the
NASD, the Securities Act and the 1940 Act, except for such instances of
noncompliance which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the Company.
Section 3.26 Derivatives. Neither the Company nor its Subsidiaries is a party
on the date hereof to any contract or agreement constituting a "derivative
financial instrument," except as set forth in Section 3.26 of the Company
Disclosure Schedule. For purposes of this Section 3.26 and that Schedule, the
term "derivative financial instrument" shall have the same meaning given such
term under Item 305 of Regulation S-K under the U.S. federal securities laws
and includes futures, forwards, swaps, options, and other financial instruments
with similar characteristics.
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Section 3.27 Investments. The Company SAP Statements set forth a list, which
list is accurate and complete in all material respects, of all securities,
mortgages and other investments (collectively, the "Company Investments") owned
by the Company Insurance Subsidiaries as of December 31, 1998, together with
the cost basis book or amortized value, as the case may be, as of December 31,
1998. All transactions in Company Investments by each Company Insurance
Subsidiary have complied in all material respects with the investment policies
of such Company Insurance Subsidiaries and all applicable insurance laws and
regulations. A complete list of all investments owned, directly or indirectly,
by the Company and the Company Insurance Subsidiaries as of June 30, 1999 which
are in default, in bankruptcy, nonperforming, restructured, or foreclosed, or
which are included on any "watch list" is set forth in Section 3.27 of the
Company Disclosure Schedule, and there have been no changes since that date
that have or would reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.28 Ohio Farmers Compliance. To the Knowledge of the Company, each
of the Company and Ohio Farmers Insurance Company has complied in all material
respects with its obligations under the Administrative Services Agreement dated
June 2, 1998, and any related legal and regulatory obligations.
Section 3.29 Real Estate. The home office and investment real estate on the
same campus owned by a Company Subsidiary (i) to the Knowledge of the Company
contain no asbestos, (ii) are in all material respects properly zoned for the
uses to which they are being put and (iii) are presently zoned to permit
construction of a fourth building similar to the existing office buildings on
the Company's headquarters campus. The Company is not aware of any reason why
each existing building could not be operated on a "stand-alone" basis without
substantial expense.
ARTICLE IV
Representations and Warranties of Parent and Merger Sub
Except as specifically set forth, by reference to a particular section of
this Agreement, on the Disclosure Schedule delivered by Parent to the Company
prior to the execution of this Agreement (the "Parent Disclosure Schedule"),
Parent and Merger Sub represent and warrant to the Company as follows:
Section 4.1 Organization, Qualification, Etc. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina and has the corporate power and authority to own its properties
and assets and to carry on its business as it is now being conducted and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. The copies of the Parent's certificate of
incorporation and by-laws which have been delivered to the Company are complete
and correct and in full force and effect. Each of the Parent's Subsidiaries
(including Merger Sub) is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has the
power and authority to own its properties and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions
in which the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on the Parent.
Except as set forth in Section 4.1 of the Parent Disclosure Schedule, all the
outstanding shares of capital stock of, or other ownership interests in, the
Parent's Subsidiaries are validly issued, fully paid and non-assessable and are
owned by Parent, directly or indirectly, free and clear of all Liens. There are
no existing options, rights of first refusal, preemptive rights, calls, claims
or commitments of any character relating to the issued or unissued capital
stock or other securities of, or other ownership interests in, any Subsidiary
of Parent.
Section 4.2 Capital Stock. (a) The authorized capital stock of Parent
consists of 350,000,000 shares of Parent Common Stock and 20,000,000 shares of
preferred stock, par value $.01 per share ("Parent Preferred
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Stock"). As of September 17, 1999, 105,301,763 shares of Parent Common Stock
were issued and outstanding, and 10,524,102 shares were reserved for issuance
under the Parent's Option Plans. No shares of Preferred Stock are outstanding
as of the date hereof. All the outstanding shares of Parent Common Stock are,
and all Shares reserved for issuance will be, upon issuance in accordance with
the terms specified in the instruments and agreements pursuant to which they
are issuable, validly issued and are fully paid and non-assessable. As of
September 17, 1999, except as set forth in Section 4.2(a) of the Parent
Disclosure Schedule, there are no outstanding subscriptions, options, warrants,
rights or other arrangements or commitments obligating Parent to issue any
shares of its capital stock other than:
(i) Parent Rights Agreement;
(ii) options and other rights to receive or acquire 4,676,442 shares of
Parent Common Stock pursuant to the Parent's Option Plans;
(b) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of Parent having the right to vote on any matters on which
stockholders may vote are issued or outstanding.
Section 4.3 Corporate Authority Relative to this Agreement; No
Violation. (a) Each of Parent and Merger Sub has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
Parent and Merger Sub by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and, assuming
this Agreement constitutes a valid and binding agreement of the other parties
hereto, this Agreement constitutes a valid and binding agreement of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms.
(b) Neither Parent nor Merger Sub is subject to or obligated under any
charter, by-law or contract provision or any license, franchise or permit, or
subject to any order or decree, which, by its terms, would be breached or
violated or would accelerate any payment or obligation, trigger any right of
first refusal or other purchase right as a result of Parent or Merger Sub
executing or carrying out the transactions contemplated by this Agreement,
except for any breaches or violations which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Other than in connection
with or in compliance with (i) the provisions of the DGCL, (ii) the Securities
Act, (iii) the Exchange Act, (iv) the HSR Act, (v) Section 4043 of ERISA, (vi)
the Nebraska Insurers Demutualization Act, the Nebraska Insurance Holding
Company System Act, the Pennsylvania Insurance Holding Company Act and any
other applicable laws, rules, regulations, practices and orders of any state
insurance regulatory authority, (vii) any applicable United States competition,
antitrust and investments laws, (viii) the securities or blue sky laws of the
various states and (ix) the Nebraska Shareholder Protection Act (collectively,
the "Parent Required Approvals"), no authorization, consent or approval of, or
filing with, any governmental body or authority is necessary for the
consummation by Parent of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings, the failure to
obtain or make which would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or substantially impair or delay the
consummation of the transactions contemplated hereby and thereby.
Section 4.4 Reports and Financial Statements. (a) Parent has previously
furnished or made available to the Company true and complete copies of:
(i) Parent's Annual Reports on Form 10-K filed with the SEC for each of
the years ended December 31, 1996 through 1998;
(ii) each definitive proxy statement filed by Parent with the SEC since
December 31, 1996;
(iii) each final prospectus filed by Parent with the SEC since December
31, 1996, except any final prospectus on Form S-8; and
(iv) all Current Reports on Form 8-K filed by Parent with the SEC since
December 31, 1998.
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As of their respective dates, such reports, proxy statements and prospectuses
(collectively, the "Parent SEC Reports") (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Parent SEC Reports (including any related
notes and schedules) fairly present the financial position of the Parent and
its consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods or as of the dates then ended
(subject, in the case of the unaudited interim financial statements, to normal
recurring year-end adjustments), in each case in accordance with GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto). Parent has also previously furnished to the Company all
audit reports and letters to management regarding accounting controls received
since January 1, 1997 from the auditors of Parent and its Subsidiaries and all
responses thereto from Parent and its Subsidiaries. Since December 31, 1996,
Parent has timely filed all reports, registration statements and other filings
required to be filed by it with the SEC under the rules and regulations of the
SEC.
(b) Parent has made available to the Company true and complete copies of the
annual and quarterly statements of each of Parent's Subsidiaries listed in
Section 4.4(b) of the Parent Disclosure Schedule ("Parent Insurance
Subsidiaries") as filed with the applicable insurance regulatory authorities
for the years ended December 31, 1996, 1997 and 1998 and the quarterly periods
ended March 31, 1999 and June 30, 1999, including all exhibits,
interrogatories, notes, schedules and any actuarial opinions, affirmations or
certifications or other supporting documents filed in connection therewith
(collectively, the "Parent SAP Statements"). The Parent SAP Statements 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 Parent Insurance Subsidiaries as at the respective dates
thereof and the results of operations of such Subsidiaries for the respective
periods then ended. The Parent SAP Statements complied in all material respects
with all applicable laws, rules and regulations when filed, and, to the
Knowledge of Parent, no material deficiency has been asserted with respect to
any Parent SAP Statements by the applicable insurance regulatory body or any
other governmental agency or body. The annual statutory balance sheets and
income statements included in the 1996 Parent SAP Statements have been audited
by McGladrey & Pullen L.L.P. and the annual statutory balance sheets and income
statements included in the 1997 and 1998 Parent SAP Statements have been
audited by Ernst & Young L.L.P., and Parent has made available to the Company
true and complete copies of all audit opinions related thereto. Parent has made
available to the Company true and complete copies of all examination reports of
insurance departments and any insurance regulatory agencies since January 1,
1996 relating to the Parent Insurance Subsidiaries. To the Knowledge of Parent,
the amounts shown in the Parent SAP Statements as reserves and liabilities for
past and future insurance policy benefits, losses, claims and expenses under
insurance policies as of the end of each such reporting period were fairly
stated in accordance with generally accepted actuarial principles consistently
applied, were based on actuarial assumptions which were in accordance with
those called for in the policy provisions and met the requirements of the
insurance laws of the applicable insurance authority, with such exceptions as
would not, individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect. Such amounts shown on the Parent SAP Statements filed
after the date hereof and on or prior to the Closing Date will be so computed
and based and will meet all such requirements.
Section 4.5 No Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, and there is no existing condition, situation
or set of circumstances which would reasonably be expected to result in such a
liability or obligation, except (a) liabilities or obligations adequately
accrued or reserved for in the Parent SEC Reports filed prior to the date
hereof, (b) liabilities and obligations that would not be required by GAAP to
be reflected in the financial statements of the Company and (c) liabilities or
obligations which would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
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Section 4.6 No Violation of Law. The businesses of Parent and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority except (a) as described in the
Parent SEC Reports and (b) for violations or possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent.
Section 4.7 Absence of Certain Changes or Events. Other than the transactions
contemplated or permitted by this Agreement or as disclosed in the Parent SEC
Reports, since June 30, 1999, there has not been any event, occurrence,
development or state of circumstances or facts that has had, or would have, a
Material Adverse Effect on Parent and neither Parent nor any of its
Subsidiaries has taken action that, if taken after the date hereof, would have
violated Section 5.1(b).
Section 4.8 Investigations; Litigation. Except as described in the Parent SEC
Reports:
(a) there is no investigation or review pending by any governmental body
or authority with respect to Parent or any of its Subsidiaries which would,
individually or in the aggregate, have a Material Adverse Effect on Parent,
nor has any governmental body or authority notified Parent of an intention
to conduct the same; and
(b) there is no action, suit or proceeding pending (or, to Parent's
Knowledge, threatened) against or affecting Parent or its Subsidiaries, or
any of their respective properties at law or in equity, or before any
federal, state, local or foreign governmental or regulatory body or
authority which, individually or in the aggregate, are reasonably likely to
have a Material Adverse Effect on Parent.
Section 4.9 Proxy Statement; Registration Statement; Other Information. The
Registration Statement, or any amendment thereof or supplement thereto, at the
date it becomes effective and at the time of the Company Meeting, will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Merger Sub with
respect to statements made therein based on information supplied by the Company
in writing for inclusion in the Registration Statement. None of the information
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement will, at the date mailed to the Company's stockholders and at the
time of the Company Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement will comply in all
material respects with the provisions of the Securities Act and the rules and
regulations promulgated thereunder.
Section 4.10 Lack of Ownership of the Company Common Stock. Neither Parent
nor any of its Subsidiaries owns more than 2% of the outstanding shares of the
Company Common Stock (exclusive of any shares owned by Parent's employee
benefit plans or shares held in any separate account or mutual fund of any
Subsidiary of Parent), and does not own any other securities convertible into
shares of the Company Common Stock.
Section 4.11 Vote of Parent Stockholders. No vote of the stockholders of
Parent, or of the holders of any other securities of Parent (equity or
otherwise), is required by law, the certificate of incorporation or by-laws of
Parent or otherwise in order for Parent to consummate the Merger and the
transactions contemplated hereby.
Section 4.12 Finders or Brokers. Neither Parent nor any of its Subsidiaries
has employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to
any fee or any commission in connection with or upon consummation of the
Merger.
Section 4.13 Financing. Parent has, and will have at the Effective Time,
sufficient resources to satisfy the obligations of Parent and Merger Sub to pay
the aggregate Cash Consideration and any other cash payable in respect of
Shares pursuant to Article II, on the terms and subject to the conditions
contemplated by this Agreement.
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Section 4.14 Employment Agreement. The Company, Parent and Robert D. Bates
have entered into the Cancellation Agreement, and Parent and Robert D. Bates
have entered into an employment agreement, the form of which is attached hereto
as Exhibit E (the "Employment Agreement") and which shall become effective as
of the Effective Time. The Cancellation Agreement and the Employment Agreement
have been duly authorized, executed and delivered by Parent, and upon
satisfaction of the conditions set forth therein, shall be enforceable against
Parent in accordance with their respective terms.
ARTICLE V
Covenants and Agreements
Section 5.1 Conduct of Business by the Company or Parent. From and after the
date hereof and prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1 (the "Termination
Date"), and except (i) as may be required by law (provided that any party
availing itself of such exception must first consult with the other party),
(ii) as may be consented to in writing by Parent or the Company, as the case
may be, (iii) as may be expressly permitted pursuant to this Agreement, or (iv)
as set forth in Section 5.1 of the Company Disclosure Schedule or the Parent
Disclosure Schedule, as the case may be:
(a) the Company:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and shall cause each of
its Subsidiaries to use its reasonable best efforts, to preserve intact
its business organization and goodwill (except that any of its
Subsidiaries other than any Company Insurance Subsidiary may be merged
with or into, or be consolidated with any of its other Subsidiaries or
may be liquidated into the Company or any of its Subsidiaries), keep
available the services of its current officers and other key employees,
preserve its relationships with those persons having business dealings
with the Company and its Subsidiaries, including, without limitation,
brokers, agents, insureds and customers, and to comply in all material
respects with all laws and orders of all governmental and regulatory
authorities applicable to them;
(iii) shall confer at such times as Parent may reasonably request
with one or more representatives of Parent to report material
operational matters and the general status of ongoing operations and
transition plans (to the extent Parent reasonably requires such
information);
(iv) shall not, and shall not (except in the ordinary course of
business consistent with past practice) permit any of its Subsidiaries
that is not wholly owned to, declare, set aside or pay any dividends on
or make any distribution with respect to its outstanding shares of
stock, except that Company may continue to pay dividends on Company
Common Stock at times consistent with past practice and in per share
amounts not in excess of the per share amount of the most recent
dividend paid on the Company Common Stock prior to the date of this
Agreement;
(v) shall not, and shall not permit any of its Subsidiaries to,
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock,
except for any such transaction by a wholly owned Subsidiary of the
Company which remains a wholly owned Subsidiary after consummation of
such transaction;
(vi) shall not, and shall not permit any of its Subsidiaries to enter
into or amend any employment, severance or similar agreements or
arrangements with any of their respective directors or executive
officers;
(vii) shall not, and shall not permit any of its Subsidiaries to,
authorize or effect any acquisition of assets or securities, any
disposition of assets or securities or any release or relinquishment of
material contract rights, in each case not in the ordinary course of
business consistent with past
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practice, except for transactions in Company Investments by any Company
Insurance Subsidiary effected in accordance with the investment policy
of such Company Insurance Subsidiary as in effect on the date hereof
and except that the Company may acquire or dispose of assets or
securities in transactions where the fair market value of the
consideration paid or received does not exceed $1,000,000 in any single
transaction or $5,000,000 in all such transactions, and except that the
sale of AGL Life Assurance Company, Philadelphia Financial Group, Inc.,
PFG Distribution Company, Philadelphia Financial Insurance Agency of
Massachusetts, Inc. and Philadelphia Financial Group Agency of Ohio,
Inc., substantially in accordance with the terms of such sale
previously disclosed to Parent, may be pursued to completion;
(viii) shall not propose or adopt any amendments to its or any
Company Insurance Subsidiary's corporate charter or by-laws;
(ix) shall not, and shall not permit any of its Subsidiaries to,
issue or authorize the issuance of, or agree to issue or sell any
shares of their capital stock of any class (whether through the
issuance or granting of options, warrants, commitments, conversion
rights, subscriptions, rights to purchase or otherwise), other than
pursuant to the Company Option Plans and upon conversion of options
under such Plan;
(x) shall not, and shall not permit any of its Subsidiaries to,
grant, confer or award any options, warrants, conversion rights or
other rights, not existing on the date hereof, to acquire any shares of
its capital stock;
(xi) shall not, and shall not permit any of its Subsidiaries to,
purchase or redeem any shares of its stock or any rights, warrants or
options to acquire any such shares;
(xii) shall not, and shall not permit any of its Subsidiaries to,
amend in any respect the terms of their respective employee benefit
plans, programs or arrangements or any severance or similar agreements
or arrangements or any bonus or other incentive programs in existence
on the date hereof, or adopt any new employee benefit plans, programs
or arrangements or any severance or similar agreements or arrangements,
or increase any salaries except in the ordinary course of business
consistent with past practice, or pay any bonus to the Company's Chief
Executive Officer except as contemplated under the Cancellation
Agreement;
(xiii) shall not, and shall not permit any of its Subsidiaries to,
incur, assume or prepay any indebtedness or any other material
liabilities, other than in the ordinary course of business consistent
with past practice;
(xiv) shall not, and shall not permit any of its Subsidiaries to, (i)
make any loans, advances or capital contributions to, or investments
in, any other person, other than Company Investments by a Company
Insurance Subsidiary in accordance with the investment policy of such
Company Insurance Subsidiary as in effect on the date hereof or by the
Company or a Subsidiary of the Company to or in the Company or any
wholly-owned Subsidiary of the Company or (ii) pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than
indebtedness, issuances of debt securities, guarantees, loans,
advances, capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of
business consistent with past practice;
(xv) shall not sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its properties or
assets (including securitizations), other than Company Investments by a
Company Insurance Subsidiary in accordance with the investment policy
of such Company Insurance Subsidiary as in effect on the date hereof or
in the ordinary course of business consistent with past practice;
(xvi) shall not, and shall not permit any of its Subsidiaries to, (i)
make any Tax election or settle or compromise any Tax liability or (ii)
change its fiscal year;
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(xvii) except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, or as required by a governmental body or
authority, shall not change its methods of accounting (including,
without limitation, make any material write-off or reduction in the
carrying value of any assets) in effect at December 31, 1998, except as
required by GAAP;
(xviii) shall not, and shall not permit any of its Subsidiaries to,
enter into any new quota share or other reinsurance transaction (1)
which does not contain standard cancellation and termination provisions
or (2) which, except in the ordinary course of business, materially
increases or reduces the Company Insurance Subsidiaries' consolidated
ratio of net written premiums to gross written premiums;
(xix) shall not, and shall not permit any of its Subsidiaries to,
alter or amend their existing underwriting, claims management,
reserving or investment guidelines or policies; and
(xx) shall not take any action which would be required to be
disclosed under Section 3.9 if such action had been taken prior to the
date hereof;
(xxi) shall not permit any of the Company Insurance Subsidiaries to,
(i) directly or indirectly through an outside money manager, make or
commit to make any mortgage loan, private placement, real estate
acquisition, common or preferred stock acquisition, partnership
interest acquisition, derivative investment (except in connection with
hedging for the equity index annuity product) or below investment grade
investment, except for commitments existing on the date hereof, unless
such investment is consented to in advance by Parent, or (ii) enter
into any new agreements to outsource any investment or investment
accounting functions;
(xxii) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or
take any action which would (x) make any representation or warranty in
Article III hereof untrue or incorrect or (y) result in any of the
conditions to the Merger set forth in Article VI not being satisfied;
and
(xxiii) shall from time to time furnish to Parent, promptly following
the receipt by senior management of the Company or any of its
Subsidiaries (A) copies of any monthly management reports prepared for
senior management of the Company or any of its Subsidiaries, (B) copies
of all monthly financial statements and reports, (C) a copy of any
report filed with any insurance regulatory authority, (D) copies of any
reports or statements filed with the SEC, which in each such case,
shall be prepared in a manner consistent with past practice;
(b) the Parent:
(i) shall not, and shall not permit any of its Subsidiaries to agree,
in writing or otherwise, to take any action which would (x) make any
representation or warranty in Article IV hereof untrue or incorrect or
(y) result in any of the conditions to the Merger set forth in Article
VI not being satisfied; and
(ii) except as disclosed in the Parent SEC Reports filed prior to the
date of this Agreement, or as required by a governmental body or
authority, shall not change its methods of accounting (including,
without limitation, make any material write-off or reduction in the
carrying value of any assets) in effect at June 30, 1999, except as
required by GAAP.
Section 5.2 Investigation. Each of the Company and Parent shall afford to one
another and to one another's officers, employees, accountants, counsel and
other authorized representatives full and complete access during normal
business hours upon reasonable notice, throughout the period prior to the
earlier of the Effective Time or the Termination Date, to its and its
Subsidiaries' properties, contracts, commitments, books and records and any
report, schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws and shall use its reasonable
best efforts to cause its respective representatives to furnish promptly to
Parent such additional financial and operating data and other information as to
its and its Subsidiaries' businesses and properties as Parent or its duly
authorized representatives may from time to time reasonably request. The
parties hereby agree that each of them will treat any such information in
accordance
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with the Confidentiality Agreement, dated as of June 2, 1999, between the
Company and Parent (the "Confidentiality Agreement"). Notwithstanding any
provision of this Agreement to the contrary, no party shall be obligated to
make any disclosure in violation of applicable laws or regulations, including
any such laws or regulations pertaining to the treatment of classified
information.
Section 5.3 Proxy Material; Registration Statement. (a) The Company and
Parent shall together, or pursuant to an allocation of responsibility to be
agreed upon between them:
(i) prepare and file with the SEC as soon as is reasonably practicable
the Proxy Statement and a registration statement on Form S-4 under the
Securities Act with respect to the Parent Common Stock issuable in the
Merger (the "Registration Statement"), and shall use their reasonable best
efforts to have the Proxy Statement cleared by the SEC under the Exchange
Act and the Registration Statement declared effective by the SEC under the
Securities Act as promptly as practicable. No filing of, or amendment or
supplement to, the Registration Statement or the Proxy Statement will be
made by Parent or the Company without providing the other a reasonable
opportunity to review and comment thereon. The Company will advise Parent,
and Parent will advise the Company, promptly after it receives notice
thereof, of any request by the SEC for amendment of the Proxy Statement or
the Registration Statement or comments thereof or requests by the SEC for
additional information. The Company and Parent shall each provide the other
with copies of any communication received from or sent to the SEC in
connection with the Proxy Statement or the Registration Statement and with
a reasonable opportunity to review all responses to SEC comments or other
requests prior to their being sent to the SEC. If at any time prior to the
Effective Time any information relating to Parent or the Company, or any of
their respective affiliates, officers or directors, should be discovered by
Parent or the Company which should be set forth in an amendment or
supplement to the Registration Statement or the Proxy Statement, so that
any such documents would not include any misstatement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, the party which discovered such information
shall promptly notify the other party hereto and an appropriate amendment
or supplement describing such information shall be promptly filed with the
SEC and, to the extent required by law, disseminated to the stockholders of
the Company;
(ii) as soon as is reasonably practicable take all such action as may be
required under state blue sky or securities laws in connection with the
transactions contemplated by this Agreement;
(iii) promptly prepare and file with the NYSE and such other stock
exchanges as shall be agreed upon listing applications covering the shares
of Parent Common Stock issuable in the Merger and use their reasonable best
efforts to obtain, prior to the Effective Time, approval for the listing of
such Parent Common Stock, subject only to official notice of issuance;
(iv) cooperate with one another in order to lift any injunctions or
remove any other impediment to the consummation of the transactions
contemplated herein; and
(v) cooperate with one another in obtaining opinions of Kutak Rock,
counsel to the Company, and King & Spalding, counsel to Parent, dated as of
the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. In
connection therewith, each of the Company, Parent and Merger Sub shall
deliver to Kutak Rock and King & Spalding, respectively, representation
letters in form and substance reasonably satisfactory to such tax counsel.
(b) Subject to the limitations contained in Section 5.2, the Company and
Parent shall each furnish to one another and to one another's counsel all such
information as may be required in order to effect the foregoing actions.
(c) The Company and Parent shall cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable after the Registration
Statement is declared effective under the Securities Act.
(d) The Company shall duly call, give notice of, convene and hold a meeting
of its stockholders (the "Company Meeting") for the purpose of obtaining the
Company Stockholder Approval and shall, through its
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Board of Directors, subject to Section 5.9(b), recommend to its stockholders
the adoption of this Agreement, the Merger and the other transactions
contemplated hereby. Without limiting the generality of the foregoing but
subject to its rights to terminate this Agreement pursuant to Section 7.1, the
Company agrees that its obligations pursuant to the first sentence of this
Section 5.3(d) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Takeover Proposal (as
defined in Section 5.9).
Section 5.4 Affiliate Agreements. The Company shall, prior to the Effective
Time, deliver to Parent a list (reasonably satisfactory to counsel for Parent)
setting forth the names and addresses of all persons who are, at the time of
the Company Meeting, in the Company's reasonable judgment, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall
furnish such information and documents as Parent may reasonably request for the
purpose of reviewing such list. The Company shall use its reasonable best
efforts to cause each person who is identified as an "affiliate" in the list
furnished pursuant to this Section 5.4 to execute a written agreement on or
prior to the mailing of the Proxy Statement, substantially in the form of
Exhibit A hereto.
Section 5.5 Employee Incentive and Benefit Plans. Simultaneously with the
Merger, Parent agrees to take, and cause the Company to take, the actions
described in Exhibit B hereto with respect to employee benefit plans.
Section 5.6 Filings; Other Action. (a) Subject to the terms and conditions
herein provided, the Company and Parent shall (i) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act, (ii) promptly make their respective filings and thereafter make any
other required submissions with applicable insurance regulatory authorities,
including insurance regulatory authorities in the State of Nebraska and the
Commonwealth of Pennsylvania, (iii) use their reasonable best efforts to
cooperate with one another in (x) determining whether any filings are required
to be made with, or consents, permits, authorizations or approvals are required
to be obtained from, any third party or other governmental or regulatory bodies
or authorities of federal, state, local and foreign jurisdictions in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (y) timely making all such filings and
timely seeking all such consents, permits, authorizations or approvals, (iv)
use their reasonable best efforts to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated
hereby, including, without limitation, taking all such further action as
reasonably may be necessary to resolve such objections, if any, as the Federal
Trade Commission, the Antitrust Division of the Department of Justice, state
antitrust enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other person may assert under relevant
antitrust or competition laws with respect to the transactions contemplated
hereby.
(b) In furtherance and not in limitation of the covenants of the parties
contained in this Section 5.6, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law (as defined below), each of the
Company and Parent shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.6 shall limit a party's right to terminate this Agreement
pursuant to Section 7.1(b) or 7.1(c) so long as such party has up to then
complied in all respects with its obligations under this Section 5.6.
(c) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by
any governmental body or authority or any private party challenging any of the
transactions contemplated hereby as violative of any Regulatory Law, each of
the
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Company and Parent shall use its reasonable best efforts to resolve any such
objections or challenge as such governmental body or authority or private party
may have to such transactions under such Regulatory Law so as to permit
consummation of the transactions contemplated hereby. For purposes of this
Agreement, "Regulatory Law" means applicable state insurance laws and
regulations, the Sherman Act, as amended, the Clayton Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, and all other federal, state
or foreign, if any, statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade or lessening competition, whether in
the insurance industry or otherwise, through merger or acquisition.
Section 5.7 Further Assurances. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers of the Company and Parent shall take all such
necessary action.
Section 5.8 Takeover Statute. If any "fair price," "moratorium," "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Company
and Parent and the members of their respective Boards of Directors shall grant
such approvals and take such actions as are reasonably necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.
Section 5.9 No Solicitation. (a) The Company represents and warrants that it
has terminated any discussions or negotiations with any party (other than
Parent) concerning any Takeover Proposal prior to the date hereof. From and
after the date hereof, the Company will not, and shall use its reasonable best
efforts not to permit, any of its officers, directors, employees, attorneys,
financial advisors, agents or other representatives or those of any of its
Subsidiaries (collectively, "Company Representatives") to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any Takeover Proposal from any persons or engage in or
continue discussions or negotiations relating thereto, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, except that, so
long as the Company is in compliance with its obligations under this Section
5.9, the Company may, in response to a Takeover Proposal that the Board of
Directors determines is reasonably likely to constitute a Superior Proposal
that was not solicited by the Company or any of its Company Representatives,
and that did not otherwise result from a breach or a deemed breach of this
Section, and subject to providing prior written notice of its decision to take
such action to Parent, (x) furnish information with respect to the Company to
any person making such a Takeover Proposal pursuant to a customary
confidentiality agreement with terms substantially similar to those of the
agreement to which Parent is a party with the Company, and (y) participate in
discussions or negotiations regarding such Takeover Proposal. Without limiting
the foregoing, it is agreed that any action that is in violation of the
restrictions set forth in the preceding sentence by any executive officer of
the Company or any Subsidiary of the Company, whether or not such person is
purporting to act on behalf of the Company or any of its Subsidiaries or
otherwise, shall be deemed to be a breach of this Section 5.9 by the Company.
The Company will advise Parent orally (within one business day) and in writing
(as promptly as practicable) of the receipt of any Takeover Proposal or inquiry
or request for information with respect to or which could reasonably be
expected to lead to any Takeover Proposal, including the material terms and
conditions thereof (and any change in the material terms and conditions
thereof) and the identity of the person making such Takeover Proposal, and will
promptly (but in no case later than 36 hours) notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal has
been made. As used in this Agreement, (i) "Takeover Proposal" shall mean any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of business that constitutes 15% or more of the net
revenues, net income or the assets of the Company and its Subsidiaries taken as
a whole, or 15% or more of any class of equity securities of the Company or any
of its Subsidiaries (other than PFG, Inc. and its Subsidiaries), any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the
Company or any of its
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Subsidiaries (other than PFG, Inc. and its Subsidiaries), or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries, other
than the transactions contemplated by this Agreement, and (ii) "Superior
Proposal" shall mean any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of the Company Common
Stock then outstanding or at least 50% of the assets of the Company and its
Subsidiaries, taken together, and (x) the proposal is otherwise on terms which
the Board of Directors determines in its good faith judgment (based on the
advice of a financial advisor of nationally recognized reputation and such
other matters as the Board of Directors deems relevant) to be more favorable to
the Company's stockholders than the Merger and for which financing, to the
extent required, is then committed or which in the good faith judgment of the
Board of Directors is reasonably capable of being obtained by a third party and
(y) the Board of Directors, after considering such matters as the Board of
Directors deems relevant (including the advice of outside counsel), determines
in good faith that failing to furnish information to the third party,
participate in discussions or negotiations with respect to the Superior
Proposal or withdraw, or modify its recommendation or recommend a Superior
Proposal, as applicable, or terminate this Agreement, is reasonably likely to
result in a breach by the Board of Directors of the Company of its fiduciary
duties to the Company and its stockholders under applicable law.
(b) The Board of Directors of the Company shall not (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Merger Sub,
the approval or recommendation by such Board of Directors of this Agreement or
the Merger or (ii) approve or recommend, or propose to approve or recommend,
any Takeover Proposal, unless, in each case, the Company receives an
unsolicited Takeover Proposal that is a Superior Proposal. The Board of
Directors may not enter into an agreement with respect to a Takeover Proposal
except in connection with a termination of this Agreement as set forth in
Section 7.1(e). Nothing contained in this Section 5.9 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders which, in the good faith reasonable
judgment of the Board of Directors of the Company after consultation with
outside counsel, is required under applicable law, provided that, except as
otherwise permitted in this Section 5.9, the Company does not withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Merger or approve or recommend, or propose to approve or recommend, a Takeover
Proposal. Notwithstanding anything contained in this Agreement to the contrary,
any action by the Board of Directors permitted by, and taken in accordance
with, this Section 5.9 shall not constitute a breach of this Agreement by the
Company.
Section 5.10 Public Announcements. The Company and Parent will consult with
and provide each other the opportunity to review and comment upon any press
release or other public statement or comment prior to the issuance of such
press release or other public statement or comment relating to this Agreement
or the transactions contemplated herein and shall not issue any such press
release or other public statement or comment without the prior approval of the
other party (which approval will not be unreasonably withheld), except as may
be required by law.
Section 5.11 Indemnification and Insurance. (a) From and after the Effective
Time, Parent shall, and shall cause the Surviving Corporation to, indemnify and
hold harmless each present and former director and officer of the Company
determined as of the Effective Time (the "Indemnified Parties"), against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time (including
without limitation in connection with the transactions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under DGCL (and the Surviving Corporation
shall also advance expenses as incurred to the fullest extent permitted under
applicable law, provided the Person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Person is not entitled to indemnification).
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(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 5.11, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Surviving Corporation
thereof, but the failure to so notify shall not relieve the Surviving
Corporation of any liability it may have to such Indemnified Party if such
failure does not materially prejudice the Surviving Corporation. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), the Surviving Corporation shall have the
right to assume the defense thereof and the Surviving Corporation 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 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 the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received.
(c) For a period of six years after the Effective Time, Parent shall cause to
be maintained in effect Side A of the current policies of directors' and
officers' liability insurance maintained by the Company ("D&O Insurance") with
respect to claims arising from facts or events which occurred before the
Effective Time, provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions that are no
less advantageous; provided, however, that nothing contained herein shall
require Parent or the Surviving Corporation to incur any annual premium in
excess of 250% of the last annual estimated aggregate premium paid prior to the
date of this Agreement for Side A of all current D&O Insurance policies
maintained by the Company, which the Company estimates to be $100,000 (the
"Current Premium"). If such premiums for such insurance would at any time
exceed 250% of the Current Premium, then Parent shall cause to be maintained
policies of insurance which, in Parent's good faith determination, provide the
maximum coverage available at an annual premium equal to 250% of the Current
Premium.
(d) If Parent or any of its successors or assigns (i) shall consolidate with
or merge into any other corporation or entity and shall not be the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent shall
assume all of the obligations set forth in this Section.
(e) The provisions of this Section are intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties, their heirs and their
representatives.
Section 5.12 Accountants' "Comfort" Letters. The Company and Parent will each
use reasonable best efforts to cause to be delivered to each other letters from
their respective independent accountants, dated as of a date within two
business days before the date of the Registration Statement, in form reasonably
satisfactory to the recipient and customary in scope for comfort letters
delivered by independent accountants in connection with registration statements
on Form S-4 under the Securities Act.
Section 5.13 Additional Reports and Information. (a) The Company and Parent
shall each furnish to the other copies of any reports of the type referred to
in Sections 3.4 and 4.4 which it files with the SEC on or after the date
hereof, and each of the Company and Parent, as the case may be, represents and
warrants that as of the respective dates thereof, such reports 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 statement therein, in
light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present the financial
position of the Company and its consolidated Subsidiaries or Parent and its
consolidated Subsidiaries, as the case may be, as of the dates thereof and the
results of operations and changes in financial position or other information
included therein for the periods or as of the date then ended (subject, where
appropriate, to normal year-end adjustments), in each case in accordance with
past practice and GAAP consistently applied during the periods involved (except
as otherwise disclosed in the notes thereto).
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(b) The Company shall provide Parent with complete copies of all Tax Returns
filed by the Company or any Subsidiary after August 1, 1999 with the Internal
Revenue Service or with any Material State tax authority, as soon as
practicable after filing. The Company will promptly notify the Parent of the
commencement of any Tax audits or inquiries received from the Internal Revenue
Service after August 1, 1999, and will cooperate with Parent by providing any
information reasonably requested, including copies of any requests for
documents or information, proposed adjustments or assessments and penalty or
deficiency notices.
Section 5.14 Company Rights Plan. Except as set forth in Exhibit C, the
Company shall not amend, modify or supplement the Company Rights Plan without
the prior written consent of Parent.
Section 5.15 Control of Other Party's Business. Nothing contained in this
Agreement shall give the Company, directly or indirectly, the right to control
or direct the Parent's operations prior to the Effective Time. Nothing
contained in this Agreement shall give the Parent, directly or indirectly, the
right to control or direct the Company's operations prior to the Effective
Time. Prior to the Effective Time, each of the Company and the Parent shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its respective operations.
Section 5.16 Omaha Operations. Parent intends to combine its subsidiaries'
group life and disability operations with the Company Insurance Subsidiaries'
group life and disability operations in Omaha and plans that the combined
operation will remain in Omaha for the indefinite future.
Section 5.17 Nebraska Domicile. Parent contemplates that Guarantee Life
Insurance Company will maintain its Nebraska domicile and has no plan to change
that domicile.
Section 5.18 Tax Matters. Provided that the Merger is not an All Cash
Transaction, the parties intend for the Merger to qualify as a reorganization
under Section 368(a) of the Code; each party and its affiliates shall use all
reasonable efforts to cause the Merger to so qualify; neither party nor any
affiliate shall take any action that would reasonably be expected to cause the
Merger not to so qualify; and the parties will take the position for all
purposes that the Merger so qualifies.
Section 5.19 Financing. Parent will cause Merger Sub to have resources
available to it at the Effective Time sufficient to pay the aggregate Cash
Consideration and any other cash payable in respect of Shares pursuant to
Article II, on the terms and subject to the conditions contemplated by this
Agreement.
ARTICLE VI
Conditions to the Merger
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) The Company Stockholder Approval shall have been obtained all in
accordance with the Company's Certificate of Incorporation, DGCL and
applicable law.
(b) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or governmental body or authority which prohibits
the consummation of the Merger substantially on the terms contemplated
hereby and shall continue to be in effect.
(c) Unless the Merger is an All Cash Transaction, the Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act, no stop order suspending such effectiveness shall have
been issued and remain in effect and no proceeding for that purpose has
been initiated or threatened by the SEC.
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(d) Unless the Merger is an All Cash Transaction, the shares of Parent
Common Stock issuable in the Merger shall have been approved for listing on
the NYSE, subject only to official notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have expired or
been terminated.
(f) Other than the filing provided for by Section 1.3, all consents,
approvals, permits, authorizations and actions of, filings with and notices
to any governmental or regulatory authority or any other public or private
third parties required of Parent, the Company or any of their Subsidiaries
to consummate the Merger and the other matters contemplated hereby, the
failure of which to be obtained or taken could be reasonably expected to
have a material adverse effect on Parent and its Subsidiaries or the
Surviving Corporation and its Subsidiaries, in each case taken as a whole,
or on the ability of Parent and the Company to consummate the transactions
contemplated hereby shall have been made or obtained, including an order
from each of the Insurance Departments of the State of Nebraska and the
Commonwealth of Pennsylvania approving the Merger, all in form and
substance reasonably satisfactory to Parent and the Company.
Section 6.2 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
fulfillment of the following conditions:
(a) (i) The representations and warranties of Parent contained herein
shall be true and correct in all respects (but without regard to any
materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty) as of the Effective
Time with the same effect as though made as of the Effective Time except
(x) for changes specifically permitted by the terms of this Agreement, (y)
that the accuracy of representations and warranties that by their terms
speak as of the date of this Agreement or some other date will be
determined as of such date and (z) where any such failure of the
representations and warranties in the aggregate to be true and correct in
all respects would not have a Material Adverse Effect on Parent, (ii)
Parent shall have performed in all material respects all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time and (iii) Parent shall have
delivered to the Company a certificate, dated the Effective Time and signed
by its Chief Executive Officer or President certifying to both such
effects.
(b) Unless the Merger is an All Cash Transaction, the Company shall have
received an opinion of Kutak Rock, tax counsel to the Company, dated as of
the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such tax
counsel of representation letters from each of Parent, Merger Sub and the
Company, in each case, in form and substance reasonably satisfactory to
such tax counsel. The specific provisions of each such representation
letter shall be in form and substance reasonably satisfactory to such tax
counsel, and each such representation letter shall be dated on or before
the date of such opinion and shall not have been withdrawn or modified in
any material respect.
Section 6.3 Conditions to Obligation of Parent to Effect the Merger. The
obligation of Parent to effect the Merger is further subject to the fulfillment
of the following conditions:
(a) (i) The representations and warranties of the Company contained
herein shall be true and correct in all respects (but without regard to any
materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty) as of the Effective
Time with the same effect as though made as of the Effective Time except
(x) for changes specifically permitted by the terms of this Agreement, (y)
that the accuracy of representations and warranties that by their terms
speak as of the date of this Agreement or some other date will be
determined as of such date and (z) where any such failure of the
representations and warranties in the aggregate to be true and correct in
all respects would not have a Material Adverse Effect on the Company, (ii)
the Company shall have performed in all material respects all obligations
and complied with all covenants required by this Agreement to be performed
or complied with by it prior to the Effective Time and (iii) the Company
shall have delivered to Parent a certificate, dated the Effective Time and
signed by its Chief Executive Officer or Executive Vice President
certifying to both such effects.
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(b) Unless the Merger is an All Cash Transaction, Parent shall have
received an opinion of King & Spalding, tax counsel to Parent, dated as of
the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such tax
counsel of representation letters from each of Parent, Merger Sub and the
Company, in each case, in form and substance reasonably satisfactory to
such tax counsel. The specific provisions of each such representation
letter shall be in form and substance reasonably satisfactory to such tax
counsel, and each such representation letter shall be dated on or before
the date of such opinion and shall not have been withdrawn or modified in
any material respect.
(c) The Company shall have obtained the consent or approval of each
Person whose consent or approval shall be required in order to consummate
the transactions contemplated by this Agreement under any agreement, lease,
contract, note, mortgage, indenture or other obligation to which the
Company or any of its Subsidiaries is a party, except those for which the
failure to obtain such consent or approval, individually or in the
aggregate, is not reasonably likely to have, a Material Adverse Effect on
the Company.
ARTICLE VII
Termination
Section 7.1 Termination or Abandonment. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated and abandoned
at any time prior to the Effective Time, whether before or after any approval
of the matters presented in connection with the Merger by the stockholders of
the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent if (i) the Effective Time shall not
have occurred on or before March 31, 2000 and (ii) the party seeking to
terminate this Agreement pursuant to this clause 7.1(b) shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;
(c) by either the Company or Parent if (i) a statute, rule, regulation or
executive order shall have been enacted, entered or promulgated prohibiting
the consummation of the Merger substantially on the terms contemplated
hereby or (ii) an order, decree, ruling or injunction shall have been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger substantially on the terms contemplated hereby
and such order, decree, ruling or injunction shall have become final and
non-appealable and the party seeking to terminate this Agreement pursuant
to this clause 7.1(c)(ii) shall have used its reasonable best efforts to
remove such injunction, order or decree;
(d) by the Company if the approval of the stockholders of the Company
contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment thereof;
(e) by the Company if the Company has received a Superior Proposal,
except that the Company may not terminate this Agreement pursuant to this
clause 7.1(e) unless and until (i) four business days have elapsed
following delivery to Parent of a written notice of the determination by
the Board of Directors of the Company to terminate this Agreement, and
during such four business day period the Company (x) informs Parent of the
terms and conditions of the Superior Proposal and the identity of the
person making the Superior Proposal and (y) otherwise cooperates with
Parent with respect thereto with the intent of enabling Parent to agree to
a modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected, (ii) at the end of such
four business day period the Takeover Proposal continues to be a Superior
Proposal, taking into account any amendment of the terms of this Agreement
or the Merger by Parent or any firm proposal (without conditions) by Parent
to amend the terms of this Agreement or the Merger, (iii) simultaneously
with such termination the Company enters into
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a definitive acquisition, merger or similar agreement to effect the
Superior Proposal and (iv) the Company pays to Parent the amount specified
and within the time period specified in Section 7.2;
(f) by Parent if the Board of Directors of the Company shall have (i)
withdrawn or modified in a manner adverse to Parent its approval or
recommendation of this Agreement and the transactions contemplated hereby
or (ii) approved or recommended, or proposed publicly to approve or
recommend, any Takeover Proposal;
(g) by Parent if a tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of the Company is commenced prior to
the Company Meeting, and the Board of Directors of the Company fails to
recommend against acceptance of such tender offer or exchange offer by its
stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders)
within the time period specified by Rule 14e-2; or
(h) by either the Company or Parent if there shall have been a material
breach by the other of any of its representations, warranties, covenants or
agreements contained in this Agreement, which if not cured would cause the
conditions set forth in Sections 6.2(a) or 6.3(a), as the case may be, not
to be satisfied, and such breach is incapable of being cured or shall not
have been cured within 30 days after notice thereof shall have been
received by the party alleged to be in breach.
In the event of termination of this Agreement pursuant to this Section 7.1,
this Agreement shall terminate (except for the Confidentiality Agreement
referred to in Section 5.2 and the provisions of Sections 7.2, 8.2, 8.4 and
8.5), and there shall be no other liability on the part of the Company or
Parent to the other except liability arising out of an intentional breach of
this Agreement or as provided for in the Confidentiality Agreement.
Section 7.2 Termination Fee. Notwithstanding any provision in this Agreement
to the contrary, if (i) this Agreement is terminated by the Company pursuant to
Section 7.1(e), or (ii) (x) prior to the termination of this Agreement, a bona
fide Takeover Proposal is commenced, publicly proposed or publicly disclosed
and not withdrawn, (y) this Agreement is terminated by the Company pursuant to
Section 7.1(b) or pursuant to Section 7.1(d) (but only due to the failure of
the Company stockholders to approve the Merger) or by Parent pursuant to
Section 7.1(f) or 7.1(g) and (z) concurrently with or within twelve months
after such termination a Takeover Proposal shall have been consummated or an
agreement with respect to a Takeover Proposal shall have been entered into,
then, in each case, the Company shall pay to Parent a fee (the "Termination
Fee") of $9,000,000 in cash, such payment to be made simultaneously with such
termination in the case of a termination by the Company pursuant to Section
7.1(e) and, in the case of clause (ii), upon the consummation of such Takeover
Proposal.
Section 7.3 Amendment or Supplement. At any time before or after approval of
the matters presented in connection with the Merger by the stockholders of the
Company and prior to the Effective Time, this Agreement may be amended or
supplemented in writing by the Company and Parent with respect to any of the
terms contained in this Agreement, except that following approval by the
stockholders of the Company there shall be no amendment or change to the
provisions hereof which by law or in accordance with the rules of any relevant
stock exchange requires further approval by such stockholders without such
further approval nor any amendment or change not permitted under applicable
law.
Section 7.4 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, the Company and Parent may:
(a) extend the time for the performance of any of the obligations or acts
of the other party;
(b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto;
or
(c) waive compliance with any of the agreements or conditions of the
other party contained herein.
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Notwithstanding the foregoing, no failure or delay by the Company or Parent
in exercising any right hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
of any other right hereunder. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE VIII
Miscellaneous
Section 8.1 No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Merger.
Section 8.2 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring or
required to incur such expenses, except expenses incurred in connection with
the printing and filing of the Registration Statement and the printing and
mailing of the Proxy Statement (including applicable SEC filing fees) shall be
shared equally by the Company and Parent.
Section 8.3 Counterparts; Effectiveness. This Agreement may be executed in
two or more consecutive counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered (by telecopy or otherwise) to the
other parties.
Section 8.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
Section 8.5 Jurisdiction. Each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any Federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (iii) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of Delaware or a Delaware state court.
Section 8.6 Notices. All notices and other communications hereunder shall be
in writing (including telecopy or similar writing) and shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 8.6 and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section 8.6:
To Parent or Merger Sub:
Jefferson-Pilot Corporation
100 N. Greene Street
Greensboro, NC 27401
Attention: Dennis R. Glass, CFO
Fax: 336-691-3283
Attention: John D. Hopkins, General Counsel
at above address/(fax number 336-691-3639)
and
King & Spalding
1185 Avenue of the Americas
New York, NY 10036-4003
Attention: E. William Bates, II
Fax: 212-556-2222
A-35
<PAGE>
To the Company:
The Guarantee Life Companies Inc.
8801 Indian Hills Drive
Omaha, NE 68114
Attention: Robert D. Bates, President
Fax: 402-361-7571
copy to:
The Guarantee Life Companies Inc.
8801 Indian Hills Drive
Omaha, NE 68114
Attention: Richard A. Spellman, Esq.
Fax: 402-361-7571
and
Kutak Rock
1650 Farnam Street
Omaha, NE 68102
Attention: Joe E. Armstrong
Fax: (402) 346-1148
and
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Wolcott B. Dunham, Jr.
James C. Scoville
Fax: (212) 909-6836
Section 8.7 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 8.8 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 8.9 Enforcement of Agreement. The parties hereto agree that money
damages or other remedy at law would not be a sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default
and to any other equitable relief, including, without limitation, specific
performance, without bond or other security being required.
Section 8.10 Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Confidentiality Agreement constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof
and thereof and except for the provisions of Section 5.11 hereof, is not
intended to and shall not confer upon any Person other than the parties hereto
any rights or remedies hereunder.
A-36
<PAGE>
Section 8.11 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 8.12 Definitions. (a) References in this Agreement to "Subsidiaries"
of any party shall mean any corporation, partnership, association, trust or
other form of legal entity of which (i) more than 50% of the outstanding voting
securities are on the date hereof directly or indirectly owned by such party,
or (ii) such party or any Subsidiary of such party is a general partner
(excluding partnerships in which such party or any Subsidiary of such party
does not have a majority of the voting interests in such partnership).
References in this Agreement (except as specifically otherwise defined) to
"affiliates" shall mean, as to any person, any other person which, directly or
indirectly, controls, or is controlled by, or is under common control with,
such person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies of a person, whether through the
ownership of securities or partnership of other ownership interests, by
contract or otherwise. References in the Agreement to "person" shall mean an
individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity, group (as such term is used in
Section 13 of the Exchange Act) or organization, including, without limitation,
a governmental body or authority.
(b) The term "Knowledge" or any similar formulation thereof shall mean, with
respect to the Company, the actual Knowledge of Robert D. Bates, Theodore C.
Cooley, William L. Bauhard, Richard A. Spellman, Gary Rittenhouse, Michael G.
Allen, C. E. Boyle, Mary G. Rahal, Alan D. Brinkman, Richard C. Easton and
Wayne Benseler without independent investigation, and, with respect to the
Parent, the actual Knowledge of David A. Stonecipher, Dennis R. Glass, Kenneth
C. Mlekush, John D. Hopkins, Mark E. Konen, Charles C. Cornelio, Leslie L.
Durland, John C. Ingram, Edward W. O'Neil and Hoyt J. Phillips without
independent investigation.
(c) "Nebraska Insurers Demutualization Act" shall mean Sections 44-6101 to
44-6121 of the Nebraska Revised Statutes.
(d) "Nebraska Shareholders Protection Act" shall mean Sections 21-2431 to 21-
2453 of the Nebraska Revised Statutes.
A-37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
The Guarantee Life Companies Inc.
By: _________________________________
Name:
Title:
Jefferson-Pilot Corporation
By: _________________________________
Name:
Title:
LG Merger Corp.
By: _________________________________
Name:
Title:
A-38
<PAGE>
EXHIBIT A
FORM OF AFFILIATE LETTER
THE GUARANTEE LIFE COMPANIES INC.
JEFFERSON-PILOT CORPORATION
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to be
an "affiliate" of The Guarantee Life Companies Inc., a Delaware corporation
(the "Company"), as the term "affiliate" is defined for purposes of Rule 144
of the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"). Pursuant to the terms of the Agreement and Plan of
Merger, dated as of September 19, 1999 (the "Merger Agreement"), among
Jefferson-Pilot Corporation, a North Carolina corporation ("Parent"), LG
Merger Corp., a Delaware corporation ("Merger Sub") and the Company, (i)
Merger Sub will be merged with the Company (the "Merger") and (ii) the Company
will become a subsidiary of Parent. Capitalized terms used in this letter
without definition shall have the meanings assigned to them in the Merger
Agreement.
As a result of the Merger, I may receive shares of common stock, par value
$1.25 per share, of Parent (the "Parent Common Stock"). I would receive such
Parent Common Stock in exchange for shares owned by me of common stock, par
value $0.01 per share, of the Company (the "Company Common Stock").
1. I hereby represent and warrant to, and covenant with, Parent and the
Company that in the event I receive any shares of Parent Common Stock as a
result of the Merger:
A. I shall not make any offer, sale, pledge, transfer or other
disposition of shares of Parent Common Stock in violation of the Act or the
Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
shares of Parent Common Stock, to the extent I felt necessary, with my
counsel or counsel for the Company.
C. 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, nor 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.
2. By Parent's acceptance of this letter, Parent hereby agrees that, for one
year after the Closing Date, Parent shall (a) use its reasonable best efforts
to (i) file, on a timely basis, all reports and data required to be filed with
the Commission by it pursuant to Section 13 of the Securities Exchange Act of
1934, as amended and (ii) furnish to me upon request a written statement as to
whether Parent has complied with such reporting requirements during the 12
months preceding any proposed sale of the shares of Parent Common Stock by me
under Rule 145, and (b) otherwise use its reasonable efforts to permit such
sales pursuant to Rule 145.
Very truly yours,
-------------------------------
Name:
Agreed and accepted this day
of , 1999, by
The Guarantee Life Companies Inc.
By: ___________________________
Name
Title
Jefferson-Pilot Corporation
By: ___________________________
Name
Title
A-39
<PAGE>
EXHIBIT B
ACTIONS REGARDING EMPLOYEE BENEFIT PLANS
1. From and after the Effective Time, Parent shall, or shall cause the
Company to, honor and be bound by the terms and conditions of each employee or
executive benefit plan, program or agreement sponsored or maintained by the
Company or to which the Company is a party (a "Company Benefit Arrangement")
and to administer and interpret any such Company Benefit Arrangement in
accordance with the practices of the Company as in effect prior to the
Effective Time. Subject to paragraph 2 below, nothing in the immediately
preceding sentence shall be construed to limit the right of Parent or the
Company, as the case may be, following the Effective Time to amend, modify or
terminate any such Company Benefit Arrangement pursuant to the terms and
conditions thereof as in effect immediately prior to the Effective Time,
provided that: (a) no such amendment, modification or termination shall reduce
any of the benefits or compensation payable thereunder which are accrued as of
the Effective Time (or as of the date of such action, whichever is greater);
and (b) in no event shall the severance and/or other termination benefits
payable to any employee whose employment terminates prior to the first
anniversary of the Effective Time be less than the amount that would have been
payable to such employee under the terms of any and all such Company Benefit
Arrangements as in effect immediately prior to such amendment, modification or
termination, provided, however, that Parent reserves the right to change health
and welfare plans to make them comparable to those in Parent's home offices.
2. Without limiting the generality of the foregoing, for a period of twelve
months from and after the Effective Time, Parent shall, or shall cause the
Company and its subsidiaries to, make available to each person who is an
employee of the Company and its subsidiaries at the Effective Time (the
"Company Employees") employee benefit plans and programs which, in the
aggregate, are no less favorable to the Company Employees than the terms and
conditions of the Company Benefit Arrangement in which they were participating
immediately prior to the Effective Time, provided, however, that Parent
reserves the right to change health and welfare plans to make them comparable
to those in Parent's home offices.
3. To the extent service is a factor in determining eligibility for and
vesting in the benefits provided thereunder (including, without limitation,
eligibility for any early retirement benefits and similar benefit subsidies),
the plans and programs in which each Company Employee participates after the
Effective Time shall recognize service with the Company and its subsidiaries
(as taken into account for purposes of administering the corresponding Company
Benefit Arrangement immediately prior to the Effective Time) (a) for purposes
of determining each such Company Employee's eligibility to participate in, and
vest in the benefits provided under, such plan or program and (b) for purposes
of determining the benefits accrued under such plan or program to the extent
required by applicable law. Notwithstanding the foregoing, in no event shall
any employee receive duplicate benefits with respect to any period of prior
service. To the extent any welfare benefit plan in which any Company Employee
participates after the Effective Time (i) imposes any preexisting condition
limitation, such condition shall be waived or (ii) has a deductible or requires
a copayment by the Company Employee that is subject to a maximum out-of-pocket
limitation, there shall be credited against any such deductible or limitation
any costs incurred by such Company Employee during the comparable period under
the terms of the corresponding Company Benefit Arrangement prior to the
Effective Time.
B-1
<PAGE>
EXHIBIT C
AMENDMENT TO RIGHTS PLAN
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
This Amendment (the "Amendment"), dated as of September 19, 1999, is
entered into by and between The Guarantee Life Companies Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability company as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have entered into a Rights
Agreement, dated as of November 18, 1996 (the "Agreement");
WHEREAS, the Company wishes to amend the Agreement;
WHEREAS, Section 26 of the Agreement provides, among other things, that
prior to the Stock Acquisition Time the Company may, by resolution of its Board
of Directors, and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of the Agreement without the approval of any holders of
Rights; and
WHEREAS, the Board of Directors of the Company has approved this Amendment
and the Company has directed the Rights Agent to amend the Agreement as
provided herein;
NOW, THEREFORE, the Company and the Rights Agent hereby amend the
Agreement as follows:
1. Capitalized terms used in this Amendment without definition shall have
the meanings given to them in the Agreement.
2. Section 1(a) of the Agreement is amended to add the following sentence
to the end thereof:
"Notwithstanding anything in this Agreement to the contrary, neither
Jefferson-Pilot Corporation ("Parent") nor LG Merger Corporation ("Newco")
shall be deemed to be an Acquiring Person as a result of the execution and
delivery of and performance of its obligations under, or consummation of
any one or more transactions (each, a "Permitted Event" and collectively,
the "Permitted Events"), contemplated by the Agreement and Plan of Merger,
dated as of September 19, 1999, as the same may be amended from time to
time (the "Merger Agreement"), by and among the Company, Parent and Newco,
pursuant to which the Company will be merged (the "Merger") with Newco."
3. Section 1(gg) is amended to add the following sentence at the end
thereof:
"Notwithstanding anything in this Agreement to the contrary, the
acquisition of Beneficial Ownership of Common Stock of the Company pursuant
to the Merger and the consummation of any one or more of the Permitted
Events shall not constitute or result in the occurrence of a Stock
Acquisition Time."
4. Section 3(a) of the Agreement is amended to add the following language
at the end of the first sentence thereof immediately prior to the period:
"; provided, however, that, notwithstanding anything in this Agreement to
the contrary, the acquisition of Beneficial Ownership of Common Stock of
the Company pursuant to the Merger and the consummation of any one or more
of the Permitted Events shall not constitute or result in the occurrence of
a Distribution Date"
5. Section 7(a) of the Agreement is amended by (a) deleting the word "or"
at the end of clause (iii) thereof, and (b) adding the following clause
immediately following clause (iv) thereof and prior to the parenthetical
phrase:
C-1
<PAGE>
"or (v) the time immediately prior to the Effective Time (as such term is
defined in the Merger Agreement) for which notice of such time has been
given by the Company to the Rights Agent as promptly as practicable prior
to such Effective Time, provided, however, that if the Merger contemplated
by the Merger Agreement does not occur and the Merger Agreement is
terminated, the Rights will remain exercisable until the earliest of (i),
(ii), (iii) or (iv) above, no Expiration Date shall be deemed to have
occurred as a result of this clause (v)"
6. Section 11(a)(ii) of the Agreement is amended to add the following at
the end of the first sentence thereof immediately prior to the period:
"; provided, however, that, notwithstanding anything in this Agreement to
the contrary, the acquisition of Beneficial Ownership of Common Stock of the
Company pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a Section
11(a)(ii) Event"
7. Section 13(a) of the Agreement is amended to add the following at the
end thereof immediately prior to the period:
"; provided, however, that, notwithstanding anything in this Agreement to
the contrary, the acquisition of Beneficial Ownership of Common Stock of the
Company pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a Section
13 Event"
8. The term "Agreement" as used in the Agreement shall be deemed to refer
to the Agreement as amended hereby.
9. This Amendment shall be governed by and constructed in accordance with
the laws of the State of Delaware.
10. This Amendment shall be effective as of the date first above written,
and, except as set forth herein, the Agreement shall remain in full force and
effect and shall be otherwise unaffected hereby.
11. This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first above written.
The Guarantee Life Companies Inc.
By: _________________________________
Name
Title
ChaseMellon Shareholder Services,
L.L.C.
By: _________________________________
Name
Title
A-42
<PAGE>
APPENDIX B
OPINION OF GOLDMAN, SACHS & CO.
PERSONAL AND CONFIDENTIAL Goldman
Sachs
October 14, 1999
Board of Directors
The Guarantee Life Companies Inc.
8801 Indian Hills Drive
Omaha, Nebraska 68114-4066
Gentlemen and Madame:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock, par value $.01
per share (the "Shares"), of The Guarantee Life Companies Inc. ("Guarantee" or
the "Company") of the Merger Consideration (as defined below) to be received
pursuant to the Agreement and Plan of Merger, dated as of September 19, 1999,
among Jefferson-Pilot Corporation ("Jefferson-Pilot"), Jefferson-Pilot
Acquisition Corp. ("Merger Sub"), a wholly-owned subsidiary of Jefferson-
Pilot, and Guarantee, as amended by Amendment No. 1 to Agreement and Plan of
Merger, dated as of October 14, 1999, by and among Jefferson-Pilot, Merger Sub
and Guarantee (the "Agreement"). Pursuant to the Agreement, Guarantee and
Merger Sub will be merged (the "Merger") and each outstanding Share (other
than Shares to be canceled in accordance with the Agreement and dissenting
Shares) will be converted into the right to receive either a fraction of a
share of common stock (the "Stock Consideration"), par value $1.25, of
Jefferson-Pilot (the "Jefferson-Pilot Shares), calculated by dividing $32.00
by the Average Parent Price (as defined in the Agreement) or $32.00 per share
in cash (the "Cash Consideration"), or a combination of Stock Consideration
and Cash Consideration, as set forth in the Agreement. Holders of Shares will
be entitled to elect to receive Stock Consideration or Cash Consideration, or
a combination thereof, subject to certain procedures and limitations contained
in the Agreement, as to which procedures and limitations we express no
opinion. Notwithstanding the foregoing, if the Average Parent Price is less
than $65.00, Jefferson-Pilot has the right to elect to pay the Cash
Consideration for all outstanding Shares and if the Average Parent Price
exceeds $75.00 or certain other circumstances described in the Agreement
occur, all outstanding Shares will be converted into the right to receive the
Cash Consideration. The combination of Stock Consideration and Cash
Consideration to be paid by Jefferson-Pilot pursuant to the Agreement is
referred to as the "Merger Consideration".
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with Guarantee, having provided certain investment
banking services to Guarantee from time to time, including having acted as
financial advisor to Guarantee Mutual Life Company in connection with its
conversion from a mutual life insurance company to a stock life insurance
company in December 1995 (the "Demutualization") and as lead managing
underwriter of a public offering of 2,500,000 Shares issued by the Company in
connection with the Demutualization, and having acted as financial advisor in
connection with, and having participated in certain of the negotiations
leading to, the Agreement. We also have provided certain investment banking
services to Jefferson-Pilot from time to time, including having acted as
financial advisor to Jefferson-Pilot in its acquisition of Alexander Hamilton
Life Insurance Company of America in October 1995 and lead managing
underwriter in the public offering of Automatic Common Exchange Securities by
Jefferson-Pilot in November 1995. Goldman, Sachs & Co. provides a full range
of financial advisory and securities services and, in the course of its normal
trading activities, may from time to time effect
<PAGE>
The Guarantee Life Companies Inc.
October 14, 1999
Page Two
transactions and hold securities, including derivative securities, of
Guarantee or Jefferson-Pilot for its own account and for the accounts of
customers. Goldman, Sachs & Co. may provide investment banking services to
Jefferson-Pilot and its subsidiaries in the future.
In connection with this opinion, we have reviewed, among other things: the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
each of the Company and Jefferson-Pilot for the five years ended December 31,
1998; certain interim reports to stockholders and Quarterly Reports on Form
10-Q of each of the Company and Jefferson-Pilot; certain other communications
from the Company and Jefferson-Pilot to their respective stockholders; the
Company SAP Statements (as defined in the Agreement) for each of Guarantee's
insurance subsidiaries for the three years ended December 31, 1998 and the
quarterly periods ended March 31, 1999 and June 30, 1999; the Parent SAP
Statements (as defined in the Agreement) for each of Jefferson-Pilot's
principal insurance subsidiaries for the three years ended December 31, 1998
and the quarterly periods ended March 31, 1999 and June 30, 1999; and certain
internal financial analyses and forecasts for Guarantee prepared by its
management. We also have been furnished with a preliminary actuarial appraisal
as of September 30, 1998 of Guarantee (the "Appraisal") prepared by an
independent actuarial firm and a revised version of the Appraisal. We have
held discussions with members of the senior management of Guarantee and
Jefferson-Pilot regarding the strategic rationale for, and the potential
benefits of, the transaction contemplated by the Agreement and the past and
current business operations, financial condition and future prospects of their
respective companies. In addition, we have reviewed the reported price and
trading activity of the Shares and the Jefferson-Pilot Shares, compared
certain financial and stock market information for the Company and Jefferson-
Pilot with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain recent
business combinations in the life insurance industry specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. As you are aware,
Jefferson-Pilot declined our request to make available to us its projections
of expected future performance. As a consequence, our review of such expected
performance was limited to discussions with members of the senior management
of Jefferson-Pilot of the estimates published by research analysts regarding
Jefferson-Pilot. In addition, we have not made an independent evaluation or
appraisal of the assets and liabilities (including the reserves for their
respective insurance businesses) of Guarantee or Jefferson-Pilot or any of
their subsidiaries and we have not been furnished with any such evaluation or
appraisal, other than the Appraisal referred to above. We are not actuaries
and our services did not include actuarial determinations or evaluations by us
or an attempt to evaluate actuarial assumptions with respect to all matters
related to the reserve adequacy for Guarantee or Jefferson-Pilot. In that
regard, we are expressing no opinion as to the adequacy of reserves for
Guarantee or Jefferson-Pilot. We also have assumed that all material
governmental, regulatory or other consents and approvals necessary for the
consummation of the transaction contemplated by the Agreement will be obtained
without any adverse effect on Guarantee or Jefferson-Pilot or on the potential
benefits of the transaction contemplated by the Agreement. We also note that
at the instruction of the Company we contacted a limited number of third
parties regarding a potential merger with Guarantee.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of Guarantee in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to how any
holder of Shares should vote with respect to such transaction or as to whether
any holder of Shares should elect to receive the Stock Consideration or the
Cash Consideration.
B-2
<PAGE>
The Guarantee Life Companies Inc.
October 14, 1999
Page Three
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Merger
Consideration to be received by the holders of Shares pursuant to the Agreement
is fair from a financial point of view to such holders.
Very truly yours,
[SIGNATURE OF GOLDMAN, SACHS & CO.]
B-3
<PAGE>
APPENDIX C
DISSENTER'S APPRAISAL RIGHTS
Delaware General Corporation Law. 8 Del. C. (S) 262 Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to (S) 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a non stock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S) 251 (other than a merger effected pursuant to 8 Del.
C. (S) 251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or 8
Del. C. (S) 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of 8 Del. C. (S) 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to 8 Del.
(S)(S) 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under 8 Del. C. (S) 253 of this title is not
owned by the parent corporation immediately before the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
<PAGE>
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days before the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to (S) 228 or 8
Del. C. (S) 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days before the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given
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<PAGE>
before the effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal before the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
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<PAGE>
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is before
the effective date of the merger or consolidation); provided, however, that if
no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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<PAGE>
APPENDIX D
Information Statement
JEFFERSON-PILOT CORPORATION
INFORMATION STATEMENT
The identity of the Acquiring Person is Jefferson-Pilot Corporation ("JPC"),
and a list of JPC's affiliates and associates is attached as a part hereof.
This statement is given pursuant to Section 21-2449 of the Nebraska
Shareholders Protection Act.
Neither JPC nor any affiliate or associate thereof owns any shares of The
Guarantee Life Companies Inc. ("Guarantee Life") common stock.
If the proposed merger is consummated, JPC will acquire all of the
outstanding shares of common stock, par value $0.01 per share, of Guarantee
Life (9,252,744 at September 14, 1999), constituting over 50% of the voting
power of Guarantee Life.
JPC proposes to acquire Guarantee Life in a merger transaction pursuant to
and in accordance with the provisions of NRS Section 21-2439 and the Agreement
and Plan of Merger dated as of September 19, 1999 among JPC, LG Merger Corp.
and Guarantee Life. That Agreement is incorporated into this Information
Statement as if fully restated herein.
<PAGE>
Listing of JPC and its Affiliates and Associates
Revised: 9/15/99
A. Affiliates actually controlled
Jefferson-Pilot Corporation (North Carolina corp.)
Alexander Hamilton Life Insurance Company of America (Michigan corp.)
First Alexander Hamilton Life Insurance Company (New York corp.)
Jefferson Pilot Financial Insurance Company (New Hampshire corp.) (name
changed May 1, 1998 from Chubb Life Insurance Company of America)
Jefferson Pilot Life Insurance Agency of Massachusetts, Inc. (Mass.
corp.)
Jefferson Pilot LifeAmerica Insurance Company (New Jersey corp.) (name
changed May 1, 1998 from Chubb Colonial Life Insurance Company)
HARCO Capital Corp. (Delaware corp.)
Omega Jefferson Pilot Seguros de Vida S.A. (Argentina corp.)
Jefferson Pilot Omega Seguros de Vida S.A. (Uruguay corp.)
Hampshire Funding, Inc. (New Hampshire corp.)
Jefferson-Pilot Capital Trust A (Delaware business trust)
Jefferson-Pilot Capital Trust B (Delaware business trust)
Jefferson-Pilot Communications Company (North Carolina corp.)
Jefferson-Pilot Communications Company of California (North Carolina
corp.)
Jefferson-Pilot Communications Company of Virginia (Virginia corp.)
Jefferson-Pilot Sports, Inc. (North Carolina corp.)
WCSC, Inc. (South Carolina corp.)
Tall Tower, Inc. (South Carolina corp.)
Jefferson Pilot Investment Advisory Corporation (Tennessee corp.)
(Chubb Investment Advisory Corporation until 1/1/98)
Jefferson-Pilot Investments, Inc. (North Carolina corp.)
Hampshire Syndications, Inc. (New Hampshire corp.)
Jefferson Pilot Variable Corporation (North Carolina corp.)
(Jefferson-Pilot Investor Services, Inc. until 1/1/98)
Jefferson-Pilot Investor Services of Nevada, Inc. (Nevada corp.)
Jefferson-Pilot Life Insurance Company (North Carolina corp.)
Jefferson Standard Life Insurance Company (North Carolina corp.)
Jefferson Pilot Securities Corporation (New Hampshire corp.)
(Chubb Securities Corporation until 1/1/98)
Allied Professional Advisors, Inc. (New Hampshire corp.)
Jefferson Pilot Insurance Agency of Alabama, Inc. (Alabama corp.)
LG Merger Corp. (Delaware corp.)
Notes: (1) Each indentation reflects another tier of ownership. All entities
more than 50% owned are listed.
(2) The immediate parent owns 100% of the voting securities of each entity.
D-2
<PAGE>
B. Entities not controlled, but are "associates" because of at least 10%
ownership.
Jefferson-Pilot Life Insurance Company owns:
Athens Newspapers, Inc., Class A Common, Georgia corp., 40.0% owned
Tomco2 Equipment Company, Class A Common, Georgia corp., 29.16% owned
HARCO Capital Corp. owns:
International Home Furnishing Center, Inc., Common, North Carolina corp.,
25.06% owned
D-3
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation
Act contain specific provisions relating to indemnification of directors and
officers. In general, the statutes provide that:
(i) a corporation must indemnify a director or officer who is wholly
successful in defense of a proceeding to which the director or officer is a
party because of status as such; and
(ii) in the absence of an indemnity agreement, a corporation may, but is
not required to, indemnify a director or officer who is not wholly
successful in such defense if it is determined as provided by statute that
the director or officer meets certain standards of conduct; but a
corporation may not indemnify a director or officer who is adjudged liable
to the corporation itself or is adjudged liable to a third party on the
basis that personal benefit was improperly received;
(iii) the court conducting the proceeding may order indemnification under
certain circumstances described in the statute; and
(iv) a corporation may, in its articles of incorporation or bylaws or by
contract or resolution, provide indemnification in addition to that
provided by statute, subject to certain conditions.
Jefferson Pilot has agreed to indemnify its officers and directors against
any liability, to the fullest extent permitted by law. The board of directors
adopted a resolution granting indemnity, and Jefferson Pilot shareholders then
ratified and approved the board's actions. The resolution reads as follows:
1. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or contemplated
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, including all appeals, by reason of the fact that he/she is
or was a director, officer, or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, or as a committee member, trustee, or
administrator under an employee benefit plan (all such persons hereinafter
sometimes referred to as "employee"), against expenses (including
attorney's fees), judgments, decrees, fines, penalties, and amounts paid in
settlement actually and reasonably incurred by such employee in connection
with such action, suit or proceeding, except that no indemnification shall
be made in respect of any liability or litigation expenses which such
employee may incur on account of that employee's activities which were at
the time taken known or believed by that employee to be clearly in conflict
with the best interests of the Corporation. The termination of any action,
suit, or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the employee knew or believed the activities were clearly
in conflict with the best interests of the Corporation.
2. Any indemnification under Section 1 (unless ordered by a court) shall
be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the employee is proper in the
circumstances because the employee did not know or believe, at the time,
that the activities were clearly in conflict with the best interests of the
Corporation. Such determination shall be made (a) by a majority vote of
directors acting at a meeting at which a quorum is present, or (b) if such
a quorum is not obtainable (or even if obtainable), a majority of directors
so direct, by independent legal counsel (compensated by the Corporation) in
written opinion, or (c) by the affirmative vote of the holders of a
majority of the shares entitled to vote in the election of directors.
3. Expenses of each employee indemnified hereunder incurred in defending
a civil, criminal, administrative, or investigative action, suit, or
proceeding (including all appeals), or threat thereof, may be paid by the
Corporation in advance of the final disposition of such action, suit, or
proceeding as authorized by the board of directors, upon receipt of an
undertaking by or on behalf of the employee, to repay such
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<PAGE>
amount unless it shall ultimately be determined that the employee is
entitled to be indemnified by the Corporation.
4. The indemnification provided by this Resolution shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled as a matter of law, any agreement, vote of shareholders, any
insurance purchased by the Corporation, or otherwise, both as to action in
the employee's official capacity and as to action in another capacity while
holding such office, and shall continue as to an employee who has ceased to
be a director, officer, or employee and shall inure to the benefit of the
heirs, executors, and administrators of such an employee.
5. The Corporation may purchase and maintain insurance on behalf of any
employee who is or was a director, officer, or employee of the Corporation,
or is or was serving at the request of the Corporation as a director,
trustee, officer, or employee of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against
the employee and incurred by the employee in any such capacity, or arising
out of the employee's status as such, whether or not the Corporation would
have the power to indemnify the employee against such liability under the
provisions of this Resolution or of the North Carolina Business Corporation
Act.
Jefferson Pilot has purchased a Director's and Officer's Liability policy
with National Union Fire Insurance Company, a member company of American
International Group. Only Side A coverage was purchased. This covers the
personal liability of directors and officers of Jefferson Pilot and its
subsidiaries, but not any liability of its corporate entities. The policy
period is August 28, 1998 to August 28, 2001. The limit of liability is $20
million. There is no deductible; this is first dollar coverage.
The policy will pay any loss of any director or officer arising from a claim
(including a securities claim and a Year 2000 claim) first made against the
director or officer during the policy period for any actual or alleged
wrongful act in the capacity of director and officer. But the director or
officer would not collect under the policy if Jefferson Pilot has covered the
loss through indemnity as described above.
Wrongful act includes any actual or alleged employment practice violation or
other actual or alleged breach of duty, neglect, error, misstatement,
misleading statement, omission or act by the director or officer in his or her
capacity or status. Important exclusions include deliberate criminal or
deliberate fraudulent acts or the gaining of any profit or advantage to which
the director or officer would not be legally entitled.
In addition to the indemnification agreement, in May 1988, Jefferson Pilot's
shareholders approved an amendment to Jefferson Pilot's Articles of
Incorporation eliminating the personal liability of each director to the
fullest extent permitted by the North Carolina Business Corporation Act.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Description
-----------
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as of September
19, 1999, as amended and restated as of October 14, 1999 among Jefferson-
Pilot Corporation, LG Merger Corp. and The Guarantee Life Companies Inc.
(included as Appendix A to this proxy statement-prospectus)
4.1 Articles of Incorporation of Jefferson-Pilot Corporation and amendments
that have been approved by shareholders are incorporated by reference to
Form 10-Q for the first quarter 1996
4.2 By-laws of Jefferson-Pilot Corporation are incorporated by reference to
Form 10-K for 1997
4.3 Amended and Restated Rights Agreement dated November 7, 1994 between
Jefferson-Pilot Corporation and First Union National Bank, as Rights
Agent, was included in Form 8-K for November 7, 1994, and Amendment to
Rights Agreement dated February 8, 1999 was included in Form 8-K for
February 8, 1999; both are incorporated by reference
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
4.4 Amended and Restated Credit Agreement dated as of May 7, 1997 among
the Registrant and the banks named therein, and Bank of America
(formerly NationsBank, N.A.), as Agent, is not being filed because the
total amount of borrowings available thereunder does not exceed 10% of
total consolidated assets. The Registrant agrees to furnish a copy of
the Credit Agreement to the Commission upon request.
5.1 Opinion of Richard T. Stange as to the legality of the securities
being registered
8.1 Opinion of King & Spalding regarding tax matters
23.1 Consent of Ernst & Young LLP
23.2 Consent of KPMG LLP
23.3 Consent of King & Spalding (included in Exhibit 8.1)
23.4 Consent of Richard T. Stange (included in Exhibit 5.1)
23.5 Consent of Goldman Sachs & Co.
24.1(a) Power of Attorney--Edwin B. Borden
24.1(b) Power of Attorney--Dr. William H. Cunningham
24.1(c) Power of Attorney--Robert G. Greer
24.1(d) Power of Attorney--George W. Henderson, III
24.1(e) Power of Attorney--E.S. Melvin
24.1(f) Power of Attorney--Kenneth C. Mlekush
24.1(g) Power of Attorney--William Porter Payne
24.1(h) Power of Attorney--Patrick S. Pitlard
24.1(i) Power of Attorney--Donald S. Russell, Jr.
99.1 Form of Proxy Card
99.2 Election Form/Letter of Transmittal to Accompany Certificates
Representing Common Stock, $.01 Par Value Per Share, of the Guarantee
Life Companies Inc.
99.3 Election Form/Letter of Transmittal for Common Stock, $.01 Par Value
Per Share, of The Guarantee Life Companies Inc. Held in Book-Entry
with Guarantee's Transfer Agent
</TABLE>
Item 22. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation Registration Fee" table in the
effective registration statement;
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<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial, bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start
of any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of
the Act need not be furnished, provided, that the registrant includes
in the prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other
information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be filed to
include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes as follows: that before any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any
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<PAGE>
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Greensboro, state of
North Carolina, on November 24, 1999.
Jefferson-Pilot Corporation
(Registrant)
/s/ David A. Stonecipher
By: _________________________________
David A. Stonecipher
Chairman of the Board,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ David A. Stonecipher Chairman of the Board, November 24, 1999
______________________________________ President, Chief
David A. Stonecipher Executive Officer and
Director (Principal
Executive Officer)
/s/ Dennis R. Glass Executive Vice President, November 24, 1999
______________________________________ Chief Financial Officer
Dennis R. Glass and Treasurer (Principal
Financial Officer)
/s/ Reggie D. Adamson Senior Vice President-- November 24, 1999
______________________________________ Finance (Principal
Reggie D. Adamson Accounting Officer)
* Director November 24, 1999
______________________________________
Edwin B. Borden
* Director November 24, 1999
______________________________________
Dr. William H. Cunningham
* Director November 24, 1999
______________________________________
Robert G. Greer
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* Director November 24, 1999
______________________________________
George W. Henderson, III
* Director November 24, 1999
______________________________________
E. S. Melvin
* Director November 24, 1999
______________________________________
Kenneth C. Mlekush
* Director November 24, 1999
______________________________________
William Porter Payne
* Director November 24, 1999
______________________________________
Patrick S. Pittard
* Director November 24, 1999
______________________________________
Donald S. Russell, Jr.
/s/ Robert A. Reed
Robert A. Reed,
By:______________________________
Attorney-in-Fact
</TABLE>
II-7
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF JEFFERSON PILOT]
November 24, 1999
Jefferson-Pilot Corporation
100 North Greene Street
Greensboro, NC 27401
Re: Jefferson-Pilot Corporation -- Registration Statement on Form S-4
Ladies and Gentlemen:
I am Senior Vice President and Deputy General Counsel of Jefferson-Pilot
Corporation, a North Carolina corporation (the "Company"), and am familiar with
the Registration Statement on Form S-4 (the "Registration Statement") filed
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, relating to the merger (the "Merger") of The Guarantee Life
Companies Inc. ("Guarantee") with a wholly owned subsidiary of the Company, as
set forth in the proxy statement-prospectus contained in the Registration
Statement and in accordance with the Amended and Restated Agreement and Plan of
Merger (the "Merger Agreement"), dated as of September 19, 1999, as amended and
restated as of October 14, 1999, among the Company, Guarantee and LG Merger
Corp., a Delaware corporation, attached as Appendix A to the proxy statement-
prospectus.
In my capacity as such counsel, I have reviewed (i) the Registration
Statement, and (ii) the Merger Agreement. I also have reviewed such matters of
law and examined original, certified, conformed or photostatic copies of such
other documents, records, agreements and certificates as in my judgment are
necessary or appropriate to form the basis for the opinions hereinafter set
forth. In all such examinations, I have assumed the genuineness of signatures
on original documents and the conformity to such photographic copies, and as to
certificates of public officials, I have assumed the same to have been properly
given and to be accurate. As to matters of fact material to this opinion, I
have relied upon statements and representations of representatives of the
Company and of public officials and have assumed the same to have been properly
given and to be accurate.
This opinion is limited in all respects to the laws of the State of North
Carolina, and no opinion is expressed with respect to the laws of any other
jurisdiction or any effect which such laws may have on the opinions expressed
herein. This opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated herein.
Based upon and subject to the foregoing, I am of the opinion that the shares
of common stock, $1.25 par value per share of the Company to be issued in
connection with the Merger have been duly authorized and, when issued in
accordance with the terms of the Merger Agreement, will be validly issued,
fully paid and nonassessable.
This opinion is given as of the date hereof, and I assume no obligation to
advise you after the date hereof of facts or circumstances that come to my
attention or changes in law that occur which could affect the opinions
contained herein. This letter is being rendered solely for the benefit of the
Company in connection with the matters addressed herein.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the proxy statement-prospectus that is included in the Registration
Statement.
Very truly yours,
/s/ Richard T. Stange
By: _________________________________
Richard T. Stange
Senior Vice President &
Deputy General Counsel
<PAGE>
EXHIBIT 8.1
November 24, 1999
Jefferson-Pilot Corporation
100 North Greene Street
Greensboro, North Carolina 27401
The Guarantee Life Companies Inc.
Guarantee Center
8801 Indian Hills Drive
Omaha, Nebraska 68114
Re: Material United States Federal Income Tax Consequences of Proposed Merger
-------------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Jefferson Pilot Corporation ("Jefferson Pilot")
and LG Merger Corp. ("Merger Sub") in connection with (i) the preparation of the
registration statement on Form S-4 (the "Registration Statement") relating to
the proposed merger (the "Merger") of The Guarantee Life Companies Inc.
("Guarantee") with Merger Sub pursuant to the Amended and Restated Agreement and
Plan of Merger, dated as of September 19, 1999 and amended and restated October
14, 1999, among Jefferson Pilot, Merger Sub and Guarantee (the "Merger
Agreement"), and (ii) the transactions contemplated by the Merger Agreement. You
have requested our opinion, in our capacity as counsel to Jefferson Pilot and
Merger Sub, regarding the qualification of the Merger as a reorganization under
the Internal Revenue Code of 1986, as amended (the "Code"), and the material
federal income tax consequences of the Merger to holders of Guarantee common
stock.
Capitalized terms used herein without definition have the meanings specified
in the Merger Agreement.
<PAGE>
Jefferson-Pilot Corporation
The Guarantee Life Companies Inc.
November 24, 1999
Page 2
INFORMATION AND ASSUMPTIONS RELIED ON
-------------------------------------
In rendering the opinion expressed herein, we have examined such documents as
we have deemed appropriate, including the Merger Agreement and the Registration
Statement. In our examination of documents, we have assumed, with your consent,
that all documents submitted to us as photocopies or telecopies faithfully
reproduce the originals thereof, that such originals are authentic, that all
such documents have been or will be duly executed to the extent required, and
that all statements of fact set forth in such documents are accurate. In
addition, we have obtained such additional information and representations as we
have deemed relevant and necessary through consultation with various
representatives of Jefferson Pilot, Merger Sub and Guarantee, including written
certificates (the "Certificates") from officers of such corporations verifying
certain relevant facts that have been represented to us.
We have assumed, with your consent, that the statements contained in the
Certificates are true and correct on the date hereof and that any representation
made in any of the documents referred to herein "to the best of the knowledge
and belief" of any person (or with similar qualification) is true and correct
without such qualification. We have not attempted to verify such representations
independently.
OPINION
-------
Based upon the foregoing:
1. It is our opinion unless the Merger is consummated as an All Cash
Transaction, the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code.
2. We confirm our opinion with respect to the material United States
federal income tax consequences of the Merger to holders of Guarantee
common stock who hold their shares as "capital assets" within the
meaning of Section 1221 of the Code set forth in the Registration
Statement under the heading "MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES."
The opinion expressed herein is based upon existing statutory, regulatory and
judicial authority, any of which may be changed at any time with retroactive
effect. In addition, our opinion is based solely on the documents that we have
examined, the additional information that we have obtained, and the facts set
out in the Certificates that we have assumed, with your consent, to be true and
correct. Our opinion cannot be relied upon if any of the facts contained in such
documents or in any such additional information is, or later becomes, inaccurate
or if any of the facts set out in the Certificates is, or later becomes,
inaccurate.
<PAGE>
Jefferson-Pilot Corporation
The Guarantee Life Companies Inc.
November 24, 1999
Page 3
Our opinion is limited to the United States federal income tax matters
specifically covered thereby, and we have not been asked to address, nor have we
addressed, any other federal, state, local, or foreign income, estate, gift,
transfer, sales, use, or other tax consequences that may result from the Merger
or any other transaction (including any transaction undertaken in connection
with the Merger). We express no opinion regarding the tax consequences of the
Merger to shareholders who are subject to special tax rules (including without
limitation the tax treatment of persons who acquired Guarantee stock pursuant to
the exercise of employee stock options or otherwise as compensation).
In addition, we hereby consent to the filing of this opinion letter as an
Exhibit to the Registration Statement and to the reference to our firm in the
Registration Statement under the heading "MATERIAL UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES." In giving such consent, however, we do not thereby admit
that we are an "expert" within the meaning of the Securities Act of 1933, as
amended. Except as stated in this paragraph, this opinion letter may not be
furnished to or relied upon by any person or any entity for any purpose without
our prior written consent and may not be quoted in whole or in part or otherwise
referred to (other than in connection with the transactions contemplated by the
Merger Agreement).
Yours very truly,
/s/ King & Spalding
King & Spalding
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data" in the Registration Statement (Form S-4)
of Jefferson-Pilot Corporation and the related Proxy Statement-Prospectus for
the registration of shares of its common stock, and to the incorporation by
reference therein of our report dated February 8, 1999 with respect to the
consolidated financial statements and our report dated November 23, 1999 with
respect to the financial statement schedules of Jefferson-Pilot Corporation
included in its Annual Report (Form 10-K/A) for the year ended December 31, 1998
filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
-----------------------
Greensboro, North Carolina
November 24, 1999
<PAGE>
EXHIBIT 23.2
Accountant's Consent
The Board of Directors
The Guarantee Life Companies Inc.:
We consent to the use of our reports and schedules incorporated herein by
reference, and to the reference to our firm under the headings "Experts" and
"Independent Public Accountants."
/s/ KPMG LLP
Omaha, Nebraska
November 22, 1999
<PAGE>
EXHIBIT 23.5
- --------------------------------------------------------------------------------
Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004
Tel: 212-902-1000
Goldman
Sachs
PERSONAL AND CONFIDENTIAL
- -------------------------
- --------------------------------------------------------------------------------
November 22, 1999
Board of Directors
The Guarantee Life Companies Inc.
8801 Indian Hills Drive
Omaha, Nebraska 58114-4066
Re: Registration Statement of Jefferson-Pilot Corporation relating to shares of
common stock, par value $1.25, being registered in connection with the merger
with The Guarantee Life Companies Inc.
Gentlemen and Madame:
Reference is made to our opinion letter dated October 14, 1999 with respect to
the fairness from a financial point of view to the holders of the outstanding
shares of common stock, par value $.01 per share, of The Guarantee Life
Companies Inc. ("Guarantee"or the "Company") of the Merger Consideration (as
defined therein) to be received pursuant to the Agreement and Plan of Merger,
dated as of September 19, 1999, among Jefferson-Pilot Corporation ("Jefferson-
Pilot"), Jefferson-Pilot Acquisition Corp. ("Merger Sub"), a wholly-owned
subsidiary of Jefferson-Pilot, and Guarantee, as amended by Amendment No. 1 to
Agreement and Plan of Merger, dated as of October 14, 1999, by and among
Jefferson-Pilot, Merger Sub and Guarantee.
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of Guarantee in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary--Opinion of Financial Advisor," "The
Merger--Background of the Merger," "The Merger--Recommendation of Guarantee
Board of Directors and Guarantee's Reasons for the Merger," "The Merger--Opinion
of Goldman Sachs, Financial Advisor to Guarantee," and "The Merger Agreement--
Representations and Warranties" and to the inclusion of the foregoing opinion in
the Proxy Statement/Prospectus included in the above-mentioned Registration
Statement. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
<PAGE>
The Guarantee Life Companies Inc.
November 22, 1999
Page Two
Very truly yours,
/s/ Goldman, Sachs & Co.
- ------------------------------------
(GOLDMAN, SACHS & CO.)
<PAGE>
EXHIBIT 24.1(a)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ Edwin B. Borden
-------------------------------------
Date: November 24, 1999
1
<PAGE>
EXHIBIT 24.1(b)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ Dr. William H. Cunningham
-------------------------------------
Date: November 24, 1999
1
<PAGE>
EXHIBIT 24.1(c)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ Robert G. Greer
-------------------------------------
Date: November 24, 1999
1
<PAGE>
EXHIBIT 24.1(d)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ George W. Henderson, III
-------------------------------------
Date: November 24, 1999
1
<PAGE>
EXHIBIT 24.1(e)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ E. S. Melvin
-------------------------------------
Date: November 24, 1999
1
<PAGE>
EXHIBIT 24.1(f)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ Kenneth C. Mlekush
-------------------------------------
Date: November 24, 1999
<PAGE>
EXHIBIT 24.1(g)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ William Porter Payne
-------------------------------------
Date: November 24, 1999
<PAGE>
EXHIBIT 24.1(h)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ Patrick S. Pittard
-------------------------------------
Date: November 24, 1999
<PAGE>
EXHIBIT 24.1(i)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of Jefferson- Pilot Corporation, a North Carolina corporation, does
hereby constitute and appoint John D. Hopkins, Robert A. Reed and Mark E.
Konen, and each of them (with full power of substitution to appoint any Senior
Officer, Vice President, Secretary or Assistant Secretary of the Company) as
his true and lawful attorney and agent, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may deem
necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with
the registration under the said Securities Act of securities of said
corporation offered, sold or delivered in connection with the acquisition
of The Guarantee Life Companies Inc. ("JP Securities"), including,
specifically, but without limiting the generality of the foregoing, the
power and authority to sign for and on behalf of the undersigned the name
of the undersigned as officer and/or director of the said corporation to a
registration statement or to any pre-effective or post-effective amendment
thereto filed with the Securities and Exchange Commission in respect to
said JP Securities and to any instrument or document filed as part of, as
an exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said JP Securities for sale under the
securities or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said JP Securities
as contemplated by said registration statement, including specifically, but
without limiting the generality of the foregoing, the power and authority
to sign for and on behalf of the undersigned the name of the undersigned as
an officer and/or director of said corporation to any application,
statement, petition, prospectus, notice or other instrument or document, or
to any amendment thereto, or to any exhibit filed as a part thereto or in
connection therewith, which is required to be signed by the undersigned and
to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying
said JP Securities;
and the undersigned does hereby ratify and confirm as his own act and deed
all that said attorney and agent (or the substitute) shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents.
( S E A L ) /s/ Donald S. Russell, Jr.
-------------------------------------
Date: November 24, 1999
<PAGE>
EX 99.1
THE GUARANTEE LIFE COMPANIES INC.
Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
THE GUARANTEE LIFE COMPANIES INC.
PROXY CARD
The person(s) signing on the reverse side of this Proxy Card hereby
appoint(s) Robert D. Bates, William L. Bauhard, and Richard A. Spellman
proxies, with full power to act without the other and with full power of
substitution, and hereby authorizes them to represent and vote, as designated
on the reverse side, on the matters set forth on the reverse side, the number
of shares of Common Stock of The Guarantee Life Companies Inc. which the
person(s) signing on the reverse side would be entitled to vote and with all
powers said person(s) would possess if present at the Special Meeting of the
Shareholders of The Guarantee Life Companies Inc. to be held December 30, 1999,
or any adjournment thereof.
Please mark, sign and date the reverse side of this Proxy Card and return it
in the enclosed envelope addressed to ChaseMellon. If you sign, date and mail
your Proxy Card without indicating how you want to vote, your proxy will be
voted FOR the merger proposal.
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
You can vote in one of two ways:
1. Call toll-free 1-800-840-1208 using a touch-tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
or
2. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope addressed to ChaseMellon.
. Holders of a majority of shares of Guarantee common stock must be present
by proxy or in person in order for the Special Meeting to be held as scheduled
on December 30, 1999. Your vote is vital--your shares cannot be voted unless
you sign and return your proxy card or vote by telephone.
PLEASE VOTE
<PAGE>
- ------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE MERGER PROPOSAL Please X
- ------------------------------------------------------------------
mark
your
votes
as
indicated
in
this
example
(1)A proposal (the "Merger Proposal") to:
(a) adopt the Amended and Restated Agreement and Plan of Merger, dated as
of September 19, 1999, as amended and restated as of October 14, 1999
(the "Merger Agreement"), among Jefferson-Pilot Corporation, a North
Carolina corporation ("Jefferson Pilot"), LG Merger Corp., a Delaware
corporation and a wholly owned subsidiary of Jefferson Pilot, and The
Guarantee Life Companies Inc., a Delaware corporation ("Guarantee");
(b) approve the merger contemplated by the Merger Agreement; and
(c) authorize the acquisition of Guarantee's common stock by Jefferson
Pilot under the Nebraska Shareholders Protection Act.
The proxies are instructed to vote on the Merger Proposal as follows:
FOR AGAINST ABSTAIN
[_] [_] [_]
(2) Such other business as may properly be brought before the special meeting
or any adjournment of the special meeting.
* * * IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW * * *
-----
Signature(s) _____________________ Signature(s) _____________________ Date ____
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
. FOLD AND DETACH HERE AND READ THE REVERSE SIDE .
-----------------------------------------
HELP US SAVE MONEY
. VOTE BY TELEPHONE .
QUICK * * * EASY * * * IMMEDIATE
----------------------------------------
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: CALL TOLL-FREE USING A TOUCH-TONE TELEPHONE 1-800-840-1208
ANYTIME. THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the 11-digit Control Number located
in the lower right corner of this form
Proposal: To vote FOR the Merger Proposal, press [1], to vote AGAINST the
Merger Proposal, press [9], to ABSTAIN on the Merger Proposal, press [0].
When asked, you must confirm your vote by pressing 1.
If you vote by telephone, there is no need to mail back your proxy card.
THANK YOU FOR VOTING.
Call * * Toll-Free * * * On a Touch-Tone Telephone
1-800-840-1208 ANYTIME
There is NO CHARGE to you for this call. Control number________
<PAGE>
Exhibit 99.2
ELECTION FORM/LETTER OF TRANSMITTAL
TO ACCOMPANY CERTIFICATES REPRESENTING
COMMON STOCK, $.01 PAR VALUE PER SHARE, OF
THE GUARANTEE LIFE COMPANIES INC.
PLEASE READ AND FOLLOW THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Exchange Agent: First Union National Bank
If by Overnight Courier:
If by Mail: First Union National Bank
First Union National Bank 1525 West W. T. Harris Blvd. 3C3
1525 West W. T. Harris Blvd. 3C3 Attn: Corporate Trust Operations/Reorg
Attn: Corporate Trust Services
Operations/Reorg Services Charlotte, NC 28262
Charlotte, NC 28288-1153
We are sending you this Election Form/Letter of Transmittal because
Jefferson-Pilot Corporation has signed a merger agreement to acquire Guarantee
through a merger.
You hold shares of common stock of Guarantee. If we complete this merger,
each of your Guarantee shares will be exchanged for $32.00 cash, or Jefferson
Pilot common stock, or both. This form offers you a choice of electing to
receive cash or Jefferson Pilot common stock, or some of each, for your
Guarantee shares.
You should make an election on this form, but even if you do so, we may not
be able to give you what you elect. The merger could become an all cash
merger, and you would simply receive cash. And if we receive too many
elections for cash or stock, we may have to allocate cash and stock to you in
different proportions than your election calls for, since only 50% of what
Jefferson Pilot pays can be its common stock. For further explanation, see
page 2 of this form and "The Merger Agreement--Allocation of Stock
Consideration and Cash Consideration; Proration" in the enclosed proxy
statement-prospectus.
To make an election, simply indicate your choice in the box below, sign this
form where necessary and complete and sign the Substitute Form W-9 on
page 9. Also sign as otherwise directed in the instructions, if they
apply, and return the materials to the exchange agent at one of the
above addresses. Make sure to include your share certificate(s).
Note that you may use the enclosed return envelope that is
addressed to First Union. Do not return this form in the
enclosed envelope addressed to Chase Mellon, because
that envelope is for return of your proxy card.
Delivery to any address other than First Union's
will not constitute valid delivery.
<TABLE>
<CAPTION>
- --------------------------------------------------------- ---------------------------------------------------------
DESCRIPTION OF GUARANTEE COMMON STOCK ELECTION
ACCOUNT
- --------------------------------------------------------- ---------------------------------------------------------
Name(s) of Record Holder(s) Election for Certificate(s) Being Surrended ("Election")
As Shown on the Certificate(s) (Attach additional list if necessary.)
and Address(es) of such Record Holder(s)
- --------------------------------------------------------- ---------------------------------------------------------
<S> <C>
Stock Cash
Election Election
(number (number Non-Election
Certificate of of (number of
Number(s) shares) shares) shares)
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Total Shares
---------------------------------------------------------
YOU MUST ENCLOSE ALL OF YOUR CERTIFICATES FOR YOUR
GUARANTEE COMMON STOCK WITH THIS FORM UNLESS YOU ENCLOSE
A GUARANTEE OF DELIVERY
- --------------------------------------------------------- ---------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
You must make sure that First Union National Bank receives this form, properly
completed and signed, with your share certificate by 5 p.m. Eastern Time on
December 24, 1999, unless we extend this time and publicly announce a new
deadline.
If you don't properly submit this form, you will have made no election and you
will receive cash and/or stock under the allocation provisions of the merger
agreement.
- --------------------------------------------------------------------------------
<PAGE>
The details of the allocation provisions of the merger agreement and the
effect of your election are complicated. The proxy statement-prospectus sent
with this form discusses all of these details, and you should read it before
deciding what to elect.
If you have any questions about this form or the merger, please call
ChaseMellon Consulting Services, our Information Agent, at (888) 566-9472.
Under the Amended and Restated Agreement and Plan of Merger, dated as of
September 19, 1999, as amended and restated as of October 14, 1999 among
Jefferson Pilot, LG Merger Corp. and Guarantee, you hereby surrender to the
exchange agent the certificate(s) representing all of the common shares, $.01
par value per share, of Guarantee and associated preferred stock purchase
rights owned of record by you, and, if the merger is a stock election merger
where Jefferson Pilot is delivering its common stock ($1.25 par value per
share), you hereby elect, in the manner indicated in the table on page 1, to
have each share of Guarantee common stock so evidenced by that certificate(s)
converted into the right to receive one (and only one) of the following:
(a) stock consideration consisting of a number of shares of Jefferson Pilot
common stock equal to $32.00 divided by the average high and low sales
prices, regular way, per share of Jefferson Pilot common stock as
reported in The Wall Street Journal for each of the 10 consecutive New
York Stock Exchange trading days ending on (and including) the fourth
trading day before the completion of the merger for all of your
Guarantee common stock (a "Stock Election") or
(b) $32.00 in cash per share for all of your Guarantee common stock (a
"Cash Election"); or
(c) a combination of the stock consideration and cash consideration worth
in the aggregate approximately $32.00 based on the average price
calculated as described in paragraph (a) above (a "Mixed Election"); or
(d) cash consideration, stock consideration, or some of each, solely under
the allocation provisions of the merger agreement for all of your
Guarantee common stock (a "Non-Election").
If you do not mark at least one of the election boxes in the table above, or
mark Non-Election and any other box(es), or if the exchange agent does not
receive this form by the election deadline, you will be deemed to have made a
Non-Election.
You understand that despite making an election, you may receive more cash or
more Jefferson Pilot common stock than you elected, for either of two reasons.
1. We can only pay 50% of the total consideration paid in a stock
election merger in Jefferson Pilot common stock, so we may have to allocate
cash and stock under the provisions of the merger agreement as discussed in
the accompanying proxy statement-prospectus. If we receive too many cash
elections and you elect cash, or if we receive too many stock elections and
you elect stock, you may be allocated some cash and some Jefferson Pilot
common stock.
2. Under certain circumstances related to the price of Jefferson Pilot
common stock before closing, the merger will be an all cash merger. See the
next paragraph below. You and other holders of Guarantee common stock will
then receive only cash.
You understand that if the average price of Jefferson Pilot stock is (1)
greater than $75.00 per share, (2) less than $65.00 per share and Jefferson
Pilot decides to pay the merger consideration in cash, or (3) higher than the
New York Stock Exchange closing price of Jefferson Pilot common stock on the
trading day before the anticipated completion of the merger and, as a result,
counsel for Jefferson Pilot or Guarantee cannot deliver the tax opinion that is
required as a
2
<PAGE>
condition to a stock election merger, the election made in this form will be
void and of no effect, and you will receive solely cash for all of your
Guarantee common stock.
You understand that the election is subject to certain terms, conditions and
limitations set forth in the merger agreement and described in the proxy
statement-prospectus. We have attached a copy of the merger agreement to the
proxy statement-prospectus as Appendix A. These terms, conditions and
limitations include, but are not limited to, the fact that under the allocation
procedure described in the proxy statement-prospectus and set forth in the
merger agreement, you may be subject to a proration process in which you
receive a combination of cash and stock for each of your shares of Guarantee
common stock. All elections are subject to the allocation procedures in Section
2.3 of the merger agreement. We have described the allocation procedures under
the caption "The Merger Agreement-Allocation of Stock Consideration and Cash
Consideration; Proration" in the proxy statement-prospectus. We urge you to
read the merger agreement and the proxy statement-prospectus in their entirety
before completing this form.
You understand that the definitive terms pursuant to which the merger will be
effected in accordance with the merger agreement, including the amount and form
of consideration that you will receive, the effect of this form, and certain
conditions to the consummation of the merger, are summarized in the proxy
statement-prospectus and all of those definitive terms and conditions are set
forth in full in the merger agreement.
You also understand that different tax consequences may be associated with
each of the election options, and that any cash you receive is likely to be
fully taxable. You are aware that those tax consequences are summarized in
general terms in the proxy statement-prospectus section entitled "Material
United States Federal Income Tax Consequences."
You hereby make the election for all of your Guarantee common stock owned of
record and surrendered hereby, as shown in the box beside the respective
certificate number(s) on the first page of this document.
The exchange agent reserves the right to deem that you have made a Non-
Election if:
(a) You have not made an election in the box on the first page of this
form;
(b) You fail to follow the instructions on this form or otherwise fail to
properly make an election; or
(c) The exchange agent has not received a completed form by 5:00 p.m., New
York City time on December 24, 1999, unless we extend this deadline in
accordance with the terms of the merger agreement.
To receive the merger consideration, this Election Form/Letter of Transmittal
must be (i) completed and signed in the space in the box labeled
"Shareholder(s) Sign Here" on page 5 and on the Substitute Form W-9 on page 9
and (ii) mailed or delivered to the exchange agent at either of the addresses
set forth on the first page of this document. To properly make an election, you
must make sure the exchange agent receives the Election Form/Letter of
Transmittal with your share certificate(s) or guarantee of delivery and any
other required documents before the election deadline. Jefferson Pilot will
notify the exchange agent of any extension of the election deadline by oral
notice (promptly confirmed in writing) or written notice and will make a press
release or other public announcement of that change five business days before
the new election deadline if it is earlier than the election deadline set forth
above or two business days before the new election deadline if it is later than
the election deadline set forth above.
If you are acting in a representative or fiduciary capacity for a particular
beneficial owner, you hereby certify that this form covers all of the Guarantee
common stock owned of record by you in a representative or fiduciary capacity
for that particular beneficial owner.
You hereby acknowledge receipt of the proxy statement-prospectus and agree
that all elections, instructions and orders in this form are subject to the
terms and conditions of the merger agreement, the proxy statement-prospectus
and the instructions applicable to this form. You hereby represent and warrant
that you are, as of the date hereof, and will be, as of the completion of the
merger, the record holder of the Guarantee common stock represented hereby,
with good title to those common shares and full power and authority (i) to
sell, assign and transfer that common stock free and clear of all liens,
restrictions, charges and encumbrances, and not subject to any adverse claims
and (ii) to make the election indicated herein. You will, upon request, execute
any additional documents necessary or desirable to complete the surrender and
exchange of those common shares.
3
<PAGE>
You hereby irrevocably appoint the exchange agent, as your agent, to effect
the exchange pursuant to the merger agreement and the instructions hereto. You
hereby authorize and instruct the exchange agent to deliver the certificate(s)
for shares of Guarantee common stock covered by this form, and to receive on
your behalf, in exchange for such Guarantee common stock, any check and/or any
Jefferson Pilot common stock issuable to you. You understand that, if you are
entitled to receive Jefferson Pilot stock in the merger, your ownership of that
stock will be reflected in book-entry form and no certificate(s) for Jefferson
Pilot common stock will be issued to you, unless you specifically request.
Furthermore, you authorize the exchange agent to follow any election and to
rely upon all representations, certifications and instructions contained in
this form. All authority conferred or agreed to be conferred in this form is
binding upon your successors, assigns, heirs, executors, administrators and
legal representatives and is not affected by and survives, your death or
incapacity.
Record holders of Guarantee common stock who are nominees only may submit a
separate form for each beneficial holder for whom that record holder is a
nominee; provided, however, that at the request of Jefferson Pilot, that record
holder must certify to the satisfaction of Jefferson Pilot that the record
holder holds those shares as nominee for the beneficial owner(s) thereof. Each
beneficial owner for whom an form is submitted will be treated as a separate
holder of Guarantee common stock.
Completing and returning this form does not have the effect of voting on
adoption of the merger agreement and approval of the related transactions at
the special meeting of shareholders of Guarantee.
Note: The tax consequences to a holder of Guarantee common stock can vary
depending on the election you choose. Holders of Guarantee common stock
should consult their own tax advisors as to the federal, state and local
tax consequences of the merger to them. (See Instruction 3.)
4
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4 & 6)
To be completed ONLY if the check is to be made payable to and/or the
certificate(s) for Jefferson Pilot common stock are to be is-sued in the name of
the record holder(s) of the Guarantee common shares but are to be SENT to an
other person or to an address other than as set forth beneath the record
holder's signature on this Election Form/Letter of Transmittal.
Check or certificate(s) for Jefferson Pilot common stock to be delivered to:*
Name ___________________________________________________________________
(Please Print)
Address ________________________________________________________________
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------
*Please attach additional sheets if necessary.
SPECIAL PAYMENT INSTRUCTIONS (See
Instructions 4 & 6)
To be completed ONLY if the check is to be made PAYABLE TO and/or the
certificate(s) for Jefferson Pilot common stock is to be ISSUED in the name of
someone other than the record holder(s) of the Guar-antee common stock or the
NAME of the record holder(s) needs to be corrected or changed.
Issue: [ ] Certificate [ ] Check to:
Name ___________________________________________________________________
(Please Print)
Address ________________________________________________________________
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------
(Tax Identification Number or Social Security Number)
RECEIPT OF CERTIFICATES (See
Instruction 10)
Unless you check the box below, you will receive book-entry shares of
Jefferson Pilot common stock.
[ ] Check here if you would like certificate(s) for your Jefferson Pilot
stock.
SHAREHOLDER(S) SIGN HERE
(Also complete Substitute Form W-9 below)
Please sign exactly as your name(s) appear(s) on your certificate(s).
A check(s) or certificate(s) for Jefferson Pilot common stock will be issued
only in the name of the person(s) submitting this Election Form/Letter of
Transmittal and will be mailed to the address set forth beneath the person's
signature unless the Special Delivery or Special Payment Instructions to the
left are completed.
_____________________________________________________________________
(Signature(s) of Owner(s)--See Instruction 6)
Dated: ___________________________
_______________________________________________________________________
Social Security or other Tax Identification Number
If signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other persons(s) acting in a fiduciary or
representative capacity, please also provide the following information. See
Instruction 5.
Name:________________________________________________________________________
_____________________________________________________________________________
(Please Print)
_____________________________________________________________________________
(Capacity)
Address:_____________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number:
( ):____________________________________________________________
SIGNATURE GUARANTEE
(If required by Instruction 4 or 6)
Apply Signature Guarantee Medallion Below
Note: In the event that the check and/or certificate representing Jefferson
Pilot common stock is to be issued in exactly the name of the record
holder as inscribed on the surrendered certificate(s), the surrendered
certificate(s) need not be endorsed and no guarantee of the signature on
this Election Form/Letter of Transmittal is required.
5
<PAGE>
GUARANTEE OF DELIVERY Exchange Agent fax
(TO BE USED ONLY AS TO number: (704) 590-7628
CERTIFICATES NOT TRANSMITTED HEREWITH)
(to confirm receipt of fax,
(See Instruction 15) call 704-590-7408)
The Undersigned (check applicable box),
[_]a member of a registered national securities exchange,
[_]a member of NASD, Inc., or
[_]a commercial bank or trust company in the United States,
guarantees to deliver to the exchange agent either all of the certificate(s)
for Guarantee common stock to which this Election Form/Letter of Transmittal
relates, or such of those certificates as are identified below, duly endorsed
in blank or otherwise in form acceptable for transfer on the books of
Guarantee, no later than 5:00 P.M., New York City time, on the third NYSE
trading day after the Election Deadline.
<TABLE>
<CAPTION>
Certificate Shares Represented by
No. Each Certificate
----------- ---------------------
<S> <C>
----------- ------------
----------- ------------
----------- ------------
----------- ------------
</TABLE>
________________________________________________________________________________
(Firm -- Please Print)
________________________________________________________________________________
(Authorized Signature)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Area Code and Telephone Number)
________________________________________________________________________________
(Dated)
6
<PAGE>
INSTRUCTIONS
To make a proper election, you must complete this Election Form/Letter of
Transmittal and return it to the exchange agent so that it is received by 5:00
p.m. on the election deadline at the address listed on the front of this form.
You should include your share certificates or an appropriate guarantee of
delivery of your share certificates with this form. If you do not properly
complete and return this form before the election deadline, your Guarantee
common stock will be treated as shares subject to a non-election. This means
that the form of merger consideration you will receive will be determined by
the Non-Election allocation provisions of the merger agreement described in the
attached proxy statement-prospectus. To receive consideration, however, you
must first surrender the share certificates that you hold representing your
ownership of Guarantee shares along with this form.
1. Time in Which to Make an Election. To make a valid election, you must send
the exchange agent at either of the addresses on the front of this form, before
the election deadline, this form, properly completed and executed. Any
shareholder whose form is not so received will be deemed to have made a Non-
Election.
2. Change or Revocation of Election. Any holder of Guarantee common stock who
has made an election may revoke or change the election at any time before the
election deadline by properly signed written notice of revocation or by a
properly completed and executed, revised form, in either case received by the
exchange agent before the election deadline.
3. Nominees. Record holders of Guarantee common stock who are nominees only
may submit a separate form for each beneficial owner for whom the record holder
is a nominee. However, at the request of Jefferson Pilot the record holder must
certify to Jefferson Pilot's satisfaction that the record holder holds those
shares of Guarantee common stock as nominee for the beneficial owner(s)
thereof. Each beneficial owner for which an Election Form/Letter of Transmittal
is submitted will be treated as a separate holder of Guarantee common stock.
4. Guarantee of Signatures. No signature guarantee is required on this form
if it is signed by the record holder(s) of the Guarantee common stock
surrendered hereby, and the shares of Jefferson Pilot common stock and/or the
check, if applicable, are to be issued to that record holder(s) without any
correction or change in the name of the record holder(s). In all other cases,
all signatures on this Election Form/Letter of Transmittal must be guaranteed.
All signatures required to be guaranteed in accordance with these instructions
must be guaranteed by a bank, broker or other institution that is a member of
the Medallion Signature Guaranty Program. Public notaries cannot execute
acceptable guarantees of signatures.
5. Signatures on Election Form/Letter of Transmittal, Stock Powers and
Endorsements.
(a) If this form is signed by the record holder(s) of the Guarantee
common stock surrendered hereby without any alteration, variation,
correction or change in the name of the record holder(s), the signature(s)
must correspond exactly with the name(s) as written on the book-entry
record(s) without any change whatsoever. If the name of the record
holder(s) needs to be corrected or has changed (by marriage or otherwise),
see Instruction 6.
(b) If any Guarantee common stock surrendered hereby is held of record by
two or more joint holders, each of the joint holders must sign this form.
(c) If this form is signed by a person(s) other than the record holder(s)
of the share(s) listed, it must be accompanied by appropriate stock powers,
signed exactly as the name of the record holder(s) appears on the book-
entry account. Signatures on the stock powers must be guaranteed. See
Instruction 4.
(d) If this form or any stock power(s) is signed by a person(s) other
than the record holder(s) of the share certificate(s) listed and the
signer(s) is acting in the capacity of trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or any other person(s)
acting in a fiduciary or representative capacity, that person(s) must so
indicate when signing and must submit proper evidence satisfactory to the
exchange agent of authority to so act.
6. Special Payment and Delivery Instructions. Unless instructions to the
contrary are given in the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions," the book-entry advice for shares
of Jefferson Pilot common stock and/or the check to be distributed upon the
surrender of Guarantee common stock pursuant
7
<PAGE>
to this form will be issued in the name and mailed to the address of the record
holder(s) set forth in the box entitled "Description of Guarantee Common Stock
Account." If the check and book-entry shares are to be issued in the name of a
person(s) other than the record holder(s) or if the name of the record
holder(s) needs to be corrected or changed (by marriage or otherwise), the box
entitled "Special Payment Instructions" must be completed. If the check and/or
notice of book-entry shares are to be sent to a person(s) other than the record
holder(s) or to the record holder(s) at an address other than that shown in the
box entitled "Description of Guarantee Common Stock Account," the box entitled
"Special Delivery Instructions" must be completed. If the box entitled "Special
Payment Instructions" is completed, or the box entitled "Special Delivery
Instructions" is completed other than for the sole purpose of changing the
address of the record holder(s), the signature(s) of the person(s) signing this
form must be guaranteed. See Instruction 4.
7. Important Information Regarding 31% Backup Withholding. Under U.S. federal
income tax law, the holder of Guarantee common stock must generally report and
certify his or her social security or other taxpayer identification number and
further certify that the holder is not subject to backup withholding due to
notified underreporting. Failure to complete the Substitute Form W-9 above
could result in certain penalties as well as backup withholding of 31% of any
payments due to the holder. See the attached "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
8. Inadequate Space. If there is inadequate space to complete any box or to
sign this form, you must set forth the information or signatures required on
additional sheets substantially in the form of the corresponding portion of
this form and attach them to this form.
9. Method of Delivery. The method of delivery of all documents to the
exchange agent is at the option and risk of the holder of Guarantee common
stock. We have enclosed a return envelope, addressed to First Union. You should
hand deliver or mail this form to the exchange agent as soon as possible to
assure receipt by the election deadline. Delivery of the documents will be
deemed effective, and risk of loss and title with respect thereto will pass,
only when the exchange agent actually receives the materials.
10. Payment Will Be Made by a Single Check or Certificate. The exchange agent
will issue you a single check and/or a single book-entry advice representing
Jefferson Pilot common stock. If you would prefer to receive a share
certificate, please check the box on page 5. If you request a share
certificate, normally the exchange agent will issue a single certificate
representing Jefferson Pilot common stock. However, if for tax purposes or
otherwise you wish to have the certificates issued in particular denominations,
please provide explicit written instructions to the exchange agent.
11. Non-Consummation of Merger. Consummation of the merger is subject to the
required approval of the shareholders of Guarantee and to the satisfaction of
certain other conditions. The exchange agent will not make any payments related
to any surrender of Guarantee common stock before the merger, will not make any
payments to shareholders if the merger agreement is terminated. If the merger
agreement is terminated, all elections will be void.
12. Voting Rights and Dividends. Holders of Guarantee common stock will
continue to have the right to vote and to receive all dividends paid on all
Guarantee common stock covered by this form until the merger becomes effective.
13. Construction. All elections will be considered in accordance with the
terms and conditions of the merger agreement.
Jefferson Pilot, in its sole discretion, will resolve all questions with
respect to this form (including, without limitation, questions relating to the
timeliness, effectiveness or revocation of any election) and such resolution
will be final and binding.
With the consent of Jefferson Pilot, the exchange agent may (but is not
required to) waive any immaterial defects or variances in the manner in which
this form has been completed and submitted so long as the intent of the holder
of Guarantee common stock submitting this form is reasonably clear.
14. Miscellaneous. We will not issue any fractional shares of Jefferson Pilot
common stock upon the surrender for exchange of Guarantee common stock. In lieu
of fractional shares, you will receive a check for an amount of cash determined
under a formula set forth in the merger agreement.
8
<PAGE>
Completing and returning this form does not cast a vote on the merger
proposal at the special meeting of shareholders of Guarantee. You must
separately cast your proxy vote if you wish to vote at the special meeting.
15. Questions and Requests for Information. You should direct your questions
and requests for information or assistance relating to this form to the
information agent (telephone: 888-566-9472). You may obtain additional copies
of the proxy statement-prospectus and this form from the exchange agent at
either of its addresses set forth on the front of this form or by calling the
information agent at the telephone number in the preceding sentence.
Note: Failure to complete and return this form may result in backup U.S.
federal income tax withholding of 31% of any payments made to the
undersigned pursuant to the Merger Agreement. Please review the attached
"Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional details.
PAYOR: First Union National Bank
- --------------------------------------------------------------------------------
Name: _______________________________________________________________________
(If joint names, list first and circle the name of the person or entity whose
number you enter in Part I below.)
Address: ___________________________________________________________________
City, State and ZIP Code: __________________________________________________
List account number(s) here (optional): ____________________________________
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR
TAXPAYER IDENTIFICATION ----------------------
SUBSTITUTE NUMBER OR TIN IN THE BOX AT Social Security Number
Form W-9 RIGHT AND CERTIFY BY OR
SIGNING AND DATING BELOW. ----------------------
Department of Employer Identification
the Treasury Number
Internal (1) you have been notified by the Internal Revenue
Revenue Service that you are subject to backup
Service withholding as a result of failure to report all
interest or dividends or,
--------------------------------------------------------
PART 2--Check the box if you are subject to backup
withholding because
(2) the Internal Revenue Service has not notified you
that you are no longer subject to backup
withholding. [_]
--------------------------------------------------------
Certification--Under the penalties of
Payor's Request for perjury, I certify that the informa- PART 3--
Taxpayer tion provided on this form is true,
Identification correct and complete.
Number (TIN) and
Certification
Check the box
if you are
awaiting a TIN.
[_]
Signature ______________ Date _______
9
<PAGE>
[CHECK WITH TRANSFER AGENT TO GET THE MOST CURRENT VERSION OF THESE
INSTRUCTIONS.]
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give to the payor.
- ------------------------------------------------
<TABLE>
<CAPTION>
Give The
SOCIAL SECURITY
For This Type of Account: Number of--
- ------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of other
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, the account
if joint funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Give The EMPLOYER
iDENTIFICATION
For This Type of Account: Number of--
- ------------------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments including
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust. A common trust fund operated by a bank
under Section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount renewed is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payor's trade or business and you
have not provided your correct taxpayer identification number to the
payor.
. Payments of tax-exempt interest (including exempt-interest dividends)
under section 852 of the Code.
. Payments described in section 6049(b)(5) of the Code to non-resident
aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations. Payments made to a
nominee.
Exempt payees described above must still complete the substitute Form W-9
enclosed herewith to avoid possible erroneous backup withholding. File
substitute Form W-9 with the Payor, remembering to certify your Taxpayer
Identification Number on Part III of the form, write "exempt" on the face of
the form, and sign and date the form and return it to the Payor. If you are a
Non-Resident Alien or a Foreign Entity not subject to backup withholding give
the Payor a completed Form W-8 Certificate of Foreign Status.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
Privacy Act Notice.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payors must be given the numbers whether or not recipients are required to
file a tax return. Payors must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payor. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payor, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect To Withholding--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
For additional information contact your tax consultant or the Internal Revenue
Service.
<PAGE>
Exhibit 99.3
ELECTION FORM/LETTER OF TRANSMITTAL
FOR COMMON STOCK, $.01 PAR VALUE PER SHARE,
OF THE GUARANTEE LIFE COMPANIES INC.
HELD IN BOOK-ENTRY WITH GUARANTEE'S TRANSFER AGENT
PLEASE READ AND FOLLOW THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Exchange Agent: First Union National Bank
If by Mail: If by Overnight Courier:
First Union National Bank First Union National Bank
1525 West W. T. Harris Blvd. 3C3 1525 West W. T. Harris Blvd. 3C3
Attn: Corporate Trust Attn: Corporate Trust
Operations/Reorg Services Operations/Reorg Services
Charlotte, NC 28288-1153 Charlotte, NC 28262
We are sending you this Election Form/Letter of Transmittal because
Jefferson-Pilot Corporation has signed a merger agreement to acquire Guarantee
through a merger.
You received shares of common stock of Guarantee when it demutualized in
late 1995. Your shares were issued and are held in book-entry form with
ChaseMellon Consulting Services, L.L.C., Guarantee's transfer agent.
If we complete this merger, each of your Guarantee shares will be exchanged
for $32.00 cash, or Jefferson Pilot common stock, or both. This form offers
you a choice of electing to receive cash or Jefferson Pilot common stock, or
some of each, for your Guarantee shares.
You should make an election on this form, but even if you do so, we may not
be able to give you what you elect. The merger could become an all cash
merger, and you would simply receive cash. And if we receive too many
elections for cash or stock, we may have to allocate cash and stock to you in
different proportions than your election calls for, since only 50% of what
Jefferson Pilot pays can be its common stock. For further explanation, see
page 2 of this form and "The Merger Agreement--Allocation of Stock
Consideration and Cash Consideration; Proration" in the enclosed proxy
statement-prospectus.
To make an election, simply indicate your choice in the box below, sign this
form in the right hand box on page 5, complete and sign the Substitute
Form W-9 on page 8. Also sign as otherwise directed in the instructions,
if they apply, and return this form to the exchange agent at one of
the above addresses. Note that you may use the enclosed return
envelope that is addressed to First Union. Do not return this
form in the enclosed envelope addressed to ChaseMellon,
because that envelope is for return of your proxy card.
Delivery to any address other than First Union's will
not constitute valid delivery.
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ----------------------------------------------------------------
DESCRIPTION OF GUARANTEE COMMON STOCK ELECTION
ACCOUNT ----------------------------------------------------------------
- ---------------------------------------------------------- Election for Shares Being Surrendered ("Election")
Name(s) of Record Holder(s) (The paragraphs below describe the elections.)
As Shown on the transfer agent book-entry records ----------------------------------------------------------------
and Address(es) of such Record Holder(s) Election for Stock Election for Cash Non-Election
(number of shares) (number of shares) (number of shares)
- ---------------------------------------------------------- ----------------------------------------------------------------
<S> <C>
- ---------------------------------------------------------- ----------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
This form, properly completed and signed, must be received by First Union National Bank, the exchange
agent, by 5 p.m. Eastern Time on December 24, 1999, unless we extend this time and publicly announce a new
deadline.
If you don't properly submit this form, you will have made no election and you will receive cash and/or stock
under the allocation provisions of the merger agreement.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The details of the allocation provisions of the merger agreement and the
effect of your election are complicated. The proxy statement-prospectus sent
with this form discusses all of these details, and you should read it before
deciding what to elect.
If you have any questions about this form or the merger, please call
ChaseMellon Consulting Services, our Information Agent, at (888) 566-9472.
Under the Amended and Restated Agreement and Plan of Merger, dated as of
September 19, 1999, as amended and restated as of October 14, 1999 among
Jefferson-Pilot Corporation ("Jefferson Pilot"), LG Merger Corp. and The
Guarantee Life Companies Inc. ("Guarantee"), you hereby surrender to the
exchange agent all of the common shares, $.01 par value per share, of Guarantee
and associated preferred stock purchase rights owned of record by you in
uncertificated form through book-entry with Guarantee's transfer agent, and, if
the merger is a stock election merger where Jefferson Pilot is delivering its
common stock ($1.25 par value per share), you hereby elect, in the manner
indicated in the table on page 1, to have each share of Guarantee common stock
so owned converted into the right to receive one (and only one) of the
following:
(a) stock consideration consisting of a number of shares of Jefferson
Pilot common stock equal to (1) $32.00 divided by the average high and low
sales prices, regular way, per share of Jefferson Pilot common stock as
reported in The Wall Street Journal for each of the 10 consecutive New York
Stock Exchange trading days ending on (and including) the fourth trading
day before the completion of the merger for all of your Guarantee common
stock; (a "Stock Election") or
(b) $32.00 in cash per share for all of your Guarantee common stock (a
"Cash Election"); or
(c) a combination of the stock consideration and cash consideration worth
in the aggregate approximately $32.00 based on the average price calculated
as described in paragraph (a) above (a "Mixed Election"); or
(d) cash consideration, stock consideration, or some of each, solely
under the allocation provisions of the merger agreement for all of your
Guarantee common stock (a "Non-Election").
If you do not mark at least one of the election boxes in the table above, or
mark Non-Election and any other box(es), or the exchange agent does not receive
this form by the election deadline, you will be deemed to have made a Non-
Election.
You understand that despite making an election, you may receive more cash or
more Jefferson Pilot common stock than you elected, for either of two reasons.
1. We can only pay 50% of the total consideration paid in a stock election
merger in Jefferson Pilot common stock, so we may have to allocate cash and
stock under the provisions of the merger agreement as discussed in the
accompanying proxy statement-prospectus. If we receive too many cash elections
and you elect cash, or if we receive too many stock elections and you elect
stock, you may be allocated some cash and some Jefferson Pilot common stock.
2. Under certain circumstances related to the price of Jefferson Pilot common
stock before closing, the merger will be an all cash merger. See the next
paragraph below. You and other holders of Guarantee common stock will then
receive only cash.
You understand that if the average price of Jefferson Pilot stock (1) greater
than $75.00 per share, (2) less than $65.00 per share and Jefferson Pilot
decides to pay the merger consideration in cash, or (3) higher than the New
York Stock Exchange closing price of Jefferson Pilot common stock on the
trading day before the anticipated completion of the merger and, as a result,
counsel for Jefferson Pilot or Guarantee cannot deliver the tax opinion that is
required as a condition to a stock election merger, the election made in this
form will be void and of no effect, and you will receive solely cash for all of
your Guarantee common stock.
You understand that the election is subject to certain terms, conditions and
limitations set forth in the merger agreement and described in the proxy
statement-prospectus. We have attached a copy of the merger agreement to the
proxy statement-prospectus as Appendix A. These terms, conditions and
limitations include, but are not limited to, the fact that under the allocation
procedure described in the proxy statement-prospectus and set forth in the
merger agreement, you may
2
<PAGE>
be subject to a proration process in which you receive a combination of cash
and stock for each of your shares of Guarantee common stock. All elections are
subject to the allocation procedures in Section 2.3 of the merger agreement. We
have described the allocation procedures under the caption "The Merger
Agreement--Allocation of Stock Consideration and Cash Consideration; Proration"
in the proxy statement-prospectus. We urge you to read the merger agreement and
the proxy statement-prospectus in their entirety before completing this form.
You understand that the definitive terms pursuant to which the merger will be
effected in accordance with the merger agreement, including the amount and form
of consideration that you will receive, the effect of this form, and certain
conditions to the consummation of the merger, are summarized in the proxy
statement-prospectus and all of those definitive terms and conditions are set
forth in full in the merger agreement.
You also understand that different tax consequences may be associated with
each of the election options, and that any cash you receive is likely to be
fully taxable. You are aware that those tax consequences are summarized in
general terms in the proxy statement-prospectus section entitled "Material
United States Federal Income Tax Consequences."
You hereby make the election for all of your Guarantee common stock owned of
record and surrendered hereby, as shown in the box on the first page of this
document.
The exchange agent reserves the right to deem that you have made a Non-
Election if:
(a) You have not made an election in the box on the first page of this
form;
(b) You fail to follow the instructions on this form or otherwise fail to
properly make an election; or
(c) The exchange agent has not received a completed form by 5:00 p.m.,
New York City time on December 24 1999, unless we extend this deadline in
accordance with the terms of the merger agreement.
To receive the merger consideration, this Election Form/Letter of Transmittal
must be (i) completed and signed in the space in the box labeled
"Shareholder(s) Sign Here" on page 5 and on the Substitute Form W-9 on page 8
and (ii) mailed or delivered to the exchange agent at either of the addresses
set forth on the first page of this document. To properly make an election, you
must make sure the exchange agent receives the Election Form/Letter of
Transmittal and any other required documents before the election deadline.
Jefferson Pilot will notify the exchange agent of any extension of the election
deadline by oral notice (promptly confirmed in writing) or written notice and
will make a press release or other public announcement of that change five
business days before the new election deadline if it is earlier than the
election deadline set forth above or two business days before the new election
deadline if it is later than the election deadline set forth above.
If you are acting in a representative or fiduciary capacity for a particular
beneficial owner, you hereby certify that this form covers all of the Guarantee
common stock owned of record by you in a representative or fiduciary capacity
for that particular beneficial owner.
You hereby acknowledge receipt of the proxy statement-prospectus and agree
that all elections, instructions and orders in this form are subject to the
terms and conditions of the merger agreement, the proxy statement-prospectus
and the instructions applicable to this form. You hereby represent and warrant
that you are, as of the date hereof, and will be, as of the completion of the
merger, the record holder of the Guarantee common stock represented hereby,
with good title to those common shares and full power and authority (i) to
sell, assign and transfer that common stock free and clear of all liens,
restrictions, charges and encumbrances, and not subject to any adverse claims
and (ii) to make the election indicated herein. You will, upon request, execute
any additional documents necessary or desirable to complete the surrender and
exchange of those common shares.
You hereby irrevocably appoint the exchange agent, as your agent, to effect
the exchange pursuant to the merger agreement and the instructions hereto. You
hereby authorize and instruct the exchange agent to deliver the uncertificated
shares of Guarantee common stock in book-entry form covered hereby, and to
receive on your behalf, in exchange for such Guarantee common stock, any check
and/or any Jefferson Pilot common stock issuable to you. Furthermore, you
authorize
3
<PAGE>
the exchange agent to follow any election and to rely upon all representations,
certifications and instructions contained in this form. All authority conferred
or agreed to be conferred in this form is binding upon your successors,
assigns, heirs, executors, administrators and legal representatives and is not
affected by, and survives, your death or incapacity.
Record holders of Guarantee common stock who are nominees only may submit a
separate form for each beneficial holder for whom that record holder is a
nominee; provided, however, that at the request of Jefferson Pilot, that record
holder must certify to the satisfaction of Jefferson Pilot that the record
holder holds those shares as nominee for the beneficial owner(s) thereof. Each
beneficial owner for whom a form is submitted will be treated as a separate
holder of Guarantee common stock.
Completing and returning this form does not have the effect of voting on
adoption of the merger agreement and approval of the related transactions at
the special meeting of shareholders of Guarantee.
Note: The tax consequences to a holder of Guarantee common stock can vary
depending on the election you choose. Holders of Guarantee common stock
should consult their own tax advisors as to the federal, state and local
tax consequences of the merger to them. (See Instruction 3.)
4
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS SHAREHOLDER(S) SIGN HERE (Also
(See Instructions 4 & 6) complete Substitute Form W-9
below)
To be completed ONLY if the
check and/or the book-entry ad- Please sign exactly as your
vice for shares of Jefferson Pi- name(s) appear(s) on your book-
lot common stock are to be issued entry account with Guarantee. If
in the name of the record hold- this is a joint election, each
er(s) of the Guarantee common person covered by this Election
stock but are to be SENT to an- Form/Letter of Transmittal must
other person or to an address sign personally.
other than as set forth beneath
the record holder's signature on
this Election Form/Letter of
Transmittal.
A check(s) and/or book-entry ad-
vice for shares of Jefferson Pi-
lot common stock will be issued
only in the name of the person(s)
submitting this Election
Form/Letter of Transmittal and
will be mailed to the address set
forth beneath the person's signa-
ture unless the Special Delivery
or Special Payment Instructions
to the left are completed.
Check or book-entry advice for
shares of Jefferson Pilot common
stock to be delivered to:*
Name: ____________________________
(Please Print)
Address: _________________________
__________________________________
__________________________________ __________________________________
(Signature(s) of Owners--See
__________________________________ Instruction 6)
__________________________________ Dated:____________________________
(Include Zip Code)
__________________________________
*Please attach additional sheets Social Security or other Tax
if necessary. Identification Number
- -------------------------------------- If signature is by a person(s)
other than the record holder(s)
and in the capacity of trustee,
executor, administrator, guard-
ian, attorney-in-fact, officer of
a corporation or any other
persons(s) acting in a fiduciary
or representative capacity,
please provide the following in-
formation. See Instruction 5.
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4 & 6)
To be completed ONLY if the
check is to be made payable to
and/or the book-entry advice for
shares of Jefferson Pilot common
stock is to be ISSUED in the name
of someone other than the record
holder(s) of the Guarantee common
stock or the NAME of the record
holder(s) need to be corrected or
changed.
Name: ____________________________
(Please Print)
Capacity: ________________________
Issue[_] Shares to: Address: _________________________
[_] Check to:
__________________________________
Name: ____________________________
(Please Print) __________________________________
(Include Zip Code)
Address: _________________________
Area Code and Telephone Number:
__________________________________
( ) ____________________________
__________________________________
SIGNATURE GUARANTEE
__________________________________ (If required by Instruction 4 or
(Include Zip Code) 6)
Apply Signature Guarantee
__________________________________ Medallion Below
(Tax Identification Number or
Social Security Number)
5
<PAGE>
INSTRUCTIONS
To make a proper election, you must complete this Election Form/Letter of
Transmittal and return it to the exchange agent so that it is received by 5:00
p.m. on the election deadline at the address listed on the front of this form.
If you do not properly complete and return this form before the election
deadline, your Guarantee common stock will be treated as shares subject to a
Non-Election. This means that the form of merger consideration you will receive
will be determined by the non-election allocation provisions of the merger
agreement described in the attached proxy statement-prospectus.
1. Time in Which to Make an Election. To make a valid election, you must send
the exchange agent at either of the addresses on the front of this form, before
the election deadline, this form, properly completed and executed. Any
shareholder whose form is not so received will be deemed to have made a Non-
Election.
2. Change or Revocation of Election. Any holder of Guarantee common stock who
has made an election may revoke or change the election at any time before the
election deadline by properly signed written notice of revocation or by a
properly completed and executed, revised form, in either case received by the
exchange agent before the election deadline.
3. Nominees. Record holders of Guarantee common stock who are nominees only
may submit a separate form for each beneficial owner for whom the record holder
is a nominee. However, at the request of Jefferson Pilot the record holder must
certify to Jefferson Pilot's satisfaction that the record holder holds those
shares of Guarantee common stock as nominee for the beneficial owner(s)
thereof. Each beneficial owner for which an Election Form/Letter of Transmittal
is submitted will be treated as a separate holder of Guarantee common stock.
4. Guarantee of Signatures. No signature guarantee is required on this form
if it is signed by the record holder(s) of the Guarantee common stock
surrendered hereby, and the shares of Jefferson Pilot common stock and/or the
check, if applicable, are to be issued to that record holder(s) without any
correction or change in the name of the record holder(s). In all other cases,
all signatures on this Election Form/Letter of Transmittal must be guaranteed.
All signatures required to be guaranteed in accordance with these instructions
must be guaranteed by a bank, broker or other institution that is a member of
the Medallion Signature Guaranty Program. Public notaries cannot execute
acceptable guarantees of signatures.
5. Signatures on Election Form/Letter of Transmittal, Stock Powers and
Endorsements.
(a) If this form is signed by the record holder(s) of the Guarantee
common stock surrendered hereby without any alteration, variation,
correction or change in the name of the record holder(s), the signature(s)
must correspond exactly with the name(s) as written on the book-entry
record(s) without any change whatsoever. If the name of the record
holder(s) needs to be corrected or has changed (by marriage or otherwise),
see Instruction 6.
(b) If any Guarantee common stock surrendered hereby is held of record by
two or more joint holders, each of the joint holders must sign this form.
(c) If this form is signed by a person(s) other than the record holder(s)
of the share(s) listed, it must be accompanied by appropriate stock powers,
signed exactly as the name of the record holder(s) appears on the book-
entry account. Signatures on the stock powers must be guaranteed. See
Instruction 4.
(d) If this form or any stock power(s) is signed by a person(s) other
than the record holder(s) of the share certificate(s) listed and the
signer(s) is acting in the capacity of trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or any other person(s)
acting in a fiduciary or representative capacity, that person(s) must so
indicate when signing and must submit proper evidence satisfactory to the
exchange agent of authority to so act.
6. Special Payment and Delivery Instructions. Unless instructions to the
contrary are given in the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions," the book-entry advice for shares
of Jefferson Pilot common stock and/or the check to be distributed upon the
surrender of Guarantee common stock pursuant to this form will be issued in the
name and mailed to the address of the record holder(s) set forth in the box
entitled "Description of Guarantee Common Stock Account." If the check and
book-entry shares are to be issued in the name of a person(s) other than the
record holder(s) or if the name of the record holder(s) needs to be corrected
or changed (by
6
<PAGE>
marriage or otherwise), the box entitled "Special Payment Instructions" must be
completed. If the check and/or notice of book-entry shares are to be sent to a
person(s) other than the record holder(s) or to the record holder(s) at an
address other than that shown in the box entitled "Description of Guarantee
Common Stock Account," the box entitled "Special Delivery Instructions" must be
completed. If the box entitled "Special Payment Instructions" is completed, or
the box entitled "Special Delivery Instructions" is completed other than for
the sole purpose of changing the address of the record holder(s), the
signature(s) of the person(s) signing this form must be guaranteed. See
Instruction 4.
7. Important Information Regarding 31% Backup Withholding. Under U.S. federal
income tax law, the holder of Guarantee common stock must generally report and
certify his or her social security or other taxpayer identification number and
further certify that the holder is not subject to backup withholding due to
notified underreporting. Failure to complete the Substitute Form W-9 above
could result in certain penalties as well as backup withholding of 31% of any
payments due to the holder. See the attached "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
8. Inadequate Space. If there is inadequate space to complete any box or to
sign this form, you must set forth the information or signatures required on
additional sheets substantially in the form of the corresponding portion of
this form and attach them to this form.
9. Method of Delivery. The method of delivery of all documents to the
exchange agent is at the option and risk of the holder of Guarantee common
stock. We have enclosed a return envelope, addressed to First Union who is the
exchange agent. You should hand deliver or mail this form to the exchange agent
as soon as possible to assure receipt by the election deadline. Delivery of the
documents will be deemed effective, and risk of loss and title with respect
thereto will pass, only when the exchange agent actually receives the
materials.
10. Payment Will Be Made by a Single Check and/or Book-Entry Account. The
exchange agent will issue to you a single check and/or a single book-entry
advice representing Jefferson Pilot common stock
11. Non-Consummation of Merger. Consummation of the merger is subject to the
required approval of the shareholders of Guarantee and to the satisfaction of
certain other conditions. The exchange agent will not make any payments related
to any surrender of Guarantee common stock before the merger and will not make
any payments to shareholders if the merger agreement is terminated. If the
merger agreement is terminated, all elections will be void.
12. Voting Rights and Dividends. Holders of Guarantee common stock will
continue to have the right to vote and to receive all dividends paid on all
Guarantee common stock covered by this form until the merger becomes effective.
13. Construction. All elections will be considered in accordance with the
terms and conditions of the merger agreement.
Jefferson Pilot, in its sole discretion, will resolve all questions with
respect to this form (including, without limitation, questions relating to the
timeliness, effectiveness or revocation of any election) and such resolution
will be final and binding.
With the consent of Jefferson Pilot, the exchange agent may (but is not
required to) waive any immaterial defects or variances in the manner in which
this form has been completed and submitted so long as the intent of the holder
of Guarantee common stock submitting this form is reasonably clear.
14. Miscellaneous. We will not issue any fractional shares of Jefferson Pilot
common stock upon the surrender for exchange of Guarantee common stock. In lieu
of fractional shares, you will receive a check for an amount of cash determined
under a formula set forth in the merger agreement.
Completing and returning this form does not cast a vote on the merger
proposal at the special meeting of shareholders of Guarantee. You must
separately cast your proxy vote if you wish to vote at the special meeting.
7
<PAGE>
15. Questions and Requests for Information. You should direct your questions
and requests for information or assistance relating to this form to the
information agent (telephone: 888-566-9472). You may obtain additional copies
of the proxy statement-prospectus and this form from the exchange agent at
either of its addresses set forth on the front of this form or by calling the
information agent at the telephone number in the preceding sentence.
Note: If the check and/or shares of Jefferson Pilot common stock are to be
issued in exactly the name of the record holder as inscribed on the transfer
agent's book-entry records for Guarantee common stock, no guarantee of the
signature on this election form is required.
Note: Failure to complete and return this form may result in backup U.S.
federal income tax withholding of 31% on any payments made to the undersigned
pursuant to the merger agreement. Please review the attached "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional details.
PAYOR: First Union National Bank
- --------------------------------------------------------------------------------
Name: ________________________________________________________________________
(If joint names, list first and circle the name of the person or entity whose
number you enter in Part I below.)
Address: _____________________________________________________________________
City, State and ZIP Code: ____________________________________________________
List account number(s) here (optional): ______________________________________
- --------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR
TAXPAYER IDENTIFICATION ----------------------
SUBSTITUTE NUMBER OR TIN IN THE BOX AT Social Security Number
Form W-9 RIGHT AND CERTIFY BY OR
SIGNING AND DATING BELOW. ----------------------
Department of Employer Identification
the Treasury Number
Internal (1) you have been notified by the Internal Revenue
Revenue Service that you are subject to backup
Service withholding as a result of failure to report all
interest or dividends or,
--------------------------------------------------------
Part 2--Check the box if you are subject to backup
withholding because
(2) the Internal Revenue Service has not notified you
that you are no longer subject to backup
withholding. [_]
--------------------------------------------------------
Certification--Under the penalties of Part 3
Payor's Request for perjury, I certify that the informa- Check the box
Taxpayer tion provided on this form is true, if you are
Identification correct and complete. awaiting a
Number (TIN) and TIN. [_]
Certification
Signature ______________ Date _______
8
<PAGE>
[CHECK WITH TRANSFER AGENT TO GET THE MOST CURRENT VERSION OF THESE
INSTRUCTIONS.]
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payor.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give to the payor.
- ------------------------------------------------
<TABLE>
<CAPTION>
Give The
Social Security
For This Type of Account: Number of--
- ------------------------------------------------
<S> <C>
1. An individual's The individual
account.
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of other
individuals (1)
3. Husband and wife (joint The actual owner of
account) the account the account
or, if joint funds,
either person (1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor (1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person
for a designated ward, (3)
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee
savings trust account (1)
(grantor is also
trustee)
b. So-called trust The actual owner (1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner (4)
account
- ------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Give The
Social Security
For This Type of Account: Number of--
- ------------------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title) (5)
10. Corporate account The organization
11. Religious, charitable, The corporation
or educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
9
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust. A common trust fund operated by a bank
under Section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount renewed is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payor's trade or business and you
have not provided your correct taxpayer identification number to the
payor.
. Payments of tax-exempt interest (including exempt-interest dividends)
under section 852 of the Code.
. Payments described in section 6049(b)(5) of the Code to non-resident
aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations. Payments made to a
nominee.
Exempt payees described above must still complete the substitute Form W-9
enclosed herewith to avoid possible erroneous backup withholding. File
substitute Form W-9 with the Payor, remembering to certify your Taxpayer
Identification Number on Part III of the form, write "exempt" on the face of
the form, and sign and date the form and return it to the Payor. If you are a
Non-Resident Alien or a Foreign Entity not subject to backup withholding give
the Payor a completed Form W-8 Certificate of Foreign Status.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payors must be given the numbers whether or not recipients are required to
file a tax return. Payors must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payor, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
For additional information contact your tax consultant or the Internal Revenue
Service.
10
