<PAGE>
As filed with the Securities and Exchange Commission on June 17, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
AEGON N.V.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
The Netherlands 6311 None
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
Mariahoeveplein 50 2591 TV The Hague, The Netherlands (31-70) 344-8344
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Craig D. Vermie AEGON USA, Inc. 4333 Edgewood Road NE Cedar Rapids, Iowa 52499
(319) 398-8500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Richard D. Truesdell, Jr. Daniel A. Neff
Davis Polk & Wardwell Wachtell, Lipton, Rosen & Katz
450 Lexington Avenue 51 West 52nd Street
New York, New York 10017 New York, New York 10019
212-450-4000 212-403-1000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective and the
consummation of the merger described herein.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Class of Amount Maximum Aggregate Amount of
Securities to be to be Offering Price Offering Registration
Registered(1) Registered Per Unit Price(2) Fee
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, par value
fifty cents Dutch
Guilder per share...... (3) Not applicable $6,391,381,292 $1,776,805
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) This Registration Statement relates to the AEGON N.V. common shares, par
value fifty cents Dutch Guilder per share, which may be issued in
connection with the merger described herein.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(f)(1) under the Securities Act of
1933.
(3) Such indeterminate number of AEGON N.V. common shares to be issued in
connection with the merger described herein.
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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION--DATED JUNE 17, 1999
TRANSAMERICA CORPORATION
600 Montgomery Street
San Francisco, California 94111
[LOGO](R) Transamerica
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
Your board of directors has approved a merger with AEGON, N.V. If we
complete the merger, you will receive for each share of your Transamerica
common stock, AEGON common shares and $23.40 in cash. If the trading value of
AEGON's common shares is between $76.16 and $114.24 per share, for each
Transamerica share you will receive a number of AEGON common shares having a
value of $54.60. However, if the trading value of AEGON common shares is not
between $76.16 and $114.24, the value of the AEGON common shares you will
receive will be different. Please see pages 1 and 14 for detailed information
about what you will receive if the merger is completed.
We have scheduled a special meeting for you to vote on the merger. We cannot
complete the merger unless our stockholders approve it.
Please take the time to vote by completing the enclosed proxy card and
returning it in the return envelope provided, even if you plan to attend the
stockholders meeting. You should note that if you sign, date and mail your
proxy card without indicating how you wish to vote, your proxy will be counted
as a vote in favor of the merger. You may also vote your shares by telephone by
following the instructions on the proxy card. If you do not return your proxy
card, or fail to call in your vote or vote in person at the stockholders
meeting, the effect will be the same as a vote against the merger.
Chairman and Chief Executive Officer
/s/ Frank C. Herringer
Neither the Securities and Exchange Commission nor any state securities
regulator has approved the AEGON common shares to be issued or determined if
this document is accurate or adequate. Any representation to the contrary is
a criminal offense.
Proxy Statement-Prospectus dated June 17, 1999, and first mailed to
stockholders on June 18, 1999.
<PAGE>
[LOGO] (R) Transamerica
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Transamerica Corporation will hold a special meeting of its stockholders on
July 20, 1999, at 10 a.m., local time, at the Wattis Theater, San Francisco
Museum of Modern Art, 151 Third Street, San Francisco, California, to consider
and vote on a proposal to approve and adopt the Agreement and Plan of Merger
and Reorganization, dated as of February 17, 1999, among AEGON N.V., Tony
Merger Corp. and Transamerica.
Only holders of record of Transamerica common stock at the close of business
on May 25, 1999, will be entitled to vote at the meeting or any adjournment. A
list of stockholders will be available for inspection by stockholders of record
during business hours at the office of the Secretary of Transamerica, 600
Montgomery Street, San Francisco, California for ten days prior to the date of
the meeting, and will also be available at the meeting.
By Order of the Board of Directors
/s/ Shirley Buccieri
Shirley H. Buccieri
Secretary
Transamerica Corporation
San Francisco, California
June 17, 1999
<PAGE>
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
TRANSACTION DIAGRAM........................................................ iii
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... iv
SUMMARY.................................................................... 1
THE PROPOSED MERGER........................................................ 14
General.................................................................. 14
Background of the Merger................................................. 16
Reasons for the Merger................................................... 17
Recommendation of the Transamerica Board of Directors.................... 18
Opinion of Financial Advisor............................................. 19
Material Federal Income Tax Consequences................................. 25
You Have Appraisal Rights................................................ 28
Stock Exchange Listing................................................... 29
HSR Act, Insurance Regulatory Approvals and Other Regulatory Approvals... 29
AEGON Shareholder Approval............................................... 30
Accounting Treatment..................................................... 30
Interests of Certain Persons in the Transactions......................... 30
Other Effects of the Merger.............................................. 34
Cautionary Statement Concerning Forward-looking Statements............... 35
Federal Securities Law Consequences...................................... 36
MARKETS AND MARKET PRICES.................................................. 37
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION........... 40
THE MERGER AGREEMENT....................................................... 53
Terms of the Merger...................................................... 53
Effective Time; Closing.................................................. 53
Exchange of Shares....................................................... 54
Principal Representations and Warranties................................. 54
Business of Transamerica Pending the Merger.............................. 55
Business of AEGON Pending the Merger..................................... 56
No Solicitation of Third Party Acquisition Proposals..................... 57
Termination; Certain Fees................................................ 58
Certain Other Covenants.................................................. 59
Fees and Expenses........................................................ 61
Conditions............................................................... 61
THE SPECIAL MEETING........................................................ 63
Time and Place; Purpose.................................................. 63
Voting Rights; Votes Required for Approval............................... 63
Voting of Proxies........................................................ 63
DESCRIPTION OF CAPITAL STOCK OF AEGON...................................... 65
Enforcement of Civil Liabilities......................................... 65
Share Capital............................................................ 65
General.................................................................. 65
Dividends................................................................ 66
Voting Rights and Appointment of Supervisory and Executive Boards........ 66
Liquidation Rights....................................................... 67
Issuance of Additional Shares............................................ 67
Preemptive Rights........................................................ 68
Repurchase by AEGON of its Own Shares.................................... 68
Certificates for Common Shares and their Transfer........................ 68
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS OF TRANSAMERICA AND AEGON.... 69
Voting Rights........................................................... 69
Amendment of Charter Documents.......................................... 69
Appraisal Rights........................................................ 70
Preemptive Rights....................................................... 70
Action by Written Consent of Shareholders............................... 70
Shareholders' Meetings.................................................. 71
Election of Directors................................................... 71
Removal of Directors.................................................... 72
Filling of Vacancies.................................................... 72
Shareholder Nominations and Proposals................................... 72
Dividends............................................................... 73
Rights of Purchase...................................................... 74
Limitation of Directors' Liability/Indemnification of Officers and
Directors.............................................................. 74
Special Meetings........................................................ 74
Shareholder Votes on Certain Reorganizations............................ 75
Certain Provisions Relating to Business Combinations.................... 75
Rights of Inspection.................................................... 75
Shareholder Suits....................................................... 76
Conflict-of-Interest Transactions....................................... 76
Financial Information Available to Shareholders......................... 76
EXPERTS................................................................... 77
LEGAL MATTERS............................................................. 77
WHERE YOU CAN FIND MORE INFORMATION....................................... 77
</TABLE>
<TABLE>
<CAPTION>
<C> <S>
Appendix A: Agreement and Plan of Merger and Reorganization, dated as of
February 17, 1999, by and among AEGON N.V., Tony Merger Corp. and
Transamerica Corporation
Appendix B: Opinion of Goldman, Sachs & Co.
Appendix C: Section 262 of Delaware General Corporation Law
</TABLE>
ii
<PAGE>
TRANSACTION DIAGRAM
The following diagrams illustrate in general terms the current structures of
AEGON and Transamerica and the post-merger structure of AEGON. For a more
complete description of the merger, see "THE PROPOSED MERGER" starting on page
14 and "THE MERGER AGREEMENT" starting on page 53.
Current Structure
[DIAGRAM APPEARS HERE]
Post-Merger Structure
[DIAGRAM APPEARS HERE]
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What do I need to do now?
A: Just mail your signed proxy card in the enclosed return envelope as soon
as possible, so that your shares may be represented at the meeting. You may
also vote by attending the stockholders' meeting and voting in person or by
calling toll-free: 1-877-779-8683.
Q: Can I change my vote after I have mailed my signed proxy card?
A: Yes. You can change your vote at any time before we vote your proxy at
the meeting. You can do so in one of four ways:
. First, you can send a written notice stating that you would like to
revoke your proxy to the Secretary of Transamerica.
. Second, you can complete a new proxy card and send it to the Secretary
of Transamerica.
. Third, you can call the toll-free number listed above.
. Fourth, you can attend the meeting and vote in person.
Q: If my shares are held in "street name" by my broker, will my broker vote
my shares for me?
A: If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be permitted to vote them on the
merger. You should be sure to provide your broker with instructions on how to
vote your shares. Please check the voting form used by your broker to see if it
offers telephone voting.
Q: Should I send in my stock certificates now?
A: No. You will receive instructions for exchanging your Transamerica share
certificates for AEGON common shares and cash to be paid in the merger.
Q: What happens to my future dividends?
A: We expect no changes in Transamerica's dividend policy before the merger.
After the merger takes place, all holders of record of AEGON common shares on
any record date, including shares that you receive in the merger, will have the
right to receive any dividends that AEGON may declare. AEGON has historically
paid dividends twice a year. The payment of dividends by AEGON in the future
will depend on business conditions, AEGON's financial condition and earnings,
and other factors.
Q: When do you expect the merger to be completed?
A: We expect to complete the merger in the summer of 1999. However, it is
possible that the actual obtaining of regulatory approvals could require us to
postpone the merger until a later time.
iv
<PAGE>
SUMMARY
This summary highlights key aspects of the merger which are described in
greater detail elsewhere in this document. It does not contain all of the
information that is important to you. To better understand the merger, and for
a more complete understanding of the legal terms of the merger, you should read
this entire document carefully, as well as those additional documents to which
we refer you. See "Where You Can Find More Information." (Page 77)
AEGON currently publishes its financial statements in Dutch Guilders
("NLG"). For your convenience, this document contains translations of Dutch
Guilder amounts into U.S. dollars at $1.00 = NLG 2.14, which was the exchange
rate on June 16, 1999. Beginning with the year ended December 31, 1999, AEGON
will publish its financial statements in euros ("(Euro)"). The euro was
introduced on January 1, 1999 as a new currency in 11 European Union member
states, including The Netherlands. The exchange rate at which the Dutch Guilder
has been irrevocably fixed against the euro is NLG2.20371 = (Euro)1.00. On June
16, 1999, one U.S. dollar was equal to .9711 euros. See "Markets and Market
Prices" (Page 37).
The Companies
AEGON
Mariahoeveplein 50
P.O. Box 202, 2501 CE The Hague
The Netherlands
Tel.: 011(31-70) 344 32 10
AEGON is a leading international insurer with a major presence in five
countries: The Netherlands, the United States, the United Kingdom, Hungary and
Spain. Nearly 90% of AEGON's core business is life insurance and pension and
related savings and investment products. The remaining 10% of its business is
in health insurance, property and casualty insurance and banking.
Transamerica
600 Montgomery Street
San Francisco, California 94111
Tel.: (415) 983-4000
Transamerica is a diversified financial services firm, with operations in
four principal lines of business. Its largest business is life insurance, where
Transamerica had, at March 31, 1999, $48 billion of assets out of
Transamerica's total assets of $61 billion. Transamerica ranks as one of the
twenty five largest U.S. life insurers based on admitted assets. In commercial
lending, Transamerica is a leader in distribution financing, and a significant
provider of asset-backed financing and equipment leasing. Transamerica's third
line of business is container, chassis, and trailer leasing, where Transamerica
ranks as one of the largest lessors on a global basis. In real estate services,
Transamerica is a leading provider of information on tax payments, flood zones,
and real estate transactions. Transamerica was incorporated in 1928.
Recommendation to Stockholders (See page 18)
Transamerica's Board of Directors has unanimously approved the merger
agreement and recommends that you vote FOR the proposal to approve and adopt
the merger agreement, under which AEGON will acquire Transamerica.
The Merger
The merger agreement, which is the legal document that governs the merger,
is attached as Appendix A to this proxy statement-prospectus. We encourage you
to read the merger agreement carefully.
What Transamerica Stockholders Will Receive in the Merger (See Page 14)
In the merger you will receive for each share of your Transamerica common
stock, $23.40 in cash and, so long as the "trading value" of AEGON's common
shares is between $76.16 and $114.24, a number of AEGON common shares having a
value of $54.60. Trading value is the average of the closing prices for an
AEGON common share on the Amsterdam Stock Exchange converted into U.S. dollars
over the 20 trading days ending one business
<PAGE>
day before the merger. The $78 of total value ($23.40 in cash and $54.60 of
AEGON common stock) represents a 35% premium over the $57 5/8 closing price of
Transamerica common stock on the day prior to announcement of the merger.
If the trading value of an AEGON common share is between $76.16 and $114.24,
a formula contained in the merger agreement adjusts the amount of AEGON common
shares you will receive to maintain the value at $54.60 per Transamerica share.
If the trading value of AEGON shares is below $76.16 but greater than or equal
to $61.88 you will receive AEGON shares with less value than $54.60. If the
trading value of AEGON shares is above $114.24 but less than or equal to
$128.52 you will receive AEGON shares with more value than $54.60. For example,
if the AEGON trading value falls to the bottom of this range ($61.88), the
number of AEGON common shares you receive will have a value of $50.50. If the
AEGON trading value rises to the top of the range ($128.52), the number of
shares you will receive will have a value of $58.70. In all cases you will
still receive $23.40 in cash. If the trading value is more than $128.52 and
Transamerica does not agree to accept fewer AEGON shares, AEGON may terminate
the merger agreement, or if the trading value is less than $61.88 and AEGON
does not agree to pay a greater number of AEGON shares, Transamerica may
terminate the merger agreement, or in each case the parties may agree to
continue with the merger and not terminate the merger agreement. We do not plan
to solicit your consent if we decide to continue with the merger. In addition,
the termination of the merger agreement or a decision to accept a different
number of AEGON common shares than the pricing formula would otherwise provide,
even if it occurs after the meeting, does not require your consent, and we will
not solicit your consent for these actions or in connection with any
negotiations which we may have if these circumstances apply.
Please also note that AEGON will not issue fractional shares in the merger.
As a result, the total number of AEGON shares that you will receive in the
merger will be rounded down to the nearest whole number. You will receive a
cash payment for the value of the remaining fraction of an AEGON common share
that you would otherwise receive.
2
<PAGE>
To illustrate how the formula in the merger agreement works, we have
included the following table. The table shows some examples of how the formula
determines the number of AEGON common shares that will be issued for each
Transamerica share in the merger. This table assumes that you own 100
Transamerica shares. The numbers shown in this table are hypothetical based
upon a variety of illustrative trading values for AEGON common stock. The table
and the discussion above also assume that the value of an AEGON common share at
closing is equal to the trading value of AEGON common share (i.e., the average
over the 20 day measuring period used in the merger agreement's pricing
formula).
As described above, the trading value of AEGON common shares used in the
formula in the merger agreement is calculated by converting the average trading
price of AEGON common shares on the Amsterdam Stock Exchange, which price is
quoted in Euros, into U.S. dollars. Changes in the Euro/U.S. dollar exchange
ratio affects the number of AEGON shares to be delivered. As the value of the
Euro against the U.S. dollar falls, more AEGON shares will be delivered and
conversely, as the Euro rises in value against the U.S. dollar, less AEGON
shares will be delivered. Because the table below assumes trading values of
AEGON common stock after taking into account the conversion of values from
Euros to U.S. dollars, the numbers in the table would not be affected by
changes in the Euro/U.S. dollar exchange rate.
<TABLE>
<CAPTION>
Merger Consideration
-----------------------------------------------------------------------------
Examples of
Trading Value of Fraction of No. of AEGON Market Value of Cash for Cash Aggregate Value
AEGON Shares AEGON Shares Shares AEGON Shares Fractional Shares Consideration of Consideration
- ---------------- ------------ ------------ --------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$ 61.88 0.81618 81 $5,012.28 $ 38.24 $2,340.00 $7,390.52
70.00 0.75476 75 5,250.00 33.32 2,340.00 7,623.32
75.00 0.72356 72 5,400.00 26.70 2,340.00 7,766.70
76.16 0.71691 71 5,407.36 52.63 2,340.00 7,799.99
80.00 0.68250 68 5,440.00 20.00 2,340.00 7,800.00
90.00 0.60667 60 5,400.00 60.03 2,340.00 7,800.03
100.00 0.54600 54 5,400.00 60.00 2,340.00 7,800.00
110.00 0.49636 49 5,390.00 69.96 2,340.00 7,799.96
114.24 0.47794 47 5,369.28 90.71 2,340.00 7,799.99
120.00 0.46876 46 5,520.00 105.12 2,340.00 7,965.12
125.00 0.46148 46 5,750.00 18.50 2,340.00 8,108.50
128.52 0.45670 45 5,783.40 86.11 2,340.00 8,209.51
</TABLE>
3
<PAGE>
Markets and Market Prices (See Page 37)
Transamerica common stock is listed on the New York Stock Exchange.
Transamerica common stock is also listed on the Pacific, Amsterdam, Frankfurt,
London, Paris and Swiss Stock Exchanges. AEGON's common shares are principally
traded on the Amsterdam Stock Exchange. AEGON common shares are also listed and
traded on the New York, Tokyo, London, Frankfurt and Zurich Stock Exchanges. On
February 17, 1999, the last trading date prior to the public announcement of
the proposed merger, AEGON common shares on the NYSE closed at $94 3/4 and the
high and low trading prices were $96 1/4 and $94. On February 17, 1999,
Transamerica common stock closed at $57 5/8 and the high and low trading prices
were 59 7/8 and 56 1/2. On February 17, 1999, the closing price of an AEGON
common share on the Amsterdam Stock Exchange was (Euro)84.60 or $95.20
converted into U.S. dollars. On June 16, 1999, AEGON common shares on the NYSE
closed at $77.875, and Transamerica common stock closed at $74.9375.
As we describe above, changes in the market price of AEGON shares and the
Euro/U.S. dollar exchange ratio will affect the number of AEGON shares you
receive in the merger. You may receive more current pricing information by
checking the financial section of your newspaper or contacting your broker.
AEGON's common shares trade on the NYSE under the symbol "AEG" and
Transamerica's common stock trades on the NYSE under the symbol "TA." We urge
you to obtain current market quotations.
Listing of AEGON Common Shares
The AEGON common shares to be issued in the merger will be listed on the
NYSE.
Ownership of AEGON After the Merger
AEGON will issue between 56.9 and 101.8 million AEGON common shares to
Transamerica stockholders in the merger. The AEGON common shares to be issued
in the merger will represent between approximately 9% and 15% of the
outstanding AEGON common shares after the merger. This information is based on
the number of AEGON and Transamerica shares outstanding on May 25, 1999 and
does not take into account stock options or other equity-based awards.
Material Federal Income Tax Consequences (See Page 25)
Capital Gain. Under current law, if your adjusted basis in your shares of
Transamerica common stock is less than the sum of the fair market value, as of
the date of the merger, of the AEGON common shares and the amount of cash you
receive, you will recognize a gain. This recognized gain will equal the lesser
of (a) the amount by which the fair market value, as of the date of the merger,
of AEGON common shares plus the amount of cash you receive exceeds the adjusted
basis of your shares of Transamerica common stock and (b) the amount of cash
you receive. In the event you realize a loss because your adjusted basis in
your shares of Transamerica common stock is greater than the sum of the fair
market value of AEGON common shares and the amount of cash you receive, that
loss will not be currently allowed.
Tax Basis in AEGON shares. Your tax basis for the AEGON common shares that
you receive in the merger, including any fractional share interest for which
you receive cash, will equal your basis in the Transamerica common stock
exchanged in the merger increased by the amount of gain recognized pursuant to
the merger and decreased by the amount of cash received.
Netherlands Dividend Withholding Tax. Under the income tax treaty currently
in force between The Netherlands and the United States, any dividend paid by
AEGON to a resident of the U.S., as defined under the treaty, will be subject
to a Dutch withholding tax, unless such dividend is a stock dividend or other
distribution exempt from tax under Dutch law. In most cases, the tax will equal
15% of the total amount of the dividend. An AEGON shareholder who is subject to
this withholding tax generally is allowed a credit or deduction for the
withholding tax against U.S. income tax liability.
U.S. Backup Withholding Tax. In most circumstances, dividends paid on AEGON
common shares will not be subject to any U.S. withholding
4
<PAGE>
taxes. However, in limited circumstances, U.S. backup withholding at a rate of
31% could apply. You would be exempt from backup withholding, however, if you
(a) are a corporation or fall within another exempt category and can
demonstrate this fact or (b) provide a correct taxpayer identification number
and other information. Any amount withheld under these rules would be credited
against your U.S. income tax liability.
Tax matters are very complicated, and the tax consequences of the merger to
you will depend on the facts of your own situation. We urge you to consult your
tax advisor for a full understanding of the tax consequences of the merger to
you.
Appraisal Rights (See Page 28)
If you do not vote for the merger, you will have the right under Delaware
law to dissent to the merger and request an appraisal of the value of your
Transamerica common stock. In order to preserve this right, you must follow the
procedures discussed in Appendix C.
Management of AEGON and Transamerica Following the Merger (See Page 61)
Following the merger, Frank C. Herringer, the current Chairman and Chief
Executive Officer of Transamerica, will become a member of AEGON's Executive
Board, Chairman of Transamerica and will become Chairman of AEGON USA. Donald
J. Shepard is President and Chief Executive Officer of AEGON USA and will
become President and Chief Executive Officer of Transamerica following the
merger. Additionally, at or prior to the merger, the AEGON Supervisory Board
will invite one current Transamerica director to be an ex officio member of the
AEGON Supervisory Board and at the next meeting of AEGON's shareholders use its
best efforts to cause the election or appointment of such person as a full
member of AEGON Supervisory Board. Please refer to the transaction diagram on
page iii for AEGON's corporate structure after the merger.
Interests of Certain Persons in the Transactions (See Page 30)
When considering the Transamerica Board's recommendation that you vote in
favor of approval and adoption of the merger agreement, you should be aware
that the directors and officers of Transamerica have interests in the merger
that are different from, or in addition to, your interests as Transamerica
stockholders. The members of the Transamerica Board knew about these additional
interests, and considered them, when they approved the merger.
For the executive officers named, amounts payable in connection with the
merger include:
. a pro-rata payment from the Value Added Incentive Plan,
. a pro-rata payment from the Cash Long-Term Incentive Plan,
. unvested stock options that will vest as a result of the merger; and
. for Mr. Herringer, a pro-rata portion of phantom restricted stock.
The merger agreement provides that all stock options and other stock awards
will be cashed out at $78, less the exercise price in the case of options. The
amount payable in connection with the cancellation of options and other stock
awards is different from the treatment of Transamerica common stock, which will
be converted into a combination of cash and AEGON common shares in the merger.
See "--What Transamerica Stockholders Will Receive in the Merger"--page 14.
We estimate that the total pre-tax value of the pro-rata cash incentive
awards and the payments related to unvested options and stock awards that will
vest or become distributable as a result of the merger that are payable to the
named executive officers is approximately:
<TABLE>
<CAPTION>
Aggregate
Executive Payments
--------- -----------
<S> <C>
F. Herringer........................................................ $35,393,500
R. Watson........................................................... 8,270,600
R. Latzer........................................................... 4,222,700
T. Cusack........................................................... 10,436,500
E. Grubb............................................................ 8,625,000
</TABLE>
Each of the named executive officers holds options granted in prior years
that vested
5
<PAGE>
as a result of the officer's continued service with Transamerica and/or the
achievement of performance objectives unrelated to the merger. These vested
options will also be canceled in connection with the merger for a payment equal
to $78, less the exercise price of the option. The pre-tax value of the amounts
relating to previously vested options that are payable to the named executive
officers is estimated to be approximately:
<TABLE>
<CAPTION>
Value of
Previously
Vested
Executive Options
--------- ------------
<S> <C>
F. Herringer....................................................... $145,862,300
R. Watson.......................................................... 37,763,400
R. Latzer.......................................................... 33,737,200
T. Cusack.......................................................... 49,159,000
E. Grubb........................................................... 41,708,400
</TABLE>
Conditions to the Merger (See Page 61)
Transamerica and AEGON will not complete the merger unless the following
conditions are satisfied or waived:
. the other party's representations and warranties are still accurate in
all material respects,
. the other party has performed in all material respects its obligations
under the merger agreement,
. Transamerica stockholders approve the merger,
. appropriate authorities clear the merger under antitrust laws,
. appropriate state and Canadian insurance regulators approve the merger,
. the AEGON shares to be issued in the merger are approved for listing on
the NYSE, and
. attorneys for AEGON and Transamerica issue opinions as to the tax-free
nature of the merger, except with respect to cash payments you receive.
Termination of the Merger Agreement (See Page 58)
AEGON and Transamerica can mutually agree to terminate the merger agreement
at any time without completing the merger. Either company can terminate the
merger agreement if
(1) the merger is not completed by December 31, 1999,
(2) the required Transamerica stockholder approval is not received,
(3) a court or other governmental authority prohibits the merger, or
(4) the Transamerica Board withdraws or materially modifies its
recommendation or approves or recommends another acquisition transaction.
AEGON may also terminate the merger agreement if the average trading value
of an AEGON common share during the relevant trading period is more than
$128.52 unless Transamerica agrees to accept a lesser number of AEGON common
shares for each share of Transamerica common stock than the pricing formula
would otherwise provide. Transamerica may terminate the merger agreement if the
average trading value of an AEGON common share during the relevant trading
period is less than $61.88 unless AEGON agrees to pay a larger number of AEGON
common shares for each share of Transamerica common stock than the pricing
formula would otherwise provide.
6
<PAGE>
Termination Fees (See Page 58)
If Transamerica enters into a merger agreement with a third party or the
merger agreement with AEGON is terminated because the Transamerica Board
withdraws or materially modifies its recommendation of the merger or approves
or recommends another acquisition transaction, Transamerica will pay AEGON $300
million.
Opinion of Transamerica's Financial Advisor (See Page 19)
On February 17, 1999, Transamerica received the written opinion of its
financial advisor, Goldman, Sachs & Co., to the effect that, as of the date of
such opinion, the receipt by the holders of Transamerica common stock of the
cash consideration and AEGON common shares pursuant to the merger agreement was
fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, which describes
assumptions made, matters considered and limitations on the review undertaken
in connection with the opinion, is attached as Appendix B to this proxy
statement-prospectus. The opinion of Goldman Sachs does not constitute a
recommendation as to how any holder of Transamerica common stock should vote
with respect to the merger. You are urged to read the opinion in its entirety.
Aggregate Consideration and Source of AEGON Common Shares (See Pages 47 and
48)
In the merger, AEGON will pay aggregate consideration for the outstanding
Transamerica common stock of approximately $9.7 billion in the form of cash and
shares of AEGON common stock. Not all of the AEGON common shares necessary to
effect the merger will be newly issued. A portion of AEGON common shares issued
in the merger will be acquired by AEGON from Vereniging AEGON, AEGON's largest
shareholder. AEGON will also issue to Vereniging AEGON preferred stock in an
amount to provide Vereniging AEGON with approximately the same amount of voting
control as it had before the merger.
7
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION
AEGON
Information in the Table. In the table below, we provide you with summary
historical consolidated financial data of AEGON. We prepared this information
using the consolidated financial statements of AEGON as of the dates indicated
and for each of the fiscal years in the five-year period ended December 31,
1998. The financial statements as of and for each of the fiscal years in the
five-year period ended December 31, 1998 have been audited by Ernst & Young
Accountants, independent auditors. The amounts presented in the table have been
prepared based on Dutch accounting principles. All common share and per common
share amounts have been restated to reflect the effect of the stock splits.
Other Financial Information. You should read the historical financial
statements and accompanying notes of AEGON that are included in its Annual
Report on Form 20-F for the year ended December 31, 1998. You can obtain these
reports by following the instructions we provide in this proxy statement-
prospectus under "Where You Can Find More Information" on page 77. A
reconciliation to U.S. GAAP for net income and shareholders' equity can be
found for each of the years 1994 through 1998 in the applicable Form 20-F.
It is also important that you read the unaudited pro forma consolidated
financial information and accompanying notes that we have included in this
proxy statement-prospectus under "Unaudited Pro Forma Condensed Consolidated
Financial Information" on page 40.
AEGON Summary Financial Data
<TABLE>
<CAPTION>
Convenience
Translation
to U.S.
Year Ended December 31, Dollars
--------------------------------------------------- -----------
1994 1995 1996 1997 1998 1998
------------ ------------ ------------ ------------ ------------ -----------
(Amount in million Dutch Guilders, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Earnings Statement Data
Revenue................. 20,832 20,979 24,487 31,309 37,857 17,690
Net income.............. 1,151 1,323 1,568 2,207 2,748 1,284
Net income per common
share:
Basic................. 2.25 2.53 2.97 3.95 4.75 2.22
Diluted............... 2.19 2.45 2.84 3.87 4.66 2.18
Dividends per common
share.................. 0.97 1.19 1.40 1.86 2.23 1.04
Weighted average common
shares outstanding..... 509.4 521.4 527.3 557.5 577.3 577.3
Balance Sheet Data
(at end of each period)
Total assets............ 137,069 150,603 183,126 272,736 289,118 135,102
Technical provisions.... 103,945 113,608 137,424 210,337 226,891 106,024
Long-term liabilities... 9,557 10,536 10,492 11,975 8,575 4,007
Shareholders' equity.... 7,889 8,173 11,285 18,131 17,485 8,171
Shareholders' equity per
common share........... 15.10 15.43 21.13 31.04 30.13 14.08
</TABLE>
8
<PAGE>
AEGON'S Historical Dividends
AEGON has historically paid dividends twice a year. The first dividend is
generally paid each year in the third or fourth quarter and is called the
interim dividend. This is called the interim dividend because it is the first
of two dividends that AEGON pays relating to earnings in the year in which it
is paid. The second dividend, called the final dividend, is paid each year
about two or three weeks after AEGON's annual shareholders' meeting, usually
held in late April or May. This is called the final dividend because it relates
to earnings from the prior year. The table below sets forth AEGON's interim and
final dividends for the years 1994 through 1998. The amounts have been
translated into U.S. dollars per AEGON common share based on the midpoint rate
(the exchange rate settled each working day at 2:15 p.m. by the Dutch Central
Bank) on each of the payment dates. From time to time, AEGON shareholders have
had the option to elect to receive dividends payable in cash or in AEGON common
shares. There is no assurance that AEGON shareholders will continue to have
this option.
<TABLE>
<CAPTION>
Translated into U.S. Dollars per AEGON
NLG per Common Share Common Share
---------------------------- ----------------------------------------
Years Ended December 31, Interim Final Total Interim Final Total
- ------------------------ ---------- -------- -------- -------------- ------------ -----
(Amounts in Dutch Guilders (Amounts in U.S. Dollars
per common share) per common share)
<S> <C> <C> <C> <C> <C> <C>
1994.................... 0.26 0.71 0.97 0.15 0.44 0.59
1995.................... 0.31 0.88 1.19 0.19 0.51 0.70
1996.................... 0.59 0.81 1.40 0.35 0.43 0.78
1997.................... 0.70 1.16 1.86 0.34 0.58 0.92
1998.................... 0.93 1.30 2.23 0.46 0.62 1.08
</TABLE>
9
<PAGE>
Transamerica
Information in the Tables. In the table below, we provide you with summary
historical consolidated financial data of Transamerica. We prepared this
information using the consolidated financial statements of Transamerica as of
the dates indicated and for each of the fiscal years in the five-year period
ended December 31, 1998. The financial statements as of and for each of the
fiscal years in the five-year period ended December 31, 1998 have been audited
by Ernst & Young LLP, independent auditors. All share, per share and common
stock amounts have been restated to reflect a two-for-one stock split on
January 15, 1999.
Other Financial Information. You should read the historical financial
statements and accompanying notes of Transamerica that are included in its
Annual Report on Form 10-K for the year ended December 31, 1998. You can obtain
this report by following the instructions we provide in this proxy statement-
prospectus under "Where You Can Find More Information" on page 77.
It is also important that you read the unaudited pro forma consolidated
financial information and accompanying notes that we have included in this
proxy statement-prospectus under "Unaudited Pro Forma Condensed Consolidated
Financial Information" on page 40.
Transamerica Summary Financial Data
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1994 1995 1996 1997 1998
------ ------ ------ ------ ------
(Amounts in million U.S. Dollars,
except per share amounts)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Total revenue.............................. 4,664 5,170 5,312 5,726 6,429
Income from continuing operations.......... 337 390 501 532 707
Basic earnings per share from continuing
operations................................ 2.10 2.71 3.64 4.06 5.65
Diluted earnings per share from continuing
operations................................ 2.07 2.66 3.55 3.93 5.44
Balance Sheet Data (at end of each period)
Total assets............................... 40,299 47,953 49,931 51,173 58,503
Total policy liabilities................... 24,732 27,893 28,543 30,142 30,336
Long-term debt............................. 7,489 9,342 9,087 5,237 6,273
Total shareholders' equity................. 2,736 4,300 4,141 4,881 5,706
</TABLE>
On June 17, 1999 the staff of the Commission advised Transamerica that the
staff intends to issue a new Staff Accounting Bulletin ("SAB"). Transamerica
believes that the SAB would modify the manner in which companies in the tax
service industry account for revenue. The staff has advised us that the SAB
will require deferral of revenue and subsequent amortization over the expected
lives of the loans for which monitoring services are provided. Additionally,
the staff has advised us that direct and incremental costs may be deferred and
amortized similar to the amortization of revenue. Transamerica is evaluating
the impact of the information provided by the staff.
10
<PAGE>
Summary Selected Unaudited Pro Forma Financial Information
Information in the Tables. In the table below, we present consolidated
balance sheet information for AEGON and Transamerica as of December 31, 1998,
as if the merger had been completed as of such date. We present consolidated
income statement data for AEGON and Transamerica for the fiscal year ended
December 31, 1998 as if the merger had been completed on January 1, 1998. We
have prepared the amounts presented in the table based on Dutch accounting
principles.
The following information does not necessarily reflect the financial
position or operating results that would have occurred had we completed the
merger on the date or at the beginning of the period shown in the table.
Assuming completion of the merger, the actual financial position and results
of operations will differ, perhaps significantly, from the pro forma amounts
reflected below because of a variety of factors, including access to additional
information, changes in value and changes in operating results between the
dates of the pro forma financial data and the date on which the merger actually
takes place. For purposes of preparing the AEGON consolidated financial
statements, AEGON will establish a new basis for Transamerica's assets and
liabilities based on their fair values and the AEGON purchase price, including
the costs of the merger. AEGON has not yet made a final determination of the
required purchase accounting adjustments, including the allocation of the
purchase price to the assets acquired and liabilities assumed based on their
respective fair values. Accordingly, the purchase accounting adjustments made
in connection with the development of the pro forma consolidated financial
information are preliminary and have been made solely for purposes of
developing this pro forma information. AEGON will undertake a study to
determine the fair value of Transamerica's assets and liabilities and will make
appropriate purchase accounting adjustments upon completion of that study.
Other Financial Information. Please see "Unaudited Pro Forma Condensed
Consolidated Financial Information" on page 40 of this proxy statement-
prospectus for a more detailed explanation of this analysis. A reconciliation
to U.S. GAAP for net income and shareholders' equity for AEGON can be found in
the "Pro Forma Reconciliation of Dutch Accounting Principles to U.S. GAAP" on
page 44 of this proxy statement-prospectus.
11
<PAGE>
Summary Unaudited Pro Forma Financial Information
Year Ended December 31, 1998
(Amounts in millions, except share and per share amounts)
<TABLE>
<CAPTION>
Convenience
Amounts Translation
in Dutch to U.S.
Guilders Dollars
-------- -----------
<S> <C> <C>
Earning Statement Data
Revenue.................................................... 50,326 23,517
Net income................................................. 3,049 1,425
Net income per common share:
Basic.................................................... 4.78 2.23
Diluted.................................................. 4.69 2.19
Weighted average common shares outstanding................. 636.4 636.4
Balance Sheet Data (at December 31, 1998)
Total assets............................................... 377,859 176,570
Technical provisions....................................... 292,950 136,893
Long-term liabilities...................................... 18,825 8,797
Shareholders' equity....................................... 23,860 11,149
Shareholders' equity per common share...................... 37.30 17.43
</TABLE>
12
<PAGE>
Historical and Pro Forma per Share Data
Information in the Tables. The table below compares historical and unaudited
pro forma per share data for AEGON and Transamerica. We have assumed for this
purpose that the average trading value for an AEGON common share is $95.20 and
that AEGON would issue .57353 of an AEGON common share for each Transamerica
share. The actual fraction of an AEGON share will be determined using the
formula set forth in the merger agreement and described herein. The amounts
presented in the table have been prepared based on U.S. GAAP accounting
principles. The "Transamerica Pro Forma Equivalent" information is calculated
by applying the fractional share percentage of .57353 to the "AEGON Pro Forma"
U.S. GAAP net income and equity per common share.
Other Financial Information. It is important that when you read this
information, you read along with it the consolidated financial statements and
accompanying notes of AEGON and Transamerica included in the documents
described on page 77 of this proxy statement-prospectus under "Where You Can
Find More Information." It is also important that you read the unaudited pro
forma condensed consolidated financial information and accompanying discussion
and notes that we have included in this proxy statement-prospectus on page 40
under "Unaudited Pro Forma Condensed Consolidated Financial Information."
<TABLE>
<CAPTION>
AEGON Transamerica
AEGON Transamerica Pro Pro Forma
Historical Historical Forma Equivalent
---------- ------------ ----- ------------
(Amounts in U.S. Dollars)
<S> <C> <C> <C> <C>
Year Ended December 31, 1998
Net income per common share:
Basic............................ 2.62 5.65 2.72 1.56
Diluted.......................... 2.57 5.44 2.68 1.53
As of December 31, 1998
Shareholders' equity per common
share............................. 16.46 45.83 22.64 12.98
</TABLE>
Since the fractional AEGON share received per Transamerica share changes at
various share prices, the following table presents the Transamerica pro forma
equivalent net income per share and shareholders' equity per share at various
price and fractional share combinations. You should compare the information
below with the fourth column in the above chart to see what happens to the
Transamerica pro forma equivalent per share data when the average trading value
for an AEGON share changes.
<TABLE>
<CAPTION>
Transamerica Pro Forma Equivalent Per
Share Data At Different Average Trading
Values for an AEGON Share
---------------------------------------
<S> <C> <C> <C> <C> <C>
Average Trading Value for
an AEGON share....................... 61.88 76.16 95.20 114.24 128.52
Cash per share........................ 23.40 23.40 23.40 23.40 23.40
Fractional share received............. 0.81618 0.71691 0.57353 0.47794 0.45670
Year ended December 31, 1998:
Net income per common share:
Basic............................... 2.15 1.91 1.56 1.32 1.26
Diluted............................. 2.11 1.88 1.53 1.30 1.24
Shareholders' equity December 31,
1998:................................ 17.09 15.86 12.98 11.46 10.92
</TABLE>
13
<PAGE>
THE PROPOSED MERGER
General
Transamerica's Board is using this proxy statement-prospectus to solicit
proxies from Transamerica stockholders. At the special meeting, Transamerica
stockholders will be asked to consider and vote upon the merger agreement.
If the merger is completed, each share of Transamerica common stock will be
converted into a right to receive a combination of
(1) $23.40 in cash, and
(2) a number of AEGON common shares determined pursuant to an exchange
ratio based on the trading value of AEGON common shares during a 20-
trading day period ending one business day before the merger.
For purposes of the merger agreement, the "exchange ratio" is equal to
$54.60 divided by the trading value of an AEGON common share so long as the
trading value of an AEGON common share is between $76.16 and $114.24. The
trading value will be determined by taking the average of the closing prices
for an AEGON common share on the Amsterdam Stock Exchange as published in the
Financial Times converted into U.S. dollars over the 20 trading days
immediately preceding the last business day before the closing date. Each of
these daily closing prices will be converted into U.S. dollars at the "closing
mid-point' exchange rate as published in the "Currency and Money' segment in
the "Companies & Markets' section of the Financial Times.
The exchange ratio is, however, subject to provisions by which if the
average trading value for an AEGON share is between $76.16 and $114.24, the
exchange ratio will deliver a number of AEGON common shares for each share of
Transamerica common stock valued at $54.60. If the trading value of AEGON
shares is below $76.16 but greater than or equal to $61.88 you will receive
AEGON shares with less value than $54.60. If the trading value of AEGON shares
is above $114.24 but less than or equal to $128.52 you will receive AEGON
shares with more value than $54.60. For example, if the AEGON trading value
falls to the bottom of this range ($61.88), the number of AEGON common shares
you receive will have a value of $50.50. If the AEGON trading value rises to
the top of the range ($128.52), the number of shares you will receive will have
a value of $58.70. In all cases you will still receive $23.40 in cash.
The following examples show the manner in which the exchange ratio will be
computed at three hypothetical average trading values for an AEGON common
share.
Example I -- The average trading value for an AEGON share is greater than
$76.16 and equal to or less than $114.24
<TABLE>
<S> <C>
Hypothetical Trading Value of an AEGON Share at Closing $97.00
Stock Value Amount = $54.60
Exchange Ratio = $54.60 = 0.56289
----------------
$97.00
</TABLE>
In this example, you will receive for each share of Transamerica common
stock $23.40 in cash plus 0.56289 of an AEGON share. If you own 100
Transamerica shares you would receive 56 AEGON shares with a market value of
$5,432.00. You will also receive $2,340.00 in cash and $29.03 in cash for the
value of a fractional share. The aggregate value of this consideration is
$7,800.03.
14
<PAGE>
Example II--The average trading values for an AEGON share is greater than
$114.24 and equal to or less than $128.52
<TABLE>
<S> <C> <C>
Hypothetical Trading
Value of an AEGON Share
at Closing $123.76
Percentage Price Change
= $123.76-$95.20 = 0.30
---------------
$95.20
Excess Price Change = 0.30-0.20 = 0.10
Adjusted Stock Value
Amount = $54.60 + 1/2 ($54.60 x 0.1) = $54.60 + $2.73 = $57.33
Exchange Ratio $57.33 = 0.46324
-------
$123.76
</TABLE>
In this example, stockholders will receive for each share of Transamerica
common stock $23.40 in cash plus 0.46324 of an AEGON share. If you own 100
Transamerica shares you would receive 46 AEGON shares with a market value of
$5,692.96. You will also receive $2,340.00 in cash and $40.10 in cash for the
value of a fractional share. The aggregate value of this consideration is
$8,073.06.
Example III--The average trading value for an AEGON share is greater than
$61.88 and equal to or less than $76.16
<TABLE>
<S> <C> <C>
Hypothetical Trading
Value of an AEGON Share
at Closing $66.64
Percentage Price Change
= $66.64-$95.20 = (0.30)
-----------------------------
$95.20
Excess Price Change = (0.30) + 0.20 = (0.10)
Adjusted Stock Value
Amount = $54.60 + 1/2 ($54.60 x (0.1)) = $54.60 + ($2.73) = $51.87
Exchange Ratio $51.87 = 0.77836
-----------------------------
$66.64
</TABLE>
In this example, stockholders will receive for each share of Transamerica
common stock $23.40 in cash plus 0.77836 of an AEGON share. If you own 100
Transamerica shares you would receive 77 AEGON shares with a market value of
$5,131.28. You will also receive $2,340.00 in cash and $55.71 in cash for the
value of a fractional share. The aggregate value of this consideration is
$7,526.99.
The merger agreement may be terminated by Transamerica if the trading value
for an AEGON share is less than $61.88, unless AEGON agrees that the exchange
ratio shall equal $50.505 divided by the trading value for an AEGON share or
the parties otherwise agree on a compromise exchange ratio. Likewise, the
merger agreement may be terminated by AEGON if the trading value for an AEGON
share is greater than $128.52, unless Transamerica agrees in such event that
the exchange ratio shall be equal to $58.695 divided by the trading value for
an AEGON share or the parties otherwise agree on a compromise exchange ratio.
If the trading value is more than $128.52 or less than $61.88, we do not plan
to solicit your consent if we decide to continue with the merger. In addition,
the termination of the merger agreement or a decision to accept or pay a
different fraction of an AEGON common share for each share of Transamerica
common stock than the pricing formula would otherwise provide, even if it
occurs after the meeting, does not require your consent, and we will not
solicit your consent for these actions or in connection with any negotiations
which we may have if these circumstances apply.
Transamerica's decision whether to terminate the merger, decrease the
exchange ratio or negotiate an exchange ratio which is a compromise outcome
will be made by the Transamerica Board. AEGON's decision whether to terminate
the merger, pay a greater number of AEGON shares, or negotiate an exchange
ratio which is a compromise outcome, will be made by the AEGON Executive Board.
It is impossible at this time to
15
<PAGE>
determine what the Transamerica Board or the AEGON Executive Board would decide
because their decision would depend on the facts and circumstances existing at
the time it is faced with such a decision. See "The Merger Agreement--Terms of
the Merger." (Page 53)
Background of the Merger
Over the past several years, the life insurance industry has undergone
significant changes as a result of the following:
. Slow Growth in Traditional Life Insurance Products. Life insurance
premiums have grown slowly during the 1990s, especially premiums for
traditional mortality-oriented products. This has resulted in increased
price competition.
. Need for Scale to Compete. In this slow growth environment, many
insurance companies have acted to lower operating costs, expand product
capabilities, and broaden distribution channels by engaging in mergers.
As the industry continues to consolidate those participants that fail to
consolidate risk becoming less competitive.
. New Competitors. The regulatory framework for banking and insurance has
been the subject of several congressional bills that would allow banks
and other institutions to participate in various aspects of the
insurance business. In advance of broad regulatory changes, some banks
have begun insurance activities where regulations now permit them to do
so. At least one major merger (Travelers/Citigroup) has been consummated
in anticipation of these regulatory changes. If broader legislation is
finally approved, it is probable that many other banks would elect to
enter the life insurance business, further increasing competition.
Transamerica's Board and AEGON's Executive Board have directed their
respective managements to develop strategies to address these factors. In line
with that directive, on October 25, 1998, Frank C. Herringer, Chairman and
Chief Executive Officer of Transamerica, and Donald J. Shepard, President and
Chief Executive Officer of AEGON USA, met to exchange views on the life
insurance industry and to discuss in broad terms the strategy each firm has
been following. No discussion of a merger took place at that meeting.
On November 19, 1998, Mr. Shepard called Mr. Herringer. On that call, the
two of them agreed that it would make sense to explore the possibility of
combining all or part of Transamerica with AEGON. To this end they agreed to
organize a meeting of senior executives of the two companies. Accordingly, on
December 10, 1998, Mr. Richard H. Fearon, Senior Vice President--Corporate
Development of Transamerica, and Mr. Patrick S. Baird, Executive Vice President
and Chief Operating Officer of AEGON USA, met to discuss the companies'
businesses, management philosophies, and goals, and made a preliminary review
of the opportunities a merger would afford the combined companies and their
respective customers and employees.
Transamerica's Board was advised of the AEGON discussions along with other
corporate development matters at its December 17, 1998 regularly scheduled
board meeting. The Transamerica Board authorized management to pursue further
discussions with AEGON.
On December 21, 1998, Messrs. Shepard and Herringer met to discuss in broad
terms the possible organizational structure following a merger of Transamerica
and AEGON and to explore the roles that each company's personnel might play in
the combined entity. They agreed at the meeting to begin a more detailed
analysis of the economic benefits of a merger.
On December 29, 1998, Transamerica and AEGON executed a mutual
confidentiality agreement. On December 30, 1998 and again on January 5, 1999,
Messrs. Fearon and Baird met to discuss the potential costs savings and revenue
enhancement opportunities that could result from a merger. Over the course of
the next week additional information was exchanged between the parties and
Messrs. Herringer and Shepard had several telephone conversations where they
discussed the progress being made. On January 14, 1999, Messrs. Fearon and
Baird met to discuss AEGON's preliminary views as to the terms on which AEGON
would be prepared to acquire Transamerica.
16
<PAGE>
On January 18 and 19, 1999, Mr. Herringer met with the AEGON Executive Board
in The Hague to discuss the status of the talks between AEGON and Transamerica
and to better understand AEGON's views as to the structure of a combined AEGON-
Transamerica. Throughout the remainder of January, AEGON and their financial
representatives reviewed financial, legal and operational information on
Transamerica and continued discussions with Transamerica and its
representatives on the possible financial terms of an acquisition.
During the week of January 22-25, 1999, Mr. Herringer called each
Transamerica Board member individually and briefed them on the status of the
discussions with AEGON. On January 28, 1999, at a regularly scheduled meeting
of the Transamerica Board of Directors, Transamerica's senior management and
legal and financial advisors reviewed in detail the potential acquisition of
Transamerica by AEGON. The Transamerica Board instructed management to continue
to explore the possible transaction.
On February 6, 1999, Messrs. Fearon and Baird met to continue discussions of
the financial and other terms of the proposed transaction. Mr. Herringer, Mr.
Fearon and other members of Transamerica's senior management conducted a due
diligence review of AEGON in The Hague from February 8 through 10. Messrs.
Shepard and Herringer spoke by phone on February 12, 1999, at which time both
agreed on the financial terms that they were prepared to recommend to their
respective Boards, assuming all other aspects of the transaction were to be
negotiated on mutually acceptable terms.
On February 12, 1999, Transamerica's senior management reported to the
Transamerica Board in a special telephone meeting that progress continued to be
made toward a possible transaction. The Transamerica Board instructed
management to attempt to negotiate a definitive acquisition agreement with
AEGON. On February 15, 1999, the AEGON Supervisory Board authorized certain
officers of AEGON to enter into definitive agreements for the acquisition of
Transamerica, within specified parameters. On February 15, 1999, the parties,
together with their respective legal and financial advisors, began negotiating
the terms of a definitive merger agreement.
On February 17, 1999, at a special meeting of the Transamerica Board, with
all directors present, senior executives of Transamerica discussed in detail
the terms of the proposed transaction. After receiving presentations from its
financial and legal advisors, the Transamerica Board received the fairness
opinion of Goldman Sachs to the effect that the consideration to be received by
the Transamerica stockholders pursuant to the merger agreement was fair, from a
financial point of view, to such stockholders. After discussion, the
Transamerica Board approved the merger agreement and resolved to recommend that
the Transamerica stockholders vote for the approval and adoption of the merger
agreement at a meeting of Transamerica stockholders to be held for that
purpose. Following this Board meeting, the merger agreement was executed by all
parties. See "Recommendation of the Transamerica Board of Directors."
Reasons for the Merger
We believe that the merger of Transamerica into a wholly owned subsidiary of
AEGON will create a more competitive life insurance group than either the life
insurance groups of Transamerica or AEGON currently offers on a stand-alone
basis and will generate significant opportunities for improved financial
performance to shareholders.
. Growth From Complementary Product Offerings. Transamerica and AEGON have
a wide array of products and distribution channels, many of which do not
overlap. Offering additional products to existing distribution channels
is expected to result in additional sales.
. Growth From Expanded Distribution. The ability to offer distributors a
wide array of products is expected to attract additional distributors to
the combined company. These new distributors are expected to increase
the growth rate of the combined company.
. Growth From Greater Brand Recognition. AEGON currently markets under an
array of brand names, none of which is as well known to consumers in the
U.S. as is the Transamerica brand name. By using the Transamerica brand
name, AEGON believes it can increase the productivity of its
distributors.
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. Cost Efficiencies From Consolidation. We forecast that $150 million of
annual cost savings before tax can be achieved within three years of the
close of the merger. The $150 million forecast is based on an estimate
of the savings of each business in which Transamerica and AEGON have
overlapping operations, and AEGON's experience from its June 1997
acquisition of Providian Corporation. The principal areas with
overlapping operations are corporate activities, individual life
insurance and institutional asset management.
Although AEGON believes that the merger will result in certain benefits,
there can be no assurance that the operations of AEGON and Transamerica can be
integrated effectively or in a timely manner. The integration is intended, in
part, to realize cost savings. There can be no assurance of the extent to which
such cost savings will be achieved, if any. The integration of the two
organizations will require the dedication of management resources which may
temporarily distract them from attention to the day-to-day business of the
combined company. The difficulties of integration may be increased by the
necessity of coordinating geographically separated organizations and
integrating personnel. The process of combining the companies may cause an
interruption of, or a loss of momentum in, the activities of either or both of
the companies' businesses. Furthermore, the process of combining the companies
or any delay in closing the merger could have a material adverse effect on
employee morale of current Transamerica employees and of employees at divisions
of AEGON to be consolidated with certain Transamerica operations and on the
ability of the combined company to retain key management, sales and marketing
personnel.
Recommendation of the Transamerica Board of Directors
Transamerica. The Transamerica Board, in reaching its decision to approve
the merger agreement, consulted with its legal counsel and financial advisors
as well as with Transamerica's management and considered many factors,
including the following material factors (the order does not reflect the
relative significance):
(1) The fact that the expected per share consideration to be received by
Transamerica stockholders in the merger represented a premium of
approximately 35% over the closing price of the Transamerica common stock
on the last trading day prior to the approval of the merger agreement
(based upon the Transamerica common stock price per share of $57 5/8 and
the AEGON common share price of $95.20 on such date);
(2) All of the reasons described above under "Background of the Merger"
and "Reasons for the Merger" including the need to expand product
offerings, broaden distribution channels and realize cost efficiencies;
(3) Goldman Sachs' presentation and fairness opinion that, as of
February 17, 1999, the consideration to be received by the Transamerica
stockholders under the merger agreement was fair, from a financial point of
view, to such stockholders. See "--Opinion of Financial Advisor." The
Goldman Sachs fairness opinion is included as Appendix B to this proxy
statement-prospectus and should be read in its entirety;
(4) The opportunity for Transamerica stockholders to continue as
stockholders of a combined organization with greater financial strength,
global diversification and scale, than Transamerica currently has;
(5) The complementary nature of the two companies' businesses and the
belief of Transamerica senior management that Transamerica and AEGON share
a similar culture, making it likely that integration of the two companies
would proceed smoothly;
(6) An assessment of Transamerica's strategic alternatives to the
merger, including continuing to operate as an independent public company in
a slow growth environment or merging with others;
(7) The terms and conditions of the merger agreement, including in
particular the "no solicitation" and fiduciary responsibility provisions of
the merger agreement, the fees payable by Transamerica, in certain
circumstances, to AEGON, the termination sections of the merger agreement,
the provisions relating to Transamerica's ability to continue to operate
its business during the period between the
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execution of the merger agreement and closing, the conditions to closing
and the representations and warranties of each of the parties in the merger
agreement; and
(8) The fact that the merger is expected to be a partially tax-free
transaction to Transamerica stockholders.
The Transamerica Board also considered potential drawbacks or risks relating
to the merger, including the following material drawbacks and risks (the order
does not reflect the relative significance):
(1) The difficulty and management distraction inherent in integrating
two large and geographically dispersed operations and the risk that the
cost efficiencies and benefits sought in the merger might not be fully
achieved;
(2) The risk that the merger would not be consummated and the potential
effects the failure to consummate might have on the business, employees and
customers of Transamerica;
(3) The expenses expected to be incurred by Transamerica in connection
with the merger; and
(4) The fact that AEGON is organized under Dutch law and has a
controlling stockholder.
The lists provided above contain all of the material factors considered by
the Transamerica Board. In view of the wide variety of factors considered in
connection with its evaluation of the merger, the Transamerica Board did not
find it practicable to, and did not, quantify or assign any relative or
specific weights to the factors listed above. Individual directors may have
viewed different factors to be more significant than others. The Transamerica
Board considered all these factors as a whole, and overall concluded that the
merger was attractive to and in the interests of Transamerica's stockholders.
For the reasons discussed above, the Transamerica Board has approved the
merger agreement, and determined that the transactions contemplated by the
merger agreement are fair to, and in the best interests of, Transamerica and
its stockholders. Accordingly, the Transamerica Board recommends that
Transamerica stockholders vote FOR approval and adoption of the merger
agreement and the transactions contemplated thereby.
Opinion of Financial Advisor
On February 17, 1999, Goldman Sachs delivered its written opinion to
Transamerica's Board that as of the date of such opinion, the merger
consideration to be received by the holders of Transamerica common stock under
the merger agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs dated February 17,
1999, which sets forth assumptions made, matters considered and limitations on
the review undertaken in connection with the opinion, is attached hereto as
Appendix B to this proxy statement-prospectus and is incorporated herein by
reference. Stockholders of Transamerica are urged to read such opinion in its
entirety.
In connection with its opinion, Goldman Sachs reviewed, among other things:
. the merger agreement;
. the annual reports to stockholders and annual reports on Form 10-K of
Transamerica for the five years ended December 31, 1997;
. the annual reports to shareholders and annual reports on Form 20-F of
AEGON for the five years ended December 31, 1997;
. interim reports to stockholders and quarterly reports on Form 10-Q of
Transamerica and an interim earnings release of AEGON for the nine
months ended September 30, 1998;
. elected statutory annual statements filed by Transamerica and AEGON with
the insurance departments of the states under the laws of which their
insurance subsidiaries organized;
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. internal financial analyses for Transamerica and AEGON prepared by their
respective managements;
. cost savings and operating synergies projected by the managements of
Transamerica and AEGON to result from the transaction contemplated by
the merger agreement; and
. financial forecasts for Transamerica prepared by management of
Transamerica.
Goldman Sachs also held discussions with members of the senior managements
of Transamerica and AEGON. They discussed the strategic rationale for, and the
potential benefits of, the transaction contemplated by the merger agreement. In
addition, they discussed the past and current business operations, financial
condition and future prospects of their respective companies. Goldman Sachs
requested but did not receive financial statements of AEGON for the year ended
December 31, 1998 and financial forecasts for AEGON for periods thereafter.
Goldman Sachs' review of such matters was limited to a discussion with AEGON
management. In addition, Goldman Sachs reviewed the reported price and trading
activity for the Transamerica common stock and AEGON common shares, compared
certain financial and stock market information for Transamerica and AEGON with
similar information for certain other financial services companies the
securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the insurance industry specifically and
in other industries generally, and performed such other studies and analyses as
it considered appropriate.
Goldman Sachs relied upon and assumed the accuracy and completeness of all
of the financial and other information reviewed by it (including information
related to reserves and related items) for purposes of rendering its opinion.
In that regard, Goldman Sachs assumed with Transamerica's consent that the
estimates of costs savings and operating synergies prepared by managements of
Transamerica and AEGON have been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of Transamerica, and that such
estimates will be realized in the amounts and time periods contemplated
thereby. Goldman Sachs does not act as actuaries and its services did not
include actuarial assumptions. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and liabilities (including
any hedge or derivative positions) of Transamerica or AEGON or any of their
subsidiaries and was not furnished with any such evaluation or appraisal. For
purposes of United States federal income tax imposed on corporations, Goldman
Sachs assumed that the merger would be treated as a tax-free reorganization.
Goldman Sachs also assumed that all material governmental, regulatory or other
consents and approvals necessary for the consummation of the transaction
contemplated by the merger agreement would be obtained without any adverse
effect on Transamerica or AEGON or on the contemplated benefits of the
transaction contemplated by the merger agreement.
Goldman Sachs' advisory services and the opinion expressed herein are
provided for the information and assistance of the Transamerica Board in
connection with its consideration of the transaction contemplated by the merger
agreement and such opinion does not constitute a recommendation as to how any
holder of Transamerica common stock should vote with respect to such
transaction.
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its February 17, 1999 written
opinion to the Transamerica Board. Some of the summaries of financial analyses
include information presented in tabular format. In order to more fully
understand the financial analyses used by Goldman Sachs, the tables must be
read together with the full text of each summary. The tables alone do not
constitute a complete description of Goldman Sachs' financial analyses.
(1) Analysis of Selected Transactions. This analysis was undertaken to
provide information regarding the fairness of the merger consideration
based upon a comparison of the financial terms of the merger with the
financial terms of several other business combinations in the life
insurance industry. Goldman Sachs analyzed certain information relating to
selected acquisitions since 1994 in the life insurance industry, where the
aggregate equity consideration was greater than $1 billion. Goldman Sachs
analyzed the following acquisitions:
. American International Group, Inc.'s acquisition of SunAmerica Inc.
in August 1998;
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. Swiss Reinsurance Company's acquisition of Life Re Corporation in
July 1998;
. Lincoln National Corporation's acquisition of Aetna's Inc.'s life
business in May 1998;
. American General Corporation's acquisition of Western National
Corporation in September 1997;
. Lincoln National Corporation's acquisition of Connecticut General
Life Insurance Company in July 1997;
. ING Group N.V.'s acquisition of Equitable of Iowa Companies in July
1997;
. American General Corporation's acquisition of USLIFE Corporation in
February 1997;
. AEGON N.V.'s acquisition of Providian Corporation in December 1996;
. General Electric Capital Corporation's acquisition of First Colony
Corporation in August 1996;
. Metropolitan Life Insurance Company's acquisition of New England
Mutual Life Insurance Co. in April 1996;
. Massachusetts Mutual Life Insurance Company's acquisition of
Connecticut Mutual Life Insurance Co. in June 1995;
. General Electric Capital Corporation's acquisition of AMEX Life in
June 1995;
. Zurich Insurance Company's acquisition of Kemper Corporation in
April 1995; and
. American General Corporation's acquisition of Franklin Life
Insurance Company in November 1994.
The following table presents for the selected transactions the range, median
and mean aggregate equity consideration multiples of tangible book value and
forward earnings, each as compared to corresponding values as of February 12,
1999 for the merger. The table also presents the premium to market price
(calculated based on the target company's ten day average share price five days
prior to announcement of the transaction), as compared to the premium as of
February 12, 1999 for Transamerica.
<TABLE>
<CAPTION>
Ranges for
the Selected
Transactions Median Mean The Merger
------------- ------ ----- ----------
<S> <C> <C> <C> <C>
Multiple of Tangible Book Value........... 1.1x-5.1x 1.7x 2.2x 2.0x
Multiple of Forward Earnings.............. 12.5x-25.8x 15.0x 17.6x 19.0x
Premium to Market Price................... 11.5%-26.0% 19.8% 19.3% 43.1%
</TABLE>
(2) Merger Market Valuation. Goldman Sachs calculated the implied
premium to Transamerica's current market price based on Transamerica's
management's 1999 net income estimates for each segment of Transamerica's
business. The estimates provided to Goldman Sachs by Transamerica's
management were generally in line with publicly available Institutional
Broker's Estimate System estimates. Goldman Sachs' analysis excluded the
impact of non-recurring items, tax effects and Transamerica's management's
estimates of certain potential sources of additional value. Goldman Sachs
applied net income multiples ranging from 12.0x to 19.0x to each segment to
derive implied per share premiums over the Transamerica share price as of
February 12, 1999. These premiums ranged from 22% to 36%, compared to the
premium at a $78 transaction price to the February 12, 1999 Transamerica
share price of 43.1%.
(3) Discounted Cash Flow Analysis. Goldman Sachs performed a discounted
cash flow analysis to determine the theoretical value per share of
Transamerica common stock under the following scenarios:
. On a standalone basis assuming certain earnings estimates provided
to Goldman Sachs through the year 2001 and a 12% growth rate for net
income thereafter, dividends based on income in
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excess of required equity (where equity is projected to grow at the
same rate as income) and an initial required equity equal to current
equity less an assumed dividendable amount;
. On a pro forma basis assuming the standalone basis assumptions and
after-tax synergies phased in 50% in 1999 and 100% in 2000, with a 5%
growth rate beginning in 2000; and
. The above scenario plus potential sources of additional value
relating to a one time dividend, tax benefits and other annual
potential sources of value.
Goldman Sachs applied discount rates ranging from 11% to 13% and terminal
value multiples of net income ranging from 12.0x to 18.0x, to derive
theoretical values per share of the Transamerica common stock ranging from:
. $44 to $81 on a standalone basis;
. $54 to $95 on a pro forma basis; and
. $68 to $111 on a pro forma plus additional value basis.
(4) Analysis of Selected Companies. Goldman Sachs performed this
analysis to evaluate the fairness of the merger consideration based upon a
comparison of specific financial information of Transamerica to
corresponding financial information for selected annuity, life insurance
and finance companies. Goldman Sachs selected the following companies for
comparison because they are publicly traded companies with certain
operations that for purposes of analysis may be considered similar to
certain operations of Transamerica:
The selected publicly traded annuity companies consisted of:
. Hartford Life Inc.,
. Nationwide Financial Services, and
. Liberty Financial Company.
The selected publicly traded life insurance companies consisted of:
. American General Corp.,
. The Equitable Company Inc.,
. AFLAC Inc.,
. UNUM/Provident,
. Conseco Inc.,
. Lincoln National Corp.,
. Jefferson-Pilot Corp.,
. Torchmark Corp.,
. ReliaStar Financial Corp.,
. Allmerica Financial Corp., and
. Protective Life Corp.
The selected publicly traded finance companies consisted of:
. Associates First Capital Corp.,
. Household Finance Corp.,
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. CIT Group, Inc.,
. Newcourt Credit Group Inc.,
. The Finova Group Inc.,
. Heller Financial, Inc.,
. GATX Corp., and
. XTRA Corp.
Goldman Sachs calculated and compared various financial multiples
and ratios for the selected companies based on financial data as of
September 30, 1998 and latest median earnings estimates provided by
Institutional Broker's Estimate System. The multiples for the selected
companies were calculated using closing per share prices as of February
12, 1999 and the multiples for Transamerica were calculated using a per
share price of $54.50, the closing market price of the Transamerica
common stock on the NYSE on February 12, 1999. With respect to the
selected companies, Goldman Sachs considered:
. 1999 and 2000 estimated price/earnings ratios based on Institutional
Broker's Estimate System estimates,
. five year earnings growth rates based on Institutional Broker's
Estimate System estimates,
. the 1999 estimated price/earnings ratio as a multiple of the five
year earnings growth rate,
. price as a multiple of book value (after adjusting for certain
accounting and foreign currency translation adjustments), and
. latest twelve months return on average common equity and return on
average assets for the selected annuity and life insurance companies
and latest twelve months return on managed assets for the selected
finance companies.
<TABLE>
<CAPTION>
Price/Earnings Multiples Latest Twelve Months
------------------------- ---------------------
Institutional
Broker's 1999 Return on
Estimate System Price/Earnings Average Return on
Selected 5 Year Earnings to Common Average
Companies 1999 2000 Growth Rate Growth Rate Price/Book Equity Assets
- --------- ------------ --------------------------- -------------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Annuity
Companies
Median................. 15.5x 13.3x 15.0% 1.0x 2.7x 15.5% 0.7%
Range.................. 8.6x-18.4x 7.8x-16.1x 10.0%-16.0% 0.9x-1.2x 0.9x-3.3x 10.4%-18.0% 0.3%-1.5%
Life
Insurance
Companies
Median................. 14.3x 12.7x 13.0% 1.0x 2.1x 13.2% 1.2%
Range.................. 6.6x-26.1x 6.6x-22.0x 12.0%-16.0% 0.4x-1.6x 1.2x-6.5x 8.1%-21.1% 0.4%-3.3%
<CAPTION>
Return on
Managed
Assets
---------
<S> <C> <C> <C> <C> <C> <C> <C>
Finance
Companies
Median................. 11.6x 10.7x 15.3% 0.80x 2.20x 13.6% 1.5%
Range.................. 10.2x-15.8x 9.1x-18.4x 12.0%-40.0% 0.32x-0.93x 1.5x-3.93 11.6%-18.0% 1.0%-3.8%
Transamerica........... 13.5x 12.1x 11.0% 1.2x 2.0x 15.0% 1.0%
</TABLE>
For the selected finance companies, Goldman Sachs also calculated:
.debt to equity ratios ranging from 2.0x to 8.16x with a median of
6.3x, and
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. premium as a percentage of managed receivables ranging from 8.1% to
32.8% with a median of 12.4%.
For the selected annuity companies and the selected life insurance
companies, Goldman Sachs also derived median dividends yields of 0.7% and
1.3%, respectively, compared to a dividend yield of 1.8% for Transamerica.
(5) Transaction Price Analysis. Based on the transaction price per share
of $78 for the Transamerica common stock and using estimates provided to
Goldman Sachs, Goldman Sachs considered the aggregate share consideration
as a multiple of Transamerica's estimated operating income in 1998, 1999
and 2000 and as a multiple of GAAP book value as of December 31, 1998.
Goldman Sachs' calculations indicated estimated operating income multiples
in 1998, 1999 and 2000 of 21.5x, 19.0x and 16.9x, respectively, and book
value multiples as of December 31, 1998 ranging from 1.9x to 2.8x.
Goldman Sachs also considered the 2000 estimated earnings per share and
dividend impact of the transaction using AEGON's management's pro forma
financial estimates. Based on the transaction price, Goldman Sachs'
analysis indicated that in 2000 the transaction would be significantly
accretive to AEGON's earnings per share and significantly dilutive to
Transamerica's earnings per share and dividends (assuming AEGON maintains a
47% dividend payout ratio compared to Transamerica's dividend policy of
$2.00 per share).
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 described 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. No company or
transaction used in the above analyses as a comparison is directly comparable
to Transamerica or AEGON or the contemplated transaction. The analyses were
prepared solely for purposes of Goldman Sachs' providing its opinion to
Transamerica's Board as to the fairness from a financial point of view of the
merger consideration to the holders of Transamerica common stock and 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 Transamerica, AEGON, Goldman Sachs or any other person
assumes responsibility if future results are materially different from those
forecast. As described above, Goldman Sachs' opinion to Transamerica's Board
was one of many factors taken into consideration by Transamerica's Board in
making its determination to approve the merger agreement. This summary does not
purport to be a complete description of the analysis performed by Goldman Sachs
and is qualified by reference to the written opinion of Goldman Sachs contained
in Appendix B to this document.
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 Transamerica, having provided certain investment banking services
to Transamerica from time to time, including having acted as its financial
advisor in the sale of Transamerica Financial Services Holding Company to
Household International in 1997 and as dealer on several financings and having
acted as its financial advisor in connection with, and having participated in
certain of the negotiations leading to, the merger agreement. For its financial
advisory services to Transamerica during the course of the past two years,
excluding any fees pursuant to this transaction, Goldman Sachs received fees of
approximately $9.5 million. Goldman Sachs has also acted as a dealer in
connection with the issuance of certain commercial paper by AEGON in 1996, and
may provide investment banking services to AEGON and its affiliates in the
future.
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<PAGE>
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 Transamerica or AEGON for its own account and for the accounts of customers.
As of June 15, 1999, Goldman Sachs accumulated a net long position of 6,106
shares of Transamerica common stock, a net long position of 4,084 AEGON common
shares and a net long position of options to purchase 142,100 AEGON common
shares.
Pursuant to a letter agreement dated January 25, 1999, Transamerica engaged
Goldman Sachs to act as its financial advisor in connection with a potential
merger or business combination with AEGON. Pursuant to the terms of the letter
agreement, Transamerica has agreed to pay Goldman Sachs upon consummation of
the merger a transaction fee of 0.24% of the aggregate consideration (as
described in the letter agreement). Transamerica has agreed to reimburse
Goldman Sachs for its reasonable out-of-pocket expenses, including attorney's
fees, and to indemnify Goldman Sachs against certain liabilities, including
certain liabilities under the federal securities laws.
Material Federal Income Tax Consequences
The following is a summary description of the material U.S. federal income
tax consequences of the merger applicable to Transamerica stockholders that are
U.S. persons. A U.S. person is any one of the following:
. An individual who is a citizen or resident of the United States;
. A corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision of
the United States;
. An estate the income of which is subject to United States federal income
taxation regardless of its source; or
. A trust if a court within the United States is able to exercise primary
supervision of the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust.
This summary is not a complete description of all of the tax consequences of
the merger. It is based on the U.S. tax code, Treasury Regulations, Internal
Revenue Service rulings and judicial opinions, all as in effect on the date of
this proxy statement-prospectus. Your individual circumstances may affect the
tax consequences of the merger to you, and your particular facts or
circumstances are not considered in the discussion below. The summary is not
intended to apply to Transamerica stockholders in special situations, such as:
. Dealers in securities;
. Traders in securities who elect to apply a mark-to-market method of
accounting;
. Financial institutions;
. Tax-exempt organizations;
. Insurance companies;
. Persons holding shares of Transamerica common stock or AEGON common
shares as part of a hedging, straddle, conversion or other integrated
transaction;
. Non-U.S. persons;
. Persons whose functional currency is not the U.S. dollar;
. Persons subject to the U.S. alternative minimum tax;
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<PAGE>
. Persons who acquired shares of Transamerica common stock pursuant to an
employee stock option or otherwise as compensation; and
. Transamerica stockholders that will own or will be deemed to own, five
percent or more of either the total voting power or the total value of
the stock of AEGON immediately after the merger.
In addition, no information is provided in this document as to the tax
consequences of the merger under state, local, or foreign laws or any federal
laws other than those pertaining to the income tax. Consequently, you are
advised to consult a tax advisor as to the specific tax consequences of the
merger to you.
General. Transamerica and AEGON have received opinions of Wachtell, Lipton,
Rosen & Katz and LeBoeuf, Lamb, Greene & McRae, L.L.P., respectively, dated the
date of this proxy statement-prospectus, to the effect that the merger will be
treated for U.S. federal income tax purposes as a reorganization under Section
368(a) of the Code. Based upon such opinions, the material federal income tax
consequences of the merger will be as described below. Opinions of counsel are
not equivalent to rulings from the IRS. We have not requested nor will we
request an advance ruling from the IRS as to the tax consequences of the
merger.
None of AEGON, Transamerica or Tony Merger Corp. will recognize gain or loss
as a result of the merger.
If your surrendered Transamerica shares have an adjusted basis that is less
than the sum of the fair market value, as of the date of the merger, of the
AEGON common shares and the amount of cash you receive in the exchange, then
you will recognize a gain. This recognized gain will equal the lesser of:
(1) the excess, if any, of the sum of the fair market value, as of the
date of the merger, of the AEGON common shares and amount of cash you
receive over your adjusted basis of the shares of Transamerica common stock
surrendered; and
(2) the amount of cash you receive in the exchange.
However, if your adjusted basis in the shares of Transamerica common stock
surrendered in the transaction is more than the sum of the fair market value,
as of the date of the merger, of the AEGON common shares and the amount of cash
you receive, your loss will not be currently allowed or recognized for U.S.
federal income tax purposes. This is because the reorganization provisions of
the U.S. tax code do not permit a stockholder who receives both stock and cash
in a reorganization to recognize the loss.
Character of Gain as Capital Gain or Dividend Income. If you recognize all
or part of your gain on the exchange you will recognize a capital gain if the
exchange is not regarded as a dividend and you held your shares of Transamerica
common stock as capital assets. If the exchange is so regarded, however, such
gain will be taxable as a dividend to the extent of your ratable share of
accumulated earnings and profits. Any such dividend would be taxable at
ordinary income rates. The remainder, if any, of such recognized gain will be
capital gain if the shares of Transamerica common stock you exchange were held
as capital assets.
The determination of whether the exchange is regarded as a dividend will be
made in accordance with Section 302 of the U.S. tax code, taking into account
the deemed stock ownership rules of Section 318 of the U.S. tax code. If your
percentage interest in AEGON is "meaningfully reduced," you will be entitled to
capital gains treatment on the exchange. This determination is based on your
particular facts and circumstances. However, the IRS has indicated in published
rulings that a distribution that results in any actual reduction in interest of
an extremely small minority stockholder in a publicly held corporation will
meaningfully reduce the stockholder's interest in the corporation. Accordingly,
such a distribution will result in capital gains treatment for you if you hold
your Transamerica shares as capital asset and exercise no control with respect
to corporate affairs.
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Under the rules described above, if your exchange does not qualify for
capital gains treatment, your exchange will be regarded as a dividend. If the
exchange is so regarded as to a corporate stockholder of Transamerica common
stock, such corporate stockholder will be eligible for a dividends received
deduction, subject to applicable conditions and limitations. Such a corporate
stockholder will also be subject to the "extraordinary dividend" provisions of
the U.S. tax code. Under recently enacted legislation, any such cash that is
treated as a dividend to a corporate stockholder will constitute an
extraordinary dividend. Consequently, the nontaxed portion of any such dividend
would reduce a corporate stockholder's adjusted tax basis in the AEGON common
shares received in the merger, but not below zero, and would thereafter be
taxable as capital gain.
Because the determination of whether a payment will be regarded as a
dividend will generally depend upon the facts and circumstances pertaining to
you, you are strongly advised to consult your own tax advisor regarding the tax
treatment of cash received in the merger, including the application of the
deemed ownership rules of the U.S. tax code and the effect of any transactions
in AEGON common shares by you.
Basis and Holding Period. Your basis in the AEGON common shares received in
the merger will equal your basis in your shares of Transamerica common stock
reduced by the amount of cash received in the merger and increased by any gain
recognized on the merger. Provided that you held the shares of Transamerica
common stock surrendered as capital assets at the time of the merger, the
holding period of the AEGON common shares you receive will include the holding
period of the shares of Transamerica common stock surrendered.
Cash Received in Lieu of Fractional Shares. If you receive cash in lieu of
fractional AEGON common shares you will be treated as having first received
such fraction of a AEGON Share and then as having received cash in exchange for
the fractional share interest. Thus, you will generally recognize gain or loss
in an amount equal to the difference between the amount of cash received in
lieu of fractional AEGON common shares and the portion of your basis in the
shares of Transamerica common stock allocable to the fractional interest.
Dissenting Stockholders. The transaction will be a taxable event for U.S.
federal income tax purposes for you if you exercise dissenters' rights and
receive solely cash in exchange for your shares of Transamerica common stock in
connection with the exercise of dissenters' rights. In that case you generally
will recognize a gain or loss for U.S. federal income tax purposes equal to the
difference between the cash received and your tax basis in the shares of
Transamerica common stock surrendered. Assuming that you hold the shares of
Transamerica common stock as a capital asset, such gain or loss will generally
be capital gain or loss. If you actually or constructively own AEGON common
shares after the merger, the cash you receive may, in certain circumstances, be
taxed as a dividend in accordance with the principles described above under
"Character of Gain as Capital Gain or Dividend Income."
U.S. Backup Withholding with Respect to Cash Payments. Unless you are a
corporation or come within another exempt category, the exchange agent will be
required to withhold, and will withhold, 31% of any payments to which you or
your payee is entitled pursuant to the merger agreement unless you or your
payee provides your or your payee's taxpayer identification number and you or
your payee certifies that such number is correct. You and, if applicable, your
other payee should complete and sign the Substitute Form W-9 that will be
included as part of the transmittal letter to avoid backup withholding unless
an applicable exemption exists and is proved in a manner satisfactory to AEGON
and the exchange agent.
Netherlands Dividend Withholding Tax. Under the income tax treaty currently
in force between The Netherlands and the U.S., any cash dividend paid by AEGON
to a resident of the U.S., as defined under that treaty, will be subject to a
Dutch withholding tax that in most cases will equal 15% of the gross amount of
the dividend. In most circumstances, an AEGON shareholder who is subject to
such withholding tax should be allowed a credit or deduction for such
withholding tax against his U.S. income tax liability. Generally, the
withholding tax does not apply to stock dividends.
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<PAGE>
U.S. Backup Withholding Tax in General. After the merger closes, you may be
subject to backup withholding at the rate of 31% with respect to dividends and
proceeds of a redemption, unless you (a) are a corporation or come within
certain other exempt categories and, when required, demonstrate this fact or
(b) provide a correct taxpayer identification number, certify as to no loss of
exemption from backup withholding and otherwise comply with applicable
requirements of the backup withholding rules. Any amount withheld under these
rules would be credited against your federal income tax liability. AEGON may
require you to establish an exemption from backup withholding or to make
arrangements satisfactory to AEGON with respect to the payment of backup
withholding. If you do not provide AEGON with your current taxpayer
identification number, you may be subject to penalties imposed by the IRS.
You Have Appraisal Rights if You Do Not Wish to Receive the Consideration to be
Delivered in the Merger
You are entitled to appraisal rights under Section 262 of the Delaware
General Corporation Law. This means that, instead of accepting the
consideration to be issued in the merger for your Transamerica shares, you may
demand the fair value of your Transamerica shares as determined by a Delaware
court. However, to do so, you must comply with the conditions established by
Section 262, which are complex.
The following discussion is only a summary of those conditions. If you are
considering exercising appraisal rights, you should also read the copy of
Section 262 which we have provided at Appendix C. If you fail to comply with
the conditions described below or in Section 262, you may lose your appraisal
rights.
Here are some of the requirements for preserving and exercising appraisal
rights:
. You must own the shares of Transamerica common stock for which you
demand appraisal on the date you deliver the demand for appraisal
described below.
. You must continue to own those shares through the closing of the
acquisition of Transamerica by AEGON.
. Before the vote is taken at the special meeting, you must deliver a
properly executed written demand for appraisal of your shares to
Transamerica. The demand will be sufficient if you sign it, and it
reasonably informs Transamerica of your identity and your intent to
demand an appraisal of your shares. Any written demands should be sent
to:
Transamerica Corporation
600 Montgomery Street
San Francisco, California 94111
Attention: Secretary
. You must NOT have voted in favor of the proposed merger, either in
person, by proxy or by written consent. You can meet this requirement by
either not voting or by voting against the merger.
Important: You must separately comply with each of the last two requirements
listed above. Under Delaware law, to not vote in favor of the proposed
transaction, or to vote against it, is not considered a written demand for
appraisal of your shares.
. You must file a petition for appraisal of your shares in the Delaware
Court of Chancery, as more fully described below, within 120 days after
the closing of the merger.
. Within 20 days after you file your petition with the Delaware Court of
Chancery, you must send a copy of it to Transamerica. Send it to the
same address to which your written demand is sent (see the third bullet
point in this section).
. You must satisfy the other conditions described more fully below and in
Appendix C.
Availability of Information About Other Dissenting Stockholders. Within 120
days after the closing of the proposed merger, if you have complied with the
conditions for appraisal of your shares, you may request in
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<PAGE>
writing, and Transamerica will send you, a statement of the number of
Transamerica's shares not voted in favor of the transaction, the number of
shares for which Transamerica has receive a written demand for appraisal and
the number of stockholders who own those shares. Transamerica is required to
mail this statement to you within 10 days after receiving your request or
within 10 days after the special meeting, whichever is later. You should send
any such request to the same address to which your written demand is sent (see
the third bullet point in this section).
What You Would Receive by Exercising Appraisal Rights. If you intend to
demand an appraisal of your Transamerica shares, keep in mind that the fair
value of your shares as determined under Delaware law could be more than, the
same as or less than the value of the cash and AEGON common stock you would
receive if you did not demand an appraisal of your shares. Section 262 requires
the fair value of your Transamerica common shares to be determined exclusive of
any element of value arising from the accomplishment or expectation of the
merger. A discussion of the other factors considered by the Delaware Court of
Chancery in appraising your shares is beyond the scope of this summary.
Expenses of the Appraisal Proceeding. The cost of the appraisal proceeding
may be determined by the court and allocated among the parties to the
proceeding as the court deems equitable. Also, on application by a dissenting
stockholder, the court may order that all or a portion of the expenses incurred
in the appraisal proceeding by all dissenting stockholders be charged pro rata
against the value of all shares of stock entitled to appraisal.
Termination of Rights as a Stockholder. If you properly demand appraisal of
your shares, you will lose your right to vote those shares on any matter or to
receive payment of dividends or other distributions on such shares.
Withdrawal of a Demand for Appraisal. You may withdraw a demand for
appraisal, and accept the consideration received by other stockholders of
Transamerica, at any time within 60 days after the closing of the merger. After
this 60-day period has passed, you may not withdraw your demand for appraisal
unless Transamerica consents to the withdrawal. If you take all the other
actions required to exercise your appraisal rights but fail to file a petition
in the Delaware Court of Chancery within 120 days after the transaction closes,
you will lose your appraisal rights. However, you will then be entitled to
receive the consideration the other stockholders of Transamerica receive in the
transaction.
The failure to take any step required to preserve or exercise appraisal
rights may result in the loss of those rights. In view of the complexity of
exercising appraisal rights under Delaware law, stockholders who are
considering exercising such rights should consult with their legal advisors.
Stock Exchange Listing
It is a condition to the merger that the AEGON common shares to be issued
pursuant to the merger agreement be authorized for listing on the NYSE, subject
to official notice of issuance. Application has been made for listing on the
NYSE of the AEGON common shares to be issued in the merger.
HSR Act, Insurance Regulatory Approvals and Other Regulatory Approvals
U.S. Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the related rules (the "HSR Act"), the merger may not be consummated
unless specified waiting period requirements have been satisfied. AEGON and
Transamerica applied to the U.S. Federal Trade Commission (the "FTC") and the
U.S. Department of Justice (the "DOJ") for clearance under this requirement on
March 19, 1999 and were granted early termination of the waiting period
requirements on March 30, 1999. However, at any time before or after the
closing of the merger, the FTC, the DOJ or any other person could take action
under the antitrust laws, including seeking to enjoin the completion of the
merger or seeking the divestiture of substantial assets by
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<PAGE>
AEGON or Transamerica. Although AEGON and Transamerica do not believe that
there are substantive grounds for such challenge, we cannot assure you that a
challenge to the merger on antitrust grounds will not be made or that, if such
a challenge is made, it would not be successful.
European Union. Under Council Regulation No. 4064/89 of the European
Commission and the related regulations, the merger is subject to review by the
European Commission. We notified the European Commission of the merger on April
30, 1999 and expect the European Commission to issue a clearance decision on or
before June 15, 1999.
State Insurance Commissions. Transamerica is engaged in writing life and
accident and health insurance. Generally, a person seeking to acquire voting
securities, such as shares of Transamerica common stock, in an amount that
would result in such person controlling, directly or indirectly, a U.S. insurer
must, together with any person ultimately controlling such person, file with
the relevant insurance commissioners an application seeking approval of the
change of control. Transamerica owns insurance companies domiciled in Arizona,
California, Missouri, New York and North Carolina. Accordingly, the obligations
of Transamerica and AEGON to consummate the merger are conditioned upon the
approval of the insurance commissioners of these states. The Arizona,
California, Missouri, New York and North Carolina insurance statutes require a
determination by the commissioner of insurance of each state as to certain
factual matters with respect to the proposed acquisition. Public hearings
concerning the merger may be required in each state. AEGON and Transamerica
have filed applications for such approvals, but we cannot assure you as to when
or if the required approvals will be obtained.
Other Laws. Transamerica also has an insurance operation domiciled in Canada
and the approval of the relevant Canadian insurance regulator will be required.
In addition, because Transamerica has a subsidiary which is a national bank the
approval of the Comptroller of the Currency will be required. AEGON and
Transamerica conduct operations in a number of jurisdictions where other
regulatory filings, notifications or approvals may be required or advisable in
connection with the completion of the merger.
General. The merger agreement provides that the parties to the merger
agreement will use all reasonable efforts to take all actions and do all things
required under applicable laws and regulations to complete the merger
agreement, including using their best efforts to avoid the entry of, or to have
vacated, any order or judgment that would prevent consummation of the merger.
AEGON Shareholder Approval
On April 29, 1999, AEGON's shareholders approved use of general reserves in
connection with the issuance of shares in the merger. Although shareholder
approval is not always required for AEGON to issue shares in a merger,
shareholder approval was required under Dutch law in this case because the
paid-in capital on the newly issued shares had to be made from the general
reserves of AEGON.
Accounting Treatment
The merger will be accounted for by AEGON as a purchase for financial
accounting purposes in accordance with Dutch accounting principles.
Interests of Certain Persons in the Transactions
In considering the recommendation of the Transamerica Board to approve the
merger, you should be aware that the senior executive officers of Transamerica
and the members of the Transamerica Board have interests in the transaction
that are different from, or in addition to, the interests of stockholders
generally. The Transamerica Board recognized those interests and determined
that they neither supported nor detracted from the advisability of the merger.
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<PAGE>
Severance Agreements. Transamerica has change in control severance
agreements with certain of our employees, including the following senior
executive officers of Transamerica:
. Frank C. Herringer, chairman of the board and chief executive officer,
. Robert A. Watson, executive vice president,
. Richard N. Latzer, senior vice president and chief investment officer,
. Thomas J. Cusack, executive vice president, and
. Edgar H. Grubb, executive vice president and chief financial officer.
Under the severance agreements with these executive officers, if within the
three years of a change in control of Transamerica (such as the merger), the
surviving corporation terminates the executive's employment other than for:
. cause,
. normal retirement,
. disability, or
. death,
or the executive terminates his employment after:
. a substantial change in duties or responsibilities,
. a reduction in annual base salary or benefits,
. the elimination (without replacement) of compensation plans,
. a required relocation,
. a substantial increase in required business travel, or
. the first anniversary of the closing of the merger (within 30 days),
the executive will be entitled to receive a lump-sum severance payment equal to
the sum of the following amounts:
. the executive's base salary through the date of termination (if not
previously paid),
. three times the executive's highest annual target cash compensation
(based on annual base salary and target annual bonus) during the three
years prior to the change in control,
. any unpaid incentive compensation for the year preceding the date of
termination (based on the greater of the executive's target annual bonus
for such year or the actual annual bonus determined for such year) plus
the pro-rata annual bonus (based on the executive's target annual bonus
for the year in which the date of termination occurs), and
. a payment having an actuarial present value equal to the additional
pension benefits the executive would have received if the executive had
continued to be employed for an additional three years.
Additionally, we would be required to continue welfare benefits coverage for
the executive for three years following termination and from retirement until
death (or his spouse's death, if later). Under the severance agreement we would
pay the executive an amount sufficient to make the executive whole for any
excise tax on excess parachute payments imposed under Section 4999 of the U.S.
tax code.
At this time, we do not know whether any of these executive officers'
employment with the surviving corporation will terminate under circumstances
entitling the executive to severance payments. The factors that provide the
basis for calculating the severance payments vary over time, and consequently
we can only
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<PAGE>
determine these amounts on the date they are payable. If cash severance
payments are made to these executive officers at the closing of the merger, we
estimate the pre-tax amounts would be approximately:
<TABLE>
<CAPTION>
Severance
Executive Payment
--------- -----------
<S> <C>
Frank C. Herringer............................................ $10,058,000
Robert A. Watson.............................................. 5,599,000
Richard N. Latzer............................................. 3,380,000
Thomas J. Cusack.............................................. 4,322,000
Edgar H. Grubb................................................ 3,702,000
-----------
Total....................................................... $27,061,000
===========
</TABLE>
Incentive Compensation Plans. Under the terms of Transamerica's Value Added
Incentive Plan, upon a change in control of Transamerica, we will pay each
named executive officer the pro-rata amount of the officer's target award for
the plan year. Assuming we close the merger on July 1, 1999, we estimate the
pre-tax amounts of the pro-rata payments as follows:
<TABLE>
<CAPTION>
Target Award
as a Percent Pro-Rata Value
Executive of Salary Added Plan Payment
--------- ------------ ------------------
<S> <C> <C>
Frank C. Herringer........................ 125% $ 604,000
Robert A. Watson.......................... 75% 298,000
Richard N. Latzer......................... 65% 185,000
Thomas J. Cusack.......................... 75% 260,000
Edgar H. Grubb............................ 75% 195,000
----------
Total................................... $1,542,000
==========
</TABLE>
Under the terms of the Transamerica 1998 Cash Long-Term Incentive Plan, upon
a change in control of Transamerica occurring prior to December 31, 1999 (such
as the merger), each participant will receive a payment equal to the greater of
one-third of the participant's target award and the pro-rata amount of the
participant's target award. Assuming we close the merger on July 1, 1999, we
estimate the pre-tax amount of the pro-rata payments to these executive
officers to be approximately:
<TABLE>
<CAPTION>
Pro-
Rata 1998
Executive LTIP Payment
--------- ------------
<S> <C>
Frank C. Herringer........................................... $2,559,000
Robert A. Watson............................................. 1,439,000
Richard N. Latzer............................................ 640,000
Thomas J. Cusack............................................. 1,439,000
Edgar H. Grubb............................................... 800,000
----------
Total...................................................... $6,877,000
==========
</TABLE>
Unvested Stock Options. At the closing of the merger, each outstanding and
unexercised Transamerica stock option will become fully vested and immediately
exercisable. Each holder of an option will receive for each share subject to an
option cash equal to $78 minus the exercise price of the option (less any
required income or employment tax withholding). At the closing of the merger,
each holder of a Transamerica tandem limited stock appreciation right will be
entitled to elect to receive cash equal to:
. the greater of (1) the highest fair market value of a share of
Transamerica common stock during the 60-day period ending on the merger
closing and (2) the highest price paid in the merger for Transamerica
common stock, less the exercise price of the right, times
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<PAGE>
. the number of shares of Transamerica common stock subject to the right
at the closing, less
. any required income or employment tax withholding.
The aggregate number of shares of Transamerica common stock underlying
awards of options held by nonemployee directors that will become exercisable as
a result of the merger is 24,000, with an aggregate pre-tax value $576,000. The
aggregate number of shares of Transamerica common stock underlying awards of
options and tandem limited stock appreciation rights held by these executive
officers that will vest as a result of the merger has the pre-tax value of
approximately:
<TABLE>
<CAPTION>
Number of
Underlying
Executive Shares Value
--------- ---------- -----------
<S> <C> <C>
Frank C. Herringer................................. 753,334 $25,540,400
Robert A. Watson................................... 237,980 6,533,600
Richard N. Latzer.................................. 145,000 3,397,700
Thomas J. Cusack................................... 279,647 8,737,500
Edgar H. Grubb..................................... 237,051 7,630,000
--------- -----------
Total............................................ 1,653,012 $51,839,200
========= ===========
</TABLE>
Phantom Restricted Stock. At the closing of the merger, each phantom
restricted stock award and phantom restricted share will, generally, fully vest
and become immediately payable at $78 (less any required income or employment
tax withholding). The aggregate number of phantom restricted stock awards held
by nonemployee directors that will vest or become free of restrictions is
17,590, and the aggregate pre-tax value of these awards is approximately
$1,372,000. A pro-rata portion of the phantom restricted share award granted
under Mr. Herringer's employment agreement will vest, with the remaining
unvested portion of such award continuing to vest over the term of the
employment agreement or, if earlier, upon his termination of employment for
good reason or other than for cause during the two-year period following the
closing of the merger. Assuming the closing of the merger is July 1, 1999, we
estimate the pro-rata portion of the award to equal 85,771 phantom restricted
shares and the pre-tax value to be approximately $6,690,100.
Aggregate Payments. Transamerica had the compensation and benefit
arrangements described above in place prior to the commencement of discussions
with AEGON (with the exception of the Value Added Incentive Plan approved in
1999). We estimate that the aggregate value of the payments to each named
officer and the directors excluding severance that may be paid if an executive
is terminated and excluding amounts payable for shares of Transamerica common
stock owned directly and shares underlying previously vested options, is
approximately:
<TABLE>
<CAPTION>
Aggregate
Executive Payments
--------- -----------
<S> <C>
Frank C. Herringer........................................... $35,393,500
Robert A. Watson............................................. 8,270,600
Richard N. Latzer............................................ 4,222,700
Thomas J. Cusack............................................. 10,436,500
Edgar H. Grubb............................................... 8,625,000
All Nonemployee Directors.................................... 1,948,000
</TABLE>
Vested Stock Options. As disclosed in Transamerica's annual proxy statements
and in Transamerica's 1998 10-K, each of the named executive officers holds
options granted in prior years under the Transamerica stock plans that are
already vested, due to the officer's continued service with Transamerica and/or
the achievement of performance objectives unrelated to the merger. Each share
subject to a previously vested option will also be canceled in the merger for
cash equal to the $78 minus the exercise price of the option (less any required
income or employment tax withholding). This treatment differs from the way in
which
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<PAGE>
Transamerica common stock will be treated in the merger, which will be
converted into a combination of cash and AEGON common stock in the merger. See
"--What Transamerica Stockholders Will Receive in the Merger"--page 14. We
estimate the pre-tax value of the amounts relating to previously vested options
payable to these named executive officers and the non-employee directors as
follows:
<TABLE>
<CAPTION>
Value of Previously
Executive Vested Options ($)
--------- -------------------
<S> <C>
Frank C. Herringer.................................... $145,862,300
Robert A. Watson...................................... 37,763,400
Richard N. Latzer..................................... 33,737,200
Thomas J. Cusack...................................... 49,159,000
Edgar H. Grubb........................................ 41,708,400
------------
Total............................................... $308,230,300
All Nonemployee Directors............................. 3,969,100
============
</TABLE>
Indemnification and Insurance. The merger agreement provides that AEGON USA
and the surviving corporation will indemnify the present and former directors
and officers of Transamerica to the fullest extent permitted by law against any
liabilities or expenses incurred in connection with any claim or proceeding
arising out of matters existing or occurring at or prior to the closing of the
merger. The merger agreement further provides that, for a period of six years
following the closing of the merger, AEGON and the surviving corporation will
maintain a policy of officers' and directors' liability insurance for acts and
omissions occurring on or prior to the closing of the merger on terms
substantially no less advantageous as Transamerica's current policy, provided
that after the third year following the closing of the merger, the surviving
corporation will not be required to pay annual premiums in excess of 250% of
the last annual premium paid by Transamerica to procure such insurance.
The merger agreement provides that Mr. Herringer will become a member of the
Executive Board of AEGON and will remain chairman of the surviving corporation
and will become chairman of AEGON USA following the closing of the merger.
Other Effects of the Merger
The content and timing of reports and notices that AEGON files with the SEC
differs in several respects from the reports and notices that Transamerica
currently files. AEGON is, and will be subsequent to the merger, a foreign
private issuer for the purposes of the reporting rules under the Exchange Act.
As a U.S. reporting company Transamerica must file with the SEC, among other
reports and notices,
(1) an annual report on Form 10-K within 90 days after the end of each
fiscal year,
(2) quarterly reports on Form 10-Q within 45 days after the end of each
fiscal quarter, and
(3) reports on Form 8-K upon the occurrence of certain corporate
events.
As a foreign private issuer, pursuant to the requirements of the Exchange
Act, AEGON is, and will be, required to
(1) file with the SEC an annual report on Form 20-F within six months
after the end of each fiscal year and
(2) furnish reports on Form 6-K upon the occurrence of significant
corporate events.
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<PAGE>
AEGON is not required under the Exchange Act to file quarterly reports on Form
10-Q after the end of each financial quarter.
In addition, the content and timing of reports and notices that holders of
AEGON common shares will receive will differ from the reports and notices that
are currently received by Transamerica stockholders. As a U.S. reporting
company, Transamerica must mail to its stockholders in advance of each annual
meeting of stockholders
(1) an annual report containing audited financial statements, and
(2) a proxy statement that complies with the requirements of the
Exchange Act.
As a foreign private issuer, AEGON is exempt from the rules under the
Exchange Act prescribing the furnishing and content of annual reports and proxy
statements to its shareholders. However, AEGON will furnish shareholders with
an annual report which contains audited financial statements prepared in
conformity with Dutch accounting principles, including U.S. GAAP
reconciliations and a discussion of AEGON's financial results that is
comparable to the management's discussion and analysis that is contained in
Transamerica's annual reports on Form 10-K. AEGON will also furnish
shareholders with semi-annual interim reports which include unaudited interim
financial information prepared in conformity with Dutch accounting principles
and notices of meetings of shareholders and related documents in accordance
with the rules of the New York Stock Exchange. In addition, as a foreign
private issuer, AEGON is exempt from the rules under the Exchange Act which
requires officers, directors and 10% shareholders to
(1) file reports with the SEC on transactions in AEGON's common shares;
and
(2) disgorge profits realized from any purchase and sale of AEGON common
shares within six months.
Cautionary Statement Concerning Forward-looking Statements
Transamerica and AEGON have made forward-looking statements in this document
that are subject to risks and uncertainties. These statements are based on
management's belief and assumptions, and on information currently available to
management. Forward-looking statements include the information concerning
possible or assumed future results of operations of Transamerica and AEGON
contained under "Summary," "The Proposed Merger--Background of the Merger," "--
Reasons for the Merger," "--Recommendation of the Transamerica Board of
Directors," "--Opinion of Financial Advisor" and "Unaudited Pro Forma Condensed
Consolidated Financial Information" and those preceded by, followed by or that
include the words "believes," "expects," "anticipates" or similar expressions.
Forward-looking statements also include statements in which we use words such
as "expect," "anticipate," "intend," "plan," "believe," "estimate" or similar
expressions.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. Transamerica's and AEGON's future
results and shareholder values may differ materially from those expressed in
these forward-looking statements. Many of the factors that will determine these
results and values are beyond our ability to control or predict. We caution you
not to put undue reliance on any forward-looking statements. In addition, we do
not have any intention or obligation to update forward-looking statements after
we distribute this document, even if new information, future events or other
circumstances have made them incorrect or misleading. For those statements,
Transamerica and AEGON claim the protection of the safe harbor for forward-
looking statements contained in the Private Securities Litigation Reform Act of
1995.
You should understand that the following important factors, in addition to
those discussed elsewhere in this document and in the documents which are
incorporated by reference herein, could affect the future results
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<PAGE>
of Transamerica and AEGON, and could cause those results to differ materially
from those expressed in such forward-looking statements:
. the effect of economic conditions;
. the ability of AEGON to successfully integrate operations;
. the impact of competitive products and pricing;
. changes in claims paying or debt ratings by one or more of the
nationally recognized rating agencies;
. product development;
. changes in laws and regulations, including changes in accounting
standards;
. customer demand;
. effectiveness of advertising and marketing spending or programs;
. the effect of Year 2000 issues;
. consumer perception of insurance-related issues; and
. foreign economic conditions, including currency rate fluctuations.
Federal Securities Law Consequences
The AEGON common shares you receive in the merger will be freely
transferable unless you are deemed to be an "affiliate" of Transamerica under
the Securities Act. Persons who may be affiliates of Transamerica for those
purposes generally include individuals or entities that control, are controlled
by, or are under common control with, Transamerica, and would not include
stockholders who are not officers, directors or principal stockholders of
Transamerica. Common shares received by affiliates may be resold by them only
in transactions permitted by Rule 145 under the Securities Act or as otherwise
permitted under the Securities Act.
The merger agreement requires Transamerica to use its commercially
reasonable efforts to cause each of its affiliates to deliver to AEGON a
written agreement to the effect that the affiliate will not offer, sell or
otherwise dispose of any of the AEGON common shares issued to them in the
merger in violation of the Securities Act.
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<PAGE>
MARKETS AND MARKET PRICES
The principal market for AEGON common shares is the Amsterdam Exchanges (the
"Amsterdam Stock Exchange"). The AEGON common shares are also listed on the
NYSE (under the symbol "AEG") and the Tokyo, London, Frankfurt and Swiss Stock
Exchanges. Transamerica common stock is listed under the symbol "TA" on the
NYSE. Transamerica common stock is also listed on the Pacific, Amsterdam,
Frankfurt, London, Paris, and Swiss Stock Exchanges. Prices at which the AEGON
common shares may trade cannot be predicted.
On May 25, 1999, there were 38,609 holders of record of Transamerica common
stock and 124,685,589 shares of Transamerica common stock outstanding. On May
31, 1999, there were 584,347,318 outstanding AEGON common shares.
The following table presents trading information on the New York Stock
Exchange Composite Tape for an AEGON common share and Transamerica common stock
on February 17, 1999 and June 16, 1999. February 17, 1999 was the last full
trading day prior to our announcement of the proposed merger. June 16, 1999 was
the last practicable trading day for which information was available prior to
the date of this proxy statement-prospectus.
<TABLE>
<CAPTION>
AEGON Common Share Transamerica Common Stock
----------------------- -------------------------
High Low Last High Low Last
------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
February 17, 1999............. $96 1/4 $94 $94 3/4 $59 7/8 $56 1/2 $57 5/8
June 16, 1999................. 78 77 1/2 77 7/8 75 1/4 74 3/4 74 15/16
</TABLE>
On January 4, 1999, the Amsterdam Stock Exchange began quoting share prices
in euros. The exchange rate at which the Dutch Guilder has been irrevocably
fixed against the euro is NLG 2.20371=(Euro) 1.00.
37
<PAGE>
The following table sets forth for the calendar quarters indicated (ended
March 31, June 30, September 30 and December 31)
(1) the range of high and low sale prices of AEGON common shares and
Transamerica common stock as reported on the NYSE Composite Tape and the
dividends per share declared on AEGON common shares and Transamerica common
stock, and
(2) the high and low closing prices of AEGON common shares on the
Amsterdam Stock Exchange as reported by the "Officiele Prijscourant," the
official daily newspaper of the Amsterdam Exchanges in The Netherlands.
<TABLE>
<CAPTION>
AEGON Common
Shares on
Amsterdam AEGON Common Transamerica
Stock Shares on Common Stock
Exchange the NYSE(1) on the NYSE
------------- ------------ -------------
(In Dutch (In U.S. (In U.S.
Guilders) Dollars) Dollars)
High Low High Low Dividends High Low Dividends
------ ------ ------ ----- --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996
1st Qtr................ 39.00 33.45 23.69 20.63 -- 39.44 35.50 0.25
2nd Qtr................ 43.65 38.30 25.00 22.38 0.51 42.25 35.69 0.25
3rd Qtr................ 42.90 35.55 25.69 21.19 -- 41.50 33.50 0.25
4th Qtr................ 55.05 42.55 31.63 24.94 0.35 41.19 35.00 0.25
1997
1st Qtr................ 70.15 54.40 36.69 30.69 -- 45.94 38.57 0.25
2nd Qtr................ 73.40 60.15 38.19 32.32 0.43 48.00 39.32 0.25
3rd Qtr................ 80.50 69.25 39.85 34.22 -- 50.82 45.88 0.25
4th Qtr................ 90.30 75.90 44.94 37.69 0.34 58.25 48.57 0.25
1998
1st Qtr................ 128.25 90.25 62.37 44.56 -- 63.25 49.38 0.25
2nd Qtr................ 177.00 126.60 86.50 60.97 0.46 60.94 56.31 0.25
3rd Qtr................ 223.40 133.00 110.19 71.06 -- 63.13 49.50 0.25
4th Qtr................ 234.10 132.00 125.75 72.25 0.46 58.56 45.75 0.25
1999
1st Qtr................ 244.50 181.40 130.00 89.00 -- 73.94 52.50 0.25
2nd Qtr. (through
6/16/99).............. 201.00 167.04 97.06 77.88 0.62 75.56 70.94 0.25
</TABLE>
- --------
(1) Based upon a U.S. dollar/Dutch Guilder exchange rate at the date of
payment. AEGON pays an interim dividend during each year, in the third or
fourth quarter, and a final dividend in the second quarter of the following
year.
We cannot assure you of the market price of AEGON common shares or
Transamerica common stock at, or, in the case of AEGON common shares, after the
completion of the merger. We urge you to obtain current market quotations for
AEGON common shares and Transamerica common stock.
AEGON common shares (583,180,340 outstanding at December 31, 1998) are held
by shareholders worldwide in bearer and registered form. In The Netherlands
234,543,661 shares are in registered form (of which 208,298,161 shares are held
by Vereniging AEGON, AEGON's largest shareholder). In the U.S., 32,766,240
shares are "Shares of New York Registry" ("New York Shares"). Based on
information that has been collected from custodians and registrars, AEGON
estimates that U.S. shareholders in total hold approximately 79 million AEGON
common shares. After the merger the number of shares held by U.S. shareholders
will increase to between 136 million and 180 million (between approximately 22%
and 27% of the shares then outstanding) depending on the average trading value
for an AEGON common share used in the closing of the merger. AEGON's bearer
shares and registered shares may be exchanged on a one for one basis. On the
Amsterdam Stock Exchange only bearer shares may be traded and on the New York
Stock Exchange only New York Shares may be traded.
38
<PAGE>
Fluctuations in the exchange rate between the euro and the U.S. dollar will
affect the U.S. dollar equivalent of the euro price of the AEGON common shares
traded on the Amsterdam Stock Exchange and, as a result, are likely to affect
the market price of the AEGON common shares in the U.S. Such fluctuations will
also affect any U.S. dollar amounts received by holders of AEGON common shares
on conversion of any cash dividends paid in Dutch Guilders on the AEGON common
shares.
The following table sets forth for the periods indicated the high, low,
average and period-end noon buying rate in New York City for cable transfers in
Dutch Guilders as certified for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate"), which are not materially different from the
Midpoint Rate (the rate settled each working day at 2:15 p.m. hours by the
Dutch Central Bank), used in computing AEGON's financial statements. The
average rate means the average of the exchange rates on the last day of each
month during a year.
<TABLE>
<CAPTION>
High Low Average Period-End
------ ------ ------- ----------
(Dutch Guilder per one U.S.
Dollar)
<S> <C> <C> <C> <C>
1994........................................ 1.9750 1.6727 1.8077 1.7360
1995........................................ 1.7494 1.5192 1.5976 1.6035
1996........................................ 1.7560 1.6075 1.6889 1.7271
1997........................................ 2.1177 1.7300 1.9585 1.9990
1998........................................ 2.0890 1.8142 1.9825 1.8770
</TABLE>
On January 1, 1999 the euro ("(Euro)") was introduced as a new currency in
the following 11 European Union member states (the "Participating Member
States"): Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, The Netherlands, Portugal and Spain. The respective currencies of
the Participating Member States, including the Dutch Guilder, will be
nondecimal subdivisions of the euro until January 1, 2002 and to up to six
months thereafter. The exchange rate at which the Dutch Guilder has been
irrevocably fixed against the euro is NLG2.20371 = (Euro)1.00.
The Federal Reserve Bank no longer quotes Noon Buying Rate for currencies of
any of the Participating Member States in the Euro, including The Netherlands.
The following table sets forth for the period indicated the high, low, average
and period-end Noon Buying Rate for the euro. The exchange rate at which the
Dutch Guilder has been irrevocably fixed against the euro is NLG2.20371 =
(Euro)1.00.
<TABLE>
<CAPTION>
High Low Average Period-End
------ ------ ------- ----------
(euro per one U.S. Dollar)
<S> <C> <C> <C> <C>
1999 (through June 16, 1999)................ 0.9713 0.8466 0.9165 0.9711
</TABLE>
39
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma information set forth below gives effect to the
merger as if it had been consummated on December 31, 1998, for balance sheet
presentation purposes and January 1, 1998, for income statement purposes
subject to the assumptions and adjustments in the accompanying notes to the pro
forma financial information.
The pro forma adjustments reflecting the consummation of the merger are
based on purchase accounting methods under Dutch accounting principles and upon
the assumptions set forth in the notes hereto, including the exchange of all
outstanding shares of Transamerica common stock for an aggregate cash payment
of NLG 5,468 million and 71.4 million AEGON common shares. This pro forma
financial information should be read in conjunction with the financial data
appearing under "Summary--Summary Historical Financial Information" and the
historical financial statements of AEGON and Transamerica which have been
incorporated herein by reference. See "Where You Can Find More Information" on
page 77.
The pro forma adjustments do not reflect any operating efficiencies and cost
savings that may be achievable with respect to the combined companies. The pro
forma adjustments do not include any adjustments to historical product sales
volumes for any future price changes nor any adjustments to selling and
marketing expenses for any future operating changes.
The following information is not necessarily indicative of the financial
position or operating results that would have occurred had the merger been
consummated on the date, or at the beginning of the period, for which the
consummation of the merger is being given effect. For purposes of preparing the
AEGON consolidated financial statements, AEGON will establish a new basis for
Transamerica's assets and liabilities based upon the fair values thereof and
the AEGON purchase price, including the costs of the merger. A final
determination of required purchase accounting adjustments, including the
allocation of the purchase price to the identifiable tangible and intangible
assets acquired and liabilities assumed based on their respective fair values,
has not yet been made. Accordingly, the purchase accounting adjustments made in
connection with the development of the pro forma consolidated financial
information are preliminary and have been made solely for the purposes of
developing such pro forma consolidated financial information. AEGON will
undertake a study to determine the fair value of certain of Transamerica's
assets and liabilities and will make appropriate purchase accounting
adjustments upon completion of that study. Although significant adjustments are
not expected, the actual financial position and results of operations will
differ, perhaps significantly, from the pro forma amounts reflected herein
because of a variety of factors, including access to additional information,
changes in value and changes in operating results between the dates of the pro
forma financial data and the date on which the merger takes places. If the
actual financial position and results of operations differ from the information
contained in the pro forma data, Transamerica is not required to resolicit
stockholder approval of the merger and does not currently anticipate that it
would do so.
The Unaudited Pro Forma Condensed Consolidated Statements include the
following columns:
"Transamerica Corporation Historical" represents Transamerica as
previously reported in the 1998 Form 10-K after translation to Dutch
Guilders.
"Dutch Adjustments and Reclassifications" disclose the balance sheet and
income statement adjustments and reclassifications to conform with Dutch
accounting principles. Financial statement note (A) includes descriptions
explaining each adjustment and reclassification.
"Transamerica Corporation on a DAP Basis" represents Transamerica
Corporation Historical on a Dutch Accounting basis.
"Pro Forma Adjustments Relating to the Merger" discloses the balance
sheet and income statement purchase accounting adjustments related to the
merger. The financial statement notes include descriptions explaining each
adjustment.
40
<PAGE>
"Pro Forma Reclassifications relating to the Merger" represent the
deconsolidation of the finance companies of Transamerica, Financial
statement note (E) provides further disclosure.
"AEGON NV Historical" represents AEGON as previously reported in its
1998 Annual Report on Form 20-F.
"AEGON NV Pro Forma Combined" represents the combined financial
statements as if the merger had been consummated on December 31, 1998, for
balance sheet presentation purposes and January 1, 1998, for income
statement purposes.
"Convenience Translation to U.S. dollars AEGON NV Pro Forma Combined" is
consistent with the prior column, except all amounts have been translated
to U.S. dollars using the June 16, 1999, exchange rate of 2.14 NLG per U.S.
dollar.
41
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
AEGON NV
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1998
(Amounts in million Dutch Guilders)
(Unaudited)
<TABLE>
<CAPTION>
Convenience
Translation
U.S.
Dollars
-----------
Pro forma
Dutch Pro forma Reclassi-
Adjustments Transamerica Adjustments fications
Transamerica and Corporation relating relating AEGON NV AEGON NV
Corporation Reclassi- On a DAP to the to the AEGON NV Pro forma Pro forma
Historical(1) fications(A) Basis Merger Merger Historical Combined Combined(2)
------------- ----------- ------------ ----------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments.............. 63,172 (4,566)A1 59,249 4,566 B1 5,781 E 147,112 215,586 100,741
52 A2 285 B2
591 A3 (42)B3
(1,365)C
Investments for the
account of
policyholders........... 17,083 17,083 128,573 145,656 68,064
Other assets............. 29,553 456 A4 22,474 1,130 D (23,797)E 13,433 16,617 7,765
1,189 A5
(591)A3 3,531 E
(5,119)A6
(2,220)A7 (154)F
(794)A8
------- ------- ------ ------ ------- ------- ------- -------
Total assets............ 109,808 (11,002) 98,806 7,951 (18,016) 289,118 377,859 176,570
======= ======= ====== ====== ======= ======= ======= =======
Shareholders' equity..... 10,710 (2,182)A9 8,528 (8,528)G 17,485 23,860 11,149
(4,221)H
12,758 I
(2,192)J
30 K
Perpetual cumulative
subordinated loans...... 1,800 1,800 841
Subordinated
(convertible) loans..... 1,508 1,508 705
Technical provisions..... 56,941 (5,119)A6 48,868 5,119 L 98,318 147,294 68,829
(2,220)A7 (6,894)M
(734)A10 1,883 N
Technical provisions with
investments for the
account of policyholders.. 17,083 17,083 128,573 145,656 68,064
Long-term liabilities.... 13,117 13,117 7,912 O (11,368)E 5,267 15,517 7,251
208 C
381 E
Other liabilities........ 11,957 (747)A11 11,210 (1,573)C (6,648)E 36,167 42,224 19,731
1,824 C
1,244 P
------- ------- ------ ------ ------- ------- ------- -------
Total liabilities and
shareholder's equity... 109,808 (11,002) 98,806 7,951 (18,016) 289,118 377,859 176,570
======= ======= ====== ====== ======= ======= ======= =======
</TABLE>
- -------
(1)Based upon the exchange rate at December 31, 1998 of 1 USD = 1.8770 Dutch
Guilders.
(2)Based upon the exchange rate at June 16, 1999 of 1 USD = 2.14 Dutch
Guilders.
42
<PAGE>
AEGON NV
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(Amounts in million Dutch Guilders, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Dutch Pro forma
Adjustments Transamerica Pro forma Reclassi-
Transamerica and Corporation Adjustments fications AEGON NV
Corporation Reclassi- On a DAP relating to relating to AEGON NV Pro forma
Historical(1) fication(A) Basis the Merger the Merger Historical Combined
------------- ----------- ------------ ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Gross premiums... 3,662 4,143 A12 7,805 25,453 33,258
Investment
income.......... 5,225 (941)A13 4,742 (268)Q 196 E 11,024 15,688
145 A14 (6)C
313 A15
Other income..... 3,858 (93)A16 3,765 (36)E (3,226)E
(307)E (196)E
Income from
banking
activities...... 1,380 1,380
------ ----- ------ ----- ------ ------ ------
Total revenue... 12,745 3,567 16,312 (617) (3,226) 37,857 50,326
Benefits and
expenses
Premiums to
reinsurers...... 3,493 A12 3,493 1,156 4,649
Benefits paid and
provided........ 5,706 755 A12 6,522 (180)N 24,552 30,894
61 A17
Profit sharing
and rebates..... 1,257 1,257
Commissions and
expenses for own
account......... 4,082 (22)A18 3,912 (533)R (2,224)E 5,476 7,277
(32)A8 690 R
(105)A12 (8) F
(61)A17 (36) D
50 A14
Interest......... 850 850 442 O (736)E 1,627 2,161
(34)E
12 C
Miscellaneous
income and
expenditure..... (93)A16 2 188 190
95 A14
------ ----- ------ ----- ------ ------ ------
Total benefits
and expenses... 10,638 4,141 14,779 353 (2,960) 34,256 46,428
------ ----- ------ ----- ------ ------ ------
Income before
tax............. 2,107 (574) 1,533 (970) (266) 3,601 3,898
Corporation tax 706 (213)A11 493 (231)P (266)E 853 849
------ ----- ------ ----- ------ ------ ------
Net income....... 1,401 (361) 1,040 (739) 0 2,748 3,049
====== ===== ====== ===== ====== ====== ======
Per share
information
Net income per
share: (S)
Basic (3)....... 4.75 4.78
Diluted (4)..... 4.66 4.69
Weighted average
number of shares
outstanding:
Basic (3)....... 577.3 million 636.4 million
Diluted (4)..... 590.1 million 649.2 million
<CAPTION>
Convenience
Translation
to U.S. Dollars
---------------
AEGON NV
Pro forma
Combined(2)
---------------
<S> <C>
Revenues
Gross premiums... 15,541
Investment
income.......... 7,331
Other income.....
Income from
banking
activities...... 645
---------------
Total revenue... 23,517
Benefits and
expenses
Premiums to
reinsurers...... 2,172
Benefits paid and
provided........ 14,437
Profit sharing
and rebates..... 587
Commissions and
expenses for own
account......... 3,400
Interest......... 1,010
Miscellaneous
income and
expenditure..... 89
---------------
Total benefits
and expenses... 21,695
---------------
Income before
tax............. 1,822
Corporation tax 397
---------------
Net income....... 1,425
===============
Per share
information
Net income per
share: (S)
Basic (3)....... 2.23
Diluted (4)..... 2.19
Weighted average
number of shares
outstanding:
Basic (3).......
Diluted (4).....
</TABLE>
- -------
(1)U.S. Dollar amounts have been converted to Dutch Guilders at the average
exchange rate for 1998 of 1.9825.
(2)Convenience translation is based on balance sheet rate at June 16, 1999 of
2.14.
(3)Basic shares have been increased to include an additional 59,126,299 shares
issued as part of the transaction. In calculating the basic earnings per
share the income is reduced by preferred stock dividends of NLG 5.8 million.
(NLG 7.0 million on a pro forma basis.)
(4)Diluted shares have been increased to include an additional 59,126,999
shares issued as part of the transaction. In calculating diluted earnings
per share an interest adjustment is added back of NLG 5.6 million.
43
<PAGE>
AEGON NV
PRO FORMA RECONCILIATION OF DUTCH ACCOUNTING
PRINCIPLES TO U.S. GAAP
(Amounts in million Dutch Guilders, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Shareholders, Net income
Equity Year ended
December 31, December 31,
1998 1998
------------- ------------
<S> <C> <C> <C>
Amounts in accordance with Dutch accounting
principles(1)............................. 23,860 3,049
Adjustments:
Real estate................................ (1,477) (107)
The Netherlands: carried at original cost
for first five years and appraisal
increments recognized thereafter
U.S.: carried at depreciated cost
Group companies and participations......... -- 331
The Netherlands: Included as an
unconsolidated group company at fair value
in invested assets. Dividends received
reported as income.
The U.S.: Assets and liabilities recorded
at market value with remaining cost
recorded as goodwill. Actual earnings are
reported.
Debt securities (FAS 115).................. 402 --
The Netherlands: debt securities are valued
at amortized cost
The U.S.: debt securities are classified as
available for sale and valued at market
values. The impact is shown net of amount
to satisfy policyholder commitments,
adjustment of deferred policy acquisition
costs and applicable taxes
Unrealized gain on debt securities....... 3,579
Amount required to satisfy
policyholders........................... (2,862)
Adjustment of deferred policy acquisition
costs................................... (88)
Deferred tax adjustment.................. (227)
Goodwill (arising from acquisitions)....... 6,169 (395)
The Netherlands: directly charged to
shareholders' equity in the year of
acquisition
The U.S.: capitalized and amortized over
various periods not exceeding 20 years.
Goodwill related to Transamerica Life
operations is amortized over 20 years and
Finance companies over 15 years.
Technical provisions....................... 1,689 (118)
The Netherlands: calculated on recent
assumptions
The U.S.: calculated on assumptions when
the policy was issued or on recent
assumptions
Realized gains and losses on debt
securities................................ 649 480
The Netherlands: interest related realized
investment gains and losses on debt
securities are deferred and released to
income over the estimated average
remaining maturity term
The U.S.: recognized as income when
realized
Realized gains and losses on shares and
real estate............................... -- 2,010
The Netherlands: realized gains and losses
on shares and real estate are added to the
revaluation reserve. From this reserve
amounts are released to income, so that
together with the direct yield, a 30 year
moving average total return is recognized
The U.S.: recognized as income when
realized
Deferred taxation accounting difference.... (773) (122)
The Netherlands: calculated using
discounted tax rates The U.S.: calculated
using nominal tax rates Deferred taxation
on U.S. GAAP adjustments................... (259) (473)
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Shareholders, Net income
Equity Year ended
December 31, December 31,
1998 1998
------------- ------------
<S> <C> <C>
Cash settlements of convertible debt and stock
options........................................... -- (978)
The Netherlands: accounted for as conversion and
charged to shareholders' equity
The U.S.: accounted for as an extinguishment of
debt and cash settlement of stock options and
charged to expense
Balance of other items............................. 679 46
------ ------
Certain expenses are recorded in different periods
on the two basis of accounting
Approximate net income in accordance with U.S.
(GAAP)(1)......................................... 30,939 3,723
Other comprehensive income, net of tax
Foreign currency translation adjustments (1,090)
Unrealized gains during period..................... 2,273
Reclassification adjustment for gains included in
net income........................................ (2,262)
------
Approximate comprehensive net income in accordance
with U.S. (GAAP)(1)............................... 2,644
======
U.S. GAAP approximate net income per share (in NLG)
Basic............................................ 5.83
Diluted.......................................... 5.73
</TABLE>
- --------
(1) For Dutch accounting purposes the NLG 82.2 cost of the option to receive
additional shares from Vereniging AEGON has been included in the purchase
price and recorded as goodwill, which was subsequently written off to
shareholders equity. See note N to Notes to Unaudited Pro Forma Condensed
Financial Statements for a further description of the option. For U.S. GAAP
accounting purposes the cost of the option is not considered part of the
purchase price but is considered an equity instrument and pursuant to EITF
96-13 the cost is charged directly to shareholders' equity. Although the
detail entries to record the cost of the option are different under Dutch
and U.S. GAAP accounting, the impact on shareholders' equity is the same.
45
<PAGE>
AEGON NV
PRO FORMA COMBINED SUMMARY BALANCE SHEET
December 31, 1998
(Amounts in million Dutch Guilders)
(Unaudited)
<TABLE>
<CAPTION>
Dutch U.S. GAAP
Accounting Accounting
Basis Adjustments Basis
---------- ----------- ----------
<S> <C> <C> <C>
Investments................................. 215,586 (591)g 211,316
2,102 a
(5,781)h
Investments for the account of
policyholders.............................. 145,656i 145,656
Other assets................................ 16,617 591 g 52,467
6,848 b
4,614 f
23,797 h
Deferred acquisition costs.................. 9,733 e 9,733
------- ------ -------
Total assets.............................. 377,859 41,313 419,172
======= ====== =======
Technical provisions........................ 147,294 9,733 e 162,902
4,614 f
1,261 c
Technical provisions with investment risk
for the account of policyholders........... 145,656i 145,656
Long-term liabilities....................... 18,825 11,368 h 30,193
Other liabilities........................... 42,224 610 d 49,482
6,648 h
Shareholders' equity........................ 23,860 7,079 30,939
------- ------ -------
Total liabilities and shareholders'
equity................................... 377,859 41,313 419,172
======= ====== =======
</TABLE>
<TABLE>
<S> <C>
Notes:
a--Adjust real estate to depreciated cost from appraised value......... (1,477)
- --Adjust debt securities to market value from amortized cost (FAS
115).................................................................. 3,579
------
2,102
------
b--Restore goodwill charged off to equity for Dutch accounting......... 6,169
- --Capitalize and amortize certain items expensed for Dutch accounting.. 679
------
6,848
------
c--Adjustment of technical provision for portion of market value
adjustment of debt securities required to satisfy policyholder
commitments (FAS 115).............................................. 2,862
- --Adjustment of deferred acquisition cost related to market value
adjustment of debt securities (FAS 115)............................ 88
- --Reduce reserve for differences in valuation assumptions.............. (1,689)
------
1,261
------
d--Adjustment of deferred tax related to market value adjustment of
debt securities (FAS 115)............................................. 227
- --Record deferred tax at undiscounted amount and reflect tax on other
U.S. GAAP adjustments................................................. 1,032
- --Recognize gains deferred under Dutch accounting...................... (649)
------
610
------
e--Reclassify deferred acquisition costs from a reduction of technical
provisions to an asset
f--Reclassify reinsurance recoverable from a reduction of technical
provisions to other assets
g--Reclassify home office real estate from investments to other assets
h--Reclassify group companies and participations from a single line
presentation (deconsolidation method) in investments to the
appropriate asset and liability line (consolidation method).
</TABLE>
46
<PAGE>
i--Following an agreement dated April 20, 1993, AEGON and Scottish Equitable
Life Assurance Society, a mutual insurance company in the United Kingdom,
jointly established a new company called Scottish Equitable PLC and
Scottish Equitable Life Assurance Society transferred all of its existing
business, operations and staff to the newly formed company. All of the
participating (with-profits) policies were transferred to the with-profits
fund, to be maintained for the sole benefit of the participating
policyholders, and the non-participating policies were transferred to a
non-participating fund. AEGON, through payments to the participating fund,
acquired an initial 40% interest in the non-participating fund which has
been increased through additional payments to 100% as of December 31, 1998.
The assets and liabilities of the with-profits fund of Scottish
Equitable are included in AEGON's historical Dutch accounting basis
balance sheet at market value in the line items, "Investments for the
account of policyholders" and "Technical provisions with investment risk
for the account of policyholders." The assets and liabilities are equal in
amount since the with-profit fund is held for the sole benefit of the
participating policyholders. The market value adjustment for investment
assets is recorded through the income statement in investment income with
an offsetting amount recorded in benefits paid and provided. The income
statement activity of the with-profits fund is reported in each of the
applicable line items in AEGON's historical Dutch accounting basis income
statement with no net income effect.
For U.S. GAAP purposes the with-profits fund is treated similar to a
closed block of business. A closed block of business is established for
the benefit of a class of policyholders and is designed to give them
reasonable assurance after a reorganization that assets will be available
to maintain the benefits under their policies. The with-profits fund was
established as part of the regulatory requirement to allow AEGON to
acquire an interest in the non-participating business of Scottish
Equitable. The with-profits fund is treated as a closed block of business
since at the time Scottish Equitable PLC was formed the participating
policies were allocated specific assets and the business was segregated
within Scottish Equitable PLC. The participating policyholders are
entitled to receive 100% of the financial performance of this segregated
with-profits fund. Under the terms of the agreement Scottish Equitable PLC
remains obligated to the participating policyholders for the guaranteed
benefits under their policies should there be a financial short-fall in
the with-profits fund.
Pursuant to U.S. GAAP the investment assets are classified as available
for sale and accordingly are carried at fair value. Because the with-
profits fund is maintained for the sole benefit of the participating
policyholders, the market value adjustment is recorded directly to the
policyholder liability account. In addition, for U.S. GAAP reporting
rules, the income statement activity would be reported on a net basis as a
single line item. Under this arrangement the policyholders receive all of
the benefits from the with-profit fund and to the extent there is any
excess earnings a policyholder dividend liability is established such that
the net income result is zero.
46--1
<PAGE>
Summarized financial information on a Dutch accounting basis for the
with-profits fund included in the AEGON NV historical columns of the pro
forma condensed consolidated financial information as of and for the year
ended December 31, 1998, is as follows (amounts in NLG millions):
<TABLE>
<CAPTION>
Assets:
<S> <C>
Fixed maturities at fair value.................... 19,342
Equity securities at fair value................... 8,246
Other assets...................................... 645
------
Total assets.................................... 28,233
======
Liabilities:
Technical provisions.............................. 25,415
Other liabilities................................. 2,818
------
Total Liabilities............................... 28,233
======
Revenues and expenses:
Gross premiums.................................... 2,058
Investment income................................. 5,138
------
Revenue......................................... 7,196
------
Benefits paid and provided........................ 2,078
Change in Technical Provisions.................... 5,102
Commissions and expenses.......................... 16
------
Benefits and expenses........................... 7,196
------
Net income...................................... 0
======
</TABLE>
46--2
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENT
The unaudited pro forma condensed consolidated financial statements are
presented in Dutch Guilders. The Transamerica balance sheet amounts have been
converted to Dutch Guilders at the December 31, 1998 exchange rate of 1.8770
Dutch Guilders per U.S. dollar. The income statement has been converted using
the average rate of 1.9825 for the year 1998. A convenience translation to U.S.
dollars column has been provided on the balance sheet and income statement
using the June 16, 1999 exchange rate of 2.14.
PRO FORMA ADJUSTMENTS
Transactions Relating to the Merger
The merger will be accounted for under the purchase method of accounting,
which requires the total acquisition costs to be allocated to the assets and
liabilities acquired based on fair value. Any excess of purchase cost over the
fair value of the acquired assets less the fair value of the acquired
liabilities will be recorded as goodwill and charged to shareholders' equity.
In the merger, holders of Transamerica common stock will receive in exchange
for each share of Transamerica common stock $23.40 in cash plus a fractional
AEGON share. If the AEGON average share price is between $76.16 and $114.24,
the fractional AEGON share to be received is calculated by dividing $54.60 by
the average AEGON share price. If the average AEGON share price is above
$114.24 and less than or equal to $128.52 or below $76.16 and greater than or
equal to $61.88, the $54.60 amount used in the calculation is adjusted such
that the effect of the change in the AEGON share price within these ranges is
shared equally between AEGON and Transamerica stockholders. AEGON has the right
to terminate the merger agreement if the average AEGON share price is greater
than $128.52, unless Transamerica agrees in such event that the fractional
AEGON common share to be received by Transamerica stockholders for each
Transamerica share is calculated by dividing $58.695 (or such other amount as
the parties may agree) by the average AEGON share price at the time of the
merger. Transamerica has the right to terminate the merger agreement if the
average AEGON share price is less than $61.88, unless AEGON agrees in such
event that the fractional AEGON common share to be received by Transamerica
stockholders for each Transamerica share is calculated by dividing $50.505 (or
such other amount as the parties may agree) by the average AEGON share price at
the time of the merger. For purposes of these unaudited pro forma condensed
financial statements, an assumed issuance of 71.4 million common shares with a
value of NLG 12,758 million will be issued. This was calculated using an AEGON
share price of $95.20 which was the price of AEGON stock converted to U.S.
dollars on the last trading day prior to the public announcement of the
proposed merger. Of these, an assumed 59.1 million shares will be newly issued
shares while 12.273 million shares will be acquired from Vereniging AEGON and
reissued to Transamerica stockholders in the merger.
In connection with the merger, AEGON has entered into an agreement with
Vereniging AEGON, its largest shareholder, which has voting control of AEGON,
whereby Vereniging AEGON will provide a portion of the required common shares
necessary to complete the transaction. The agreement is to purchase 12.273
million common shares from Vereniging AEGON at $95.20 per common share, which
purchase price will be paid upon delivery of the common shares at the closing
of the merger. No consideration has been paid for this forward purchase
agreement since the funding costs during this period are offset by the receipt
of dividends on the shares and other benefits. The agreement also provides that
Vereniging AEGON will deliver between 2.045 million fewer shares and 3.068
million additional shares to AEGON as required to complete the merger. At the
closing of the merger, Vereniging AEGON will be paid a fee of $43.8 million for
this component of the agreement. AEGON will also issue to Vereniging AEGON
preferred stock at a price of NLG 0.50 per share (the par value) in an amount
to preserve its voting control in AEGON. See notes E, F, and N for a discussion
of the pro forma adjustments related to these agreements.
47
<PAGE>
The cost to acquire Transamerica is comprised of the following (NLG in
millions):
<TABLE>
<S> <C>
Cash payment...................................................... 5,468
Assumed issuance of 71.4 million AEGON common shares.............. 12,758
Cost to settle outstanding employee stock options and stock
appreciation rights of Transamerica.............................. 1,824
Professional fees and other direct transaction expenses........... 282
-------
Total cost to acquire Transamerica.............................. 20,332
As part of the merger, AEGON will assume on a consolidated basis
Transamerica's outstanding debt, which was NLG 2,091 million at December 31,
1998.
The total cost has been allocated to tangible and intangible assets and
liabilities as follows (NLG in millions):
Investments....................................................... 62,655
Investments for the account of policyholders...................... 17,083
Finance companies................................................. 5,819
Other assets...................................................... 3,184
Goodwill.......................................................... 4,221
Technical provisions (net of acquired insurance in force of NLG
6,894)........................................................... (48,976)
Technical provisions with investments for the account of
policyholders.................................................... (17,083)
Long-term liabilities............................................. (2,338)
Other liabilities................................................. (4,233)
-------
Total cost to acquire Transamerica.............................. 20,332
</TABLE>
Adjustments to the unaudited pro forma consolidated balance sheet and income
statement to give effect to the merger as of December 31, 1998 and January 1,
1998, respectively, are summarized below.
(A) Certain accounts have been reclassified in the balance sheet and income
statement to conform to Dutch basis financial statement presentation. The
following is a summary of classification differences between Dutch
accounting principles and U.S. GAAP which have no effect on reported net
income or shareholders' equity.
<TABLE>
<CAPTION>
US GAAP Dutch
------- -----
<S> <C> <C>
Balance Sheet Items:
Deferred acquisitions
costs................. Deferred acquisition costs asset Reduction of technical provisions
Acquired insurance in
force................. Acquired insurance in force Reduction of technical provisions
Owned and occupied real
estate................ Property and equipment Investments
Reinsurance
recoverable........... Other assets Reduction of technical provisions
Nonredeemable preferred
stocks................ Equity securities Fixed maturities
Liquid assets.......... Maturities of 3 or less months Maturities of less than 1 year
Income Statement Items:
Earnings of
affiliates............ Specific item, net of taxes Investment income and other income
Premiums collected on
Universal Life type
contracts............. Deposit in liabilities Premium revenue
Premium to reinsurers.. Reduction of revenue Separate expense item
Change in unearned
premiums.............. Premium revenue Benefit expense
Real estate rentals,
owner occupied........ Transactions eliminated Rental income and rental expense
Cost of processing
claims................ Expenses Benefit expenses
Investment expenses.... Reduction in investment income Expenses
Other income........... Other income Miscellaneous income and
expenditure
Premium tax............ Expenses Reduction of premium income
</TABLE>
48
<PAGE>
The following adjustments and reclassifications are being made to convert
the historical Transamerica U.S. GAAP financial statements to an historical
Dutch accounting basis.
<TABLE>
<CAPTION>
<C> <S>
(A1) Fixed maturity investments are adjusted from a FAS 115 market value
basis to an amortized cost basis to represent historical Dutch
accounting.
(A2) Real estate is carried at appraised value, pursuant to Dutch
accounting principles. The market value adjustment to investment real
estate was NLG 52 million.
(A3) Home office real estate of NLG 591 million was reclassified from
"other assets" to "investments."
(A4) Real estate is carried at appraised value, pursuant to Dutch
accounting principles. The market value adjustment to home office real
estate was NLG 456 million.
(A5) The FAS 115 adjustment in Transamerica's U.S. GAAP basis policy
acquisition cost are reversed to represent historical Dutch
accounting.
(A6) Reclassify deferred policy acquisition costs from "other assets" to a
reduction of "technical provisions."
(A7) Reclassify reinsurance recoverable from "other assets" to a reduction
of "technical provisions."
(A8) Eliminate Transamerica historical goodwill in the balance sheet and
related amortization expense in the income statement.
(A9) Adjust shareholder equity for the net effect of all Dutch accounting
adjustments.
(A10) The FAS 115 adjustment in Transamerica's U.S. GAAP basis technical
provisions is reversed to represent historical Dutch accounting.
(A11) The applicable pro forma balance sheet and income statement Dutch
accounting adjustments have been tax effected at the statutory rate of
35%.
(A12) Premium related reclasses to conform to the Dutch basis income
statement presentation (NLG in millions):
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
Increase "Benefits paid and provided" for universal life and
variable life net deposits and the change in unearned
premium..................................................... 755
Separately state "Premiums paid to reinsurers"............... 3,493
Decrease "Commissions and expenses for own account" for
premium tax expense.......................................... (105)
-----
Total "Gross premium" adjustment............................. 4,143
</TABLE>
<TABLE>
<CAPTION>
<C> <S>
(A13) The GAAP basis realized investment gains and losses of Transamerica of
NLG 1,126 million have been reversed in the income statement. Interest
related gains and losses on fixed maturities have been deferred and
are amortized into income over the estimated remaining maturity term
of the assets sold. The amortized gain reported for fixed maturities
is NLG 34 million. No balance sheet adjustment has been recorded since
the fixed maturities are recorded at market value at the time of the
merger.
</TABLE>
The unrealized gains and losses on equity securities of Transamerica
of NLG 2,970 million have been recorded in the revaluation reserve
account which is a separate component of shareholders' equity. Dutch
accounting rules provide for realized gains and losses on equity
securities and real estate to be recorded in a revaluation reserve
account. This account also includes unrealized gains and losses due
to changes in stock market quotations and reappraisal of real estate.
In the income statement the structural total return on shares and
real estate is recognized. This total return includes the realized
direct income (rents and dividends) of the reporting period and an
amount of indirect income. The total return is calculated by
determining the average of the total return yield over the last 30
years and multiplying this average yield by the average value of
these investments over the last 7 years, adjusted for investment
purchases and sales. The indirect income from these
49
<PAGE>
investments is then calculated as the difference between the total
return and the realized direct income. The indirect income reported
is NLG 151 million. As a measure of conservatism the indirect yield
is capped at a level of 7% after tax on the average investment
portfolio. The indirect income is released from the revaluation
account if and as far as the balance of this account is positive.
Moreover, the minimum reserve as required by law should be
maintained.
<TABLE>
<CAPTION>
<C> <S>
(A14) Investment income related reclasses to conform to the Dutch basis
income statement presentation (NLG in millions):
</TABLE>
<TABLE>
<CAPTION>
Year ended
12/31/98
----------
<C> <S> <C>
Include investment management expenses in
"Commissions and expenses for own account"............... 50
Include asset default losses in "Miscellaneous income and
expenditures"............................................ 95
---
Total "Investment income" adjustment..................... 145
</TABLE>
<TABLE>
<CAPTION>
<C> <S>
(A15) Reverse the U.S. GAAP write-off of deferred acquisition costs related
to realized gains.
(A16) Other income has been reclassified to "Miscellaneous income and
expenditure" in the income statement.
(A17) The cost of processing claims and litigation costs have been
reclassified to "Benefits paid and provided" from "Commissions and
expenses for own account" to conform to the Dutch basis income
statement presentation.
(A18) Depreciation on all real estate properties has been reversed
consistent with Dutch accounting principles.
(B)Investments recorded at market pursuant to Dutch purchase accounting
principles.
(B1) The market value adjustment to fixed maturity investments was NLG
4,566 million.
(B2) The market value adjustment to mortgage loans was NLG 285 million.
(B3) The market value adjustment to policy loans was NLG (42) million.
</TABLE>
(C) Outstanding employee stock options and stock appreciation rights of
Transamerica will be settled in cash for approximately NLG 1,824 million.
To fund the cash settlement these statements reflect the sale of NLG 1,365
million of equity securities and a borrowing of NLG 208 million of notes
payable. A net tax benefit related to the cash settlement of options and
sale of equity securities of NLG 251 million is included in adjustment (P).
The investment income and interest expense have been adjusted to reflect
the impact of the settlement.
(D) The pension asset has been adjusted to bring the book value of the
qualified and non-qualified pension plans equal to the fair value of plan
assets less the Projected Benefit Obligation and a NLG 94 million severance
and enhanced pension benefit liability. The income statement has been
adjusted to reflect the elimination of the amortization of the previously
unrecognized pension gain and interest earned on the higher asset base.
(E) The assets and liabilities of the finance companies have been adjusted to
fair value and reclassified to a single line presentation in "Group
companies and participations" (included in investments). These operations
are divergent to insurance activities and consolidation will disturb a
clear presentation of the AEGON balance sheet and the income statement. It
will eventually be considered how this business strategically fits into
AEGON's existing operations. Consequently this business is reported on a
deconsolidated basis with dividends received recognized as income to the
extent required to cover funding cost from these companies.
(F) Write-down software in the balance sheet and reverse the related
amortization expense in the income statement.
(G) Eliminate Transamerica historical equity.
50
<PAGE>
(H) Goodwill associated with the merger has been charged to shareholders'
equity.
(I) Issue an assumed 71.4 million common shares with a value of NLG 12,758
million for the merger.
(J) Purchase of 12.273 million common shares at $95.20 per share from
Vereniging AEGON at a total cost of $1,168 million (NLG 2,192 million).
(K) Preferred stock valued at NLG 30.0 million will be issued and sold to
AEGON's primary shareholder, Vereniging AEGON, to maintain its majority
voting interests.
(L) The historical deferred policy acquisition costs of Transamerica is
eliminated.
(M) Value of the acquired insurance in force
Record the value of the acquired insurance in force purchased in the merger.
Acquired insurance in force represents the fair value of Transamerica's
business in force that has been estimated to represent discounted future
after tax cash flows from the acquired policies at 9% adjusted to a pre-tax
basis using applicable tax rates. The value assigned to the acquired
insurance in force purchased is based on a preliminary estimate, which may
be adjusted upon final determination of the projected discounted cash flows.
The discount rate reflects the rate of return required by AEGON to invest in
the business being acquired. Factors considered in determining the rate
include risks associated with the actuarial assumptions in determining
expected cash flows and the cost of capital available to fund the
acquisition.
Expected gross amortization of such value using current assumptions and
accretion of interest based on an interest rate equal to the average
liability rate of 6.25% for each of the years in the five-year period ending
December 31, 2003, are as follows (NLG in millions):
<TABLE>
<CAPTION>
Year Ending Beginning Gross Accretion of Net Ending
December 31, Balance Amortization Interest Amortization Balance
------------ --------- ------------ ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
1999............ 6,894 1,087 397 690 6,204
2000............ 6,204 978 358 620 5,584
2001............ 5,584 880 321 559 5,025
2002............ 5,025 792 290 502 4,523
2003............ 4,523 713 260 453 4,070
</TABLE>
(N) Technical provisions
Pursuant to Dutch purchase accounting principles, increase the balance sheet
technical provision to reflect current interest rate and mortality
assumptions related to certain insurance liabilities. Reduce "Benefits paid
and provided" in the income statement for the effect of this increase in
technical provisions.
(O) Cash will be raised of NLG 7,912 million ($4,215 million) in the capital
markets through a combination of approximately 75% short-term and 25% long-
term financing. The financing proceeds will be used as shown below.
Interest expense has been increased for the cost of the new financing by
NLG 442 million for 1998. The interest expense was calculated using a
blended interest rate of 5.3%. The blended interest rate is composed of a
current interest rate for the short-term financing, based on 3 months
commercial paper rates and current interest rates for long term financing
based on swap rates for 3 to 7 year senior debt. For each 1/8% increment in
the interest rate the interest expense would increase by NLG 9.9 million.
AEGON intends to raise all the funding as short-term funds initially. AEGON
will transform approximately 25% of this short term debt into a long term
fixed interest rate by means of interest rate swaps. The maturity of the
swaps will be similar to the anticipated long term senior debt. In the
future, this 25% short term debt will be replaced with long term fixed rate
senior debt with a maturity ranging from 3 to 7 years and terms similar to
AEGON's currently outstanding senior debt.
51
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Uses of financing proceeds (NLG in millions):
Cash payments to Transamerica stockholders......................... 5,468
Purchase 12,273 million AEGON shares from Vereniging AEGON......... 2,192
Purchase option from Vereniging AEGON to provide additional
shares if needed for the acquisition.............................. 82
Taxes on new shares issued and foreign acquisitions................ 90
Professional fees.................................................. 110
Less proceeds from issue of preferred stock to Vereniging AEGON.... (30)
-----
7,912
=====
</TABLE>
<TABLE>
<CAPTION>
<C> <S>
A capital tax of 1% is levied on all capital contributed, in shares or in
surplus, in cash or in kind, to a company resident in The Netherlands. The
capital tax is deductible for the Netherlands corporation tax.
The agreement to purchase 12.273 million shares from Vereniging AEGON,
AEGON's largest shareholder, includes an option which provides for the
delivery of 2.045 million fewer shares and 3.068 million additional shares
as required to complete the merger. The option reduces the amount of share
dilution that would be created through the issuance of more shares, and is
only effective for this merger. A binomial model, which includes
historical volatility of the AEGON New York shares, was used in
determining the option price. The cost of the option was calculated for
the period February 22, 1999 through July 1, 1999 based upon a combination
of puts and calls at the various AEGON share prices within the range of
$61.88 and $128.52 per share.
(P) The applicable pro forma balance sheet and income statement purchase
adjustments have been tax effected at the statutory rate of 35%.
(Q) Investment income of Transamerica has been adjusted to include the effect
of amortization of market value adjustments, although the assets have
already been stated at their estimated fair value.
(R) Amortization of the deferred policy acquisition costs and acquired
insurance in force prior to the merger, including the amount charged
against realized gains and losses, has been replaced with the amortization
of the acquired insurance in force purchased which represents amortization
in relation to estimated premiums on traditional type products and in
relation to gross profits for nontraditional type products with interest
equal to the liability rate assumption of 6.25%.
(S) The following table presents AEGON pro forma combined per share
information at various AEGON share prices.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AEGON share price (U.S. Dollars)......... 61.88 76.16 95.2 114.24 128.52
Weighted average number of shares
outstanding (millions):
Basic.................................. 666.6 651.2 636.4 626.5 621.1
Diluted................................ 679.4 664.0 649.2 639.4 633.9
Earnings per share (Dutch Guilders):
Basic.................................. 4.56 4.67 4.78 4.86 4.90
Diluted................................ 4.49 4.63 4.69 4.77 4.81
</TABLE>
52
<PAGE>
THE MERGER AGREEMENT
This section of the proxy statement-prospectus describes the principal
provisions of the merger agreement. The following description does not purport
to be complete and is qualified in its entirety by reference to the merger
agreement, which is attached as Appendix A to this proxy statement-prospectus
and is incorporated herein by reference. We urge you to read the merger
agreement in its entirety.
Terms of the Merger
General. At the time the merger becomes effective, AEGON, Transamerica and
Tony Merger Corp., a wholly owned direct subsidiary of AEGON, will consummate
the merger, in which Transamerica will merge into Tony Merger Corp. and the
separate corporate existence of Transamerica will cease. Tony Merger Corp. will
be the surviving corporation in the merger and will continue to be a wholly
owned direct subsidiary of AEGON and will continue to be governed by the laws
of the State of Delaware. Upon consummation of the merger, the name of the
surviving corporation will be changed to "Transamerica Corporation."
Certificate of Incorporation. The merger agreement provides that the
certificate of incorporation of Tony Merger Corp. shall be amended to change
the name of Tony Merger Corp. to "Transamerica Corporation", and as so amended,
will be the certificate of incorporation of the surviving corporation.
By-Laws. The merger agreement provides that the by-laws of Tony Merger Corp.
in effect at the effective time of the merger will be the by-laws of the
surviving corporation.
Directors and Officers. The merger agreement provides that the directors and
officers of Tony Merger Corp. at the effective time of the merger will be the
directors and officers of the surviving corporation, until their respective
successors are duly elected and qualified.
Conversion of Transamerica Common Stock. Pursuant to the merger agreement,
as of the effective time of the merger, each issued and outstanding share of
Transamerica common stock, other than shares held by AEGON, Tony Merger Corp.,
Transamerica or any wholly owned subsidiary of AEGON or Transamerica, will be
converted into the right to receive a combination of $23.40 in cash (the "Cash
Payment") and a fraction of AEGON common shares equal to the exchange ratio.
Exchange Ratio. The exchange ratio is equal to $54.60 divided by the "AEGON
Share Price," which generally is defined as the average, during the 20 trading
days immediately preceding the last business day before the closing date of the
merger, of the average closing prices for each AEGON common share on the
Amsterdam Stock Exchange converted from Euros into U.S. dollars. The exchange
ratio is, however, subject to provisions by which if the AEGON Share Price is
between $76.16 and $114.24, the exchange ratio will deliver a fraction of an
AEGON common share for each share of Transamerica common stock valued at $54.60
(assuming each AEGON share is valued at the AEGON Share Price at the closing of
the merger). If the AEGON Share Price is below $76.16 but greater than or equal
to $61.88 you will receive AEGON shares with less value than $54.60. If the
AEGON Share Price is above $114.24 but less than or equal to $128.52 you will
receive AEGON shares with more value than $54.60. Please read the information
beginning on pages 1 and 13 for more detailed information about what you will
receive if the merger is completed.
Fractional Shares. No fractional AEGON common shares will be issued in the
merger. Instead, each holder of Transamerica common stock who would otherwise
be entitled to receive fractional AEGON common shares will be entitled to
receive in its place cash (without interest) in an amount equal to the fraction
of a share to which such holder would otherwise have been entitled multiplied
by the AEGON Share Price.
Effective Time; Closing
The merger agreement provides that the merger will become effective upon the
filing of a certificate of merger or other appropriate documents with the
Secretary of State of the State of Delaware. The merger
53
<PAGE>
agreement provides that the closing of the merger will take place on the third
business day after the conditions to the merger described in the merger
agreement have been (or can be at closing) satisfied or waived. See "--
Conditions."
Exchange of Shares
Pursuant to the merger agreement, as of the effective time of the merger,
AEGON or Tony Merger Corp. will deposit with Citibank N.A. or such other
financial institution chosen by AEGON and acceptable to Transamerica (the
"Exchange Agent"), cash in respect of the Cash Payment, fractional shares and
options, and other equity awards and certificates representing the AEGON common
shares (together with any dividends or distributions payable with respect
thereto, the "Exchange Fund") issuable pursuant to the merger agreement in
exchange for certificates formerly representing outstanding shares of
Transamerica common stock. As soon as reasonably practicable after the closing
of the merger, but in no event more than two business days after the closing
date of the merger, AEGON and the surviving corporation will cause the Exchange
Agent to mail to each holder of record of certificates which immediately prior
to the effective time of the merger represented outstanding shares of
Transamerica common stock (the "Certificates") (and holders of options and
other equity awards), a letter of transmittal (or in the case of holders of
options and other equity awards appropriate documentation) and instructions
which instructions are to be used in forwarding the Certificates for surrender
and exchange for (a) the Cash Payment amount and certificates representing the
number of whole AEGON common shares which such holder has the right to receive
pursuant to the merger and (b) cash for any fractional AEGON common shares to
which such holders otherwise would be entitled (or in the case of holders of
options and other equity awards instructions to be used in receiving the
appropriate cash payments in respect of options and other equity awards). Until
surrendered as provided above, Certificates will be deemed to represent the
right to receive the Cash Payment and certificates representing the number of
AEGON common shares into which the shares of Transamerica common stock formerly
represented by such Certificates were converted in the merger and a cash
payment in lieu of any fractional shares, and the holders of Certificates will
not be entitled to receive dividends or any other distributions from AEGON
until such Certificates are so surrendered. Upon surrender of a Certificate,
there will be paid to the person in whose name such AEGON common shares are
issued any dividends or other distributions which have a record date after the
effective time of the merger and which became payable prior to surrender with
respect to such AEGON common shares. After such surrender, there will also be
paid to the person in whose name the AEGON common shares are issued any
dividends or other distributions on such shares which have a record date after
the effective time of the merger and prior to such surrender and a payment date
after such surrender, and such payment will be made on the payment date. In no
event will the persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions.
Principal Representations and Warranties
The merger agreement contains a number of reciprocal representations and
warranties of Transamerica, AEGON and Tony Merger Corp. relating to:
. corporate organization, good standing and power,
. capitalization,
. ownership of the securities of significant subsidiaries free and clear
of all liens, charges, pledges, security interests or other
encumbrances,
. the authorization, execution, delivery, performance and enforceability
of the merger agreement,
. noncontravention of laws and agreements and organizational documents and
the absence of the need (except as specified) for governmental or third-
party consents,
. the accuracy of financial statements, and certain other matters in
connection with filings with the Securities and Exchange Commission (the
"SEC"),
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. the accuracy of the annual statements of certain subsidiaries engaged in
the insurance business filed with state insurance regulatory
authorities,
. the conduct of business in the ordinary course and the absence of
certain changes,
. the accuracy and timely filing of tax returns, the payment of taxes and
the absence of certain tax-related proceedings,
. pending or threatened litigation,
. notice of default under material contracts,
. the accuracy of information to be supplied for inclusion in this proxy
statement-prospectus and in certain other filings with the SEC,
. certain matters relating to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and other employment and labor relations
matters,
. brokers and finders,
. compliance with applicable laws regulating the insurance industry,
. the taking of action that would jeopardize the qualification of the
merger as a reorganization for tax purposes,
. ownership and use of computer software and intellectual property,
. certain matters relating to environmental liabilities, and
. insurance coverage.
Representations and warranties made solely by Transamerica relate to:
. the status of certain tax examinations,
. the absence of liability for the taxes of other persons,
. compliance with tax law requirements relating to insurance products,
. the receipt of a fairness opinion from Goldman Sachs,
. the waiver of Delaware business combination restrictions,
. the required vote to obtain approval of the transaction by
Transamerica's stockholders,
. operation of the insurance business,
. separate accounts maintained by the insurance subsidiaries of
Transamerica, and
. operating of mutual funds sponsored by Transamerica's insurance
subsidiaries.
Representations and warranties made solely by AEGON and Tony Merger Corp.
relate to:
. the interim operations of Tony Merger Corp., and
. certain transactions with affiliates.
Business of Transamerica Pending the Merger
The merger agreement provides that, during the period from the date of the
merger agreement and continuing until the closing of the merger, except for the
transactions contemplated by the merger agreement, as required by law, or to
the extent that AEGON otherwise consents in writing (which consent shall not be
unreasonably withheld or delayed), Transamerica and its subsidiaries will
operate their business only in the ordinary course, except where the failure to
so operate their businesses will not be material to Transamerica and its
subsidiaries taken as a whole, and, consistent with such operation,
Transamerica and its subsidiaries will use reasonable efforts consistent with
past practices to preserve their business organizations intact and maintain the
goodwill of their agents, third party administrators, policyholders, customers
and others with whom
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business relationships exist so that their goodwill and ongoing businesses will
not be impaired in any material respect. Subject to certain exceptions, the
merger agreement also includes limitations, prohibitions and other provisions
relating to Transamerica's conduct of business during this period with respect
to:
. charter or bylaw amendments,
. the issuance of capital stock and payment of dividends,
. levels of indebtedness,
. mortgages and pledges of assets,
. amendments to employee benefit or retirement plans,
. contracts and agreements outside the ordinary course,
. changes in underwriting standards, retention limits and administrative
practices,
. collective bargaining agreements,
. changes in accounting principles, policies and procedures,
. payments, loans and advances to affiliates,
. acquisitions, joint ventures and partnerships,
. material tax elections, settlements and accounting methods,
. the payment, discharge, settlement or satisfaction of material claims,
liabilities and obligations,
. material changes in the mix of Transamerica's investment assets or the
profile of its insurance liabilities,
. the lease or disposal of assets, and
. new capital expenditures.
Business of AEGON Pending the Merger
The merger agreement provides that, during the period from the date of the
merger agreement and continuing until the closing of the merger, except as
contemplated by the merger agreement, or to the extent Transamerica otherwise
consents in writing (which consent shall not be unreasonably withheld or
delayed) AEGON will, and will cause its subsidiaries to, operate its business
only in the ordinary course, except where the failure to do so will not
individually or in the aggregate have a material adverse effect on AEGON and
its subsidiaries taken as a whole. Subject to certain exceptions, the merger
agreement also includes limitations, prohibitions and other provisions relating
to AEGON's conduct of business during this period with respect to:
. charter or bylaw amendments,
. capital stock and payment of dividends,
. mergers or consolidations,
. acquisitions, joint ventures and partnerships,
. levels of indebtedness,
. mortgages and pledges of assets,
. contracts and agreements outside the ordinary course,
. payments, loans and advances to affiliates,
. the lease or disposal of assets, and
. new capital expenditures.
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No Solicitation of Third Party Acquisition Proposals
Pursuant to the merger agreement, Transamerica will not, nor knowingly
permit any subsidiary, nor authorize or permit any officer, director, employee
of, or any investment broker, attorney or other advisor or representative or
agent of Transamerica or its subsidiaries to, directly or indirectly, solicit,
initiate or knowingly encourage submission of any Acquisition Proposal or
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or knowingly take any other action to
facilitate the making of any proposal that constitutes any Acquisition
Proposal. An "Acquisition Proposal" means any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net revenues, net income or the
assets of Transamerica and its subsidiaries, taken as a whole, or 15% or more
of any class of equity securities of Transamerica or any of its subsidiary, 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
Transamerica or any of Transamerica's subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Transamerica or any of its subsidiary, other
than the transactions contemplated by the merger agreement. The merger
agreement provides, however, that Transamerica may furnish or cause to be
furnished to persons making an unsolicited Acquisition Proposal for a Company
Acquisition, information (pursuant to reasonably customary confidentiality
arrangements) and may participate in such discussions and negotiations if the
members of the Transamerica Board, after consultation with outside counsel,
determine in good faith that it should take such action for the Board members
to comply with their fiduciary duties to stockholders under applicable law.
A "Company Acquisition" means:
. a consolidation, exchange of shares or merger of Transamerica with any
person, other AEGON, and, in the case of a merger, in which Transamerica
would not be the continuing or surviving corporation,
. a merger of Transamerica with a person, other than AEGON, in which
Transamerica is the continuing or surviving corporation but in which the
then outstanding shares of Transamerica common stock shall be changed
into or exchanged for stock or other securities of Transamerica or any
other person or cash or any other property or the shares of Transamerica
common stock outstanding immediately before such merger shall after such
merger represent less than 50% of the voting stock of Transamerica
outstanding immediately after the merger,
. the acquisition of beneficial ownership of 50% or more of the voting
stock of Transamerica by any person (as such term is used under Section
13(d) of the Exchange Act), or
. a sale, lease or other transfer of 50% or more of the assets of
Transamerica to any person, other than AEGON.
Transamerica has agreed to promptly notify AEGON of any Acquisition Proposal
for a Company Acquisition. In such case, Transamerica must give AEGON
reasonable notice of the material terms and conditions of an Acquisition
Proposal prior to entering into a definitive agreement with respect to such
Acquisition Proposal and negotiate with AEGON to make adjustments necessary to
enable AEGON and Transamerica to proceed with the merger. The merger agreement
provides that the Transamerica Board may withdraw or materially modify in a
manner adverse to AEGON its recommendation of the merger agreement, or approve,
recommend or cause Transamerica to enter into an agreement with respect to an
Acquisition Proposal, or terminate the merger agreement, if the Transamerica
Board, following consultation with its outside counsel, determines in good
faith that such action is necessary in order for the Transamerica Board to
comply with its fiduciary duties to stockholders under applicable law. In such
event, notwithstanding anything contained in the merger agreement to the
contrary, any such withdrawal or modification of the merger or the
recommendation of another offer or proposal, or the entering by Transamerica
into an agreement with respect to another Acquisition Proposal, will not
constitute a breach of the merger agreement by Transamerica. As a consequence
of taking such actions, however, Transamerica will be required to pay to AEGON
a termination fee. See "--Termination; Certain Fees."
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Termination; Certain Fees
The merger agreement may be terminated:
. by mutual written consent of AEGON and Transamerica;
. by Transamerica if:
(1) the merger is not consummated on or before December 31, 1999,
unless the failure of such occurrence is due to the failure of
Transamerica to perform or observe the covenants and agreements in the
merger agreement to be performed or observed by it at or before the
effective time of the merger,
(2) events occur which render impossible the satisfaction of the
conditions to the obligations of Transamerica in the merger agreement,
unless the failure of such occurrence shall be due to the failure of
Transamerica to perform or observe the covenants and agreements to be
performed or observed by it at or before the effective time of the
merger,
(3) Transamerica is permanently enjoined or restrained by any
governmental authority or other regulatory body from consummating the
merger agreement or any of the transactions contemplated thereby and
such injunction or restraint shall have become final and nonappealable,
(4) the Transamerica Board shall have determined in good faith,
after consultation with counsel, that it must terminate the merger
agreement in order to comply with its fiduciary duties to its
stockholders under applicable law,
(5) the stockholders of Transamerica do not approve the merger, or
(6) on the date on which the closing would otherwise occur, the
AEGON Share Price is less than $61.88; but only if (i) Transamerica has
given AEGON at least three business days' prior written notice of
Transamerica's intent to terminate the merger agreement pursuant to
this occurrence and (ii) during such three business day period, AEGON
does not elect to decrease the exchange ratio so that the exchange
ratio multiplied by the AEGON Share Price shall equal $50.505 (or such
other number as Transamerica and AEGON may agree); and
. by AEGON if:
(1) the merger is not consummated on or before December 31, 1999,
unless the failure of such occurrence is due to the failure of AEGON or
Tony Merger Corp. to perform or observe the covenants and agreements in
the merger agreement to be performed or observed by them at or before
the effective time of the merger,
(2) events occur which render impossible the satisfaction of the
conditions to the obligations of AEGON or Tony Merger Corp. in the
merger agreement, unless the failure of such occurrence shall be due to
the failure of AEGON or Tony Merger Corp. to perform or observe the
covenants and agreements to be performed or observed by them at or
before the effective time of the merger,
(3) AEGON is permanently enjoined or restrained by any governmental
authority or other regulatory body from consummating the merger
agreement or any of the transactions contemplated thereby and such
injunction or restraint shall have become final and nonappealable,
(4) the stockholders of Transamerica do not approve the merger,
(5) the Transamerica Board shall have withdrawn or materially
modified in a manner adverse to AEGON its recommendation of the merger
agreement and the merger or the Transamerica Board shall have approved
or recommended another Acquisition Proposal, or
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(6) on the date on which the closing of the merger would otherwise
occur, the AEGON Share Price exceeds $128.52; but only if (i) AEGON has
given Transamerica at least three business days' prior written notice
of AEGON's intent to terminate the merger agreement pursuant to this
occurrence and (ii) during such three business day period, Transamerica
does not elect to decrease the exchange ratio so that the exchange
ratio multiplied by the AEGON Share Price shall equal $58.695 (or such
other number as Transamerica and AEGON may agree).
If Transamerica enters into an agreement other than a confidentiality
agreement with a third-party with respect to an Acquisition Proposal or the
merger agreement is terminated because the Transamerica Board, following
consultation with outside counsel, believes that it is necessary to do so in
order to comply with its fiduciary duties as described in the merger agreement
to its stockholders under applicable law, or AEGON terminates the merger
agreement because the Transamerica Board approves or recommends an Acquisition
Proposal or the Transamerica Board withdraws or materially modifies in a manner
adverse to AEGON its approval or recommendation of the merger agreement and the
merger, Transamerica shall pay to AEGON within 3 business days of demand $300
million as liquidated damages and not as a penalty. If Transamerica fails to
promptly pay such fees, Transamerica shall pay the costs and expenses
(including reasonable fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. in effect from time to time from the
date such fee was required to be paid.
Certain Other Covenants
Indemnification of Officers and Directors; Insurance. From and after the
closing of the merger, AEGON shall cause AEGON USA, Inc. and the surviving
corporation to indemnify, defend and hold harmless to the fullest extent
permitted under applicable law (excluding personal conduct which is finally
adjudicated by a court of competent jurisdiction to constitute the commission
of a crime by the relevant individual) each person who is, or has been at any
time prior to the closing of the merger, an officer or director of Transamerica
(or any of its subsidiaries) and each person who served at the request of
Transamerica as a director, officer, trustee or fiduciary of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (individually, an "Indemnified Party" and,
collectively, the "Indemnified Parties") against all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees), judgments, fines,
penalties and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as such,
whether commenced, asserted or claimed before or after the closing of the
merger. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"),
. AEGON shall cause AEGON USA and the surviving corporation to pay, as
incurred, the fees and expenses of counsel selected by the Indemnified
Party, which counsel shall be reasonably acceptable to the surviving
corporation, in advance of the final disposition of any such Action to
the fullest extent permitted by applicable law, and, if required, upon
receipt of any undertaking required by applicable law, and
. AEGON shall cause AEGON USA and the surviving corporation to cooperate
in the defense of any such matter; provided, however, the surviving
corporation shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or
delayed), and provided further, that AEGON shall not be obligated to
cause AEGON USA, Inc. and the surviving corporation to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in
any single Action, unless, in the good faith judgment of any of the
Indemnified Parties, there is or may be a conflict of interests between
two or more of such Indemnified Parties, in which case there may be
separate counsel for similarly situated group.
The merger agreement also requires the surviving corporation to provide to
each present and former director and officer of Transamerica and its
subsidiaries the indemnification and exoneration rights which such
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parties had immediately prior to the merger. In addition, AEGON and the
surviving corporation are required to maintain, for a period of six years after
the closing of the merger, the current policies of directors' and officers'
liability insurance maintained by Transamerica and its subsidiaries (or
policies of at least the same coverage and amounts containing terms and
conditions which are no less favorable) with respect to claims arising from
facts or events which occurred on or prior to the closing of the merger. After
the third year after the closing of the merger, the surviving corporation shall
not be required to expend on an annual basis more than 250% of the last annual
premium paid by Transamerica and its subsidiaries for such insurance.
Tax Treatment. None of AEGON, Transamerica or any of their respective
subsidiaries shall take any action that would be reasonably likely to
jeopardize qualification of the merger as a reorganization under Section 368(a)
of the Code.
Employee Benefits. The merger agreement provides that for a period of one
year from the closing of the merger, AEGON and the surviving corporation will
honor all obligations and commitments under Transamerica's employee benefit
plans, programs, arrangements, practices and contracts which provide benefits
or compensation to or on behalf of employees. AEGON will, and will cause the
surviving corporation to, waive any limitations regarding preexisting
conditions under any welfare or other employee benefit plan maintained by
either of them for the benefit of employees of Transamerica and its
subsidiaries and will treat service by all of Transamerica's and its
subsidiaries' employees with Transamerica and its subsidiaries as service with
AEGON, except to the extent such treatment would result in a duplication of
benefits.
Stock Options. At the closing of the merger, each option will become fully
vested and immediately exercisable. Each holder of an option outstanding as of
the closing of the merger will be entitled to receive in full satisfaction of
the option, a cash payment in an amount equal to the product of
. the excess of $78 over the exercise price of the option, and
. the number of shares of Transamerica common stock subject to the option
at the closing of the merger, less any income or employment tax
withholding required under the Code or any provision of state, local or
foreign law.
TLSARs. At or after the closing of the merger, each holder of a tandem
limited stock appreciation right outstanding as of the closing of the merger
will be entitled to elect to receive in full satisfaction of the right, a cash
payment in an amount equal to the product of
. the greater of (1) the highest fair market value of a share of
Transamerica common stock during the 60-day period ending on the closing
of the merger and (2) the highest price paid in the transaction for a
share of Transamerica common stock, over the exercise price of the
right, and
. the number of shares of Transamerica common stock subject to the right
at the closing of the merger, less any income or employment tax
withholding required under the Code or any provision of state, local or
foreign law; provided, however that, to the extent an option with
respect to which a related tandem limited stock appreciation right has
been granted will terminate upon exercise of the related right.
Other Equity-Based Awards. At the closing of the merger, each stock award
will, generally, fully vest and become immediately payable or distributable. At
the closing of the merger, each vested stock award will be canceled and
terminated in accordance with its terms, and the holder will receive in full
satisfaction of the stock award, a cash payment equal to the product of
. $78; and
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. the number of shares of Transamerica common stock subject to the stock
award at the closing of the merger, less any income or employment tax
withholding required under the Code or any provision of state, local or
foreign law.
All restrictions on restricted Transamerica common stock will lapse no later
than the closing of the merger and such shares will be treated as unrestricted
shares of Transamerica common stock, provided that the holder will be subject
to any income or employment tax withholding required under the Code or any
provision of state, local or foreign law.
Governance Matters. Following the date of the merger agreement and prior to
the closing of the merger, the AEGON Supervisory Board shall take such action
as necessary so that immediately following the closing of the merger, Frank C.
Herringer is elected or appointed as a member of the Executive Board of AEGON
and as Chairman of AEGON USA, Inc. and the surviving corporation. Donald J.
Shepard shall be elected or appointed as President and Chief Executive officer
of the surviving corporation and shall continue to serve as President and Chief
Executive Officer of AEGON USA, Inc. Following the closing of the merger, the
headquarters of the surviving corporation and AEGON USA, Inc. shall be in San
Francisco, California. At or prior to the closing of the merger, the AEGON
Supervisory Board will take such action as may be necessary to invite, and if
such invitation is accepted, cause the appointment of one, or in AEGON's
discretion, two, current directors of Transamerica as ex officio members of the
Supervisory Board immediately following the closing of the merger and at the
next meeting of AEGON's stockholders use best efforts to cause the election or
appointment of such person(s) as full members of the Supervisory Board.
Stock Exchange Listing. The merger agreement provides that AEGON will use
reasonable best efforts to cause the AEGON common shares to be issued in the
merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the closing date of the merger.
Fees and Expenses
Except as provided in the merger agreement with respect to termination of
the merger agreement under circumstances, the merger agreement provides that
AEGON and Transamerica will each pay its own respective expenses incident to
preparing for, entering into and carrying out the merger agreement and to
consummating the merger.
Conditions
The respective obligations of each party to the merger agreement to effect
the merger is subject to the satisfaction or waiver on or prior to the closing
date of the merger of a number of conditions, including the following:
. approval and adoption of the merger agreement by the affirmative vote or
consent of the holders of Transamerica common stock representing a
majority of the shares entitled to vote;
. the receipt by AEGON and Transamerica of all requisite approvals of, or
satisfaction of all requisite filing requirements with, governmental
entities in connection with the transactions contemplated by the merger
agreement, which the failure to obtain would have a material adverse
effect on Transamerica or AEGON, including all requisite approvals
under, and the expiration of all waiting periods in respect of, the HSR
Act;
. the absence of any order, injunction or other legal restraint or
prohibition preventing the consummation of the merger;
. the effectiveness of the AEGON Registration Statement under the
Securities Act and the absence of any stop order or pending proceedings
by a governmental entity seeking a stop order with respect to the AEGON
Registration Statement; and
. the approval for listing on the NYSE, subject to official notice of
issuance, of the AEGON common shares issuable to Transamerica's
stockholders pursuant to the merger agreement.
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The obligation of Transamerica to effect the merger is further subject to
the following conditions, unless waived in writing by Transamerica:
. the truthfulness and correctness in all material respects of the
representations and warranties of AEGON described in the merger
agreement;
. the performance by AEGON and Tony Merger Corp. in all material respects
of all obligations required to be performed by AEGON and Tony Merger
Corp. under the merger agreement at or prior to the closing date of the
merger; and
. the receipt by Transamerica of an opinion, dated the date of the closing
of the merger, of Wachtell, Lipton, Rosen & Katz, counsel to
Transamerica, concerning certain tax matters relating to the merger
agreement and the transactions contemplated thereby. This opinion will
be based upon customary assumptions and factual representations.
The obligation of AEGON to effect the merger is further subject to the
following conditions, unless waived in writing by AEGON:
. the truthfulness and correctness in all material respects of the
representations and warranties of Transamerica described in the merger
agreement;
. the performance by Transamerica in all material respects of all
obligations required to be performed by Transamerica under the merger
agreement at or prior to the closing date of the merger; and
. the receipt by AEGON of an opinion, dated the date of the closing of the
merger, of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to AEGON,
concerning certain tax matters relating to the merger agreement and the
transactions contemplated thereby. This opinion will be based upon
customary assumptions and factual representations.
All of these conditions are waivable with the consent of both Transamerica
and AEGON, except that the approval by Transamerica stockholders and certain
governmental approvals cannot legally be waived. It is not anticipated that the
other governmental approvals would be waived if they would have a material
impact on Transamerica or AEGON.
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THE SPECIAL MEETING
This document is furnished in connection with the solicitation of proxies
from the holders of Transamerica common stock by Transamerica's board of
directors for use at the Transamerica special meeting. This document and
accompanying form of proxy are first being mailed to the Transamerica
stockholders on or about June 9, 1999.
Time and Place; Purpose
The special meeting will be held at Wattis Theater, San Francisco Museum of
Modern Art, 151 Third Street, San Francisco, California, on July 20, 1999,
starting at 10 a.m., local time. At the special meeting, the Transamerica
stockholders will be asked to consider and vote upon the proposal to approve
and adopt the merger agreement.
Voting Rights; Votes Required for Approval
Transamerica's board of directors has fixed the close of business on May 25,
1999, as the record date for Transamerica stockholders entitled to notice of
and to vote at the special meeting.
The only outstanding voting securities of Transamerica are the Transamerica
common stock. Only stockholders of record on the record date are entitled to
notice of and to vote at the special meeting. Each holder of shares of record,
as of the record date, of Transamerica common stock is entitled to cast one
vote per share on the merger agreement proposal.
On the record date, there were approximately 124,685,589 shares of
Transamerica common stock outstanding and entitled to vote at the special
meeting, held by approximately 38,609 Transamerica stockholders. The favorable
vote of a majority of all outstanding shares on the record date entitled to
vote at the Transamerica special meeting is required to approve the merger
agreement proposal.
On the record date, the directors and executive officers of Transamerica and
their affiliates beneficially owned and were entitled to vote approximately
433,614 shares of Transamerica common stock.
Voting of Proxies
All shares of Transamerica common stock represented by proxies properly
received prior to or at the special meeting and not revoked, will be voted in
accordance with the instructions indicated in such proxies. If stockholders do
not indicate any instructions on a properly executed and returned proxy, that
proxy will be voted FOR the merger agreement proposal. Stockholders may also
vote by telephone by calling toll-free: 1-877-779-8683. The telephone voting
procedures are designed to authenticate votes cast by use of a personal
identification number. These procedures allow stockholders to appoint a proxy
to vote their shares and to confirm that their instructions have been properly
recorded. Instructions for voting by telephone are provided on the proxy card.
If a proposal to adjourn the Transamerica special meeting is properly
presented, the persons named in the enclosed form of proxy will not have
discretion to vote shares voted against the merger agreement proposal in favor
of the adjournment proposal.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by:
1. filing with the Secretary of Transamerica before taking the vote at
the stockholders' meeting, a written notice of revocation bearing a later
date than the date of the proxy or a later-dated proxy relating to the same
shares;
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2. voting by telephone before taking the vote at the special meeting
which will serve to revoke any prior proxy; or
3. attending the stockholders' meeting and voting in person.
In order to vote in person at the Transamerica special meeting, Transamerica
stockholders must attend the meeting and cast their votes in accordance with
the voting procedures established for the stockholders' meeting. Attendance at
a stockholders' meeting will not in and of itself constitute a revocation of a
proxy. Any written notice of revocation or subsequent proxy must be sent so as
to be delivered at or before the taking of the vote at the stockholders'
meeting as follows:
Transamerica Corporation
600 Montgomery Street
San Francisco, California 94111
Attention: Shirley H. Buccieri
Transamerica stockholders who require assistance in changing or revoking a
proxy should contact Georgeson Shareholder Communications Inc. at
Georgeson Shareholder Communications Inc.
Wall Street Plaza
New York, NY 10005
Phone Number: (800) 223-2064 (toll-free)
Abstentions may be specified on the merger agreement proposal. Since the
favorable vote of holders of more than the majority of all of the outstanding
shares of Transamerica's common stock is required to approve the merger
agreement proposal, an abstention will have the same effect as a vote against
the merger.
Under New York Stock Exchange rules, brokers who hold shares in street name
for customers do not have the authority to vote on the merger agreement
proposal when they have not received instructions from beneficial owners and,
thus, absent specific instructions from the beneficial owner of such shares,
brokers are not empowered to vote such shares with respect to the approval and
adoption of the merger agreement (i.e., "broker non-votes"). Since the
affirmative vote described above is required for approval of the proposal, a
"broker non-vote" with respect to the merger agreement proposal will have the
same effect as a vote against the merger.
It is Transamerica's policy to keep confidential proxy cards, ballots and
voting tabulations that identify individual stockholders, except where
disclosure is mandated by law and in other limited circumstances.
The cost of solicitation of proxies will be paid by Transamerica. In
addition to solicitation by mail, arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to send the proxy
materials to beneficial owners, and Transamerica will, upon request, reimburse
those brokerage houses and custodians for their reasonable expenses in so
doing. Transamerica has retained Georgeson Shareholder Communications Inc. to
aid in the solicitation of proxies and to verify records related to the
solicitations. Georgeson Shareholder Communications Inc. will receive customary
fees and expense reimbursement for such services. To the extent necessary in
order to ensure sufficient representation at its meeting, Transamerica may
request by telephone or telegram the return of proxy cards. The extent to which
this will be necessary depends entirely upon how promptly proxies are received.
We urge stockholders to vote proxies without delay.
Transamerica stockholders should not send in any stock certificates with
their proxy cards. A transmittal form with instructions for the surrender of
certificates representing shares of common stock will be mailed by or on behalf
of AEGON to former Transamerica stockholders as soon as practicable after the
consummation of the merger.
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DESCRIPTION OF CAPITAL STOCK OF AEGON
The following is a summary of the terms of AEGON's capital stock, including
brief descriptions of provisions contained in the Articles of Incorporation of
AEGON, as amended on July 17, 1995 and May 15, 1998. These summaries and
descriptions do not purport to be complete statements of these provisions.
Enforcement of Civil Liabilities
AEGON is a Dutch company located in the Netherlands. After the merger, many
of AEGON's directors and officers will be residents of the Netherlands or
countries other than the United States. In addition, although AEGON has
substantial assets in the U.S., a large portion of its assets and the assets of
its directors and officers will be located outside of the U.S. As a result,
U.S. investors may find it difficult in a lawsuit based on the civil liability
provisions of the U.S. federal securities laws:
(1) to effect service of process within the U.S. upon AEGON and the
directors and officers of AEGON located outside the U.S.,
(2) to enforce in U.S. courts or outside the U.S. judgments obtained
against those persons in U.S. courts,
(3) to enforce in U.S. courts judgments obtained against those persons
in courts in jurisdictions outside the U.S., and
(4) to enforce against those persons in the Netherlands, whether in
original actions or in actions for the enforcement of judgments of U.S.
courts, civil liabilities based solely upon the U.S. federal securities
laws.
The United States and the Netherlands do not currently have a treaty
providing for reciprocal recognition and enforcement of judgments in civil and
commercial matters, except arbitration awards. Therefore, a final judgment for
the payment of money rendered by any federal or State court in the U.S. based
on civil liability, whether or not based solely upon the federal securities
laws, would not be directly enforceable in the Netherlands. However, if the
party in whose favor a final judgment is rendered brings a new suit in a
competent court in the Netherlands, such party may submit to the Dutch court
the final judgment that has been rendered in the U.S. If the Dutch court finds
that the jurisdiction of the federal or State court in the U.S. has been based
on grounds that are internationally acceptable and that proper legal procedures
have been observed, the court in the Netherlands would, in principle, give
binding effect to the final judgment that has been rendered in the U.S. unless
such judgment contravenes Dutch public policy.
A shareholder of a company incorporated under the laws of the Netherlands
cannot sue individual members of the supervisory board or executive board
derivatively; that is, in the name of and for the benefit of AEGON. Moreover,
under Dutch law, the duties owed by members of the supervisory board and
executive board are owed primarily to AEGON, not to its shareholders. This may
limit the rights of the shareholders of a Dutch company to sue members of its
supervisory or executive boards. Dutch law does not specifically provide for
class action suits, such as a suit by one shareholder for his benefit and the
benefit of others similarly situated against a company or its supervisory or
executive directors.
Share Capital
At December 31, 1998, the total authorized capital stock of AEGON consisted
of 1,300,000,000 AEGON common shares, par value fifty Dutch Guilder cents per
share and 700,000,000 preferred shares, par value fifty Dutch Guilder cents per
share. At the same date, there were outstanding 583,180,340 AEGON common shares
and 230,000,000 AEGON preferred shares. After giving effect to the merger
(assuming an exchange ratio of .57353), there would be 642,279,401 AEGON common
shares and 290,000,000 AEGON preferred shares.
General
All of AEGON's issued Common Shares are fully paid and not subject to calls
for additional payments of any kind. The Common Shares are held in bearer and
registered form. Holders of shares of New York Registry hold their Common
Shares in registered form.
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Dividends
Under Dutch law and AEGON's Articles of Incorporation, the holders of AEGON
common shares are entitled to payment of dividends out of the profits remaining
after the creation of a reserve account, if any. Preferred dividends are
payable on the capital actually paid in on the preferred shares at a rate equal
to 2% over the rate of discount for promissory notes applied by De
Nederlandsche Bank (Central Bank of The Netherlands) plus any additional
interest charged on current account debit balances by one of the banks in The
Netherlands, all determined as of the first Amsterdam Stock Exchange working
day of the financial year in which the dividend is distributed. The Executive
Board of AEGON (the "AEGON Executive Board") may determine the dividend payment
date for the AEGON common shares and preferred shares, which may vary for
registered and bearer shares, the record date for payment applicable to holders
of registered AEGON common shares and, with the approval of the AEGON
Supervisory Board, the currency or currencies in which dividends will be paid.
For dividends on New York Shares, therefore, AEGON is empowered to make payment
in U.S. dollars.
Voting Rights and Appointment of Supervisory and Executive Boards
General Meeting of Shareholders. All holders of AEGON common shares and
preferred shares are entitled to attend personally or by proxy any general
meeting of shareholders upon compliance with the procedures hereinafter
mentioned. A holder of AEGON common shares and preferred shares is entitled to
one vote for each share held by him and represented at the meeting. A general
meeting of shareholders is required to be held not later than June 30 in each
year. General meetings of shareholders are called by the AEGON Supervisory
Board or the AEGON Executive Board and are required to be held in The Hague,
The Netherlands or certain other cities in The Netherlands. In order to attend
a general meeting of shareholders, holders of bearer shares must deposit their
share certificates with one of the depositaries designated in the notice of the
meeting. The holders of registered shares are required to notify AEGON in
writing prior to the date specified in the notice of a general meeting of the
shareholders of their desire to attend the meeting in person or by proxy and
must specify the serial numbers of their share certificates, if any. Action is
taken at such meetings by an absolute majority of the votes cast unless a
larger majority is explicitly provided by law or by the Articles of
Incorporation.
Control of AEGON. As of December 31, 1998, Vereniging AEGON held
approximately 36.37% of the common shares and 100% of the preferred shares of
AEGON. These holdings give Vereniging AEGON approximately 54.51% of AEGON's
voting shares and thus voting control of AEGON. Vereniging AEGON is a
membership association under Dutch law. One of the principal characteristics of
a membership association is that it has no share capital. The major objective
of Vereniging AEGON is to promote the direct and indirect interests of
companies subsidiary to or associated with AEGON, as well as insured parties,
employees, shareholders and other relations of those companies to be achieved,
among other things, by obtaining and executing voting control in AEGON.
The majority of AEGON's common shares is in bearer form. The AEGON common
shares held by Vereniging AEGON are (with the exception of 1,397,800 bearer
shares as per December 31, 1998) registered and represent about 88.8% of all
registered common shares in AEGON's shareholders' register (which excludes the
registered New York Shares). The holding of 100% of the preferred stock is also
registered. The table below shows the ownership percentage of Vereniging AEGON
as of December 31, 1998.
<TABLE>
<CAPTION>
Title of Class Number Owned Percent of Class
-------------- ------------ ----------------
<S> <C> <C>
Common Shares............................... 209,695,961 36.37%
Preferred Shares............................ 230,000,000 100.0%
</TABLE>
Vereniging AEGON has two administrative bodies: the general membership and
executive committee. The general membership currently consists of 20
individuals who were elected as members of Vereniging AEGON. Of these 20
individuals, 16 represent a broad cross-section of Dutch society, and are
called elected members.
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No employee (or former employee) of AEGON or its subsidiaries may be elected to
the general membership. Of the other four members of the general membership,
two are elected from the AEGON Supervisory Board and two are elected from the
AEGON Executive Board.
Appointment of the AEGON Supervisory Board and the AEGON Executive
Board. Large Dutch companies are required by Dutch law to have a two-tier
management system consisting of an executive board and a supervisory board.
Members of the AEGON Supervisory Board and the AEGON Executive Board are
appointed by the AEGON Supervisory Board. The number of members of the AEGON
Supervisory Board is determined from time to time by the AEGON Supervisory
Board but may not consist of less than seven members. Reference is made to
"Item 10. Directors and Officers of Registrant" of AEGON's 1998 Annual Report
on Form 20-F.
Shareholder Proposals. Proposals by shareholders are required to be placed
on the agenda of a general meeting of shareholders, but only if such proposals
have been signed by the holder or holders of at least 1% of the total capital
issued and are submitted to AEGON at least 30 days prior to each general
meeting of shareholders.
Amendment of Articles. The Articles of Incorporation of AEGON may be amended
at any general meeting of shareholders where at least 50% of the issued capital
is represented, by an absolute majority of the votes cast. If the required
quorum is not represented at the shareholder meeting, the amendment may be
approved at a subsequent meeting to be called and held within four weeks with
the same required vote, but without such quorum requirement. Any such amendment
must have been proposed by the AEGON Executive Board which proposal must have
been approved by the AEGON Supervisory Board.
Annual Accounts and Dividends. The AEGON Supervisory Board adopts annually
AEGON's annual accounts with respect to the previous calendar year, accompanied
by a certificate of an independent accountant certifying such annual accounts.
The annual accounts are submitted for approval to the annual general meeting of
shareholders by the AEGON Executive Board, and the AEGON Executive Board is
also required to present to the annual general meeting of shareholders a report
of management with respect to the previous calendar year.
Liquidation Rights
In the event of the liquidation of AEGON, the general meeting of
shareholders determines the remuneration of the liquidators and of the members
of the AEGON Supervisory Board. The assets remaining after payment of all
debts, liquidation expenses and taxes are to be distributed first to the
holders of preferred shares in the amount of their paid-in capital. The amount
left after such payment will be distributed to the holders of AEGON common
shares.
Issuance of Additional Shares
Shares of AEGON's authorized but unissued capital stock may be issued at
such times and on such conditions as may be determined at a general meeting of
shareholders or by the AEGON Executive Board if authorized by the shareholders.
At the general meeting of shareholders of AEGON held on May 14, 1998, the AEGON
Executive Board was designated, for a period of three years effective January
1, 1999, by a resolution approved by the shareholders, as the Company Body
which shall, subject to the approval of the AEGON Supervisory Board, be
authorized: (a) to decide upon the issue of shares and to grant rights to
acquire shares up to the authorized capital; and (b) to limit or exclude the
preemption rights of the shareholders with regard to the issuance of shares and
the granting of rights to acquire shares. In respect of the issuance of Common
Shares without preemption rights, the authority given under (a) shall be
limited to (1) 10% of the capital, plus; (2) 20% of the capital, but only if
the issuance happens to occur in connection with the acquisition of an
enterprise or a corporation. For the purposes of the designation by the
shareholders, the term capital means the par value amount of the Common Share
capital issued at the moment this authority is used for the first time in a
certain year. The designation described above may only be withdrawn by a
resolution of the general meeting of shareholders following a proposal by the
AEGON Executive Board which has been approved by the AEGON Supervisory Board.
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Preemptive Rights
Except in certain instances prescribed by law, the holders of AEGON common
shares have preemptive rights on a pro rata basis to purchase the number of
AEGON common shares to be issued. Holders of AEGON preferred shares, as such,
have no preemptive rights in respect of any AEGON common shares.
Preemptive rights in respect of AEGON common shares may be limited or
precluded by a resolution passed by the general meeting of shareholders. In the
notice of the meeting, the reasons for the proposal to limit or preclude the
preemptive rights in respect of AEGON common shares and the intended issue
price must be explained in writing. Preemptive rights may also be limited or
precluded by the AEGON Executive Board if a resolution is passed by the general
meeting of shareholders which confers such power on the AEGON Executive Board
for a maximum of five years. This power may from time to time be extended, but
never for a period longer than five years. A resolution passed at the general
meeting of shareholders or taken by the AEGON Executive Board to limit or
preclude the preemptive rights in respect of AEGON common shares requires the
approval of the AEGON Supervisory Board. If AEGON makes a rights offering to
the holders of AEGON common shares, the rights of holders of AEGON's New York
Shares to exercise the rights so offered is subject to a restriction which
permits AEGON to sell such rights in a manner to be determined by the AEGON
Executive Board and to remit the cash proceeds of such sale to such holders if
the additional AEGON common shares are not registered under the Securities Act.
AEGON common shares to be issued in connection with the merger will be issued
without preemptive rights.
Repurchase by AEGON of its Own Shares
Subject to certain restrictions contained in the Laws of The Netherlands and
AEGON's Articles of Incorporation, the AEGON Executive Board may cause AEGON to
purchase its own fully-paid shares, provided that the total number of AEGON
shares so repurchased may not exceed, in the aggregate, 10% of the issued
capital. Such purchase may be made only upon authorization by the general
meeting of shareholders, which authorization is valid for a maximum of eighteen
months and must include the number of shares to be acquired, the way in which
they may be acquired and the minimum and maximum purchase price.
Certificates for Common Shares and their Transfer
Certificates evidencing AEGON common shares are issuable, subject to the
restrictions described below, in bearer or registered form, as the holder may
elect. Certificates issued by the New York registrar are in registered form and
are printed in the English language. Bearer shares are evidenced by
certificates printed only in the Dutch language. AEGON common shares in bearer
form and New York Shares may be held by residents as well as non-residents of
The Netherlands. Only AEGON common shares in bearer form may be traded on the
Amsterdam, London, Frankfurt, Tokyo and Zurich Stock Exchanges. Only New York
Shares may be traded on a stock exchange in the U.S. Upon presentation of a
bearer certificate to AEGON's Dutch transfer agent, accompanied by a request
that the shares evidenced by such certificate be transferred to New York
Shares, the Dutch transfer agent will cancel such bearer share and will
instruct AEGON's New York transfer agent to issue a New York Share certificate
evidencing such shares. Similarly, upon presentation to the New York transfer
agent of New York Shares accompanied by an appropriate request, the New York
transfer agent will cancel such New York Shares and will instruct the Dutch
transfer agent to issue a bearer share certificate evidencing such shares.
Transfers of AEGON common shares in bearer form are accomplished by delivery of
the share certificates. New York Shares may be transferred on the books of
AEGON at the office of the New York transfer agent by surrendering the New York
Shares with the deed of transfer on the New York Shares or in a separate
instrument completed in full and signed by the transferor. Upon surrender,
AEGON, acting through its New York transfer agent, will either note the
transfer on the surrendered New York Shares or issue replacement New York
Shares registered in the name of the new owner. In addition, a shareholder is
entitled, upon written request to AEGON and the surrender for cancellation of
any share certificate previously issued, to have his name entered in the
register of shareholders with respect to the share or shares owned by him and
to receive, in lieu of a certificate, a non-negotiable declaration of
registration of such share or shares.
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COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS OF TRANSAMERICA AND AEGON
As a result of the merger, stockholders of Transamerica will become
shareholders of AEGON, and their rights will be governed by the Articles of
Incorporation of AEGON which differs in material respects from the Restated
Certificate of Incorporation of Transamerica (the "Transamerica Certificate")
and the Transamerica by-laws (the "Transamerica By-laws"). The following is a
summary of the material differences between the rights of holders of
Transamerica common stock and holders of AEGON common shares. These differences
arise from differences between the Delaware General Corporation Law (the
"DGCL") and the Dutch Civil Code as well as from differences between the
governing documents. This summary is not, and does not purport to be, complete.
This summary is qualified in its entirety by reference to the corporate laws of
Delaware and The Netherlands and the governing instruments of Transamerica and
AEGON. This summary should be read in conjunction with "Description of Capital
Stock of AEGON."
Voting Rights
Under the DGCL, each stockholder is entitled to one vote per share of stock,
unless the certificate of incorporation provides otherwise. In addition, the
certificate of incorporation may provide for cumulative voting at all elections
of directors of the corporation. Either the certificate of incorporation or the
by-laws may specify the number of shares and/or the amount of other securities
that must be represented at a meeting in order to constitute a quorum, but in
no event will a quorum consist of less than one-third of the shares entitled to
vote at a meeting.
The Transamerica Certificate provides for one vote per share of Transamerica
common stock, but does not provide for cumulative voting. In general, except as
otherwise provided by law, holders of each series of Transamerica preferred
stock have no voting rights. Under the Transamerica By-laws, the presence in
person, or by properly executed proxy, of holders of a majority of the
outstanding shares of stock entitled to vote at the meeting is required to
constitute a quorum at stockholder meetings of Transamerica.
Under Dutch law, each shareholder is entitled to one vote per share, unless
the articles of incorporation of the company provide otherwise. All shareholder
resolutions are taken by an absolute majority of the votes cast, unless the
articles or the law prescribe otherwise. The validity of shareholder decisions
is not dependent on a quorum, unless the law or the articles stipulate
otherwise.
The Articles of Incorporation of AEGON provide for one vote per AEGON
common/preferred share. Generally, all resolutions may be adopted by an
absolute majority of the total votes cast, and there are no quorum
requirements. A quorum of at least half of the issued capital is required for
amendments to the Articles of Incorporation or dissolution of AEGON.
Amendment of Charter Documents
Under the DGCL, 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 the DGCL. The Transamerica Certificate reserves the right
of amendment in the manner prescribed by the statute.
The Transamerica Certificate requires the approval of 80% of the voting
power of the shares entitled to vote generally in the election of directors, to
alter, amend, adopt any provision inconsistent with or to repeal provisions of
the Transamerica By-laws and certain provisions of the Transamerica Certificate
relating to stockholder meetings and to the board of directors.
Under Dutch law, shareholders of a Dutch company may resolve to amend the
company's articles of incorporation, although the prior approval of the Dutch
Ministry of Justice is required for any such amendment.
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Under AEGON's Articles of Incorporation, the general meeting of shareholders
may pass a resolution for an amendment to the Articles of Incorporation only
upon a proposal of the AEGON Executive Board which proposal requires the
approval of the AEGON Supervisory Board, and it must be approved by an absolute
majority of the votes cast at a meeting at which at least 50% of the issued
capital is represented. If the required quorum is not represented, then the
amendment may be approved at a subsequent meeting to be called and held within
four weeks with the same required vote but without such quorum requirement.
Appraisal Rights
The DGCL provides for appraisal rights in connection with certain mergers
and consolidations. Appraisal rights are not available for any shares of stock
of the constituent corporation surviving the merger if the merger did not
require for its approval the vote of the holders of the surviving corporation.
In addition, unless otherwise provided in the charter, no appraisal rights are
available to holders of shares of any class of stock which, as of the record
date, is either: (a) 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. (the "NASD") or (b) held of
record by more than 2,000 holders, unless such holders are required by the
terms of the merger to accept anything other than: (1) shares of stock of the
surviving corporation; (2) shares of stock of another corporation which are or
will be so listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the NASD or held
of record by more than 2,000 holders; (3) cash in lieu of fractional shares of
such stock; or (4) any combination of the above. The Transamerica Certificate
has no provision relating to appraisal rights. Transamerica stockholders who
object to the merger and do not vote in favor of the merger have certain rights
to dissent and demand "fair value" of the Transamerica Stock. See "The Proposed
Merger--Appraisal Rights" and Appendix C.
Dutch law does not recognize the concept of appraisal or dissenters' rights
and, accordingly, holders of stock in a Dutch company have no appraisal rights.
Preemptive Rights
Under the DGCL, stockholders have no preemptive rights to subscribe to
additional issues of stock or to any security convertible into such stock
unless, and except to the extent that, such rights are expressly provided for
in the certificate of incorporation. The Transamerica Certificate does not
provide for preemptive rights.
Under Dutch law, holders of common shares in a Dutch company have preemptive
rights with respect to newly issued common shares in proportion to the
aggregate nominal value of their shareholdings (with the exception of shares to
be issued to employees). Such preemptive rights in respect of newly issued
common shares may be excluded by approval of the shareholders at the General
Meeting of Shareholders. Unless the articles of incorporation state otherwise,
holders of preferred shares have no preemptive rights. The Articles of
Incorporation of AEGON conform to Dutch law and authorize the general meeting
of shareholders or the AEGON Executive Board, if so designated by the general
meeting of shareholders, to limit or eliminate preemptive rights for holders of
AEGON common shares, subject to the approval of the AEGON Supervisory Board.
Action by Written Consent of Shareholders
The DGCL provides that, unless otherwise provided in a corporation's
certificate of incorporation, any action that may be taken at a meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize such action at a meeting,
consent in writing. However, the Transamerica Certificate provides that any
action required or permitted to be taken by Transamerica stockholders must be
effected at a duly called annual or special meeting of the stockholders of
Transamerica and may not be effected by any consent in writing by such
stockholders.
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Under Dutch law, resolutions may be adopted by shareholders in writing
without holding a meeting of shareholders, provided the articles of
incorporation expressly so allow and provided no bearer shares are issued. As
AEGON's Articles of Incorporation do not contain such express provision and
AEGON has issued bearer shares, shareholders of AEGON may not adopt resolutions
outside a meeting of shareholders.
Shareholders' Meetings
Under the DGCL, an annual meeting of stockholders must be held for the
election of directors on a date and at a time designated by or in the manner
provided in the by-laws. Any other proper business may be transacted at the
annual meeting. The Transamerica By-laws provide that the Board shall fix the
date, time and place of the meeting.
Under Dutch law, a company must hold at least one annual general meeting, to
be held not later than six months after the end of the fiscal year. Pursuant to
the Articles of Incorporation of AEGON, general meetings may also be held as
often as the AEGON Executive Board or the AEGON Supervisory Board deems
necessary. In addition, under Dutch law, shareholders representing at least
one-tenth of the issued share capital may request the AEGON Executive Board or
the AEGON Supervisory Board to convene a general meeting of shareholders. If
the AEGON Executive Board or the AEGON Supervisory Board has not convened a
meeting within a certain period, the persons who have made the request are
authorized to convene such a meeting under the specific requirements of Dutch
law. The Articles of Incorporation of AEGON specify the places where general
meetings of shareholders may be held, all of which are located in The
Netherlands.
Election of Directors
Under the DGCL, the board of directors of a corporation must consist of one
or more members. The number of directors must be fixed by, or in the manner
provided in, the by-laws, unless the certificate of incorporation fixes the
number of directors. Each director shall hold office until his or her successor
is elected and qualified or until his or her earlier resignation or removal.
The directors are elected at the annual meeting of stockholders. The directors
may be divided into one, two or three classes. The Transamerica Certificate
provides that the number of directors which will constitute the board of
directors of Transamerica will be fixed, and may be altered from time to time,
as provided in the Transamerica By-laws. The Transamerica By-laws provide that
the board of directors of Transamerica will consist of not less than seven nor
more than 22 directors, as determined by the board of directors of
Transamerica. The board of directors of Transamerica currently consists of nine
directors. As provided by the Transamerica By-laws, the board of directors of
Transamerica is divided into three classes of three directors each. The
directors of each class serve for a three-year term, with the term of office of
one class expiring at each annual meeting of stockholders.
Under Dutch law, the executive board of a company must consist of at least
one member. Under Dutch law, members of the executive board are appointed for
an indefinite period of time and their appointment is not staggered. Members of
the supervisory board are appointed for a period of four years and may be re-
elected. A Dutch company may provide in its articles of association that the
appointment and resignation of members of the executive board and the
supervisory board will be staggered.
The Articles of Incorporation of AEGON provide that the AEGON Supervisory
Board will consist of at least seven members and do not specify the number of
members of the AEGON Executive Board which shall be determined by the AEGON
Supervisory Board. Under AEGON's Articles of Incorporation, the AEGON
Supervisory Board appoints the members of the AEGON Executive Board and
determines the terms of employment of such members. The executive board of a
Dutch company is in charge of the management of the company. The supervisory
board members are in charge of supervising the management as conducted by the
executive board. The supervisory board members also are appointed by the AEGON
Supervisory Board, unless objected to on certain grounds by the general meeting
of shareholders or the workers' council. AEGON's supervisory directors are
elected for renewable periods of four years.
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Removal of Directors
Under the DGCL, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, except (a) if the certificate of
incorporation provides otherwise, in the case of a corporation whose board is
classified, stockholders may effect such removal only for cause, or (b) in the
case of a corporation having cumulative voting, if less than the entire board
is to be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire board of directors, or, if there are classes of
directors, at an election of the class of directors of which he is a part. The
Transamerica board is classified.
Under Dutch law and AEGON's Articles of Incorporation, the AEGON Supervisory
Board has the authority to remove members of the AEGON Executive Board. A
member of the AEGON Executive Board can be removed by the AEGON Supervisory
Board only after having consulted with the general meeting of shareholders on
the intended dismissal. Removal without cause is possible but may be contrary
to the principles of reasonableness and fairness which are imposed under Dutch
law. Any removal without cause therefore could be declared null and void.
Members of the AEGON Supervisory Board may be removed by the court upon
petition by the general meeting of shareholders or the workers' council.
Filling of Vacancies
The DGCL provides that vacancies and newly-created directorships may be
filled by a majority of the directors then in office (even though less than a
quorum) unless (1) otherwise provided in the certificate of incorporation or
by-laws of the corporation or (2) the certificate of incorporation directs that
a particular class of stock is to elect such director, in which case any other
directors elected by such class, or a sole remaining director elected by such
class, shall fill such vacancy. The Transamerica Certificate provides that
board vacancies that result from an increase in the number of directors may be
filled by a majority of the directors then in office (provided that a quorum is
present), and any other vacancy occurring in the board of directors of
Transamerica may be filled by a majority of the directors then in office (even
if no quorum is present) or by a sole remaining director.
Under Dutch law, a decision to appoint a new member of the executive board
must be taken by the supervisory board. The supervisory board must notify the
general meeting and the works council of an intended appointment. Vacancies on
the supervisory board are filled by the supervisory board. The general meeting,
the executive board and the works council have the right to make
recommendations. Both the general meeting and the works council can object to
an intended appointment.
Shareholder Nominations and Proposals
The Transamerica By-laws provide that stockholders may nominate individuals
for election to the board of directors or propose other business at an annual
meeting of Transamerica stockholders. In order to nominate an individual, a
stockholder must deliver written notice to the Secretary of Transamerica not
less than 70 days nor more than 90 days prior to the first anniversary of the
prior year's annual meeting; provided, however, that in the event the annual
meeting is either more than 20 days before or more than 70 days after the
anniversary date, notice by the stockholder to be timely must be received not
earlier than 90 days prior to the annual meeting and not later than the later
of 70 days prior to the annual meeting and 10 days following the day on which
public announcement of the date of the annual meeting was made by Transamerica.
The written notice must set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, any information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected) (b) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the annual meeting,
the reasons for conducting such business at the annual meeting, any
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material interest of the stockholder in such business and the beneficial owner,
if any, on whose behalf the proposal is made, and in the event that the
business includes a proposal to amend the by-laws, the language of the proposed
amendment and (c) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (1) the
stockholder's name and address as it appears on Transamerica's books and the
name of the beneficial owner, if any, (2) the class and number of shares of
Transamerica that are owned, of record and beneficially, by such stockholder
and such beneficial owner, (3) a representation that the stockholder is a
holder of record of Transamerica stock entitled to vote at the annual meeting
and intends to appear in person or by proxy at the meeting to propose the
nomination or other business, and (4) a representation whether the stockholder
or beneficial owner, if any, intends to, among other things, solicit proxies in
support of such nomination or other business. If the chairman of the meeting
determines that a nomination was not made in accordance with the prescribed
procedures, the chairman must so declare to the meeting and the defective
nomination will be disregarded.
The Articles of Incorporation of AEGON provide that the general meeting of
shareholders, the AEGON Executive Board and the workers' council may recommend
individuals to the AEGON Supervisory Board for appointment as members. The
recommendation must state the nominee's age, occupation, the value of the
shares he holds in AEGON's share capital and the positions he occupies or has
occupied, insofar as the latter are of importance to the performance of duties
as a member of the AEGON Supervisory Board. The recommendation must also list
the companies for which the nominee serves as a member of a supervisory board
and must state the grounds for the recommendation. The members of the AEGON
Executive Board are individually appointed by the AEGON Supervisory Board.
The Articles of Incorporation of AEGON provide that in order to be dealt
with at a general meeting of shareholders, shareholder proposals must be signed
by one or more shareholders who together represent at least 1% of the total
issued capital and be received in writing at the office of AEGON at least 30
days before the date on which the meeting will be held.
Dividends
Under the DGCL, a Delaware corporation may pay dividends out of its surplus
(the excess of net assets over capital), or in case there is no surplus, out of
its net profits for the fiscal year in which the dividend is declared and/or
the preceding fiscal year (provided that the amount of the capital of the
corporation is not less than the aggregate amount of the capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets). In determining the amount of surplus of a Delaware
corporation, the assets of the corporation, including stock of subsidiaries
owned by the corporation, must be valued at their fair market value as
determined by the board of directors, without regard to their historical book
value. The Transamerica By-laws also provide that dividends on Transamerica
stock may be paid in cash, property or shares of Transamerica's capital stock.
In addition, the Transamerica By-laws provide that, before the payment of
dividends, the board of directors of Transamerica may set aside sums from those
available for dividends to serve as a reserve fund for contingencies, to
equalize dividends, or to repair and maintain property of Transamerica, or for
any other purpose the board of directors of Transamerica deems conducive to the
interests of Transamerica.
Dutch law provides that dividends may only be distributed after adoption of
the annual accounts by the supervisory board and approval of the company's
annual accounts by its shareholders. Moreover, dividends may be distributed
only to the extent that net assets exceed the sum of the amount of issued and
paid-up capital and reserves which must be maintained under the law or the
articles of incorporation. Interim dividends may be declared as provided for in
the articles of incorporation and may be distributed to the extent that net
assets exceed the amount of the issued and paid-up capital plus required legal
reserves. Under Dutch law, the articles of incorporation may prescribe that the
executive board and/or the supervisory board decide what portion of the profits
are to be held as reserves.
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<PAGE>
Rights of Purchase
Under the DGCL, a corporation may redeem or repurchase its own shares,
except that a corporation cannot generally make such a purchase or redemption
if it would cause impairment of its capital.
Under Dutch law, a company may not subscribe for newly issued shares in its
own capital. A Dutch company may, subject to certain restrictions, purchase
shares in its own capital, provided the nominal value of the shares acquired by
the company (or its subsidiaries) does not exceed 10% of the issued share
capital.
Limitation of Directors' Liability/Indemnification of Officers and Directors
The DGCL permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting a director's personal
liability to the corporation or its stockholders for monetary damages for
breaches of fiduciary duty. However, the DGCL expressly provides that the
liability of a director may not be eliminated or limited for (1) breaches of
his or her duty of loyalty to the corporation or its stockholders, (2) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) the unlawful purchase or redemption of stock or
unlawful payment of dividends or (4) any transaction from which the director
derived an improper personal benefit. The DGCL further provides that no such
provision shall eliminate or limit the liability of a director for any act or
omission occurring prior to the date when such provision becomes effective. The
Transamerica Certificate contains a provision eliminating director liability to
the extent permitted by the DGCL.
The Transamerica By-laws provide for indemnification of directors and
executive officers to the fullest extent permitted by the DGCL. Generally, the
DGCL permits a corporation to indemnify certain persons made a party to any
action, suit or proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise provided that such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. To the extent that person has been successful in
any such matter, that person shall be indemnified against expenses actually and
reasonably incurred by him. In the case of an action by or in the right of the
corporation, no indemnification may be made in respect of any matter as to
which that person was adjudged liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or the court in which the action was
brought determines that despite the adjudication of liability that person is
fairly and reasonably entitled to indemnity for proper expenses.
The concept of indemnification of directors of a company for liabilities
arising from their actions as members of the executive or supervisory boards
is, in principle, accepted in The Netherlands and sometimes is provided for in
a company's articles of incorporation. Although neither the laws of The
Netherlands nor the Articles of Incorporation of AEGON contain any provisions
in this respect, AEGON has contractually agreed to indemnify members of the
AEGON Executive and Supervisory Boards and officers of AEGON.
Special Meetings
Under the DGCL, a special meeting of stockholders may be called by the board
of directors or by any other person authorized in the certificate of
incorporation or the by-laws. The DGCL does not provide stockholders with an
automatic right to call special meetings of stockholders. The Transamerica
Certificate and the Transamerica By-laws provide that a special meeting of
stockholders may be called only by the board of directors or a committee of the
board.
Under Dutch law, special general meetings of shareholders may be convened by
the executive board or the supervisory board, but the articles of incorporation
may also vest this power in other persons. In addition, one or more
shareholders, who own together at least 10%--or such lesser amount as is
provided by the articles of incorporation--of the issued capital, can be
authorized by the President of the District Court with competent jurisdiction
to call a special general meeting of shareholders.
74
<PAGE>
Pursuant to the Articles of Incorporation of AEGON, special general meetings
of shareholders may be held whenever the AEGON Executive Board or the AEGON
Supervisory Board calls such meetings, subject to the specific requirements
under Dutch law.
Shareholder Votes on Certain Reorganizations
Under the DGCL, the vote of a majority of the outstanding shares of capital
stock entitled to vote thereon generally is necessary to approve a merger or
consolidation. The DGCL permits a corporation to include in its certificate of
incorporation a provision requiring for any corporate action the vote of a
larger portion of the stock or of any class or series of stock than would
otherwise be required. The Transamerica Certificate requires the vote of a
majority of the holders of Transamerica Common Shares who are not interested
parties for certain business combinations with a 20% stockholder.
Under the DGCL, no vote of the stockholders of a surviving corporation to a
merger is needed, however, unless required by the certificate of incorporation,
if (1) the agreement of merger does not amend in any respect the certificate of
incorporation of the surviving corporation, (2) the shares of stock of the
surviving corporation are not changed in the merger and (3) the number of
shares of common stock of the surviving corporation into which any other
shares, securities or obligations to be issued in the merger may be converted
does not exceed 20% of the surviving corporation's common shares outstanding
immediately prior to the effective date of the merger. In addition,
stockholders may not be entitled to vote in certain mergers with other
corporations that own 90% or more of the outstanding shares of each class of
stock of such corporation.
Under Dutch law, the general meeting of shareholders must approve any merger
in which the company would not be the surviving entity.
AEGON's Articles of Incorporation do not expressly require the approval of
the general meeting of shareholders or reorganizations or mergers in which
AEGON would not be the surviving entity, but by virtue of the application of
Dutch statutory law, a merger or reorganization involving AEGON and in which
AEGON would not be the surviving entity is subject to the approval of the
general meeting of shareholders by a majority of the votes cast at such
meeting.
Certain Provisions Relating to Business Combinations
The DGCL generally prevents a corporation from entering into certain
business combinations with an "interested stockholder" (defined generally to
include any person or entity that is the beneficial owner of at least 15% of a
corporation's outstanding voting stock or certain of its affiliates within a
three year period immediately prior to the time that such stockholder became an
"interested stockholder"), unless (1) the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder" is approved by the board of directors of the corporation, prior to
such time as the stockholder became an "interested stockholder", (2) the
interested stockholder acquired at least 85% of the corporation's voting stock
in the same transaction in which it became an "interested stockholder" or (3)
at or subsequent to such time in which the stockholder became an "interested
stockholder", the business combination is approved by the board of directors
and authorized at an annual or special meeting of stockholders, and not by
written consent, by a vote of 66 2/3% of the outstanding voting stock not owned
by the interested stockholder.
Neither Dutch law nor AEGON's Articles of Incorporation specifically prevent
business combinations with interested shareholders.
Rights of Inspection
Under the DGCL, any stockholder may inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders and its other books and
records during the corporation's usual hours for business.
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<PAGE>
Under Dutch law, the annual accounts of a company are submitted to the
general meeting of shareholders for their approval. Under Dutch law, the
shareholders' register is available for inspection by the shareholder. The
register for holders of New York Shares is available for inspection at the
office of AEGON's New York registrar. Members of the supervisory board of a
Dutch company are authorized to inspect the books and records of the company,
and they are permitted access to the buildings and premises of the company
during normal business hours.
Shareholder Suits
Under the DGCL, a stockholder may bring a derivative action on behalf of the
corporation to enforce the rights of the corporation. An individual also may
commence a class action suit on behalf of himself and other similarly situated
stockholders where the requirements for maintaining a class action under
Delaware law have been met. A person may institute and maintain such a suit
only if such person was a stockholder at the time of the transaction which is
the subject of the suit. Additionally, under Delaware case law, the plaintiff
generally must be a stockholder not only at the time of the transaction which
is the subject of the suit, but also through the duration of the derivative
suit. Delaware law also requires that the derivative plaintiff make a demand on
the directors of the corporation to assert the corporate claim before the suit
may be prosecuted by the derivative plaintiff, unless such demand would be
futile.
Dutch law does not provide for derivative suits or class actions.
Conflict-of-Interest Transactions
The DGCL generally permits transactions involving a Delaware corporation and
an interested director of that corporation if (a) the material facts as to his
relationship or interest are disclosed and a majority of disinterested
directors consents, (b) the material facts are disclosed as to his relationship
or interest and a majority of shares entitled to vote thereon consents or (c)
the transaction is fair to the corporation at the time it is authorized by the
board of directors, a committee or the stockholders.
Under Dutch law, unless the articles of incorporation of a company provide
otherwise, the corporation will be represented by the supervisory board in case
of a conflict of interest between the corporation and one or more of its
executive board members. The Articles of Incorporation of AEGON have no
specific provision on conflicts of interest.
Financial Information Available to Shareholders
AEGON and Transamerica are each required to file periodic reports with the
SEC containing certain financial information. Transamerica files Annual Reports
on Form 10-K which contain audited financial statements prepared in accordance
with U.S. generally accepted accounting principles ("U.S. GAAP") and quarterly
reports on Form 10-Q which contain quarterly financial statements prepared in
accordance with U.S. GAAP. AEGON files Annual Reports on Form 20-F which
contain annual financial statements prepared in accordance with Dutch
accounting principles together with a reconciliation to U.S. GAAP and periodic
reports on Form 6-K which contain financial statements for the six-months ended
June 30 prepared in accordance with Dutch accounting principles together with a
reconciliation to U.S. GAAP. In addition, AEGON also produces nine-month
financial reports; however, such reports are not published in the U.S. or
reconciled to U.S. GAAP.
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EXPERTS
The consolidated financial statements of Transamerica incorporated by
reference in Transamerica's Annual Report (Form 10-K) for the year ended
December 31, 1998, have been audited by Ernst & Young LLP ("Ernst & Young"),
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements have
been incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of AEGON and its subsidiaries included
in AEGON's 1998 Annual Report on Form 20-F incorporated by reference herein
have been audited by Ernst & Young Accountants, independent auditors, to the
extent and for the periods indicated in their reports thereon and have been
incorporated by reference herein in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
Representatives of Ernst & Young are expected to be present at the Meeting.
These representatives will have an opportunity to make statements if they so
desire and will be available to respond to appropriate questions.
LEGAL MATTERS
The validity of the AEGON common shares to be issued pursuant to the merger
will be passed upon for AEGON by N.W. van Vliet, AEGON's General Counsel. As of
June 16, 1999, Mr. van Vliet owned an amount of AEGON common shares equal to
less than one one-hundredth of one percent of the total number outstanding of
AEGON common shares.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information that the companies file at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document
retrieval services and at the Internet web site maintained by the SEC at
"http://www.sec.gov".
AEGON filed the AEGON Registration Statement on Form F-4 to register with
the SEC the AEGON common shares to be issued to Transamerica stockholders in
the merger. This proxy statement-prospectus is a part of that Registration
Statement and constitutes a prospectus of AEGON, as well as being a proxy
statement of Transamerica for the Meeting.
As allowed by SEC rules, this proxy statement-prospectus does not contain
all the information you can find in the AEGON Registration Statement or the
exhibits to that Registration Statement.
The SEC allows us to "incorporate by reference" information into this proxy
statement-prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this proxy
statement-prospectus, except for any information superseded by information
contained directly in the proxy statement-prospectus. This proxy statement-
prospectus incorporates by reference the documents set forth below that we
77
<PAGE>
have previously filed with the SEC. These documents contain important
information about our companies and their financial condition.
<TABLE>
<CAPTION>
AEGON SEC Filings (File No. 0-
14071) Period
------------------------------ ------
<C> <S>
Annual Report on Form 20-F
(including Amendment No. 1)..... Year ended December 31, 1998
Reports on Form 6-K.............. Filed on January 25, 1999, February 22,
1999, March 8, 1999 and May 6, 1999
Form 8-A......................... Filed on October 4, 1991
<CAPTION>
Transamerica SEC Filings (File No.
1-2964) Period
---------------------------------- ------
<C> <S>
Annual Report on Form 10-K....... Year ended December 31, 1998
Quarterly Report on Form 10-Q.... Three months ended March 31, 1999
Current Reports on Form 8-K...... Filed on February 23, 1999
</TABLE>
We incorporate by reference additional documents Transamerica and AEGON may
file with the SEC from the date of this proxy statement-prospectus to the date
of the Meeting. These 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 and any Annual Report on Form 20-F and, to the extent
specifically designated therein, certain Reports on Form 6-K filed by AEGON
with the SEC from the date of this proxy statement-prospectus to the date of
the Meeting.
AEGON has supplied all information contained or incorporated by reference in
this proxy statement-prospectus relating to AEGON, and Transamerica has
supplied all such information relating to Transamerica.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us, the SEC
or the SEC's Internet web site as described above. Documents incorporated by
reference are available from us without charge, excluding all exhibits unless
we have specifically incorporated by reference an exhibit in this proxy
statement-prospectus. Stockholders may obtain 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:
AEGON N.V.
Attention: Group Communications
Mariahoeveplein 50
P.O. Box 202, 2501 CE The Hague
The Netherlands
Tel: 011/(31-70) 344 83 44
Transamerica Corporation
Attention: Secretary
600 Montgomery Street
San Francisco, California 94111
Tel: (415) 983-4000
If you would like to request documents from us, please do so by July 9, 1999
to receive them before the Meeting. If you request any incorporated documents
from us we will mail them to you by first-class mail, or other equally prompt
means, within one business day of receipt of your request.
You should rely only on the information contained or incorporated by
reference in this proxy statement-prospectus to vote on the merger. We have not
authorized anyone to provide you with information that is different from what
is contained in this proxy statement-prospectus. This proxy statement-
prospectus is dated June 17, 1999. You should not assume that the information
contained in the proxy statement-prospectus is accurate as of any date other
than that date, and neither the mailing of this proxy statement-prospectus to
stockholders nor the issuance of AEGON common shares in the merger shall create
any implication to the contrary.
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<PAGE>
Appendix A
AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
among
AEGON N.V.,
TONY MERGER CORP.
and
TRANSAMERICA CORPORATION
February 17, 1999
<PAGE>
TABLE OF CONTENTS
----------------
ARTICLE 1
Plan of Merger
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 1.01. The Merger............................................... A-2
Section 1.02. Conversion of Shares..................................... A-2
Section 1.03. Exchange of Certificates................................. A-4
Section 1.04. Dividends................................................ A-5
Section 1.05. Escheat Laws............................................. A-5
Section 1.06. Closing of Company Transfer Books........................ A-5
Section 1.07. Withholding Rights....................................... A-5
Section 1.08. Dissenting Shares........................................ A-6
Section 1.09. Governance Matters....................................... A-6
</TABLE>
ARTICLE 2
Closing
<TABLE>
<CAPTION>
<C> <S> <C>
Section 2.01. Time and Place of Closing................................ A-6
</TABLE>
ARTICLE 3
Representations and Warranties of Company
<TABLE>
<CAPTION>
<C> <S> <C>
Section 3.01. Organization, Good Standing and Power.................... A-6
Section 3.02. Capitalization........................................... A-7
Section 3.03. Significant Subsidiaries................................. A-7
Section 3.04. Authority; Enforceability................................ A-8
Section 3.05. Non-Contravention; Consents.............................. A-8
Section 3.06. SEC Reports; Company Financial Statements................ A-9
Section 3.07. Statutory Statements..................................... A-9
Section 3.08. Absence of Certain Changes or Events..................... A-9
Section 3.09. Taxes and Tax Returns.................................... A-10
Section 3.10. Litigation............................................... A-11
Section 3.11. Contracts and Commitments................................ A-11
Section 3.12. Registration Statement, Etc.............................. A-11
Section 3.13. Employee Benefit Plans................................... A-12
Section 3.14. Labor Matters............................................ A-13
Section 3.15. Brokers and Finders...................................... A-14
Section 3.16. No Violation of Law...................................... A-14
Section 3.17. Environmental Matters.................................... A-15
Section 3.18. Fairness Opinion......................................... A-15
Section 3.19. Certain Approvals........................................ A-15
Section 3.20. Merger................................................... A-15
Section 3.21. Voting Requirements...................................... A-15
Section 3.22. Computer Software/Year 2000.............................. A-15
Section 3.23. Intellectual Property.................................... A-16
Section 3.24. Separate Accounts........................................ A-16
Section 3.25. Funds.................................................... A-16
Section 3.26. Insurance................................................ A-16
</TABLE>
<PAGE>
ARTICLE 4
Representations and Warranties of Merger Partner and Sub
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 4.01. Organization, Good Standing and Power.................... A-17
Section 4.02. Capitalization........................................... A-17
Section 4.03. Merger Partner Significant Subsidiary.................... A-18
Section 4.04. Authority; Enforceability................................ A-18
Section 4.05. Non-Contravention; Consents.............................. A-18
Section 4.06. SEC Reports; Merger Partner Financial ................... A-19
Section 4.07. Statutory Statements..................................... A-20
Section 4.08. Absence of Certain Changes or Events..................... A-20
Section 4.09. Taxes and Tax Returns.................................... A-20
Section 4.10. Litigation............................................... A-21
Section 4.11. Contracts and Commitments................................ A-21
Section 4.12. Registration Statement, Etc.............................. A-21
Section 4.13. Employee Benefit Plans................................... A-21
Section 4.14. Labor Matters............................................ A-23
Section 4.15. Brokers and Finders...................................... A-23
Section 4.16. No Violation of Law...................................... A-23
Section 4.17. Environmental Matters.................................... A-24
Section 4.18. Interim Operations of Sub................................ A-24
Section 4.19. Merger................................................... A-24
Section 4.20. Computer Software/Year 2000.............................. A-25
Section 4.21. Intellectual Property.................................... A-25
Section 4.22. Insurance................................................ A-25
Section 4.23. Affiliate Transactions................................... A-25
</TABLE>
ARTICLE 5
Conduct and Transactions Prior to Effective Time; Certain Covenants
<TABLE>
<CAPTION>
<C> <S> <C>
Section 5.01. Access and Information................................... A-25
Section 5.02. Conduct of Business Pending Merger....................... A-26
Section 5.03. Fiduciary Duties......................................... A-31
Section 5.04. Certain Fees............................................. A-31
Section 5.05. Takeover Statutes........................................ A-32
Section 5.06. Consents................................................. A-32
Section 5.07. Further Assurances....................................... A-32
Section 5.08. NYSE Listing............................................. A-32
Section 5.09. Notice; Efforts to Remedy................................ A-32
Section 5.10. Registration Statement; Stockholder Approvals............ A-33
Section 5.11. Expenses................................................. A-33
Section 5.12. Press Releases; Filings.................................. A-33
Section 5.13. Indemnification of Officers and Directors................ A-34
Section 5.14. Tax Treatment............................................ A-35
Section 5.15. Employee Benefits........................................ A-35
Section 5.16. Equity-based Awards...................................... A-36
Section 5.17. Rule 145................................................. A-36
Section 5.18. Comfort Letters.......................................... A-37
Section 5.19. Y2K Plans................................................ A-37
Section 5.20. Compliance with 1940 Act................................. A-37
</TABLE>
A-ii
<PAGE>
ARTICLE 6
Conditions Precedent to Merger
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 6.01. Conditions to Each Party's Obligations................... A-38
Section 6.02. Conditions to Obligations of Company..................... A-38
Section 6.03. Conditions to Obligations of Merger Partner.............. A-39
</TABLE>
ARTICLE 7
Termination and Abandonment of the Merger
<TABLE>
<CAPTION>
<C> <S> <C>
Section 7.01. Termination.............................................. A-39
Section 7.02. Effect of Termination and Abandonment.................... A-41
</TABLE>
ARTICLE 8
Miscellaneous
<TABLE>
<CAPTION>
<C> <S> <C>
Section 8.01. Waiver and Amendment................................... A-41
Non-Survival of Representations, Warranties and
Section 8.02. Agreements............................................. A-41
Section 8.03. Notices................................................ A-41
Section 8.04. Descriptive Headings; Interpretation................... A-42
Section 8.05. Counterparts........................................... A-43
Section 8.06. Entire Agreement....................................... A-43
Section 8.07. GOVERNING LAW.......................................... A-43
Section 8.08. Severability........................................... A-43
Section 8.09. Enforcement of Agreement............................... A-43
Section 8.10. Assignment............................................. A-43
Section 8.11. Obligation of Merger Partner........................... A-43
Section 8.12. CONSENT TO JURISDICTION; SERVICE OF PROCESS............ A-44
</TABLE>
ARTICLE 9
Definitions
<TABLE>
<CAPTION>
<C> <S> <C>
Section 9.01. Definitions.............................................. A-45
Section 9.02. Certain Defined Terms Index.............................. A-46
</TABLE>
ANNEX A--EXCHANGE RATIO COMPUTATION EXAMPLES
A-iii
<PAGE>
AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this "Agreement") dated as
of February 17, 1999, by and among AEGON N.V., a company formed under the laws
of The Netherlands ("Merger Partner"), Tony Merger Corp., a Delaware
corporation and a direct wholly owned subsidiary of Merger Partner ("Sub"), and
Transamerica Corporation, a Delaware corporation ("Company").
WHEREAS, Merger Partner has formed Sub as a direct wholly owned subsidiary
corporation under the Delaware General Corporation Law (the "DGCL") for the
purpose of Company merging with and into Sub pursuant to the applicable
provisions of the DGCL (the "Merger") so that Sub will continue as the
surviving corporation of the Merger and will remain a direct wholly owned
subsidiary of Merger Partner;
WHEREAS, the Boards of Directors of each of Company and Sub, and the
Supervisory and Executive Boards of Merger Partner have approved and declared
advisable the Merger, the terms and provisions of this Agreement and the
transactions contemplated hereby;
WHEREAS, the Boards of Directors of each of Company and Sub, and the
Supervisory and Executive Boards of Merger Partner have determined that the
Merger is fair to and in the best interests of their respective stockholders;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Code, and this Agreement is intended to be and is adopted as a plan of
reorganization; and
WHEREAS, the Merger described herein is subject to the approval of the
stockholders of Company and applicable state, federal and foreign authorities,
and satisfaction of certain other conditions described in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
A-1
<PAGE>
ARTICLE 1
Plan of Merger
Section 1.01. The Merger.
(a) Upon the terms and subject to the conditions of this Agreement, at the
Effective Time and in accordance with the provisions of this Agreement and the
DGCL, Company shall be merged with and into Sub, which shall be the surviving
corporation (sometimes referred to hereinafter as the "Surviving Corporation")
in the Merger, and the separate corporate existence of Company shall cease.
Subject to the provisions of this Agreement, on the Closing Date (as defined in
Section 2.01) a certificate of merger (the "Certificate of Merger") shall be
duly prepared, executed and acknowledged by Sub, on behalf of the Surviving
Corporation, and immediately thereafter delivered to the Secretary of State of
the State of Delaware, for filing, as provided in the DGCL. The Merger shall
become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (the "Effective Time").
(b) From and after the Effective Time, the Merger shall have all the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, by virtue of the Merger and in accordance with the DGCL, all
of the properties, rights, privileges, powers and franchises of Company and Sub
shall vest in the Surviving Corporation and all of the debts, liabilities and
duties of Company and Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
(c) The Certificate of Incorporation of Sub shall be amended to change the
name of Sub to the name of Company and, as so amended, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof and the DGCL.
(d) The Bylaws of Sub in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until altered, amended or
repealed as provided therein or in the Certificate of Incorporation of the
Surviving Corporation and the DGCL.
(e) The officers and directors of Sub immediately prior to the Effective
Time shall be the initial officers and directors of the Surviving Corporation,
in each case until their respective successors are duly elected and qualified.
Section 1.02. Conversion of Shares. As of the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof:
(a) Each share of capital stock of Sub that is issued and outstanding
immediately prior to the Effective Time shall remain outstanding unchanged by
reason of the Merger as one fully paid and nonassessable share of Common Stock,
no par value per share, of the Surviving Corporation.
(b) All shares of common stock, par value $1 per share, of Company ("Company
Common Stock") (or other capital stock of Company), that are owned by Company
as treasury stock or by any wholly owned Subsidiary of Company and any shares
of Company Common Stock owned by Merger Partner, Sub or any other wholly owned
Subsidiary of Merger Partner shall be canceled and retired and shall cease to
exist and no stock of Merger Partner or other consideration shall be delivered
in exchange therefor.
(c) Subject to Section 1.03(c), each share of Company Common Stock that is
issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 1.02(b) and Dissenting Shares)
shall be converted into a right to receive (i) $23.40 in cash (the "Cash
Payment") plus (ii) the number of shares, or fraction thereof, of voting common
stock, par value of fifty cents (0.50) Dutch Guilder per share, of Merger
Partner ("Merger Partner Common Stock") equal to the Exchange Ratio (as defined
below). All such shares of Company Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate
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previously representing any such shares (a "Certificate") shall thereafter
represent the right to receive that amount of Cash Payment and that number of
shares of Merger Partner Common Stock into which such shares of Company Common
Stock have been converted. Certificates previously representing shares of
Company Common Stock shall be exchanged for the Cash Payment and certificates
representing whole shares of Merger Partner Common Stock, and cash in lieu of
any fractional share, issued in consideration therefor upon the surrender of
such certificates in accordance with Section 1.03, without interest. For
purposes of this Agreement:
(i) "Initial Price" shall mean $95.20;
(ii) "Stock Consideration Amount" shall mean $54.60;
(iii) "Share Price" shall equal the average during the 20 trading days
immediately preceding the last business day before the date of the
Effective Time of the closing price per share of Merger Partner Common
Stock in Euros on the Amsterdam Stock Exchange ("ASE") as so reported in
the Financial Times or, if not reported therein, another authoritative
source (converting each of such daily closing prices per share to U.S.
Dollars based upon the "closing mid-point" exchange rate published in
respect of each such trading day in the "Currency and Money" segment in the
"Companies & Markets" section of the Financial Times);
(iv) "Percentage Price Change" shall mean the quotient (whether a
positive or negative amount) obtained by dividing (A) the difference
obtained by subtracting (x) the Initial Price from (y) the Share Price, by
(B) the Initial Price;
(v) "Excess Change Amount" shall mean the difference (whether a positive
or negative amount) obtained by (A) subtracting 0.2 (in case of a Share
Price greater than the Initial Price) from, or (B) adding 0.2 (in case of a
Share Price less than the Initial Price) to, the Percentage Price Change;
(vi) "Adjusted Stock Consideration Amount" shall mean the sum of the
Stock Consideration Amount and 1/2 of the product obtained by multiplying
the Stock Consideration Amount by the Excess Change Amount;
(vii) "Exchange Ratio" shall equal that number of shares, or fraction
thereof, determined as follows (rounded to the nearest hundred thousandth
of a share):
(A) if the Share Price is greater than or equal to $76.16 but less
than or equal to $114.24, the quotient obtained by dividing (x) the
Stock Consideration Amount by (y) the Share Price,
(B) if the Share Price is less than or equal to $128.52 but greater
than $114.24, the quotient obtained by dividing (x) the Adjusted Stock
Consideration Amount by (y) the Share Price,
(C) if the Share Price is greater than $128.52, 0.45670 or the
number, if any, determined pursuant to Section 7.01(c)(vi),
(D) if the Share Price is greater than or equal to $61.88 but less
than $76.16, the quotient obtained by dividing (x) the Adjusted Stock
Consideration Amount, by (y) the Share Price, and
(E) if the Share Price is less than $61.88, 0.81618 or the number,
if any, determined pursuant to Section 7.01(b)(vi).
Annex A hereto sets forth examples of the calculation of the Exchange Ratio.
(d) If after the date hereof and prior to the Effective Time, Merger Partner
shall have declared a stock split (including a reverse split) of Merger Partner
Common Stock or a dividend payable in Merger Partner Common Stock or any other
similar transaction, then the Cash Payment and the Exchange Ratio shall be
appropriately adjusted to reflect such stock split or dividend or similar
transaction.
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(e) Each Option (as defined in Section 5.16), TLSAR (as defined in Section
5.16) and Stock Award (as defined in Section 5.16) shall be converted into the
right to receive cash in accordance with Section 5.16.
Section 1.03. Exchange of Certificates.
(a) Immediately prior to the Effective Time, Merger Partner or Sub shall
deposit with Citibank N.A., or such other bank or trust company designated by
Merger Partner and reasonably acceptable to Company (the "Exchange Agent"), for
the benefit of the holders of shares of Company Common Stock, Options, TLSARs
and Stock Awards, for exchange in accordance with this Article 1 through the
Exchange Agent, in the aggregate, (i) cash in respect of the Cash Payment for
each share of Company Common Stock payable pursuant to Section 1.02, (ii)
certificates representing the shares of Merger Partner Common Stock issuable
pursuant to Section 1.02, (iii) any additional cash to be paid in lieu of
fractional shares, and (iv) except to the extent that Company and Merger
Partner otherwise agree, cash payable pursuant to Section 5.16 in respect of
Options, TLSARs and Stock Awards (such shares of Merger Partner Common Stock,
together with any dividends or distributions with respect thereto and cash
deposited by Merger Partner in accordance with this Section 1.03, being
hereinafter referred to as the "Exchange Fund"). The aggregate number of shares
of Merger Partner Common Stock which shall be issuable shall be a number of
such shares equal to the Exchange Ratio multiplied by the total number of
outstanding shares of Company Common Stock as of the Effective Time (including
shares of Restricted Stock), subject to adjustments for nonissuance of
fractional shares as provided herein.
(b) As soon as practicable after the Effective Time but in no event more
than two business days following the Closing Date, Merger Partner and the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of a Certificate or Certificates (and appropriate documentation for
holders of Options, TLSARs and Stock Awards) (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent accompanied by a properly executed letter of transmittal and
shall be in such form and have such other provisions as Merger Partner and
Company may reasonably specify), and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for cash and certificates
representing shares of Merger Partner Common Stock. Upon the surrender to the
Exchange Agent of one or more Certificates for cancellation, together with such
letter of transmittal, duly executed, the holder will be entitled to receive
(i) an amount in cash determined by multiplying (x) the Cash Payment amount by
(y) the aggregate number of such shares of Company Common Stock previously
represented by the stock certificates surrendered, (ii) certificates
representing that number of whole shares of Merger Partner Common Stock to be
issued in respect of the aggregate number of such shares of Company Common
Stock previously represented by the stock certificates surrendered based upon
the Exchange Ratio and (iii) an additional amount of cash in lieu of any
fractional share, as contemplated by Section 1.02(c). Upon the delivery to the
Exchange Agent of the appropriate documentation in respect of Options, TLSARs
or Stock Awards, the holder of such Options, TLSARs or Stock Awards will be
entitled to receive an amount in cash determined pursuant to Section 5.16.
(c) No certificate or scrip representing fractional shares of Merger Partner
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights as a stockholder of Merger Partner. All fractional shares of
Merger Partner Common Stock that a holder of Company Common Stock would
otherwise be entitled to receive as a result of the Merger shall be aggregated
and if a fractional share results from such aggregation, such holder shall be
entitled to receive, in lieu thereof, an amount in cash determined by
multiplying (i) the Share Price at the Effective Time of one share of Merger
Partner Common Stock by (ii) the fraction of a share of Merger Partner Common
Stock to which such holder would otherwise have been entitled. Merger Partner
shall timely make available to the Exchange Agent any cash necessary to make
payments in lieu of fractional shares as aforesaid. No such cash in lieu of
fractional shares of Merger Partner Common Stock shall be paid to any holder of
Company Common Stock until Certificates are surrendered and exchanged in
accordance with Section 1.03(a).
(d) If a certificate for Merger Partner Common Stock is to be sent to a
person other than the person in whose name the Certificates for shares of
Company Common Stock surrendered for exchange are registered, it
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shall be a condition of the exchange that the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes required by reason
of the delivery of such Certificate to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not applicable.
(e) The Cash Payments made and the shares of Merger Partner Common Stock
issued upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid and issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
(f) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by 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 Cash Payments
and shares of Merger Partner Common Stock and cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Merger Partner
Common Stock as provided in this Section 1.03, deliverable in respect thereof
pursuant to this Agreement.
Section 1.04. Dividends. No dividends or other distributions that are
declared or made after the Effective Time with respect to Merger Partner Common
Stock and payable to holders of record thereof after the Effective Time shall
be paid to a Company stockholder entitled to receive certificates representing
Merger Partner Common Stock until such stockholder has properly surrendered
such stockholder's Certificates. Upon such surrender, there shall be paid to
the stockholder in whose name the certificates representing such Merger Partner
Common Stock shall be issued any dividends or other distributions with a record
date after the Effective Time payable with respect to such Merger Partner
Common Stock and not paid, without interest. After such surrender, there shall
also be paid to the stockholder in whose name the certificates representing
such Merger Partner Common Stock shall be issued any dividend or other
distributions on such Merger Partner Common Stock that shall have a record date
subsequent to the Effective Time and prior to such surrender and a payment date
after such surrender; provided that such dividend payments or other
distributions shall be made on such payment dates. In no event shall the
stockholders entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other distributions. Any
portion of the Exchange Fund which remains undistributed to the stockholders of
Company for one year after the Effective Time pursuant to this Section 1.04
shall be returned by the Exchange Agent to Merger Partner which shall
thereafter act as Exchange Agent, subject to the rights of holders of
unsurrendered Certificates under this Article 1.
Section 1.05. Escheat Laws. Notwithstanding any other provision of this
Article 1, none of Merger Partner, Sub, Company, the Surviving Corporation, the
Exchange Agent or any other party hereto shall be liable to any holder of
Company Common Stock for any amount of Cash Payment or Merger Partner Common
Stock, or dividends or distributions thereon, or cash in lieu of fractional
shares, delivered to a public official pursuant to any applicable abandoned
property, escheat or similar laws.
Section 1.06. Closing of Company Transfer Books. At the Effective Time, the
stock transfer books of Company shall be closed and no transfer of Company
Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall, when
accompanied by proper documentation, be exchanged for the Cash Payment and
Merger Partner Common Stock in the manner provided in this Article 1.
Section 1.07. Withholding Rights. The Surviving Corporation or the Merger
Partner, as the case may be, shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any person such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state or local tax law. To the extent that amounts are so
withheld by the Surviving Corporation or Merger Partner, as
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the case may be, such amounts withheld shall be treated for purposes of this
Agreement as having been paid to such person in respect of which such deduction
and withholding was made by the Surviving Corporation or Merger Partner as the
case may be.
Section 1.08. Dissenting Shares. Notwithstanding anything to the contrary
contained in this Agreement, shares of Company Common Stock outstanding
immediately prior to the Effective Time held by a holder (if any) who shall be
entitled to demand, and who properly demands, appraisal for such shares in
accordance with Section 262 of the DGCL ("Dissenting Shares"), shall not be
converted into the right to receive the consideration to which such holder
would otherwise have been entitled pursuant to Section 1.02, unless and until
such holder shall have failed to perfect or withdrawn or lost such holder's
rights under Section 262 of the DGCL, and shall be entitled to receive only
such payment provided for by Section 262 of the DGCL.
Section 1.09. Governance Matters. Following the date hereof and prior to the
Effective Time, the Supervisory Board of Merger Partner shall take such action
as necessary so that immediately following the Effective Time, Frank C.
Herringer is elected or appointed as a member of the Executive Board of Merger
Partner and as Chairman of AEGON USA, Inc. ("AEGON USA") and the Surviving
Corporation. Donald Shepard shall be elected or appointed as President and
Chief Executive Officer of the Surviving Corporation and shall continue to
serve as President and Chief Executive Officer of AEGON USA. Following the
Effective Time, the headquarters of the Surviving Corporation and AEGON USA
shall be in San Francisco. At or prior to the Effective Time, the Supervisory
Board of Merger Partner will take such action as may be necessary to invite,
and if such invitation is accepted, cause the appointment of one, or in Merger
Partner's discretion, two, current directors of Company as ex officio members
of the Supervisory Board immediately following the Effective Time and at the
next meeting of Merger Partner's stockholders use best efforts to cause the
election or appointment of such person(s) as full members of the Supervisory
Board.
ARTICLE 2
Closing
Section 2.01. Time and Place of Closing. Unless otherwise mutually agreed
upon in writing by Merger Partner and Company, the closing of the Merger (the
"Closing") will be held at 10:00 a.m., local time, on the third business day
following the date that all of the conditions precedent specified in this
Agreement have been (or can be at the Closing) satisfied or waived by the party
or parties permitted to do so (such date being referred to hereinafter as the
"Closing Date"). The place of Closing shall be at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York 10019, or at
such other place as may be agreed between Merger Partner and Company.
ARTICLE 3
Representations and Warranties of Company
Except as set forth in the disclosure letter delivered to Merger Partner
concurrent with the execution hereof (the "Company Disclosure Letter") or the
Company Supplemental Disclosure Letter (as defined below) or as disclosed in
the Company Reports (as defined below) filed prior to the date hereof, Company
hereby represents and warrants to Merger Partner as follows:
Section 3.01. Organization, Good Standing and Power.
(a) Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties make
such qualification or licensing necessary, except where the failure to be so
qualified or licensed
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or to be in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on Company. Company has made available to Merger
Partner complete and correct copies of its Restated Certificate of
Incorporation as in effect as of the date hereof and its Bylaws as amended to
the date hereof. As used in this Agreement, the phrase "Material Adverse Effect
on Company" means a material adverse effect on (a) on a consolidated basis, the
financial condition, business or the annual earnings capacity of Company and
the Subsidiaries of Company (the "Company Subsidiaries"), except to the extent
that such adverse effect results from general economic conditions or changes
therein, financial market fluctuations or conditions, adverse changes or
effects in or affecting the financial services or insurance industries
generally, or as a consequence of the transactions contemplated herein
(including, without limitation, the announcement thereof), or (b) the ability
of Company to consummate the transactions contemplated by this Agreement.
(b) Each Company Subsidiary is an entity duly organized, validly existing
and in good standing (where such concept exists) under the laws of its
jurisdiction of organization, and has the corporate (or, if not a corporation,
other) power and authority necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing or in good standing (where such
concept exists) or to have such power and authority would not, individually or
in the aggregate, have a Material Adverse Effect on Company. Each Company
Subsidiary is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
except where the failure to be so qualified or licensed or to be in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Company.
Section 3.02. Capitalization. The authorized capital stock of Company as of
the date hereof consists of (i) 300 million shares of Common Stock, par value
$1 per share, of which as of February 12, 1999, 124,549,157 shares were issued
and outstanding and 29,260,350 shares of Company Common Stock were reserved for
issuance upon exercise of outstanding Options (as defined below), (ii) 5
million shares of preference stock, without par value, of which as of the date
hereof no shares are issued and outstanding, and (iii) 1,200,000 shares of
Preferred Stock, par value $100 per share, of which as of the date hereof no
shares are issued and outstanding. All outstanding shares of Company Common
Stock are, and all shares which may be issued prior to the Effective Time
pursuant to any outstanding Options will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to any preemptive
rights. Except as set forth above, as of February 12, 1999, there were no
shares of capital stock of Company outstanding, and, except as set forth in
Schedule 3.2 of the Company Disclosure Letter, as of February 12, 1999 there
are no outstanding options, warrants or rights to purchase or acquire from
Company any capital stock of Company, there are no existing registration
covenants with Company with respect to outstanding shares of Company Common
Stock, and there are no convertible securities or other contracts, commitments,
agreements, understandings, arrangements or restrictions by which Company is
bound to issue any additional shares of its capital stock.
Section 3.03. Significant Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Except as would not have a Material
Adverse Effect on Company or as disclosed in the Company Disclosure Letter, (i)
Company owns, directly or indirectly, the securities of each Significant
Subsidiary held by Company, free and clear of all liens, charges, pledges,
security interests or other encumbrances, and (ii) all of the outstanding
capital stock of each Significant Subsidiary has been duly authorized, and is
validly issued, fully paid and nonassessable. There are no outstanding options
or rights to subscribe to, or any contracts or commitments to issue or sell any
shares of the capital stock or any securities or obligations convertible into
or exchangeable for, or giving any person any right to acquire, any shares of
the capital stock of any Significant Subsidiary to which Company or any
Significant Subsidiary is a party. There are no voting trusts or other
agreements with respect to the voting of capital stock of Company or any
Significant Subsidiary to which Company or any Significant Subsidiary is a
party. Schedule 3.3 to the Company Disclosure Letter sets forth for each
Significant Subsidiary of Company, its name and jurisdiction of incorporation
or organization.
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Section 3.04. Authority; Enforceability. Company has the corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Company other than the
approval and adoption of this Agreement by the Company's stockholders, and this
Agreement has been duly executed and delivered by Company and constitutes the
valid and binding obligation of Company, enforceable against it in accordance
with its terms, (i) except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) subject to general principles of equity.
Section 3.05. Non-Contravention; Consents.
(a) Except as would not have a Material Adverse Effect on Company, neither
the execution, delivery and performance by Company of this Agreement, nor the
consummation by Company of the transactions contemplated hereby, nor compliance
by Company with any of the provisions hereof, will:
(i) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event that, with notice or lapse of time or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination
or acceleration, or the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Company, under any of
the terms, conditions or provisions of, (x) its Certificate of
Incorporation or Bylaws, or (y) any note, bond, mortgage, indenture, deed
of trust, license, lease, contract, agreement or other instrument or
obligation to which Company or any of the Company Subsidiaries is a party,
or by which Company or any of the Company Subsidiaries may be bound, or to
which Company or any of the Company Subsidiaries or the properties or
assets of any of them may be subject (any of the foregoing being referred
to herein as a "Violation"); or
(ii) subject to compliance with the statutes and regulations referred to
in Section 3.05(b), violate any valid and enforceable judgment, ruling,
order, writ, injunction, decree, or any statute, rule or regulation
applicable to Company or any of the Company Subsidiaries or any of their
respective properties or assets.
(b) Except for (i) the filing of applications and notices, as applicable,
with federal and state regulatory authorities governing banking, insurance
premium finance, commercial collections, broker-dealers, investment advisors
and investment companies, leasing, consumer finance, commercial finance,
mortgage lending and insurance in the states in which Company and the Company
Subsidiaries operate their respective business and the approval of such
applications or the grant of required licenses by such authorities, (ii) the
filing of applications and notices, as applicable, with the foreign
governmental authorities regulating banking, insurance premium finance,
commercial collections, broker-dealers, investment advisors and investment
companies, leasing, consumer finance, commercial finance, mortgage lending and
insurance in the foreign jurisdictions in which the Company Subsidiaries
operate their businesses, and the approval of such applications or the grant of
required licenses by such authorities, (iii) the filing of notification and
report forms with the United States Federal Trade Commission and the United
States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and the expiration or termination of
any applicable waiting period thereunder, (iv) the filing of applications and
notices, as applicable, with foreign governmental authorities under the Foreign
Competition Laws, and the approval of such applications by such authorities, if
required, (v) the filing with the SEC of a proxy statement in definitive form
relating to the meeting of Company's stockholders to be held in connection with
this Agreement and the transactions contemplated hereby and the filing and
declaration of effectiveness of the registration statement on Form F-4 relating
to the shares of Merger Partner Common Stock to be issued in the Merger, (vi)
the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware pursuant to the DGCL, (vii) the approval of the listing of
the Merger Partner Common Stock to be issued in the Merger on the New York
Stock Exchange (the "NYSE"), (viii) such notices, consents, approvals, filings
or registrations appearing on the supplement to the Company Disclosure Letter
to be delivered by Company to Merger Partner as promptly as reasonably
practicable following the date hereof (the "Supplemental Disclosure Letter"),
and (ix) such other notices, consents, approvals, filings or registrations, the
failure of which to be made or obtained would not, individually
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or in the aggregate, reasonably be expected to have a Material Adverse Effect
on Company, no notices to, consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality (each, a "Governmental Entity") or
with any self-regulatory authority are necessary in connection with the
execution and delivery by Company of this Agreement and the consummation by
Company of the transactions contemplated hereby.
Section 3.06. SEC Reports; Company Financial Statements.
(a) Since January 1, 1997, Company has in all material respects timely filed
all reports, registration statements, proxy statements or information
statements and all other documents, together with any amendments required to be
made thereto, required to be filed with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933 (the "Securities Act") or the
Securities Exchange Act of 1934 (the "Exchange Act") (collectively, the
"Company Reports"). Company has heretofore made available to Merger Partner
true copies of all the Company Reports, together with all exhibits thereto,
that Merger Partner has requested.
(b) All of the financial statements included in the Company Reports (which
are collectively referred to herein as the "Company Consolidated Financial
Statements") fairly presented in all material respects the consolidated
financial position of Company and its subsidiaries as at the dates mentioned
and the consolidated results of operations, changes in stockholders' equity and
cash flows for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis (subject to any exceptions
specified therein or as may be indicated in the notes thereto or in the case of
the unaudited statements, as may be permitted by Form 10-Q of the SEC and
subject, in the case of unaudited statements, to normal audit adjustments). As
at the respective dates of the consolidated balance sheets of Company and its
Subsidiaries included in such Company Reports, the Company Reports complied in
all material respects with all applicable rules and regulations promulgated by
the SEC and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Except as set forth in the Company Reports, as at
the respective dates of the respective consolidated balance sheets contained
therein, neither Company nor any Company Subsidiary had any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be set forth on a
consolidated balance sheet of Company and its consolidated subsidiaries or in
the notes thereto, other than liabilities or obligations which would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on Company.
Section 3.07. Statutory Statements. Company has previously made available to
Merger Partner the annual statements of each Company Significant Subsidiary
that is engaged in the business of insurance (a "Company Insurance Subsidiary")
for the years ended December 31, 1996 and December 31, 1997, which have been
filed with the insurance regulatory authority of the jurisdiction of
organization of such Company Insurance Subsidiary, and statutory statements,
where required, for each such company for the periods ended March 31, 1998,
June 30, 1998 and September 30, 1998 and Company shall promptly furnish to
Merger Partner all statutory statements for any calendar years or quarters
ending thereafter but prior to the Effective Time. Such statutory statements
present or will present fairly in all material respects the financial position
of each respective Company Insurance Subsidiary at the end of each of the
periods then ended, and the results of its operations and changes in its
surplus for each of the periods then ended, in conformity with accounting
practices prescribed or permitted by the insurance regulatory authority of the
jurisdiction of organization of such Company Insurance Subsidiary, applied on a
consistent basis as and to the extent described in such statutory statements.
For purposes of this Section 3.07, materiality shall be determined by reference
to Company and its Subsidiaries taken as a whole.
Section 3.08. Absence of Certain Changes or Events. Since December 31, 1997
(with respect to clauses (i), (ii), (iii), (v) and (vi)) and September 30, 1998
(with respect to clause (iv)), there has not been (i) any change on a
consolidated basis in the business, financial condition or the annual earnings
capacity of Company and the Company Subsidiaries which constituted a Material
Adverse Effect on Company, (ii) any
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declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Company's
outstanding capital stock (other than the regular quarterly dividend and the
stock dividend referred to in clause (iii) hereof), (iii) any split (other than
the stock dividend declared December 17, 1998), combination or reclassification
of any of Company's outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of Company's outstanding capital stock, (iv) (x)
any granting by Company or any Company Subsidiary to any executive officer of
Company or any Company Subsidiary of any increase in compensation, except for
increases in the ordinary course of business consistent with prior practice or
as was required under employment agreements in effect as of September 30, 1998,
or in connection with a promotion, (y) any granting by Company or any Company
Subsidiary to any such executive officer of any increase in severance or
termination pay, except (A) for obligations which have been satisfied prior to
the date hereof, (B) for increases in the ordinary course of business
consistent with past practice in any one case not in excess of $100,000, or (C)
as was required under any employment, severance or termination agreements in
effect as of September 30, 1998, or (D) in connection with a promotion, (z) any
entry by Company or any Company Subsidiary into any new severance or
termination agreement with any such executive officer (other than (A) for
obligations which have been satisfied prior to the date hereof, (B) new
severance or termination obligations in the ordinary course of business in any
one case not in excess of $100,000, and (C) in connection with a promotion),
(v) any significant change in accounting methods, principles or practices by
either Company's life insurance business or non-life insurance business
materially affecting its assets, liabilities or business, except insofar as may
be appropriate to conform to changes in statutory accounting rules or generally
accepted accounting principles and except as would not have a Material Adverse
Effect on Company's life insurance business or non-life insurance business, as
applicable or (vi) except for changes in a manner consistent with past practice
or consistent with industry standards, any material change in the underwriting,
pricing, actuarial or investment practices or policies of either Company's life
insurance business or non-life insurance business, except as would not have a
Material Adverse Effect on the life insurance business or non-life insurance
business, respectively.
Section 3.09. Taxes and Tax Returns.
(a) Company and the Company Subsidiaries have (i) duly filed (or there has
been filed on their behalf) with appropriate governmental authorities all Tax
Returns required to be filed by them, on or prior to the date hereof, and all
Tax Returns were in all material respects true, complete and correct and filed
on a timely basis (taking into account any extension of time within which to
file) except to the extent that any failure to file or failure to be true,
complete and correct would not, individually or in the aggregate, have a
Material Adverse Effect on Company, and (ii) duly paid in full within the time
and in the manner prescribed by law or made provisions in accordance with
generally accepted accounting principles with respect to Taxes not yet due and
payable (or there has been paid or provision has been made on their behalf) for
the payment of all Taxes for all periods ending on or prior to the date hereof,
except to the extent that any failure to fully pay or make provision for the
payment of such Taxes would not, individually or in the aggregate, have a
Material Adverse Effect on Company.
(b) No federal, state, local or foreign Tax audits, investigations or other
administrative proceedings or court proceedings are presently pending or
threatened in writing with regard to any Taxes or Tax Returns of Company or the
Company Subsidiaries, and no issues have been raised in writing by any Tax
authority and not fully settled in connection with any Tax or Tax Return, in
either case, which individually or in the aggregate would have a Material
Adverse Effect on Company.
(c) The federal income Tax Returns of Company and the Company Subsidiaries
have been examined by the Internal Revenue Service ("IRS") (or the applicable
statutes of limitation for the assessment of federal income Taxes for such
periods have expired) for all periods through and including December 31, 1995.
Deficiencies for all periods 1995 and prior have been assessed by the IRS and
have either been paid or are being contested in good faith. Unpaid Taxes
related to those issues being contested are provided for in the financial
statements and to the extent that such Taxes are not provided for, the ultimate
payment would not individually or in the aggregate have a Material Adverse
Effect on Company.
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(d) Neither Company nor any Company Subsidiary is party to any agreement
relating to the allocation or sharing of Taxes, other than agreements among
Company and the Company Subsidiaries. Neither Company nor any Company
Subsidiary (i) since January 1, 1994 has been a member of an affiliated group
filing a U.S. consolidated federal income tax return (other than a group the
common parent of which was Company) or an affiliated, consolidated, combined or
unitary group for state income tax return purposes (other than a group the
common parent of which was Company or a Company Subsidiary) or (ii) has any
liability for Taxes of any Person (other than Company and the Company
Subsidiaries) under United States Treasury Regulation Section 1.1502-6 (or any
provision of state, local, or foreign law), as a transferee or successor, by
contract or otherwise. Except as set forth in the Company Disclosure Letter,
neither Company nor any Company Subsidiary is currently under (i) any
obligation to pay any amounts as a result of being party, or having been party,
to any Tax sharing agreement, other than agreements among Company and the
Company Subsidiaries or (ii) any express or implied obligation to indemnify any
other person for Taxes.
(e) There are no Tax liens upon any asset of Company or any Company
Subsidiary except liens for Taxes not yet due or Taxes that are being contested
in good faith by appropriate proceedings.
(f) (i) All insurance or investment policies, plans, or contracts, financial
products, employee benefit plans, individual retirement accounts, or any
similar or related policy, contract, plan or product, whether individual, group
or otherwise including annuity contracts, life insurance contracts and variable
contracts (including any supplements, endorsements, riders and ancillary
agreements in connection therewith), (the "Insurance Product(s)") issued,
assumed, modified, exchanged or sold by a Company Insurance Subsidiary complies
(and has complied since the time of issuance, assumption, modification,
exchange or sale) with all requirements of the Code, and the rules and
regulations thereunder, relating to the qualifications and/or tax treatment for
which the Insurance Products were intended to qualify or for which a Company
Insurance Subsidiary represented any or all of the Insurance Products
qualified, except for failures to comply or qualify that would not,
individually, or in the aggregate, have a Material Adverse Effect on Company.
(ii) In providing recordkeeping and administrative services in the
ordinary course with respect to customers' Insurance Products whether
individual or group retirement or deferred compensation plans or
arrangements, and with respect to any life insurance or annuity contracts
issued, assumed, modified, exchanged or sold by a Company Insurance
Subsidiary as of the Closing Date, each Company Insurance Subsidiary is in
compliance with the applicable administrative requirements of the Code and
the rules and regulations thereunder, and, to the extent applicable, the
requirements of Parts 2, 3 and 4 of Title I of ERISA, except for failures
to comply that would not individually, or in the aggregate, have a Material
Adverse Effect on Company.
Section 3.10. Litigation. Neither Company nor any Company Subsidiary is a
party to any pending or, to the knowledge of Company, threatened claim, action,
suit, investigation or proceeding which would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Company.
There is no outstanding order, writ, judgment, stipulation, injunction, decree,
determination, award or other decision against Company or any Company
Subsidiary which, either individually or in the aggregate, has had or would
have a Material Adverse Effect on Company.
Section 3.11. Contracts and Commitments. To the knowledge of Company,
neither Company nor any Company Subsidiary has received notice from any person
alleging that Company or any Company Subsidiary is in default under any
contracts, agreements, leases, commitments, or assignments in other interests
which are material to Company and the Company Subsidiaries as a whole which
would result, individually or in the aggregate, in a Material Adverse Effect on
Company.
Section 3.12. Registration Statement, Etc. None of the information supplied
or to be supplied by Company for inclusion or incorporation by reference in (a)
the Registration Statement to be filed by Merger Partner with the SEC in
connection with the Merger Partner Common Stock to be issued in the Merger (the
"Registration Statement"), (b) the Proxy Statement (the "Proxy Statement") to
be mailed to Company's
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stockholders in connection with the meeting (the "Stockholders' Meeting") to be
called to consider the Merger, and (c) any other documents to be filed with the
SEC in connection with the transactions contemplated hereby will, at the
respective times such documents are filed and at the time such documents become
effective or at the time any amendment or supplement thereto becomes effective,
contain any untrue statement of a material fact, or omit to state any material
fact required or necessary in order to make the statements therein not
misleading; and, in the case of the Registration Statement, when it becomes
effective or at the time any amendment or supplement thereto becomes effective,
will cause the Registration Statement or such supplement or amendment to
contain any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or which is necessary in order to make the
statements therein not misleading; or, in the case of the Proxy Statement, when
first mailed to the stockholders of Company, or in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Stockholders' Meeting, will cause the Proxy Statement or any amendment thereof
or supplement thereto to contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All documents that Company is responsible for
filing with the SEC and any other regulatory agency in connection with the
Merger will comply as to form in all material respects with the provisions of
applicable law and any applicable rules or regulations thereunder, except that
no representation is made by Company with respect to statements made therein
based on information supplied by Merger Partner or with respect to information
concerning Merger Partner or Sub which is incorporated by reference in the
Registration Statement or the Proxy Statement.
Section 3.13. Employee Benefit Plan.
(a) Schedule 3.13 of the Supplemental Company Disclosure Letter shall
contain a list of each material plan, program or contract which is maintained
by Company or any Company Subsidiary or to which Company or any Company
Subsidiary is obligated to make contributions and which provides benefits or
compensation to or on behalf of persons employed or formerly employed in the
United States, including but not limited to material executive arrangements
(for example, any bonus, incentive compensation, stock option, deferred
compensation, commission, severance, golden parachute or other executive
compensation plans, programs, contracts or arrangements) and "employee benefit
plans" as defined in Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). All such plans, programs, arrangements,
practices or contracts are referred to herein as "Company Employee Plans."
Company shall make available to Merger Partner the plan documents or other
writing constituting each Company Employee Plan and, if applicable, the trust,
insurance contract or other funding arrangement, the ERISA summary plan
description and the most recent Forms 5500 and annual reports for each such
plan. Schedule 3.13 of the Supplemental Company Disclosure Letter shall
identify those Company Employee Plans which Company intends to satisfy the
requirements of Section 401 of the Code and Company shall make available to
Merger Partner accurate copies of the most recent favorable determination
letters for such plans. For purposes of this Agreement, the term "Company
Foreign Plan" shall refer to each material plan, program or contract that is
subject to or governed by the laws of any jurisdiction other than the United
States, and which would have been treated as a Company Employee Plan had it
been a United States plan, program or contract. Company shall use its
reasonable best efforts to make available to Merger Partner within thirty (30)
days following the date of this Agreement a list and copies of the Company
Foreign Plans.
(b) With respect to each Company Employee Plan that is subject to Title IV
or Section 302 of ERISA or Section 412 or 4971 of the Code, except as would not
have a Material Adverse Effect on Company: (i) there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived; (ii) no reportable event within
the meaning of Section 4043(c) of ERISA with respect to which the 30-day notice
period has not been waived has occurred before the date of this Agreement, nor
will any such event occur solely as a result of the consummation of the
transactions contemplated by this Agreement; and (iii) all premiums required to
be paid to the Pension Benefit Guaranty Corporation have been timely paid in
full. Except as would not have a Material Adverse Effect on Company, there does
not now exist, nor do any circumstances exist that could result in, any Company
Controlled Group
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Liability (as defined below) that would be a liability of Company or any
Company Subsidiary following the Effective Time. "Company Controlled Group
Liability" means any and all liabilities under (i) Title IV of ERISA, (ii)
Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code and (iv) the
continuation coverage requirements of Section 601 et seq. of ERISA and Section
4980B of the Code, other than such liabilities that arise solely out of, or
relate solely to, the Company Employee Plans.
(c) Neither Company nor any Company Subsidiary is a participant in a multi-
employer plan (within the meaning of ERISA Section 3(37)). Except as disclosed
in the Supplemental Company Disclosure Schedule, neither Company nor any
Company Subsidiary maintains a Company Employee Plan which is subject to Title
IV of ERISA and neither Company nor any Company Subsidiary is obligated to
provide post employment or retirement medical benefits or any other unfunded
welfare benefits to or on behalf of any person who is no longer an employee of
Company or any Company Subsidiary, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
(d) Each Company Employee Plan has at all times been maintained, by its
terms and in operation, in accordance with all applicable laws, and each of
those Company Employee Plans which are intended to be qualified under Section
401 of the Code has at all times been maintained, by its terms and in
operation, in accordance with Section 401 of the Code, in each case except
where a failure to be so maintained would not have a Material Adverse Effect on
Company. As of December 31, 1997, neither Company nor any of the Company
Subsidiaries had any liability under any Company Employee Plan that was not
reflected in the Company audited consolidated balance sheet at December 31,
1997 or disclosed in the notes thereto, other than liabilities which
individually or in the aggregate would not have a Material Adverse Effect on
Company.
(e) No prohibited transaction has occurred with respect to any Company
Employee Plan maintained by Company or any of the Company Subsidiaries that
would result, directly or indirectly, in the imposition of an excise tax or
other liability under the Code or ERISA, except for such a tax or other
liability that would not have a Material Adverse Effect on Company.
(f) Except as previously disclosed to Merger Partner, the execution of or
performance of the transactions contemplated by this Agreement will not create,
accelerate or increase any obligations under the Company Employee Plans which
would have a Material Adverse Effect on Company.
(g) Except as would not have a Material Adverse Effect on Company, with
respect to each Company Foreign Plan: (i) all amounts required to be reserved
on account of each Company Foreign Plan have been so reserved in accordance
with reasonable accounting practices prevailing in the country where such
Company Foreign Plan is established; (ii) each Company Foreign Plan required to
be registered with a governmental entity has been registered, has been
maintained in good standing with the appropriate governmental entities, and has
been maintained and operated in accordance with its terms and applicable law;
and (iii) the fair market value of the assets of each funded Company Foreign
Plan that is a defined benefit pension plan (or termination indemnity plan),
and the liability of each insurer for each Company Foreign Plan that is a
defined benefit pension plan (or termination indemnity plan) and is funded
through insurance or the book reserve established for each Company Foreign Plan
that is a defined benefit pension plan (or termination indemnity plan) that
utilizes book reserves, together with any accrued contributions, is sufficient
to procure or provide for the liability for accrued benefits with respect to
those current and former employees of Company and any Company Subsidiary that
participates in such Company Foreign Plan according to the reasonable actuarial
or other applicable assumptions and valuations most recently used to determine
employer contributions to or the funded status or book reserve of such Company
Foreign Plans.
Section 3.14. Labor Matters. Neither Company nor any of its Subsidiaries has
any collective bargaining agreement with respect to its U.S. employees. Neither
Company nor any of its Subsidiaries is subject to a dispute, strike or work
stoppage with respect to any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization to which it
is a party or by which it is bound which would have a Material Adverse Effect
on Company. To Company's knowledge, there are no
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organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Company or any
of its Subsidiaries, except for those the formation of which would not have a
Material Adverse Effect on Company.
Section 3.15. Brokers and Finders. Neither Company nor any of the Company
Subsidiaries, nor any of their respective officers, directors or employees, has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions, or finder's fees, and no broker or
finder has acted directly or indirectly for Company or any of the Company
Subsidiaries, in connection with this Agreement or any of the transactions
contemplated hereby, except that Company has retained Goldman, Sachs & Co.
("Goldman Sachs") as its financial advisor, whose fees and expenses will be
paid by Company.
Section 3.16. No Violation of Law.
(a) The business and operations of the Company Insurance Subsidiaries have
been conducted in compliance with all applicable statutes and regulations
regulating the business of insurance and all applicable orders and directives
of insurance regulatory authorities and market conduct recommendations
resulting from market conduct examinations of insurance regulatory authorities
(collectively, "Insurance Laws"), except where the failure to so conduct such
business and operations would not individually or in the aggregate have a
Material Adverse Effect on Company. Notwithstanding the generality of the
foregoing, except where the failure to do so would not have, individually or in
the aggregate, a Material Adverse Effect on Company, each Company Insurance
Subsidiary has marketed, sold and issued insurance products in compliance, in
all material respects, with all statutes, laws, ordinances, rules, orders and
regulations applicable to the business of such Company Insurance Subsidiary and
in the respective jurisdictions in which such products have been sold,
including, without limitation, in compliance with (i) all applicable
requirements relating to the disclosure of the nature of insurance products as
policies of insurance and (ii) all applicable requirements relating to
insurance product projections. In addition (i) there is no pending or, to the
knowledge of 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 Company, threatened, investigation by any insurance
regulatory authority with respect to possible violations of, any applicable
Insurance Laws where such violations would have individually or in the
aggregate a Material Adverse Effect on Company; (ii) none of the Company
Insurance Subsidiaries is subject to any order or decree of any insurance
regulatory authority relating specifically to such Company Insurance Subsidiary
(as opposed to insurance companies generally) which would have individually or
in the aggregate a Material Adverse Effect on Company; and (iii) the Company
Insurance Subsidiaries have filed all reports required to be filed with any
insurance regulatory authority on or before the date hereof as to which the
failure to file such reports would have individually or in the aggregate a
Material Adverse Effect on Company.
(b) In addition to Insurance Laws, the business and operations of Company
and the Company Subsidiaries have been conducted in compliance with all other
applicable laws, ordinances, regulations and orders of all governmental
entities and other regulatory bodies (including, without limitation, laws,
ordinances, regulations and orders relating to commercial lending, commercial
leasing, real estate servicing, and the safety and health of employees), except
where such noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on Company. In addition, (i) neither Company nor any
Company Subsidiary has been charged with or, to the knowledge of Company, is
now under investigation with respect to, a violation of any applicable law,
regulation, ordinance, order or other requirement of a governmental entity or
other regulatory body, which would have, individually or in the aggregate, a
Material Adverse Effect on Company, (ii) neither Company nor any Company
Subsidiary is a party to or bound by any order, judgment, decree or award of a
governmental entity or other regulatory body relating specifically to such
entity which will have, individually or in the aggregate, a Material Adverse
Effect on Company; and (iii) Company and the Company Subsidiaries have filed
all reports required to be filed with any governmental entity or other
regulatory body (including self regulatory organizations) on or before the date
hereof as to which the failure to file such reports would result, individually
or in the aggregate, in a Material Adverse Effect on Company. Company and the
Company Subsidiaries have all permits, certificates, licenses, approvals and
other authorizations required in connection with the operation of the business
of Company and the Company Subsidiaries, except for permits, certificates,
licenses, approvals
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and other authorizations the failure of which to have would not, individually
or in the aggregate, have a Material Adverse Effect on Company and except for
such permits, certificates, licenses, approvals and other authorizations
required to be obtained in connection with the consummation of the transactions
contemplated hereby.
Section 3.17. Environmental Matters. Except as would not have a Material
Adverse Effect on Company:
(a) there are not any past or present conditions or circumstances that
interfere with the conduct of the business of Company and each of the
Company Subsidiaries in the manner now conducted or which interfere with
compliance with any order of any court, governmental authority or
arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation related to human health or the environment ("Environmental
Law");
(b) there are not any past or present conditions or circumstances at, or
arising out of, any current or former business, assets or properties of
Company or any Company Subsidiary, including but not limited to on-site or
off-site disposal or release of any chemical substance, product or waste,
which could reasonably be expected to give rise to: (i) liabilities or
obligations for any cleanup, remediation, disposal or corrective action
under any Environmental Law or (ii) claims arising for personal injury,
property damage, or damage to natural resources; and
(c) neither Company nor any Company Subsidiary has (i) received any
written notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law or (ii) entered into any
consent decree or order or is subject to any order of any court or
governmental authority or tribunal under any Environmental Law or relating
to the cleanup of any hazardous materials contamination.
Section 3.18. Fairness Opinion. The Board of Directors of Company has
received an opinion dated as of the date hereof from Goldman Sachs to the
effect that as of such date the consideration to be received by the
stockholders of Company pursuant to the Merger is fair to such stockholders
from a financial point of view.
Section 3.19. Certain Approvals. Prior to the date hereof Company has taken
all appropriate actions so that the provisions of DGCL Section 203 will not
apply with respect to or as a result of this Agreement or the Merger.
Section 3.20. Merger. Neither Company nor any Company Subsidiary has taken
any action or failed to take any action which action or failure to take action
would cause the Merger not to qualify as a reorganization within the meaning of
Section 368(a) of the Code.
Section 3.21. Voting Requirements. The affirmative vote of the holders of a
majority of the shares of Company Common Stock with respect to this Agreement
and the Merger is the only vote of the holders of any class or series of
Company's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
Section 3.22. Computer Software/Year 2000.
(a) Company or Company Subsidiaries own, or possess adequate rights to use,
all computer software programs that are material to the conduct of the business
of Company and the Company Subsidiaries taken as a whole, except as would not
have a Material Adverse Effect on Company. There are no infringement suits,
actions or proceedings pending or, to the knowledge of Company, threatened
against Company or any Company Subsidiary with respect to any software owned or
licensed by Company or any Company Subsidiary, which would have, either
individually or in the aggregate, a Material Adverse Effect on Company.
(b) Company has and is implementing a Year 2000 remediation plan (the
"Company Y2K Plan") which contains inventory, assessment, remediation, testing
and implementation phases, and contingency plans, and Merger Partner has been
provided with information regarding such plan and access to employees of
Company responsible for such plan.
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Section 3.23. Intellectual Property. Company owns, or possesses adequate
rights to use, all Intellectual Property that is used in the conduct of the
business of Company and the Company Subsidiaries taken as a whole, except as
would not have a Material Adverse Effect on Company. To the knowledge of
Company, Company has not received any notice of any conflict with or violation
or infringement of, any asserted rights of any other person with respect to any
Intellectual Property owned or licensed by Company or any Company Subsidiary,
which would have, either individually or in the aggregate, a Material Adverse
Effect on Company. The conduct of Company's and the Company Subsidiaries'
respective businesses as currently conducted does not conflict with any
patents, patent rights, licenses, trademarks, trademark rights, trade names,
trade name rights or copyrights of others, or any other rights with respect to
Intellectual Property, in any way likely to have, individually or in the
aggregate, a Material Adverse Effect on Company. There is no material
infringement of any proprietary right owned by or licensed by or to Company or
any Company Subsidiary which is likely to have, individually or in the
aggregate, a Material Adverse Effect on Company. As used in this Agreement, the
phrase "Intellectual Property" means all domestic or foreign patents, patent
applications, inventions (whether or not patentable), processes, products,
technologies, discoveries, copyrightable and copyrighted works, apparatus,
trade secrets, trademarks (registered and unregistered) and trademark
applications and registrations, brand names, certification marks, service marks
and service mark applications and registrations, trade names, trade dress,
copyright registrations, design rights, mask works, technical information
(whether confidential or otherwise), and all documentation thereof.
Section 3.24. Separate Accounts. Except as otherwise would not, individually
or in the aggregate, have a Material Adverse Effect on Company, each separate
account maintained by a Company Insurance Subsidiary (collectively, the
"Company 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
Investment Company Act of 1940 (the "1940 Act") or is duly registered as an
investment company under the 1940 Act. Except as otherwise would not,
individually or in the aggregate, have a Material Adverse Effect on Company,
each such Company Separate Account, if registered, is operated in compliance
with the 1940 Act, has filed all reports and amendments of its registration
statement required to be filed, and has been granted all exemptive relief
necessary for its operations as presently conducted. Except as otherwise would
not, individually or in the aggregate, have a Material Adverse Effect on
Company, the Company Insurance Contracts under which Company 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.
Section 3.25. Funds.
(a) Except as otherwise would not have a Material Adverse Effect on Company,
(i) each mutual fund sponsored by Company or a Company Subsidiary sponsored by
a Company Subsidiary (the "Funds") is duly registered with the SEC as an open-
end management investment company under the 1940 Act or, in the case of one
bond fund, is so registered as a closed-end fund, (ii) each Fund is in material
compliance with the 1940 Act and the SEC regulations promulgated thereunder,
including the requirements to file semiannual or annual reports on NSAR with
the SEC, (iii) all shares of the Funds are duly registered under the Securities
Act and any applicable state securities laws, and (iv) each of the Funds is
duly incorporated and in good standing under the laws of the state of its
incorporation or is a validly existing business trust under the laws of the
jurisdiction in which it was formed.
(b) Except as otherwise would not have a Material Adverse Effect on Company,
Transamerica Investment Services is duly registered under the Investment
Advisers Act of 1940.
Section 3.26. Insurance. Company and the Company Subsidiaries maintain
insurance coverage reasonably customary or adequate for the operation of their
respective businesses (taking into account the cost and availability of such
insurance).
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ARTICLE 4
Representations and Warranties of Merger Partner and Sub
Except as set forth in the disclosure letter delivered to Company concurrent
with the execution hereof (the "Merger Partner Disclosure Letter") or the
Merger Partner Supplemental Disclosure Letter (as defined below) or as
disclosed in the Merger Partner Reports (as defined below) filed prior to the
date hereof, each of Merger Partner and Sub hereby represents and warrants to
Company as follows:
Section 4.01. Organization, Good Standing and Power.
(a) Merger Partner and Sub are corporations duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation and each has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Merger Partner is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties make such qualification or licensing
necessary, except where the failure to be so qualified or licensed or to be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Merger Partner. Merger Partner has delivered to Company
complete and correct copies of its and Sub's articles or certificate of
incorporation, bylaws or other organizational documents and all amendments
thereto to the date hereof. As used in this Agreement, the phrase "Material
Adverse Effect on Merger Partner" means a material adverse effect on (a) on a
consolidated basis, the financial condition, business or the annual earnings
capacity of Merger Partner and the Subsidiaries of Merger Partner (the "Merger
Partner Subsidiaries"), except to the extent that such adverse effect results
from general economic conditions or changes therein, financial market
fluctuations, conditions or adverse changes in or affecting the insurance
industry generally, or as a consequence of the transactions contemplated herein
(including, without limitation, the announcement thereof) or (b) the ability of
Merger Partner or Sub to consummate the transactions contemplated by this
Agreement.
(b) Each Merger Partner Subsidiary is a corporation duly organized, validly
existing and in good standing (where such concept exists) under the laws of its
jurisdiction of incorporation, and has the corporate (or, if not a corporation,
other) power and authority necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing or in good standing (where such
concept exists) or to have such power and authority would not, individually or
in the aggregate, have a Material Adverse Effect on Merger Partner. Each Merger
Partner Subsidiary is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed or to be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Merger Partner.
Section 4.02. Capitalization. The authorized capital stock of Merger Partner
consists of 1,300,000,000 shares of Common Stock, par value of fifty cents
(0.50) Dutch Guilder per share, of which as of January 31, 1999, 583,180,340
shares were issued and outstanding, 700,000,000 shares of Preferred Stock, par
value fifty cents (0.50) Dutch Guilder per share ("Merger Partner Preferred
Stock"), of which as of the date hereof 230,000,000 shares are issued and
outstanding. All outstanding shares of Merger Partner Common Stock are, and all
shares which may be issued prior to the Effective Date pursuant to any
outstanding stock options issued by Merger Partner will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. All of the shares of Merger Partner Common Stock to be
issued at the Effective Time in accordance with this Agreement will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. Except as set forth above, as of January 31, 1999, there
were no shares of capital stock or other equity securities of Merger Partner
outstanding, and, except as set forth in Schedule 4.2 of the Merger Partner
Disclosure Letter, as of January 31, 1999 there are no outstanding options,
warrants or rights to purchase or acquire from Merger Partner any capital stock
of Merger Partner, there are no existing registration covenants with Merger
Partner with respect to outstanding shares of Merger Partner
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Common Stock, and there are no convertible securities or other contracts,
commitments, agreements, understandings, arrangements or restrictions by which
Merger Partner is bound to issue any additional shares of its capital stock or
other securities.
Section 4.03. Merger Partner Significant Subsidiaries. Except as would not
have a Material Adverse Effect on Merger Partner, and except as disclosed in
Schedule 4.3 of the Merger Partner Disclosure Letter, Merger Partner owns,
directly or indirectly, the securities of each Merger Partner Significant
Subsidiary held by Merger Partner, free and clear of all liens, charges,
pledges, security interests or other encumbrances. All of the capital stock of
each Merger Partner Significant Subsidiary has been duly authorized, and is
validly issued, fully paid and nonassessable. Except as disclosed in Schedule
4.3 of the Merger Partner Disclosure Letter, there are no outstanding options
or rights to subscribe to, or any contracts or commitments to issue or sell any
shares of the capital stock or any securities or obligations convertible into
or exchangeable for, or giving any person any right to acquire, any shares of
the capital stock of any Merger Partner Significant Subsidiary to which Merger
Partner or any Merger Partner Significant Subsidiary is a party. Except as
disclosed in Schedule 4.3 of the Merger Partner Disclosure Letter, there are no
voting trusts or other agreements or understandings with respect to the voting
of capital stock of Merger Partner or any Merger Partner Significant Subsidiary
to which Merger Partner or any Merger Partner Significant Subsidiary is a
party. Schedule 4.3 to the Merger Partner Disclosure Letter sets forth for each
Significant Subsidiary of Merger Partner, its name and jurisdiction of
incorporation or organization.
Section 4.04. Authority; Enforceability. Each of Merger Partner and Sub has
the corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby do
not require the approval, authorization or consent of any work council, and
have been duly authorized by all necessary corporate action on the part of each
of Merger Partner and Sub other than the approval of the Issuance by Merger
Partner's stockholders (including all necessary approvals on the part of
Vereniging AEGON (the "Association")), and this Agreement has been duly
executed and delivered by Merger Partner and Sub and constitutes the valid and
binding obligation of each such party, enforceable against it in accordance
with its terms, (i) except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) subject to general principles of equity.
Section 4.05. Non-Contravention; Consents.
(a) Except as would not have a Material Adverse Effect on Merger Partner,
neither the execution, delivery and performance by Merger Partner or Sub of
this Agreement, nor the consummation by Merger Partner or Sub of the
transactions contemplated hereby, nor compliance by Merger Partner or Sub with
any of the provisions hereof, will:
(i) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event that, with notice or lapse of time or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination
or acceleration, or the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Merger Partner or Sub,
under any of the terms, conditions or provisions of, (x) its respective
organizational documents, or (y) any note, bond, mortgage, indenture, deed
of trust, license, lease, contract agreement or other instrument or
obligation to which Merger Partner or any of the Merger Partner
Subsidiaries is a party, or by which Merger Partner or any of the Merger
Partner Subsidiaries may be bound, or to which Merger Partner or any of the
Merger Partner Subsidiaries or the properties or assets of any of them may
be subject; or
(ii) subject to compliance with the statutes and regulations referred to
in Section 4.05, violate any valid and enforceable judgment, ruling, order,
writ, injunction, decree, or any statute, rule or regulation applicable to
Merger Partner or any of the Merger Partner Subsidiaries or any of their
respective properties or assets.
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(b) Except for (i) the filing of applications and notices, as applicable,
with federal and state regulatory authorities governing banking, insurance
premium finance, commercial collections, broker-dealers, investment advisors
and investment companies, leasing, consumer finance, commercial finance,
mortgage lending and insurance in the states in which Merger Partner and the
Merger Partner Subsidiaries operate their respective business and the approval
of such applications or the grant of required licenses by such authorities,
(ii) the filing of applications and notices, as applicable, with the foreign
governmental authorities regulating banking, insurance premium finance,
commercial collections, broker-dealers, investment advisors and investment
companies, leasing, consumer finance, commercial finance, mortgage lending and
insurance in the foreign jurisdictions in which the Merger Partner Subsidiaries
operate their businesses, and the approval of such applications or the grant of
required licenses by such authorities, (iii) the filing of notification and
report forms under the HSR Act and the expiration or termination of any
applicable waiting period thereunder, (iv) the filing of applications and
notices, as applicable, with foreign governmental authorities under the Foreign
Competition Laws, and the approval of such applications by such authorities, if
required, (v) the filing with the SEC of a proxy statement in definitive form
relating to the meetings of Company's stockholders to be held in connection
with this Agreement and the transactions contemplated hereby and the filing and
declaration of effectiveness of the registration statement on Form F-4 relating
to the shares of Merger Partner Common Stock to be issued in the Merger, (vi)
the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware pursuant to the DGCL, and (vii) the approval of the listing
of the Merger Partner Common Stock to be issued in the Merger on the NYSE, no
notices to, consents or approvals of, or filings or registrations with, any
Governmental Entity or with any self-regulatory authority or with any third
party are necessary in connection with the execution and delivery by Merger
Partner of this Agreement and the consummation by Merger Partner of the
transactions contemplated hereby, (viii) such notices, consents, approvals,
filings or registrations appearing on the supplement to the Merger Partner
Disclosure Letter to be delivered by Merger Partner to Company as promptly as
reasonably practicable following the date hereof (the "Merger Partner
Supplemental Disclosure Letter"), and (ix) such other notices, consents,
approvals, filings or registrations, the failure of which to be made or
obtained would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Merger Partner, no notices to, consents or
approvals of, or filings or registrations with, any Governmental Entity or with
any self-regulatory authority are necessary in connection with the execution
and delivery by Merger Partner of this Agreement and the consummation by Merger
Partner of the transactions contemplated hereby.
Section 4.06. SEC Reports; Merger Partner Financial.
(a) Since January 1, 1997, Merger Partner has timely filed all reports,
registration statements, proxy statements or information statements and all
other documents, together with any amendments required to be made thereto,
required to be filed with the SEC under the Securities Act or the Exchange Act
(collectively, the "Merger Partner Reports"). Merger Partner has heretofore
made available to Company true copies of all the Merger Partner Reports,
together with all exhibits thereto, that Company has requested.
(b) All of the financial statements included in the Merger Partner Reports
(which are collectively referred to herein as the "Merger Partner Consolidated
Financial Statements") fairly presented in all material respects the
consolidated financial position of Merger Partner and its subsidiaries as at
the dates mentioned and the consolidated results of operations, changes in
stockholders' equity and cash flows for the periods then ended in conformity
with Dutch generally accepted accounting principles with a reconciliation on an
annual basis to United States generally accepted accounting principles applied
on a consistent basis (subject to any exceptions specified therein or as may be
indicated in the notes thereto or in the case of the unaudited statements, as
may be permitted by Form 6-K of the SEC and subject, in the case of unaudited
statements, to normal, recurring audit adjustments). As at the respective dates
of the consolidated balance sheets of Merger Partner and its Subsidiaries
included in such Merger Partner Reports, the Merger Partner Reports complied in
all material respects with all applicable rules and regulations promulgated by
the SEC and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not
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misleading. Except as set forth in the Merger Partner Reports, as at the
respective dates of the respective consolidated balance sheets contained
therein, neither Merger Partner nor any Merger Partner Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by Dutch generally accepted accounting principles to be
set forth on a consolidated balance sheet of Merger Partner and its
consolidated subsidiaries or in the notes thereto, other than liabilities or
obligations which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Merger Partner.
Section 4.07. Statutory Statements. Merger Partner has made available to
Company the annual statements (or equivalent statements) of each Merger Partner
Significant Subsidiary that is engaged in the business of insurance in the
United States, the United Kingdom and The Netherlands (a "Merger Partner
Insurance Subsidiary") for the years ended December 31, 1996 and December 31,
1997, which have been filed with the insurance regulatory authority of the
jurisdiction of organization of such Merger Partner Insurance Subsidiary, and
statutory statements, where required, for each such Merger Partner Insurance
Subsidiary for the periods ended March 31, 1998, June 30, 1998 and September
30, 1998, and Merger Partner shall promptly furnish to Company all statutory
statements for any calendar years or quarters ending thereafter but prior to
the Effective Time. Such statutory statements (or equivalent statements)
present or will present fairly in all material respects the financial position
and surplus of each Merger Partner Insurance Subsidiary at the end of each of
the periods then ended, and the results of its operations and changes in its
surplus for each of the periods then ended, in conformity with accounting
practices prescribed or permitted by the insurance regulatory authority of the
jurisdiction of organization of such Merger Partner Insurance Subsidiary,
applied on a consistent basis as and to the extent described in such statutory
statements (or equivalent statements). For the purposes of this Section 4.07,
materiality shall be determined by reference to Merger Partner and its
Subsidiaries taken as a whole.
Section 4.08. Absence of Certain Changes or Events. Since December 31, 1997,
Merger Partner and the Merger Partner Subsidiaries have conducted their
business in all material respects only in the ordinary course, and there has
not been (i) any change on a consolidated basis in the business, financial
condition or the annual earnings capacity of Merger Partner and the Merger
Partner Subsidiaries which constituted a Material Adverse Effect on Merger
Partner, (ii) any declaration, setting aside or payment of any dividend or
other distribution (other than regular dividends consistent with past practice)
(whether in cash, stock or property) with respect to any of Merger Partner's
outstanding capital stock, (iii) any split, combination or reclassification of
any of Merger Partner's outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of Merger Partner's outstanding capital stock,
(iv) any significant change in accounting methods, principles or practices by
Merger Partner or any Merger Partner Subsidiary materially affecting its
assets, liabilities or business, except insofar as may be appropriate to
conform to changes in statutory accounting rules or generally accepted
accounting principles, or (v) except for changes in a manner consistent with
past practice or consistent with industry standards, any material change in the
underwriting, pricing, actuarial or investment practices or policies of Merger
Partner and its Subsidiaries taken as a whole.
Section 4.09. Taxes and Tax Returns.
(a) Merger Partner and the Merger Partner Subsidiaries have (i) duly filed
(or there has been filed on their behalf) with appropriate governmental
authorities all Tax Returns required to be filed by them, on or prior to the
date hereof, and all Tax Returns were in all material respects true, complete
and correct and filed on a timely basis (taking into account any extension of
time within which to file) except to the extent that any failure to file would
not, individually or in the aggregate, have a Material Adverse Effect on Merger
Partner, and (ii) duly paid in full within the time and in the manner
prescribed by law or made provisions in accordance with generally accepted
accounting principles with respect to Taxes not yet due and payable (or there
has been paid or provision has been made on their behalf) for the payment of
all Taxes for all periods ending on or prior to the date hereof, except to the
extent that any failure to fully pay or make provision for the payment of such
Taxes would not, individually or in the aggregate, have a Material Adverse
Effect on Merger Partner.
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(b) No federal, state, local or foreign audits, investigations or other
administrative proceedings or court proceedings are presently pending or
threatened in writing with regard to any Taxes or Tax Returns of Merger Partner
or the Merger Partner Subsidiaries and no issues have been raised in writing by
any Tax authority and not fully settled in connection with any Tax or Tax
Return wherein an adverse determination or ruling in any one such proceeding or
in all such proceedings in the aggregate would have a Material Adverse Effect
on Merger Partner.
Section 4.10. Litigation. Neither Merger Partner nor any Merger Partner
Subsidiary is a party to any pending or, to the knowledge of Merger Partner,
threatened, claim, action, suit, investigation or proceeding which would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Merger Partner. There is no outstanding order, writ,
judgment, stipulation, injunction, decree, determination, award or other
decision against Merger Partner or any Merger Partner Subsidiary which, either
individually or in the aggregate, has had or would have a Material Adverse
Effect on Merger Partner.
Section 4.11. Contracts and Commitments. To the knowledge of Merger Partner
neither Merger Partner nor any Merger Partner Subsidiary has received notice
from any person alleging that Merger Partner or any Merger Partner Subsidiary
is in default under any contracts, agreements, leases, commitments, or
assignments in other interests which are material to Merger Partner and the
Merger Partner Subsidiaries as a whole as to which it is reasonably foreseeable
that an adverse determination would result, individually or in the aggregate,
in a Material Adverse Effect on Merger Partner.
Section 4.12. Registration Statement, Etc. None of the information supplied
or to be supplied by Merger Partner for inclusion or incorporation by reference
in (a) the Registration Statement, (b) the Proxy Statement and (c) any other
documents to be filed with the SEC in connection with the transactions
contemplated hereby will, at the respective times such documents are filed and
at the time such documents become effective or at the time any amendment or
supplement thereto becomes effective contain any untrue statement of a material
fact, or omit to state any material fact required or necessary in order to make
the statements therein not misleading; and, in the case of the Registration
Statement, when it becomes or at the time any amendment or supplement thereto
becomes effective, will cause the Registration Statement or such supplement or
amendment to contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or which is necessary in order
to make the statements therein not misleading, or, in the case of the Proxy
Statement, when first mailed to the stockholders of Company, or in the case of
the Proxy Statement or any amendment thereof or supplement thereto, at the time
of the Stockholders' Meeting, will cause the Proxy Statement or any amendment
thereof or supplement thereto to contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents that
Merger Partner is responsible for filing with the SEC and any other regulatory
agency in connection with the Merger will comply as to form in all material
respects with the provisions of applicable law and any applicable rules or
regulations thereunder, except that no representation is made by Merger Partner
with respect to statements made therein based on information supplied by
Company or with respect to information concerning Company or Sub which is
incorporated by reference in the Registration Statement or the Proxy Statement.
Section 4.13. Employee Benefit Plans.
(a) Schedule 4.13 of the Merger Partner Supplemental Disclosure Letter
contains a list of each material plan, program, arrangement, practice or
contract which is maintained by Merger Partner or any Merger Partner Subsidiary
or to which Merger Partner or any Merger Partner Subsidiary is obligated to
make contributions and which provides benefits or compensation to or on behalf
of persons employed or formerly employed in the United States, including but
not limited to executive arrangements (for example, any bonus, incentive
compensation, stock option, deferred compensation, commission, severance,
golden parachute or other executive compensation plans, programs, contracts or
agreements) and "employee benefit plans" as defined in Section 3(1) of ERISA.
All such plans, programs, arrangements, practices or contracts are referred to
herein as
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"Merger Partner Employee Plans." Merger Partner has made available to Company
the plan documents or other writing constituting each Merger Partner Employee
Plan and, if applicable, the trust, insurance contract or other funding
arrangement, the ERISA summary plan description and the most recent Forms 5500
and annual reports for each such plan. Merger Partner has identified those
Merger Partner Employee Plans which Merger Partner intends to satisfy the
requirements of Section 401 of the Code and has made available to Company
accurate copies of the most recent favorable determination letters for such
plans. For purposes of this Agreement, the term "Foreign Plan" shall refer to
each material plan, program or contract that is subject to or governed by the
laws of any jurisdiction other than the United States, and which would have
been treated as a Merger Partner Employee Plan had it been a United States
plan, program or contract. Merger Partner shall use its reasonable best efforts
to make available, promptly upon request to Company a list and/or copies of the
Foreign Plans.
(b) With respect to each Merger Partner Employee Plan that is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there
does not exist any accumulated funding deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA, whether or not waived; (ii) no
reportable event within the meaning of Section 4043(c) of ERISA with respect to
which the 30-day notice period has not been waived has occurred, nor will any
such event occur solely as a result of the consummation of the transactions
contemplated by this Agreement and (iii) all premiums required to be paid to
the Pension Benefit Guaranty Corporation have been timely paid in full. There
does not now exist, nor do any circumstances exist that could result in, any
Merger Partner Controlled Group Liability (as defined below) that would be a
liability of Merger Partner or any Merger Partner Subsidiary following the
Effective Time. "Merger Partner Controlled Group Liability" means any and all
liabilities under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii)
Sections 412 and 4971 of the Code and (iv) the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code,
other than such liabilities that arise solely out of, or relate to, the Merger
Partner Employee Plans.
(c) Neither Merger Partner nor any Merger Partner Subsidiary is, or has
been, a participant in a multi-employer plan (within the meaning of ERISA
Section 3(37)). Neither Merger Partner nor any Merger Partner Subsidiary
maintains or has at any time maintained a Merger Partner Employee Plan which is
subject to Title IV of ERISA. Neither Merger Partner nor any Merger Partner
Subsidiary is obligated to provide post employment or retirement medical
benefits or any other unfunded welfare benefits to or on behalf of any person
who is no longer an employee of Merger Partner or any Merger Partner
Subsidiary, except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA.
(d) Each Merger Partner Employee Plan has at all times been maintained, by
its terms and in operation, in accordance with all applicable laws, and each of
those Merger Partner Employee Plans which are intended to be qualified under
Section 401 of the Code has at all times been maintained, by its terms and in
operation, in accordance with Section 401 of the Code, except where a failure
to be so maintained would not have a Material Adverse Effect on Merger Partner.
As of December 31, 1997, neither Merger Partner nor any of the Merger Partner
Subsidiaries had any liability under any Merger Partner Employee Plan that was
not reflected in the Merger Partner audited consolidated balance sheet at
December 31, 1997 or disclosed in the notes thereto, other than liabilities
which individually or in the aggregate would not have a Material Adverse Effect
on Merger Partner.
(e) No prohibited transaction has occurred with respect to any Merger
Partner Employee Plan maintained by Merger Partner or any of the Merger Partner
Subsidiaries that would result, directly or indirectly, in the imposition of an
excise tax or other liability under the Code or ERISA, except for such a tax or
other liability that would not have a Material Adverse Effect on Merger
Partner.
(f) All contributions or premium payments with respect to the Merger Partner
Employee Plans due for any period ending on or before the Effective Time have
been or will be timely paid by Merger Partner. The execution of or performance
of the transactions contemplated by this Agreement will not create, accelerate
or increase any obligations under the Merger Partner Employee Plans which would
have a Material Adverse Effect on Merger Partner.
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(g) Except as would not have a Material Adverse Effect on Merger Partner,
with respect to each Foreign Plan: (i) all amounts required to be reserved
under each book reserved Foreign Plan have been so reserved in accordance with
reasonable accounting practices prevailing in the country where such Foreign
Plan is established; (ii) each Foreign Plan required to be registered with a
governmental entity has been registered, has been maintained in good standing
with the appropriate governmental entities, and has been maintained and
operated in accordance with its terms and applicable law; and (iii) the fair
market value of the assets of each funded Foreign Plan that is a defined
benefit pension plan (or termination indemnity plan), and the liability of each
insurer for each Foreign Plan that is a defined benefit pension plan (or
termination indemnity plan) and is funded through insurance or the book reserve
established for each Foreign Plan that is a defined benefit pension plan (or
termination indemnity plan) that utilizes book reserves, together with any
accrued contributions, is sufficient to procure or provide for the liability
for accrued benefits with respect to those current and former employees of
Merger Partner and any Merger Partner Subsidiary that participate in such
Foreign Plan according to the reasonable actuarial or other applicable
assumptions and valuations most recently used to determine employer
contributions to or the funded status or book reserve of such Foreign Plans.
Section 4.14. Labor Matters. Neither Merger Partner nor any of its
Subsidiaries has any collective bargaining agreement with respect to its U.S.
employees. Neither Merger Partner nor any of its Subsidiaries is subject to a
dispute, strike or work stoppage with respect to any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization to which it is a party or by which it is bound which would
have a Material Adverse Effect on Merger Partner. To Merger Partner's
knowledge, there are no organizational efforts with respect to the formation of
a collective bargaining unit presently being made or threatened involving
employees of Merger Partner or any of its Subsidiaries, except for those the
formation of which would not have a Material Adverse Effect on Merger Partner.
Section 4.15. Brokers and Finders. Neither Merger Partner nor any of the
Merger Partner Subsidiaries, nor any of their respective officers, directors or
employees, has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees, and no
broker or finder has acted directly or indirectly for Merger Partner or any of
the Merger Partner Subsidiaries, in connection with this Agreement or any of
the transactions contemplated hereby, except that Merger Partner has retained
Donaldson, Lufkin & Jenrette Securities Corporation as its financial advisor,
whose fees and expenses will be paid by Merger Partner.
Section 4.16. No Violation of Law.
(a) The business and operations of the Merger Partner Insurance Subsidiaries
have been conducted in compliance with all applicable Insurance Laws, except
where the failure to so conduct such business and operations would not
individually or in the aggregate have a Material Adverse Effect on Merger
Partner. Notwithstanding the generality of the foregoing, except where the
failure to do so would not have, individually or in the aggregate, a Material
Adverse Effect on Merger Partner and each Merger Partner Insurance Subsidiary
have marketed, sold and issued insurance products in compliance, in all
material respects, with all statutes, laws, ordinances, rules, orders and
regulations applicable to the business of such Merger Partner Insurance
Subsidiary and in the respective jurisdictions in which such products have been
sold, including, without limitation, in compliance with (i) all applicable
requirements relating to the disclosure of the nature of insurance products as
policies of insurance and (ii) all applicable requirements relating to
insurance product projections. In addition (i) there is no pending or, to the
knowledge of Merger Partner, threatened, charge by any insurance regulatory
authority that any of the Merger Partner Insurance Subsidiaries has violated,
nor any pending or, to the knowledge of Merger Partner, threatened,
investigation by any insurance regulatory authority with respect to possible
violations of, any applicable Insurance Laws where such violations would have
individually or in the aggregate a Material Adverse Effect on Merger Partner;
(ii) none of the Merger Partner Insurance Subsidiaries is subject to any order
or decree of any Merger Partner Insurance Subsidiary regulatory authority
relating specifically to such Merger Partner Insurance Subsidiary (as opposed
to insurance companies generally) which would have individually or in the
aggregate a Material Adverse Effect on Merger Partner; and
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(iii) the Merger Partner Insurance Subsidiaries have filed all reports required
to be filed with any insurance regulatory authority on or before the date
hereof as to which the failure to file such reports would have individually or
in the aggregate a Material Adverse Effect on Merger Partner.
(b) In addition to Insurance Laws, the business and operations of Merger
Partner and the Merger Partner Subsidiaries have been conducted in compliance
with all other applicable laws, ordinances, regulations and orders of all
governmental entities and other regulatory bodies (including, without
limitation, laws, ordinances, regulations and orders relating to the safety and
health of employees), except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on Merger Partner. In
addition, (i) neither Merger Partner nor any Merger Partner Subsidiary has been
charged with or, to the knowledge of Merger Partner, is now under investigation
with respect to, a violation of any applicable law, regulation, ordinance,
order or other requirement of a governmental entity or other regulatory body,
which violations or penalties would have, individually or in the aggregate, a
Material Adverse Effect on Merger Partner; (ii) neither Merger Partner nor any
Merger Partner Subsidiary is a party to or bound by any order, judgment, decree
or award of a governmental entity or other regulatory body relating
specifically to such entity which will have, individually or in the aggregate,
a Material Adverse Effect on Merger Partner; and (iii) Merger Partner and the
Merger Partner Subsidiaries have filed all reports required to be filed with
any governmental entity or other regulatory body (including self-regulatory
organizations) on or before the date hereof as to which the failure to file
such reports would result, individually or in the aggregate, in a Material
Adverse Effect on Merger Partner. Merger Partner and the Merger Partner
Subsidiaries have all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of the business of
Merger Partner and the Merger Partner Subsidiaries, except for permits,
certificates, licenses, approvals and other authorizations the failure of which
to have would not have, individually or in the aggregate, a Material Adverse
Effect on Merger Partner and except for such permits, certificates, licenses,
approvals and other authorizations required to be obtained in connection with
the consummation of the transactions contemplated hereby.
Section 4.17. Environmental Matters. Except as would not have a Material
Adverse Effect on Merger Partner:
(a) there are not any past or present conditions or circumstances that
interfere with the conduct of the business of Merger Partner and each of
the Merger Partner Subsidiaries in the manner now conducted or which
interfere with compliance with any order or any court, governmental
authority or arbitration board or tribunal, or any Environmental Law;
(b) there are not any past or present conditions or circumstances at, or
arising out of, any current or former business, assets or properties of
Merger Partner or any Merger Partner Subsidiary, including but not limited
to on-site or off-site disposal or release of any chemical substance,
product or waste, which could reasonably be expected to give rise to: (i)
liabilities or obligations for any cleanup, remediation, disposal or
corrective action under any Environmental Law or (ii) claims arising for
personal injury, property damage, or damage to natural resources; and
(c) neither Merger Partner nor any Merger Partner Subsidiary has (i)
received any written notice of noncompliance with, violation of, or
liability or potential liability under any Environmental Law or (ii)
entered into any consent decree or order or is subject to any order of any
court or governmental authority or tribunal under any Environmental Law or
relating to the cleanup of any hazardous materials contamination.
Section 4.18. Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 4.19. Merger. Neither Merger Partner nor any Merger Partner
Subsidiary has taken any action or failed to take any action which action or
failure to take action would cause the Merger not to qualify as a
reorganization within the meaning of Section 368(a) of the Code.
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Section 4.20. Computer Software/Year 2000.
(a) Merger Partner or Merger Partner Subsidiaries own, or possess valid
license rights to, all computer software programs that are material to the
conduct of the business of Merger Partner and the Merger Partner Subsidiaries
taken as a whole except as would not have a Material Adverse Effect on Merger
Partner. There are no infringement suits, actions or proceedings pending or, to
the knowledge of Merger Partner, threatened against Merger Partner or any
Merger Partner Subsidiary with respect to any software owned or licensed by
Merger Partner or any Merger Partner Subsidiary, which would have, either
individually or in the aggregate, a Material Adverse Effect on Merger Partner.
(b) Merger Partner has and is implementing a Year 2000 remediation plan (the
"Merger Partner Y2K Plan") which contains inventory, assessment, remediation,
testing and implementation phases, and contingency plans, and Company has been
provided with information regarding such plan and access to employees of Merger
Partner responsible for such plan.
Section 4.21. Intellectual Property. Merger Partner owns, or possesses
adequate rights to, all Intellectual Property that is used in the conduct of
the business of Merger Partner and the Merger Partner Subsidiaries taken as a
whole except as would not have a Material Adverse Effect on Merger Partner. To
the knowledge of Merger Partner, Merger Partner has not received any notice of
any conflict with or violation or infringement of, any asserted rights of any
other person with respect to any Intellectual Property owned or licensed by
Merger Partner or any Merger Partner Subsidiary, which would have, either
individually or in the aggregate, a Material Adverse Effect on Merger Partner.
The conduct of Merger Partner's and the Merger Partner Subsidiaries' respective
businesses as currently conducted does not conflict with any patents, patent
rights, licenses, trademarks, trademark rights, trade names, trade name rights
or copyrights of others, or any other rights with respect to Intellectual
Property, in any way likely to have, individually or in the aggregate, a
Material Adverse Effect on Merger Partner. There is no material infringement of
any proprietary right owned by or licensed by or to Merger Partner or any
Merger Partner Subsidiary which is likely to have, individually or in the
aggregate, a Material Adverse Effect on Merger Partner.
Section 4.22. Insurance. Merger Partner and the Merger Partner Subsidiaries
maintain insurance coverage reasonably customary or adequate for the operation
of their respective businesses (taking into account the cost and availability
of such insurance).
Section 4.23. Affiliate Transactions. Except as set forth in Section 4.23 of
the Merger Partner Disclosure Letter, none of Merger Partner nor any of its
Subsidiaries has any outstanding contract, agreement or other arrangement with
any of its affiliates (including the Association) or has engaged in any
transaction outside the ordinary course of business or inconsistent with past
practices with its affiliates since January 1, 1998.
ARTICLE 5
Conduct and Transactions Prior to Effective Time; Certain Covenants
Section 5.01. Access and Information. Subject to the restrictions contained
in confidentiality obligations to which such party is subject and subject to
preservation of attorney client and work product privileges (each party
agreeing to use reasonable best efforts to include the information described
below), upon reasonable notice, each of Company and Merger Partner shall (and
shall cause each of their respective Subsidiaries to) give to the other and to
the respective accountants, counsel and other representatives of such other
party reasonable access during normal business hours throughout the period
prior to the Effective Time to all of its and its Subsidiaries' properties,
books, contracts, commitments and records (including tax returns and insurance
policies) and shall permit them to consult with its and its Subsidiaries'
respective officers, employees, auditors (including, in connection with the
comfort letters referred to under Section 5.18, consulting with such party's
independent auditors and, subject to their concurrence, allow the review of the
work papers of such
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auditors relating thereto), actuaries, attorneys and agents; provided, however,
that any such investigation or consultation shall be conducted in such a manner
as not to interfere unreasonably with the business or operations of the other
party or its Subsidiaries. Subject to the proviso of the immediately preceding
sentence, Company shall permit Merger Partner and its representatives access to
all computer software programs that are material to the conduct of the business
of Company and the Company Subsidiaries for the purpose of monitoring the
implementation and progress of the Company's Year 2000 remediation plan. All
confidential information provided pursuant to this Section 5.01 will be subject
to the Confidentiality Agreement (the "Confidentiality Agreement"), between
Company and Merger Partner.
Section 5.02. Conduct of Business Pending Merger.
(a) Company agrees that from the date hereof to the Effective Time, except
as contemplated by this Agreement or as required by law or to the extent that
Merger Partner shall otherwise consent in writing (which consent will not be
unreasonably withheld or delayed), Company and the Company Subsidiaries will
operate their businesses only in the ordinary course, except where the failure
to so operate their businesses will not individually or in the aggregate be
material to Company and its Subsidiaries taken as a whole; and, consistent with
such operation, will use reasonable efforts consistent with past practices to
preserve their business organizations intact, to keep available to them the
goodwill of their agents, third party administrators, policyholders, borrowers,
customers and others with whom business relationships exist to the end that
their goodwill and ongoing business shall not be impaired in any material
respect at the Effective Time, and will further exercise reasonable efforts to
maintain their existing relationships with their employees in general.
(b) Company agrees that from the date hereof to the Effective Time, except
as set forth in the Company Disclosure Letter and as otherwise consented to by
Merger Partner in writing (which consent will not be unreasonably withheld or
delayed) or as permitted, required or contemplated by this Agreement or as
required by law (and in such event reasonably prompt notice will be provided to
Merger Partner), (i) it will not change any provision of its Restated
Certificate of Incorporation or Bylaws; (ii) it will not make, declare or pay
any dividend or make any other distribution with respect to any shares of
capital stock, except regular quarterly cash dividends with respect to the
Company Common Stock (not to exceed $.25 per share per quarter); and (iii)
except (A) in connection with the issuance of shares of common stock, pursuant
to the exercise of presently outstanding employee or director stock options or
vesting of restricted stock or any other equity-based award in accordance with
its terms, (B) the grants of annual awards to directors in accordance with the
terms of the Phantom Restricted Stock Plan for Nonemployee Directors and (C)
the grant of awards of Options (as defined below) and Stock Awards to new hires
in the ordinary course of business consistent with past practice, it will not
directly or indirectly sell, issue, redeem, purchase or otherwise acquire, any
shares of its outstanding capital stock, change the number of shares of its
authorized or issued capital stock or issue or grant any option, warrant, call,
commitment, subscription, right to purchase or agreement of any character
relating to its authorized or issued capital stock or any securities
convertible into shares of such stock.
(c) Except as set forth in the Company Disclosure Letter, or as permitted,
required or contemplated by this Agreement, as required by law or except in the
ordinary course of business, Company agrees that from the date hereof to the
Effective Time it will not take or permit any Company Subsidiary to take any of
the following actions, except to the extent consented to by Merger Partner in
writing (which consent will not be unreasonably withheld or delayed):
(i) except for refinancing of existing indebtedness, consistent with
past practice, and for the taking down of additional indebtedness for
borrowed money by Company and its finance Subsidiaries such that their
respective leverage ratios are not materially increased above their target
levels, enter into any agreement representing an obligation for
indebtedness for borrowed money or increase the principal amount of
indebtedness under any existing agreement or assume, guarantee, endorse or
otherwise become responsible for the obligations of any other individual,
firm or corporation (except a guarantee of the obligation of a Company
Subsidiary);
(ii) mortgage or pledge any of its properties or assets;
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(iii) (A) take any action to amend or terminate any Company Employee
Plan that would materially increase the cost of benefits thereunder or
increase the compensation of any of its executive officers (other than
increases which are in the aggregate in the ordinary course or in
connection with promotions) or (B) adopt any other material plan, program,
arrangement or practice providing new or increased benefits or compensation
to its employees (provided, however, that this clause (iii) shall not
prohibit the Company from implementing its Value Added Incentive Plan
Restated 1999 as heretofore approved by the Compensation Committee of the
Company Board of Directors or such other annual incentive plans for the
1999 fiscal year at the corporate, divisional or business unit levels);
(iv) materially amend or cancel or agree to the material amendment or
cancellation of any agreement, treaty or arrangement which is material to
the Company and the Company Subsidiaries on a consolidated basis, or enter
into any new material agreement, treaty or arrangement which is material to
Company and Company Subsidiaries on a consolidated basis or to Company
Insurance Subsidiaries on a consolidated basis (other than the renewal of
any existing agreements, treaties or arrangements);
(v) make any significant change in any accounting methods or systems of
internal accounting controls, except as may be appropriate to conform to
changes in statutory or regulatory accounting rules or generally accepted
accounting principles or regulatory requirements with respect thereto;
(vi) pay, loan or advance (other than the payment of compensation,
directors' fees or reimbursements of expenses in the ordinary course of
business and other than as may be required by any agreement in effect as of
the date hereof) any material amount to, or sell, transfer or lease any
material properties or assets (real, personal or mixed, tangible or
intangible) to, or enter into any material agreement or arrangement with,
any of its officers or directors or any "affiliate" or "associate" of any
of its officers or directors (as such terms are defined in Rule 405
promulgated under the Securities Act);
(vii) form or commence the operations of any business or any
corporation, partnership, joint venture, marketing arrangement, association
or other business organization or division thereof which in any case is
material to the Company and its Subsidiaries taken as a whole;
(viii) (A) make or rescind any material express or deemed election
relating to Taxes;
(B) settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit, or controversy relating to
Taxes, other than the resolution of any matter (federal, state or local)
related to the 1987 to 1993 tax years (including carryovers and/or
carrybacks therefrom), which years are currently under consideration by the
IRS, the Tax Court or the Joint Committee on Taxation; or
(C) change in any material respect its methods of reporting income,
deductions or accounting for federal income tax purposes from those used in
the preparation of its federal income Tax Return for the taxable year
ending December 31, 1997, except as may be required by applicable law;
(ix) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) which are material to Company and the Company Subsidiaries as a
whole, other than the payment, discharge or satisfaction of liabilities (i)
reflected or reserved against in, or contemplated by, the financial
statements (or the notes thereto) of Company included in the Company
Reports or (ii) incurred since December 31, 1997 in the ordinary course of
business consistent with past practice;
(x) other than as would not be inconsistent with the Company's or its
Subsidiaries' respective investment guidelines (or following consultation
with the Merger Partner, consistent with industry standards), intentionally
and materially alter the mix of investment assets of Company or the
duration or credit quality of such assets;
(xi) other than consistent with past practice (or following consultation
with Merger Partner, consistent with industry standards), intentionally and
materially alter the profile of the insurance liabilities
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of the Company Insurance Subsidiaries or materially alter the pricing
practices or policies of the Company Insurance Subsidiaries;
(xii) lease or otherwise dispose of any of its assets (including capital
stock of the Company Subsidiaries) (except pursuant to contractual
commitments in effect on the date hereof) which are material to Company and
its Subsidiaries in the aggregate;
(xiii) make or agree to make any new capital expenditure or expenditures
(except pursuant to contractual commitments in effect on the date hereof),
or enter into any agreement or agreements providing for payments which,
individually, are in excess of $20 million or, in the aggregate, are in
excess of $100 million;
(xiv) permit the Company Subsidiaries to, except pursuant to contractual
commitments in effect on the date hereof and disclosed in the Company
Disclosure Letter, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets or
securities in each case (i) (a) for any individual acquisition (except for
any of Company's leveraged businesses) for an aggregate consideration in
excess of $10 million, or (b) for any individual acquisition by any of
Company's leveraged businesses in which the aggregate amount of ultimate
equity capital employed (after releveraging the assets acquired to a ratio
consistent with the relevant acquiring business' respective leverage ratio)
is in excess of $10 million or (ii)(a) for all acquisitions (except for any
acquisition by Company's leveraged businesses) for an aggregate
consideration in excess of $100 million, or (b) for all acquisitions by
Company's leveraged businesses, in which the aggregate amount of ultimate
equity capital employed (after in each case re-leveraging the assets
acquired to a ratio consistent with the relevant acquiring business'
respective leverage ratio) is in excess of $100 million (excluding
acquisitions approved in writing by Merger Partner) and (iii) where a
filing under the HSR Act is required, except where Merger Partner and
Company have agreed in writing that such action is not likely to (a) have a
material effect on the ability of the parties to consummate the
transactions contemplated by this Agreement or (b) delay the Effective Time
by more than five business days; or
(xv) enter into any agreement to take any of the actions described in
Section 5.02(b) or elsewhere in this Section 5.02(c)
Notwithstanding the foregoing, nothing contained herein shall prohibit
Company or any of its Subsidiaries from securitizing financial assets in the
ordinary course of business consistent with past practice.
(d) Company agrees that from the date hereof to the Effective Time, Company
shall, and shall cause the Company Subsidiaries to:
(i) promptly deliver to Merger Partner true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(ii) use reasonable efforts to maintain with financially responsible
insurance companies insurance in such amounts and against such risks and
losses as are customary for such party; and
(iii) at the request of Merger Partner, enter into a commercially
reasonable "costless collar" arrangement with a counter-party reasonably
acceptable to Company with respect to the equity portfolios (other than the
holdings of the stock of Charles Schwab & Co., Inc.) of the Company and of
the Company Insurance Subsidiaries.
(e) Merger Partner agrees that from the date hereof to the Effective Time,
except as contemplated by this Agreement or to the extent that Company shall
otherwise consent in writing (which consent shall not be unreasonably withheld
or delayed), it will, and will cause each Merger Partner Subsidiary to, operate
its business only in the ordinary course, except where the failure to so
operate its business will not individually or in the aggregate be material to
Merger Partner and the Merger Partner Subsidiaries taken as a whole.
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(f) Merger Partner agrees that from the date hereof to the Effective Time it
will not take, or permit any Merger Partner Subsidiary to take, any of the
following actions, except to the extent consented to by Company in writing
(which consent will not unreasonably be withheld or delayed) or permitted,
required or contemplated by this Agreement:
(i) adopt or propose any change in its governing documents that would
have any adverse impact on the transactions contemplated by this Agreement
or which would amend or modify the terms or provisions of the capital stock
of Merger Partner;
(ii) effect any combination, reclassification, recapitalization,
division or similar transaction with respect to any class or series of
capital stock of Merger Partner (other than a stock split, stock dividend
or similar transaction contemplated by Section 1.02(d));
(iii) merge or consolidate with any other person if such merger or
consolidation could reasonably be expected to have a material impact on the
ability of Merger Partner to consummate the transactions contemplated by
this Agreement or to have any of the effects set forth in clause (A), (B),
(C), (D) or (E) of subsection (vi) below;
(iv) make, declare, set aside or pay any dividend or other distribution
with respect to shares of capital stock of Merger Partner, except the
regular declaration and payment of cash or stock dividends with respect to
the Merger Partner Common Stock (not to exceed, in the aggregate between
the date of this Agreement and the Closing Date, $2.00 per share in cash
and market value of Merger Partner Common Stock), and the regular
declaration and payment of dividends with respect to Merger Partner
Preferred Stock in accordance with its terms;
(v) issue, sell, grant, pledge or otherwise encumber any shares of the
Merger Partner Common Stock, any other voting securities or any securities
convertible into such shares, if any such action could, individually or in
the aggregate, reasonably be expected to (A) require the consent of the
stockholders of Merger Partner, (B) delay the date of mailing of the Proxy
Statement by more than five business days, (C) if it were to occur after
such date of mailing, require an amendment of the Proxy Statement which
would delay the Company Stockholders' Meeting by more than five business
days, (D) have a material adverse effect on the ability of Merger Partner
to consummate the transactions contemplated by this Agreement, or (E) delay
the Effective Time by more than five business days;
(vi) acquire any business or any corporation, partnership, joint
venture, association or other business organization or division thereof, in
each case if any such action could, individually or in the aggregate,
reasonably be expected to (A) be material to Merger Partner, (B) delay by
more than five business days the date of mailing of the Proxy Statement,
(C) if it were to occur after such date of mailing, require an amendment of
the Proxy Statement which would delay the Company Stockholders' Meeting by
more than five business days, (D) have a material adverse effect on the
ability of Merger Partner to consummate the transactions contemplated by
this Agreement, or (E) delay the Effective Time by more than five business
days;
(vii) except in the ordinary course of business, enter into any
agreement representing an obligation for indebtedness for borrowed money or
increase the principal amount of indebtedness under any existing agreement
or assume, guarantee, endorse or otherwise become responsible for the
obligations of any other individual, firm or corporation (except a
guarantee of the obligation of a Subsidiary), except indebtedness incurred
in connection with the financing and consummation of the transactions
contemplated by this Agreement and additional indebtedness not in excess of
$1.3 billion;
(viii) mortgage or pledge any of its properties or assets, except to the
extent that the aggregate amount of assets subject to such mortgages and
pledges is not material to Merger Partner;
(ix) except in the ordinary course of business, materially amend or
cancel or agree to the amendment or cancellation of any agreement, treaty
or arrangement, or enter into any new agreement, treaty or arrangement
(other than the renewal of any existing agreements, treaties or
arrangements), except and to
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the extent that the aggregate amount involved with respect to such
agreements, treaties or arrangements is not material to Merger Partner;
(x) pay, loan or advance (other than the payment of compensation,
directors' fees or reimbursements of expenses in the ordinary course of
business and other than as may be required by any agreement in effect as of
the date hereof) any amount to, or sell, transfer or lease any properties
or assets (real, personal or mixed, tangible or intangible) to, or enter
into any agreement or arrangement with, the Association, any of its
officers or directors or any "affiliate" or "associate" of any of its
officers or directors (as such terms are defined in Rule 405 promulgated
under the Securities Act), except and to the extent that the aggregate
amount involved with respect to such transactions is not material to Merger
Partner;
(xi) except in the ordinary course of business, lease or otherwise
dispose of any of its assets (including capital stock of the Merger Partner
Subsidiaries) which are material to Merger Partner or the Merger Partner
Subsidiaries, as the case may be, individually or in the aggregate;
(xii) make or agree to make any new capital expenditure or expenditures,
or enter into any agreement or agreements providing for payments which,
individually, are in excess of $100 million or, in the aggregate, are in
excess of $1 billion;
(xiii) except for acquisitions from the Association and as required by
employee and agent benefit plans in the ordinary course of business,
consistent with past practice, acquire directly or indirectly (including by
or through its affiliates including the Association) any shares of Merger
Partner Common Stock during the period beginning 22 trading days prior to
the Effective Time and ending at the Effective Time; or
(xiv) authorize any of, or commit or agree to take any of, the foregoing
actions.
(g) Merger Partner agrees that from the date hereof to the Effective Time,
Merger Partner shall, and shall cause the Merger Partner Subsidiaries to:
(i) promptly deliver to Company true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement; and
(ii) use reasonable efforts to maintain with financially responsible
insurance companies insurance in such amounts and against such risks and
losses as are customary for such party.
(h) Company shall not, nor shall it knowingly permit any Company Subsidiary
to, nor shall it authorize or permit any officer, director or employee of, or
any duly authorized investment banker, attorney or other advisor or
representative or agent of, Company or any Company Subsidiary to, directly or
indirectly, (i) solicit, initiate or knowingly encourage the submission of any
Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
knowingly take any other action to facilitate the making of any proposal that
constitutes any Acquisition Proposal; provided, however, that nothing contained
in this Section 5.02(h) shall prohibit the Board of Directors of Company (and
its authorized representatives) from furnishing information to, or entering
into discussions or negotiations with, any person or entity that makes an
unsolicited Acquisition Proposal for a Company Acquisition (as defined below)
if, and only to the extent that (A) the Board of Directors of Company after
consultation with outside counsel, determines in good faith that in order for
the Board of Directors of Company to comply with its fiduciary duties to
stockholders under applicable law it should take such action, and (B) prior to
taking such action, Company receives from such person or entity an executed
agreement in reasonably customary form relating to the confidentiality of
information to be provided to such person or entity. Notwithstanding anything
in this Agreement to the contrary, Company shall (i) promptly advise Merger
Partner orally and in writing of (A) the receipt by it (or any of the other
entities or persons referred to above) after the date hereof of any Acquisition
Proposal for a Company Acquisition and (B) the material terms and conditions of
such Acquisition Proposal and (ii) give Merger Partner reasonable notice of the
material terms and conditions of an Acquisition Proposal prior to entering into
a definitive agreement with respect to such Acquisition Proposal, and negotiate
with Merger Partner to make such adjustments in the terms and conditions of
this Agreement as would enable
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Company to proceed with the transactions contemplated herein. Without limiting
the foregoing, it is understood that any violation of the restrictions set
forth in the first sentence of this Section 5.02(h) by any officer or director
of Company or any duly authorized investment banker, attorney or other advisor,
representative or agent of Company or any Company Subsidiary shall be deemed to
be a breach of this Section 5.02(h) by Company. For purposes of this Agreement,
"Acquisition Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of a business that
constitutes 15% or more of the net revenues, net income or the assets of
Company and Company Subsidiaries, taken as a whole, or 15% or more of any class
of equity securities of Company or any Company Subsidiary, 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 Company or any Company
Subsidiary, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Company or any Company Subsidiary, other than the transactions contemplated by
this Agreement. For purposes of this Agreement, "Company Acquisition" means (i)
a consolidation, exchange of shares or merger of Company with any person, other
than Merger Partner or one of its Subsidiaries, and, in the case of a merger,
in which Company shall not be the continuing or surviving corporation, (ii) a
merger of Company with a person, other than Merger Partner or one of its
Subsidiaries, in which Company shall be the continuing or surviving corporation
but the then outstanding shares of Company Common Stock shall be changed into
or exchanged for stock or other securities of Company or any other person or
cash or any other property or the shares of Company Common Stock outstanding
immediately before such merger shall after such merger represent less than 50%
of the voting stock of Company outstanding immediately after the merger, (iii)
the acquisition of beneficial ownership of 50% or more of the voting stock of
Company by any person (as such term is used under Section 13(d) of the Exchange
Act), or (iv) a sale, lease or other transfer of 50% or more of the assets of
Company to any person, other than Merger Partner or one of its Subsidiaries.
Section 5.03. Fiduciary Duties. Except as set forth below, the Board of
Directors of Company shall not (i) withdraw or modify in a manner materially
adverse to Merger Partner, the approval or recommendation by such Board of
Directors of this Agreement or the Merger, or (ii) approve, recommend or cause
Company to enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if Company receives an unsolicited Acquisition
Proposal for a Company Acquisition and the Board of Directors of Company
determines in good faith, following consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary duties to
stockholders under applicable law, the Board of Directors may (w) withdraw or
materially modify in a manner adverse to Merger Partner its approval or
recommendation of this Agreement and the Merger, (x) approve or recommend such
Acquisition Proposal, (y) cause Company to enter into an agreement with respect
to such Acquisition Proposal or (z) terminate this Agreement pursuant to
Section 7.01(b)(iv). If the Board of Directors of Company takes any action
described in clause (y) or (z) of the preceding sentence (other than entering
into a confidentiality agreement) or Merger Partner exercises its right to
terminate this Agreement under Section 7.01(c)(v) based on the Board of
Directors of Company having taken any action described in clause (w) or (x) of
the preceding sentence, Company shall, as a result of the taking of such action
or such termination (a "Fee Payment Event"), as applicable, pay to Merger
Partner the fees provided for under Section 5.04. Notwithstanding anything
contained in this Agreement to the contrary, any action by the Board of
Directors of Company permitted by this Section 5.03 shall not constitute a
breach of this Agreement by Company. Nothing contained in this Agreement shall
prevent the Company or its Board of Directors from complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
Section 5.04. Certain Fees. If a Fee Payment Event occurs, Company shall pay
within three business days of a demand by Merger Partner, $300 million, payable
in same-day funds, as liquidated damages and not as a penalty. If Company fails
to timely pay to Merger Partner any amount due under this Section 5.04, Company
shall pay the costs and expenses (including reasonable legal fees and expenses)
in connection with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on the amount of
any unpaid fee at the publicly announced prime rate of Citibank, N.A. in effect
from time to time from the date such fee was required to be paid.
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Section 5.05. Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition," "business combination," "stockholder protection" or similar
antitakeover statute or regulation enacted under state or Federal law shall
become applicable to the Merger or any of the other transactions contemplated
hereby, each of Company and Merger Partner and the Board of Directors of each
of Company and Merger Partner shall grant such approvals and take such
commercially reasonable actions as are within its authority and consistent with
its fiduciary obligations to its stockholders as determined in good faith by
such Board so that the Merger and the other transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise use commercially reasonable efforts, subject to such fiduciary
duties, to eliminate or minimize the effects of such statute or regulation on
the Merger and the other transactions contemplated hereby.
Section 5.06. Consents. Company and Merger Partner will use reasonable best
efforts to obtain the written consent or approval of each and every
governmental authority and other regulatory body, the consent or approval of
which shall be required in order to permit Merger Partner, Sub and Company to
consummate the transactions contemplated by this Agreement. Company will use
reasonable best efforts to obtain the written consent or approval, in form and
substance reasonably satisfactory to Merger Partner, of each person whose
consent or approval shall be required in order to permit Merger Partner, Sub
and Company to consummate the transactions contemplated by this Agreement,
except for any contracts of Company as to which the failure to obtain any
required written consent or approval thereunder would not individually or in
the aggregate result in a Material Adverse Effect on Company. Merger Partner
will use reasonable best efforts to obtain the written consent or approval, in
form and substance reasonably satisfactory to Company, of each person whose
consent or approval shall be required in order to permit Merger Partner, Sub
and Company to consummate the transactions contemplated by this Agreement,
except for any contracts of Merger Partner as to which the failure to obtain
any required written consent or approval thereunder would not individually or
in the aggregate result in a Material Adverse Effect on Merger Partner.
Section 5.07. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto will promptly file and prosecute
diligently the applications and related documents required to be filed by such
party with the applicable regulatory authorities in order to effect the
transactions contemplated hereby, including filings under the HSR Act
requesting early termination of the applicable waiting period, filings under
Foreign Competition Laws and filings with state, federal and foreign banking
and insurance authorities. Each party hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement including, without limitation, each party shall use its best
efforts to avoid the entry of, or to have vacated or terminated, any decree,
order or judgment that would restrain, prevent or delay the Closing, including
without limitation defending through litigation on the merits any claim
asserted in any court by any party. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each corporation which is
a party to this Agreement shall take all such necessary action. Each of the
parties hereto agrees to defend vigorously against any actions, suits or
proceedings in which such party is named as defendant which seeks to enjoin,
restrain or prohibit the transactions contemplated hereby or seeks damages with
respect to such transactions.
Section 5.08. NYSE Listing. Merger Partner will use reasonable best efforts
to cause to be approved for listing on the NYSE, subject to official notice of
issuance, a sufficient number of shares of Merger Partner Common Stock to be
issued in the Merger.
Section 5.09. Notice; Efforts to Remedy. Each party hereto shall promptly
give written notice to the other parties hereto upon becoming aware of the
occurrence of any event which would cause or constitute a breach of any of the
representations, warranties or covenants of such party contained in this
Agreement and shall use reasonable best efforts to prevent or promptly remedy
the same. During the period from the date of this Agreement to the Effective
Time, Company and Merger Partner each shall cause one or more of its
representatives to confer on a regular and frequent basis with representatives
of the other and to report on the
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general status of its ongoing operations. Company shall promptly notify Merger
Partner of any change in each case on a consolidated basis in the normal course
of Company's or the Company Subsidiaries' businesses or in the operation of its
or their properties having a Material Adverse Effect on Company and of the
receipt by Company or the Company Subsidiaries of notice of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) or the receipt by Company or the Company Subsidiaries
of a notice of the institution or the threat of litigation involving Company or
any of the Company Subsidiaries which, individually or in the aggregate, would
have a Material Adverse Effect on Company. Merger Partner shall promptly notify
Company of any change in each case on a consolidated basis in the normal course
of Merger Partner's or the Merger Partner Subsidiaries' businesses or in the
operation of its or their properties having a Material Adverse Effect on Merger
Partner, and of the receipt by Merger Partner or the Merger Partner
Subsidiaries of notice of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated) or
the receipt by Merger Partner or the Merger Partner Subsidiaries of a notice of
the institution or the threat of litigation involving Merger Partner or any of
the Merger Partner Subsidiaries which, individually or in the aggregate, would
have a Material Adverse Effect on Merger Partner.
Section 5.10. Registration Statement; Stockholder Approvals.
(a) As soon as is reasonably practicable after the execution of this
Agreement, Merger Partner shall prepare and file with the SEC the Registration
Statement (in which the Proxy Statement will be included as a prospectus) and
Company shall prepare and file with the SEC the Proxy Statement. Merger Partner
shall use reasonable best efforts to cause the Registration Statement to become
effective under the Securities Act as promptly as practicable after such filing
and shall take all commercially reasonable actions required to be taken under
any applicable state blue sky or securities laws in connection with the
issuance of the shares of Merger Partner Common Stock pursuant to this
Agreement. Each party hereto shall furnish all information concerning it and
the holders of its capital stock as the other party hereto may reasonably
request in connection with such actions.
(b) Company shall call a Stockholders' Meeting to be held as soon as
practicable after the date hereof for the purpose of voting upon the Merger and
this Agreement. Subject to Section 5.03, (i) Company shall mail the Proxy
Statement to its stockholders, (ii) the Board of Directors of Company shall
recommend to its stockholders the approval of the Merger and this Agreement,
and (iii) Company shall use reasonable best efforts to obtain such stockholder
approval. Without limiting the generality of the foregoing, Company agrees
that, subject to its rights pursuant to Section 5.03, its obligations pursuant
to this Section 5.10(b) shall not be affected by the commencement, public
proposal, public disclosure or communication to Company of any Acquisition
Proposal.
(c) Merger Partner shall present to its stockholders at its general meeting
of stockholders to be held on April 29, 1999, a proposal to approve the use of
general reserves of Merger Partner such that the shares of Merger Partner
Common Stock to be issued in the Merger shall be fully paid out of such general
reserves (the "Issuance"). (i) Merger Partner shall mail the disclosure
required under applicable law to its stockholders in connection with such
meeting, (ii) the Executive Board of Merger Partner shall take such action with
respect to its stockholders in support of the approval of the Issuance as
permitted by Dutch law, and (iii) Merger Partner shall use its reasonable best
efforts to obtain such stockholder approval.
Section 5.11. Expenses. If this Agreement is terminated for any reason
without breach by any party, each party hereto shall pay its own expenses
incident to preparing for, entering into, and carrying out this Agreement and
to consummating the Merger.
Section 5.12. Press Releases; Filings. Without the consent of the other
parties, none of the parties shall issue any press release or make any public
announcement with regard to this Agreement or the Merger or any of the
transactions contemplated hereby; provided, however, that nothing in this
Section 5.12 shall be deemed to (i) prohibit Company or Merger Partner from
making any disclosures, press releases or
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announcements relating to their respective businesses or operations, or (ii)
prohibit any party hereto from making any disclosure which its counsel deems
necessary or advisable in order to fulfill such party's disclosure obligations
imposed by law or the rules of any national securities exchange or automated
quotation system. Each of Company and Merger Partner shall promptly notify the
other of each report, schedule and other document filed by it or any of its
respective Subsidiaries with the SEC and of any other document pertaining to
the transactions contemplated hereby filed with any other governmental
authorities.
Section 5.13. Indemnification of Officers and Directors.
(a) From and after the Effective Time, Merger Partner shall cause AEGON USA
and the Surviving Corporation to indemnify, defend and hold harmless to the
fullest extent permitted under applicable law (excluding personal conduct which
is finally adjudicated by a court of competent jurisdiction to constitute the
commission of a crime by the relevant individual) each person who is, or has
been at any time prior to the Effective Time, an officer or director of Company
(or any Subsidiary or division thereof) and each person who served at the
request of Company as a director, officer, trustee or fiduciary of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (individually, an "Indemnified Party" and,
collectively, the "Indemnified Parties") against all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees), judgments, fines,
penalties and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as such,
whether commenced, asserted or claimed before or after the Effective Time. In
the event of any such claim, action, suit, proceeding or investigation (an
"Action"), (i) Merger Partner shall cause AEGON USA and the Surviving
Corporation to pay, as incurred, the fees and expenses of counsel selected by
the Indemnified Party, which counsel shall be reasonably acceptable to the
Surviving Corporation, in advance of the final disposition of any such Action
to the fullest extent permitted by applicable law, and, if required, upon
receipt of any undertaking required by applicable law, and (ii) Merger Partner
shall cause AEGON USA and the Surviving Corporation to cooperate in the defense
of any such matter; provided, however, the Surviving Corporation shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed), and provided further, that
Merger Partner shall not be obligated pursuant to this Section 5.13 to cause
AEGON USA and the Surviving Corporation to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single Action, unless,
in the good faith judgment of any of the Indemnified Parties, there is or may
be a conflict of interests between two or more of such Indemnified Parties, in
which case there may be separate counsel for each similarly situated group.
(b) The parties agree that the provisions relating to exoneration of
directors and the rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action or suit, in the
certificate of incorporation and bylaws of Company and its Subsidiaries with
respect to matters occurring through the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period of six years
from the Effective Time; provided, however, that all rights to indemnification
in respect of any Action pending or asserted or claim made within such period
shall continue until the disposition of such Action or resolution of such
claim.
(c) For a period of six years after the Effective Time, Merger Partner and
the Surviving Corporation shall cause to be maintained officers' and directors'
liability insurance covering the Indemnified Parties who are or at any time
prior to the Effective Time covered by the Company's existing officers' and
directors' liability insurance policies on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance; provided,
that after the third year after the Effective Time, the Surviving Corporation
shall not be required to pay annual premiums in excess of 250% of the last
annual premium paid by the Company prior to the date hereof (the amount of
which premium is set forth in the Company Disclosure Letter), but in such case
shall purchase as much coverage as reasonably practicable for such amount.
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(d) The rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, under the
DGCL or otherwise.
(e) In the event Merger Partner, the Surviving Corporation, AEGON USA or any
of their respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation or
entity in such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then and in either such case,
proper provision shall be made so that the successors and assigns of Merger
Partner or the Surviving Corporation, or AEGON USA, as the case may be, shall
assume the obligations set forth in this Section 5.13.
(f) This Section 5.13 shall survive the Closing and is intended to benefit
Company, the Surviving Corporation and each of the Indemnified Parties and his
or her heirs and representatives (each of whom shall be entitled to enforce
this Section 5.13 against Merger Partner, AEGON USA or the Surviving
Corporation to the extent specified herein) and shall be binding on all
successors and assigns of Merger Partner, AEGON USA and the Surviving
Corporation.
Section 5.14. Tax Treatment. Merger Partner and Company agree to treat the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
None of Merger Partner, Company or any of their respective Subsidiaries shall
take any action which would be reasonably likely to jeopardize qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the
Code.
Section 5.15. Employee Benefits.
(a) For a period of one year from the Effective Time, Merger Partner and the
Surviving Corporation shall honor all obligations and commitments under the
plans, programs, arrangements, practices and contracts which are maintained by
Company or any of the Company Subsidiaries or to which Company or any Company
Subsidiary is obligated to make contributions or which provide benefits or
compensation, including but not limited to executive arrangements and "employee
benefit plans" as defined in Section 3(1) of ERISA and the Company Employee
Plans and Company Foreign Plans, in each case in accordance with their terms as
in effect at the Effective Time, with only such amendments as are required by
applicable laws, or as provided by Section 5.15(c), or permitted by the terms
thereof as in effect at the Effective Time, and which do not decrease the
benefits or otherwise adversely affect the rights of participants (or their
beneficiaries) thereunder. Notwithstanding anything contained herein to the
contrary, Merger Partner and the Surviving Corporation agree to honor in
accordance with their terms all benefits accrued or vested as of the Effective
Time under the Company Employee Plans and the Company Foreign Plans including
any rights or benefits arising as a result of the transactions contemplated by
this Agreement (either alone or in combination with any other event).
(b) Merger Partner shall take, and shall cause the Surviving Corporation and
its Subsidiaries and all other Affiliates of Merger Partner to take, the
following actions: (i) waive any limitations regarding pre-existing conditions
under any welfare or other employee benefit plan maintained by any of them for
the benefit of employees of Company or any of its subsidiaries (the "Company
Employees") or in which Company Employees participate after the Effective Time,
(ii) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time for the calendar year in which the
Effective Time occurs, in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time, and (iii) for all purposes under all
compensation and benefit plans and policies applicable to employees of any of
them, treat all service by Company Employees with Company or any of its
Subsidiaries or Affiliates of Company before the Effective Time as service with
Merger Partner and its affiliates, except to the extent such treatment would
result in duplication of benefits with respect to the same period of service.
(c) Effective as of the date set forth therein, the amendments to the
Company's Retirement Plan for Salaried U.S. Employees (the "Retirement Plan"),
the Supplemental Pension Plan, the SSP+ Supplemental
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Pension Plan and Deferred Compensation Plan, described in Schedule 5.15 of the
Company Disclosure Letter, shall become effective and remain in effect without
amendment, except as required by law with respect to the Retirement Plan or
such amendments which do not decrease the benefits or otherwise adversely
affect the rights of participants (or their beneficiaries) thereunder.
Section 5.16. Equity-Based Awards. (a) Stock Options. At the Effective Time,
each option to purchase shares of Company Common Stock outstanding and
unexercised as of the Effective Time (the "Options") granted pursuant to the
Company's 1985 Stock Option and Stock Award Plan, 1995 Performance Stock Option
Plan and 1996 Stock Option and Award Plan as each has been amended from time to
time (collectively, the "Company Stock Plans") shall become fully vested and
immediately exercisable. Each holder of an Option outstanding as of the
Effective Time shall be entitled to receive out of the Exchange Fund, and shall
be paid out of the Exchange Fund in full satisfaction of such Option, a cash
payment in an amount in respect thereof equal to the product of (i) the excess
of the Consideration Amount over the exercise price of such Option, and (ii)
the number of shares of Company Common Stock subject to such Option at the
Effective Time, less any income or employment tax withholding required under
the Code or any provision of state, local or foreign law.
(b) TLSARs. At or after the Effective Time, each holder of a tandem limited
stock appreciation right ("TLSAR") outstanding as of the Effective Time shall
be entitled to elect to receive out of the Exchange Fund, and shall be paid out
of the Exchange Fund upon such election in full satisfaction of such TLSAR, a
cash payment in an amount in respect thereof equal to the product of (i) the
Change of Control Value (as defined in the applicable Company Stock Plan and
award agreement thereunder), over the exercise price of such TLSAR, and (ii)
the number of shares of Company Common Stock subject to such TLSAR at the
Effective Time, less any income or employment tax withholding required under
the Code or any provision of state, local or foreign law; provided, however
that, to the extent an Option with respect to which a related TLSAR has been
granted shall terminate upon exercise of the related TLSAR.
(c) Other Equity-Based Awards. At the Effective Time, each phantom
restricted stock award and phantom restricted share (collectively, the "Stock
Awards") granted pursuant to the Company's Stock Plans, the Company's Phantom
Restricted Stock Plan for Nonemployee Directors or pursuant to an individual
agreement (collectively, the "Award Arrangements") shall fully vest and become
immediately payable or distributable (except as set forth in Schedule 5.16(c)
of the Company Disclosure Letter). At the Effective Time, each vested Stock
Award shall be canceled and terminated in accordance with its terms, and the
holder thereof shall receive out of the Exchange Fund in full satisfaction of
such Stock Award, a cash payment in an amount in respect thereof equal to the
product of (i) the Consideration Amount, and (ii) the number of shares of
Company Common Stock subject to such Stock Award at the Effective Time, less
any income or employment tax withholding required under the Code or any
provision of state, local or foreign law.
(d) All Options, TLSARs, Stock Awards and restricted Company Common Stock
outstanding as of the Effective Time and the exercise price thereof (if any)
shall have been adjusted prior to the Effective Time pursuant to the terms of
the applicable Company Stock Plan or Award Arrangement for the stock dividend
declared December 17, 1998.
(e) All restrictions on restricted Company Common Stock shall lapse no later
than the Effective Time and such shares shall be treated under Article 1 of
this Agreement as unrestricted shares of Company Common Stock, provided the
holder thereof shall be subject to any income or employment tax withholding
required under the Code or any provision of state, local or foreign law.
Section 5.17. Rule 145. Company shall use commercially reasonable efforts to
cause each person who Company believes, at the time the Merger is submitted to
a vote of the stockholders of Company, is an "affiliate" for purposes of Rule
145 under the Securities Act, to deliver to Merger Partner on or prior to the
Closing Date a written agreement in terms satisfactory to Merger Partner, that
such person will not offer to sell, transfer or otherwise dispose of any of the
shares of Merger Partner Common Stock issued to such person
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pursuant to the Merger, except in accordance with the applicable provisions of
Rule 145, and except in other transactions that are not in violation of the
Securities Act.
Section 5.18. Comfort Letters. (a) Company shall use its reasonable best
efforts to cause its independent auditor to provide a letter dated the
effective date of the Registration Statement, with respect to certain financial
information regarding Company included in the Registration Statement, in form
reasonably satisfactory to Merger Partner and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement. The costs of
such letter shall be borne equally by Company and Merger Partner.
(b) Merger Partner shall use its reasonable best efforts to cause its
independent auditor to provide a letter dated the effective date of the
Registration Statement, with respect to certain financial information regarding
Merger Partner included in the Registration Statement, in form reasonably
satisfactory to Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement. The costs of such letter
shall be borne equally by Company and Merger Partner.
Section 5.19. Y2K Plans. (a) Company shall use its reasonable best efforts
to continue to execute the Company Y2K Plan in accordance with its terms.
(b) Merger Partner shall use its reasonable best efforts to continue to
execute the Merger Partner Y2K Plan in accordance with its terms.
Section 5.20. Compliance with 1940 Act. (a) The parties hereto acknowledge
that each of them has entered into this Agreement in reliance upon the benefits
and protections provided by Section 15(f) of the 1940 Act. Each of the parties
hereto shall not take, and each of them shall cause its affiliates not to take,
any action not contemplated by this Agreement that would have the effect,
directly or indirectly, of causing the requirements of any of the provisions of
Section 15(f) of the 1940 Act not to be met in respect of this Agreement and
the transactions contemplated hereby, and each of them shall not fail to take,
and each of them shall cause its affiliates not to fail to take, and after the
Closing Date shall not cause the Surviving Corporation to fail to take, any
action if the failure to take such action would have the effect, directly or
indirectly, of causing the requirements of any of the provisions of Section
15(f) of the 1940 Act not to be met in respect of this Agreement and the
transactions contemplated hereby. In that regard, each of the parties hereto
shall conduct its business and shall, subject to applicable fiduciary duties,
use its reasonable best efforts to cause each of its affiliates to conduct its
business so as to assure that, insofar as within the control of the parties
hereto or their respective affiliates:
(i) for a period of three years after the Closing Date, at least 75% of
the members of the Board of Directors or trustees of each fund that is
registered under the 1940 Act, and that continues after the Closing Date
its existing or a replacement investment advisory contract with the
Surviving Corporation or any affiliate of the Surviving Corporation, are
not (A) "interested persons" of the investment manager of such fund after
the Closing Date or (B) "interested persons" of the present investment
manager of such fund; and
(ii) for a period of two years after the Closing Date, there shall not
be imposed on any of the funds or sub-advisory funds that is registered
under the 1940 Act an "unfair burden" as a result of the transactions
contemplated by this Agreement, or any terms, conditions or understandings
applicable thereto.
(b) The terms and quotations in this Section 5.20 shall have the meanings
set forth in Section 15(f) or Section 2(a)(19) of the 1940 Act.
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ARTICLE 6
Conditions Precedent to Merger
Section 6.01. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) This Agreement and the Merger shall have been approved and adopted by
the affirmative vote or consent of the holders of at least a majority of the
outstanding shares of Company Common Stock.
(b) (i) All consents, authorizations, orders and approvals as are required
under applicable state insurance holding company laws in the United States, and
insurance change of control laws in Canada, and (ii) all additional consents,
authorizations, orders and approvals of (or filings or registrations with) any
governmental authority or other regulatory body required in connection with the
execution, delivery and performance of this Agreement which, in the case of
clause (ii) the failure to obtain would have a Material Adverse Effect on
Company or a Material Adverse Effect on Merger Partner shall have been obtained
and shall be in full force and effect and all statutory waiting periods in
respect thereof shall have expired without the imposition of any conditions
which would have, individually or in the aggregate, a Material Adverse Effect
on Company or a Material Adverse Effect on Merger Partner.
(c) Early termination shall have been granted or applicable waiting periods
shall have expired under the HSR Act.
(d) No governmental authority or other regulatory body (including any court
of competent jurisdiction) shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making illegal, materially restricting or in any way
preventing or prohibiting the Merger.
(e) The Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such purpose,
shall be pending before or threatened by the SEC.
(f) The shares of Merger Partner Common Stock to be issued pursuant to this
Agreement shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
Section 6.02. Conditions to Obligations of Company. The obligations of
Company to effect the Merger shall be subject to the satisfaction on or prior
to the Closing Date of each of the following conditions unless waived by
Company:
(a) (i) The representations and warranties of Merger Partner set forth in
this Agreement which are qualified by a "Material Adverse Effect on Merger
Partner" qualification shall be true and correct in all respects as so
qualified at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date and (ii) the representations
and warranties of Merger Partner set forth in this Agreement which are not
qualified by a "Material Adverse Effect on Merger Partner" qualification shall
be true and correct at and as of the date of this Agreement and at and as of
the Closing Date as though made at and as of the Closing Date except for such
failures to be true and correct as would not, in the aggregate, have a Material
Adverse Effect on Merger Partner; provided, however, that, with respect to
clauses (i) and (ii) hereof, representations and warranties that are given as
of a particular date or period and relate solely to such particular date or
period shall be true and correct (in the manner set forth in clauses (i) or
(ii), as applicable), only as of such date or period.
(b) Merger Partner and Sub each shall have performed in all material
respects all covenants and agreements required to be performed by them under
this Agreement at or prior to the Closing Date.
(c) Merger Partner shall furnish Company with a certificate of its
appropriate officers as to compliance with the conditions set forth in Sections
6.02(a) and 6.02(b).
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(d) Company shall have received the opinion of Wachtell, Lipton, Rosen &
Katz, counsel to Company, in form and substance reasonably satisfactory to
Company, dated the Closing Date, a copy of which shall be furnished to Merger
Partner, to the effect that (i) the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of section 368(a) of the
Code and (ii) no gain or loss will be recognized by the stockholders of Company
with respect to the receipt of Merger Partner Common Stock in exchange for
Company Common Stock pursuant to the Merger (except to the extent of Cash
Payments received and except with respect to cash received in lieu of a
fractional share interest in Merger Partner Common Stock). In rendering such
opinion, such counsel shall be entitled to receive and rely upon
representations of officers of Company and Merger Partner as to such matters as
such counsel may reasonably request. Notwithstanding the foregoing, this
condition shall not be a condition if Company shall have taken any action or
failed to take any action, which in any manner shall have been a cause of, or
resulted in, the failure to obtain the opinion referred to in this subsection
(d), other than failures to take action which were reasonable under the
circumstances.
Section 6.03. Conditions to Obligations of Merger Partner. The obligations
of Merger Partner to effect the Merger shall be subject to the satisfaction on
or prior to the Closing Date of each of the following conditions unless waived
by Merger Partner:
(a) (i) The representations and warranties of Company set forth in this
Agreement which are qualified by a "Material Adverse Effect on Company"
qualification shall be true and correct in all respects as so qualified at and
as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date and (ii) the representations and warranties
of Company set forth in this Agreement which are not qualified by a "Material
Adverse Effect on Company" qualification shall be true and correct at and as of
the date of this Agreement and at and as of the Closing Date as though made at
and as of the Closing Date except for such failures to be true and correct as
would not, in the aggregate, have a Material Adverse Effect on Company;
provided, however, that, with respect to clauses (i) and (ii) hereof,
representations and warranties that are given as of a particular date or period
and relate solely to such particular date or period shall be true and correct
(in the manner set forth in clauses (i) or (ii), as applicable), only as of
such date or period.
(b) Company shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) Company shall furnish Merger Partner with a certificate of its
appropriate officers as to compliance with the conditions set forth in Sections
6.03(a) and 6.03(b).
(d) Merger Partner shall have received the opinion of LeBoeuf, Lamb, Greene
& MacRae, L.L.P., counsel to Merger Partner, in form and substance reasonably
satisfactory to Merger Partner, dated the Closing Date, a copy of which shall
be furnished to Company, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of section
368(a) of the Code. In rendering such opinion, such counsel shall be entitled
to receive and rely upon representations of officers of Company and Merger
Partner as to such matters as such counsel may reasonably request.
Notwithstanding the foregoing, this condition shall not be a condition if
Merger Partner shall have taken any action or failed to take any action, which
in any manner shall have been a cause of, or resulted in, the failure to obtain
the opinion referred to in this subsection (d), other than failures to take
action which were reasonable under the circumstances.
ARTICLE 7
Termination and Abandonment of the Merger
Section 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the approval by the
stockholders of Company:
(a) by the mutual written consent of Merger Partner and Company;
(b) by Company if:
(i) the Merger is not consummated on or before December 31, 1999 (or
such later date as shall have been approved by Merger Partner and Company),
unless the failure of such occurrence shall be due to the
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failure of Company to perform or observe the covenants and agreements
hereof to be performed or observed by it at or before the Effective Time;
(ii) events occur which render impossible the satisfaction of one or
more of the conditions set forth in Sections 6.01 and 6.02 and such
conditions are not waived by Company, unless the failure of such occurrence
shall be due to the failure of Company to perform or observe the covenants
and agreements hereof to be performed or observed by it at or before the
Effective Time;
(iii) Company is permanently enjoined or restrained by any governmental
authority or other regulatory body (including any court of competent
jurisdiction), such injunction or restraining order prevents the Merger and
such injunction or restraining order shall have become final and
nonappealable;
(iv) the Board of Directors of Company shall have exercised any of its
rights set forth in the second sentence of Section 5.03;
(v) the stockholders of Company do not approve this Agreement and the
Merger at the Stockholders' Meeting (including adjournments and
postponements thereof); or
(vi) on the date on which the Closing would otherwise occur, the Share
Price shall be less than $61.88; but only if (i) Company has given Merger
Partner at least three business days' prior written notice of Company's
intent to effect such termination pursuant to this Section 7.01(b)(vi), and
(ii) during such three business day period, Merger Partner shall not have
elected to increase the Exchange Ratio such that the Exchange Ratio as so
increased multiplied by the Share Price shall equal $50.505 (or such other
number as Company and Merger Partner may agree);
(c) by Merger Partner if:
(i) the Merger is not consummated on or before December 31, 1999 (or
such later date as shall have been approved by Company and Merger Partner),
unless the failure of such occurrence shall be due to the failure of Merger
Partner or Sub to perform or observe the covenants and agreements hereof to
be performed or observed by them at or before the Effective Time;
(ii) events occur which render impossible the satisfaction of one or
more of the conditions set forth in Sections 6.01 and 6.3 and such
conditions are not waived by Merger Partner, unless the failure of such
occurrence shall be due to the failure of Merger Partner or Sub to perform
or observe the covenants and agreements hereof to be performed or observed
by them at or before the Effective Time;
(iii) Merger Partner is permanently enjoined or restrained by any
governmental authority or other regulatory body (including any court of
competent jurisdiction), such injunction or restraining order prevents the
Merger and such injunction or restraining order shall have become final and
nonappealable;
(iv) the stockholders of Company do not approve this Agreement and the
Merger at the Stockholders' Meeting (including adjournments and
postponements thereof); or
(v) the Board of Directors of Company shall have withdrawn or materially
modified in a manner adverse to Merger Partner its recommendation of this
Agreement and the Merger or the Board of Directors shall have approved or
recommended another Acquisition Proposal; or
(vi) on the date on which the Closing would otherwise occur, the Share
Price shall be greater than $128.52; but only if (i) Merger Partner has
given Company at least three business days' prior written notice of Merger
Partner's intent to effect such termination pursuant to this Section
7.01(c)(vi) and (ii) during such three business day period, Company shall
not have elected to decrease the Exchange Ratio
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<PAGE>
such that the Exchange Ratio as so decreased multiplied by the Share Price
shall equal $58.695 (or such other number as Company and Merger Partner may
agree).
Section 7.02. Effect of Termination and Abandonment. In the event of the
termination and abandonment of this Agreement under Section 7.01, this
Agreement shall become void and have no effect, without any liability on the
part of any party or its directors, officers or stockholders except (i) as
provided in the third sentence of Section 5.01, and in Sections 5.04 and 5.11
and (ii) to the extent that such termination results from the willful breach by
any party hereto of any covenant or agreement hereunder.
ARTICLE 8
Miscellaneous
Section 8.01. Waiver and Amendment. Any term or provision of this Agreement
may be waived in writing at any time by the party which is, or whose
stockholders are, entitled to the benefits thereof, and any term or provision
of this Agreement may be amended or supplemented at any time by action of the
respective Boards of Directors (or its authorized representative) of Merger
Partner or Company without action of the stockholders, whether before or after
the Stockholders' Meeting; provided, however, that after approval of the
stockholders of Company, except as provided in Sections 7.01(b)(vi) and
7.01(c)(vi) no such amendment shall reduce the amount or change the form of the
consideration to be delivered to Company's stockholders as contemplated by this
Agreement or otherwise materially adversely affect the interests of such
stockholders unless such amendment is approved by Company's stockholders. No
amendment to this Agreement shall be effective unless it has been executed by
Company, Merger Partner and Sub.
Section 8.02. Non-Survival of Representations, Warranties and
Agreements. Except for the agreements contained in Sections 1.02, 1.03, 1.04,
1.05, 1.06, 1.09, 5.07, 5.13, 5.14, 5.15 and 5.16 and Article 8, none of the
representations, warranties and agreements of Company, Merger Partner or Sub in
this Agreement, or in any instrument or certificate delivered pursuant to this
Agreement, shall survive the Merger nor shall their respective stockholders,
directors or officers have any liability to the other after the Effective Time
on account of any breach of warranty or failure or the incorrectness of any of
the representations or warranties contained herein or in any certificate or
other instrument delivered pursuant to this Agreement. The sole right and
remedy arising from a misrepresentation or breach of warranty or from the
failure of any of the conditions of the Merger to be met shall be termination
of this Agreement by the aggrieved party and the remedies except that, as
provided in Section 7.02 nothing herein shall relieve any party from any
liability for any willful and material breach by such party of any of its
covenants or agreements set forth in this Agreement.
Section 8.03. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally, telecopied (if confirmed) or sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to Company:
Transamerica Corporation
The Transamerica Pyramid
600 Montgomery Street, 24th Floor
San Francisco, California 94111
Attention: Shirley H. Buccieri
Telecopy No.: (415) 983-4164
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Daniel A. Neff
Telecopy No.: (212) 403-2000
A-41
<PAGE>
If to Merger Partner:
(via mail):
AEGON N.V.
P.O. Box 202
2501 CE The Hague
The Netherlands
Attention: Mr. Kees J. Storm
Telecopy No.: (31-70) 347-7929
(via hand delivery):
AEGON N.V.
Mariahoeveplein 50
2591 TV The Hague
The Netherlands
Attention: Mr. Kees J. Storm
Telecopy No.: (31-70) 347-7929
and to:
AEGON USA, Inc.
4333 Edgewood Road, NE
Cedar Rapids, Iowa 52499
Attention: Mr. Craig D. Vermie
Telecopy No.: (319) 369-2218
With a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019-5389
Attention: Mr. Donald B. Henderson, Jr.
Telecopy No.: (212) 424-8500
If to Sub:
Tony Merger Corp.
c/o AEGON USA, Inc.
4333 Edgewood Road, NE
Cedar Rapids, Iowa 52499
Attention: Mr. Craig D. Vermie
Telecopy No.: (319) 369-2218
With a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019-5389
Attention: Mr. Donald B. Henderson, Jr.
Telecopy No.: (212) 424-8500
Section 8.04. Descriptive Headings; Interpretation. The descriptive headings
are for convenience of reference only and shall not control or affect the
meaning or construction of any provision of this Agreement. When a reference is
made in this Agreement to Sections, such reference shall be to a Section of
this Agreement
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<PAGE>
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitations" The words "hereof," "herein," "hereby" and
other words of similar import refer to this Agreement as a whole unless
otherwise indicated. The words "to the knowledge of the Company" or "to
Company's knowledge" and any words of similar import shall mean that any one of
the persons listed on Exhibit A has actual knowledge of the matter. The words
"to the knowledge of Merger Partner" or "to Merger Partner's knowledge" and any
words of similar import shall mean that any one of the persons listed on
Exhibit B has actual knowledge of the matter.
Section 8.05. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement. This Agreement shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties, it
being understood that the parties need not sign the same counterpart.
Section 8.06. Entire Agreement. This Agreement, the Company Disclosure
Letter, the Merger Partner Disclosure Letter and the Confidentiality Agreement
contain the entire agreement between Merger Partner, Sub and Company with
respect to the Merger, and supersede all prior arrangements or understandings
with respect to the subject matter hereof. Except as otherwise contemplated in
the covenants listed in Section 8.02 (which covenants shall be enforceable by
the person or persons affected thereby following the Effective Time), this
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 8.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO ANY APPLICABLE CONFLICTS OF LAW PROVISIONS THEREOF).
Section 8.08. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.
Section 8.09. Enforcement of Agreement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 8.10. Assignment. 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, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns.
Section 8.11. Obligation of Merger Partner. Whenever this Agreement requires
Sub (or its successors, including the Surviving Corporation) to take any
action, such requirement shall be deemed to include an
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<PAGE>
undertaking on the part of Merger Partner to cause Sub (or such successors) to
take such action and a guarantee of the performance thereof.
Section 8.12. CONSENT TO JURISDICTION; SERVICE OF PROCESS. (a) EACH PARTY
IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING BY OR
AGAINST IT WITH RESPECT TO ITS RIGHTS, OBLIGATIONS OR LIABILITIES UNDER THIS
AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT
SHALL BE BROUGHT BY SUCH PARTY ONLY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND EACH PARTY HEREBY CONSENTS TO THE
JURISDICTION OF SUCH COURT, OR, IF (BUT ONLY IF) SUCH COURT DOES NOT HAVE
SUBJECT MATTER JURISDICTION OVER SUCH ACTION, SUIT OR PROCEEDING (INCLUDING,
WITHOUT LIMITATION, CLAIMS FOR INTERIM RELIEF, COUNTERCLAIMS, ACTIONS WITH
MULTIPLE DEFENDANTS AND ACTIONS IN WHICH SUCH PARTY IS IMPLIED SUCH OTHER COURT
IN THE CITY AND STATE OF NEW YORK AS WOULD HAVE SUBJECT MATTER JURISDICTION AND
EACH PARTY HEREBY CONSENTS TO THE JURISDICTION OF SUCH COURT; PROVIDED,
HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL LIMIT THE RIGHT OF COMPANY OR ANY
THIRD PARTY BENEFICIARY HEREUNDER TO COMMENCE ANY LEGAL ACTION AGAINST MERGER
PARTNER AND ITS AFFILIATES IN ANY COURT OF COMPETENT JURISDICTION IN THE
NETHERLANDS OR ELSEWHERE TO ENFORCE THE JUDGMENTS AND ORDERS OF ANY OTHER
COURT. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT IT MAY
HAVE TO A JURY TRIAL IN ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO,
OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER AGREEMENT
EXECUTED IN CONNECTION WITH THIS AGREEMENT.
(b) MERGER PARTNER HEREBY IRREVOCABLY DESIGNATES LEBOEUF, LAMB, GREENE &
MACRAE, LLP (IN SUCH CAPACITY THE "PROCESS AGENT"), WITH AN OFFICE AT 125 WEST
55TH STREET, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, FOR AND ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY
LEGAL ACTION OR PROCEEDINGS WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND SUCH SERVICE SHALL BE
DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT, PROVIDED THAT IN
THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH
SERVICE SHALL ALSO DELIVER A COPY THEREOF TO MERGER PARTNER IN THE MANNER
PROVIDED IN SECTION 8.03. MERGER PARTNER SHALL TAKE ALL SUCH ACTION AS MAY BE
NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT
ANOTHER AGENT SO THAT MERGER PARTNER WILL AT ALL TIMES HAVE AN AGENT FOR
SERVICE OF PROCESS FOR THE ABOVE PURPOSES IN NEW YORK. IN THE EVENT OF THE
TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS AND BUSINESS OF THE PROCESS
AGENT TO ANY OTHER CORPORATION BY CONSOLIDATION, MERGER, SALE OF ASSETS OR
OTHERWISE, SUCH OTHER CORPORATION SHALL BE SUBSTITUTED HEREUNDER FOR THE
PROCESS AGENT WITH THE SAME EFFECT AS IF NAMED HEREIN IN PLACE OF LEBOEUF,
LAMB, GREENE & MACRAE, LLP. MERGER PARTNER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED AIRMAIL, POSTAGE
PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN THIS AGREEMENT, SUCH SERVICE
OF PROCESS TO BE EFFECTIVE UPON ACKNOWLEDGMENT OF RECEIPT OF SUCH REGISTERED
MAIL. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. MERGER PARTNER EXPRESSLY
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE
LAWS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA.
A-44
<PAGE>
ARTICLE 9
Definitions
Section 9.01. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"Consideration Amount" shall mean $78.
"Foreign Competition Laws" shall mean foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other foreign Laws
that are designed or intended to prohibit, restrict or regulate actions having
the purpose or effect of monopolization, lessening of competition or restraint
of trade.
"Laws" shall mean any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative order or
decree, administrative or judicial decision, and any other executive or
legislative proclamation.
"Liens" shall mean all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Subsidiary" shall mean, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other subsidiary of such party is a general partner or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization or at
least a majority of the value of the outstanding equity is directly or
indirectly owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries.
"Tax" shall mean any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income, gross
income, premiums, sales and use, ad valorem, transfer, gains, profits, windfall
profits, excise, franchise, real and personal property, gross receipts, capital
stock, production, business and occupation, employment, disability, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes, other
taxes or similar charges of any kind whatsoever imposed by any governmental
entity, whether imposed directly on a Person or resulting under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign Law), as a transferee or successor, by contract or otherwise and
includes any interest and penalties (civil or criminal) on or additions to any
such taxes or in respect of a failure to comply with any requirement relating
to any Tax Return.
"Tax Return" shall mean a report, return or other information required to be
supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities.
A-45
<PAGE>
Section 9.02. Certain Defined Terms Index. For purposes of this Agreement,
the following terms shall have their respective meaning as set forth in the
Section indicated below:
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
Acquisition Proposal................................ 5.02(h)
Action.............................................. 5.13(a)
Adjusted Stock Consideration Amount................. 1.02(c)(vi)
AEGON USA........................................... 1.09
Agreement .......................................... Introductory Paragraph
ASE................................................. 1.02(c)(iii)
Association......................................... 4.04
Award Arrangements.................................. 5.16(c)
Cash Payment........................................ 1.02(c)
Certificate......................................... 1.02(c)
Certificate of Merger............................... 1.01(a)
Closing............................................. 2.01
Closing Date........................................ 2.01
Code................................................ 1.07
Company............................................. Introductory Paragraph
Company Acquisition................................. 5.02(h)
Company Common Stock................................ 1.02(b)
Company Consolidated Financial Statements........... 3.06(b)
Company Controlled Group Liability.................. 3.13(b)
Company Disclosure Letter........................... Introductory Paragraph to
Art. 3
Company Employee Plans.............................. 3.13(a)
Company Employees................................... 5.15(b)
Company Foreign Plan................................ 3.13(a)
Company Insurance Subsidiary........................ 3.07
Company Reports..................................... 3.06(a)
Company Separate Accounts........................... 3.24
Company Stock Plans................................. 5.16(a)
Company Subsidiaries................................ 3.01(a)
Company Y2K Plan.................................... 3.22(b)
Confidentiality Agreement........................... 5.01
DGCL................................................ Recitals
Dissenting Shares................................... 1.08
Effective Time...................................... 1.01(a)
Environmental Law................................... 3.17(a)
ERISA............................................... 3.13(a)
Excess Change Amount................................ 1.02(c)(v)
Exchange Act........................................ 3.06(a)
Exchange Agent...................................... 1.03(a)
Exchange Fund....................................... 1.03(a)
Exchange Ratio...................................... 1.02(c)(vii)
Fee Payment Event................................... 5.03
Foreign Plan........................................ 4.13(a)
Funds............................................... 3.25(a)
Goldman Sachs....................................... 3.15
Governmental Entity................................. 3.05
HSR Act............................................. 3.05
Indemnified Parties................................. 5.13(a)
</TABLE>
A-46
<PAGE>
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
Initial Price...................................... 1.02(c)(i)
Insurance Laws..................................... 3.16(a)
Insurance Product(s)............................... 3.09(f)(i)
Intellectual Property.............................. 3.23
IRS................................................ 3.09(c)
Issuance........................................... 5.10(c)
Material Adverse Effect on Company................. 3.01(a)
Material Adverse Effect on Merger Partner.......... 4.01(a)
Merger ............................................ Recitals
Merger Partner..................................... Introductory Paragraph
Merger Partner Common Stock........................ 1.02(c)
Merger Partner Consolidated Financial Statements... 4.06(b)
Merger Partner Controlled Group Liability.......... 4.13(b)
Merger Partner Disclosure Letter................... Introductory Paragraph to
Art. 4
Merger Partner Employee Plans...................... 4.13(a)
Merger Partner Insurance Subsidiary................ 4.07
Merger Partner Preferred Stock..................... 4.02
Merger Partner Reports............................. 4.06(a)
Merger Partner Subsidiary.......................... 4.01(a)
Merger Partner Supplemental Disclosure Letter...... 4.05(b)
Merger Partner Y2K Plan............................ 4.20(b)
1940 Act........................................... 3.24
NYSE............................................... 3.05(b)
Options............................................ 5.16(a)
Percentage Price Change............................ 1.02(c)(iv)
Process Agent...................................... 8.12(b)
Proxy Statement.................................... 3.12
Registration Statement............................. 3.12
Retirement Plan.................................... 5.15(c)
SEC................................................ 3.06(a)
Securities Act..................................... 3.06(a)
Share Price........................................ 1.02(c)(iii)
Significant Subsidiary............................. 3.03
Stock Awards....................................... 5.16(c)
Stock Consideration Amount......................... 1.02(c)(ii)
Stockholders' Meeting.............................. 3.12
Sub................................................ Introductory Paragraph
Supplemental Disclosure Letter..................... 3.05
Surviving Corporation.............................. 1.01(a)
TLSAR.............................................. 5.16(b)
Violation.......................................... 3.05(a)(i)
</TABLE>
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered by its respective duly authorized officers, all as of
the date first above written.
AEGON N.V.
/s/ Donald J. Shepard
By: _________________________________
Name: Donald J. Shepard
Title:Member of Executive Board
TONY MERGER CORP.
/s/ Patrick S. Baird
By: _________________________________
Name: Patrick S. Baird
Title:President
TRANSAMERICA CORPORATION
/s/ Frank C. Herringer
By: _________________________________
Name: Frank C. Herringer
Title:Chairman and Chief Executive
Officer
A-48
<PAGE>
ANNEX A
EXCHANGE RATIO COMPUTATION EXAMPLES
For purposes of clarification, the following examples show the manner in
which the Exchange Ratio is computed in accordance with Section 1.02.
Example I (clause (B) of Section 1.02(c)(vii) applies)
Assumptions
Initial Price = $95.20
Share Price = $123.76
Calculations $123.76 - $95.20
Percentage Price Change = ----------------- = 0.3
$95.20
Excess Change = 0.3 - 0.2 = 0.1
Adjusted Stock Consideration Amount = $54.60 + 1/2[$54.60 . 0.1] =
$54.60 + $2.73 = $57.33
$ 57.33
Exchange Ratio = ---------- =0.46324
$123.76
Example II (clause (D) of Section 1.02(c)(vii) applies)
Assumptions
Initial Price = $95.20
Share Price = $66.64
Calculations
$66.64 - $95.20
Percentage Price Change = ---------------- = (0.3)
$95.20
Excess Change = (0.3) + 0.2 = (0.1)
Adjusted Stock Consideration Amount = $54.60 + 1/2[$54.60 . (0.1)] =
$54.60 + ($2.73) = $51.87
$51.87
Exchange Ratio = -------- = 0.77836
$66.64
A-49
<PAGE>
Appendix B
[LETTERHEAD OF GOLDMAN SACHS]
PERSONAL AND CONFIDENTIAL
- -------------------------
February 17, 1999
Board of Directors
Transamerica Corporation
600 Montgomery Street
24th Floor
San Francisco, California 94111
Ladies and Gentlemen:
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 $1.00
per share (the "Shares"), of Transamerica Corporation (the "Company") of the
Consideration (as defined below) to be received by the holders of Shares
pursuant to the Agreement and Plan of Merger, dated as of February 17, 1999,
between the Company and Aegon N.V. ("Aegon") (the "Agreement"). Pursuant to the
Agreement, the Company will be merged into a wholly-owned subsidiary of Aegon,
and each Share not owned by the Company, Aegon or Merger Sub or their
respective wholly-owned subsidiaries, will be converted into the right to
receive (i) $23.40 in cash and (ii) that number of shares, or fraction thereof,
of voting common stock, par value of fifty cents Dutch Guilder per share
("Aegon Stock"), of Aegon equal to the Exchange Ratio (as defined in the
Agreement) (collectively, the "Consideration"). Pursuant to the Agreement, the
Exchange Ratio shall provide for such a number of shares, or fraction thereof,
of Aegon Stock equal to a value of $54.60 in the event that the Share Price (as
defined in the Agreement) of the Aegon Stock is greater than or equal to $76.16
or lesser than or equal to $114.24, and equal to such other amounts as set
forth in the Agreement in all other circumstances.
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 the Company, having provided certain investment banking services
to the Company from time to time, including having acted as its financial
advisor in the sale of Transamerica Financial Services Holding Company to
Household International in 1997 and as dealer on several financings, and having
acted as its financial advisor in connection with, and having participated in
certain of the negotiations leading to, the Agreement. We also have acted as a
dealer in connection with the issuance of certain commercial paper by Aegon in
1996, and we may provide investment banking services to Aegon and its
affiliates in the future. 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 transactions and hold
securities, including derivative securities, of the Company or Aegon for its
own account and for the accounts of customers. As of the date hereof, Goldman,
Sachs & Co. accumulated a net long position of 7,117 Shares, a net short
position of 91,998 Aegon Stock and a net long position of options to purchase
346,704 shares of Aegon Stock.
<PAGE>
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
the Company for the five years ended December 31, 1997; Annual Reports to
Stockholders of Aegon for the five years ended December 31, 1997; Annual
Reports on Form 20-F of Aegon for the five years ended December 31, 1997;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
the Company and an interim earnings release of Aegon for the nine months ended
September 30, 1998; selected Statutory Annual Statements filed by the Company
and Aegon with the insurance departments of the states under the laws of which
they are respectively organized; certain internal financial analyses for the
Company and Aegon, each prepared by their respective managements; certain cost
savings and operating synergies projected by the managements of the Company and
Aegon to result from the transaction contemplated by the Agreement (the
"Synergies"); and certain financial forecasts for the Company prepared by
management of the Company. We also have held discussions with members of the
senior managements of the Company and Aegon 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. As you know, we requested but
did not receive financial statements of Aegon for the year ended December 31,
1998 and financial forecasts of Aegon for periods thereafter. Our review of
such matters was limited to a discussion with Aegon management. In addition, we
have reviewed the reported price and trading activity for the Shares and Aegon
Stock, compared certain financial and stock market information for the Company
and Aegon with similar information for certain other financial services
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the 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 (including information related to reserves
and related items), and have assumed such accuracy and completeness for
purposes of rendering this opinion. In that regard, we have assumed with your
consent that the Synergies prepared by managements of the Company and Aegon
have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the Company, and that such Synergies will
be realized in the amounts and time periods contemplated thereby. We are not
actuaries and our services did not include actuarial determinations or
evaluations by us or an attempt to evaluate actuarial assumptions. In addition,
we have not made an independent evaluation or appraisal of the assets and
liabilities (including any hedge or derivative positions) of the Company or
Aegon or any of their subsidiaries and we have not been furnished with any such
evaluation or appraisal. For purposes of United States federal income tax
imposed on corporations, we have assumed that the Merger will be treated as a
tax-free reorganization. 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 the Company or Aegon or on the contemplated benefits of the
transaction contemplated by the Agreement.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company 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.
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
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,
/s/ Goldman, Sachs & Co.
Goldman, Sachs & Co.
B-2
<PAGE>
Appendix C
THE GENERAL CORPORATION LAW
OF
THE STATE OF DELAWARE
SECTION 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 (e) 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 nonstock 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 (S)251(g)
of this title, (S)252, (S)254, (S)257, (S)258, (S)263 or (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 (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
(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.
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<PAGE>
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(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 prior to the meeting
shall notify each of its stockholders who was such on the record date for
such meeting with CIA respect to shares for which appraisal rights are
available pursuant to subsection (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
(S)253 of this title, each constituent corporation, either before the
effective data 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 twenty 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
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<PAGE>
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 prior to 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
prior to 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
C-3
<PAGE>
proceedings and may proceed to trial upon the appraisal prior to 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.
(i) The Court shall direct the payment of the fair market 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 uncertified
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 prior to 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.
(1) 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.
C-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
The Company has agreed to indemnify each member of the Executive Board and
the Supervisory Board and each officer of the Company if, in carrying out his
duties, such person incurs personal liability under civil law for the financial
consequences thereof, subject to the Company's reservation of its rights to
recover payment made under the indemnity from each such person to the fullest
extent permitted by applicable laws. The Company maintains an insurance policy
with a third party insurer insuring officers and directors against this type of
liability.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
The following documents are filed as exhibits to the Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization dated as of February
17, 1999 among AEGON N.V., Tony Merger Corp. and Transamerica
Corporation (included as Appendix A to the proxy statement-prospectus
included in this Registration Statement)
5.1 Opinion of Willem Van Vliet, General Counsel to the Company, regarding
the legality of the Common Shares
8.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P. as to certain
federal income tax consequences of the merger
8.2 Opinion of Wachtell, Lipton, Rosen & Katz as to certain federal income
tax consequences of the merger
23.1 Consent of Ernst & Young LLP
23.2 Consent of Ernst & Young Accountants
23.3 Consent of Willem Van Vliet (included in Exhibit 5.1)
23.4 Consent of Goldman, Sachs & Co.
23.5 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit
8.1)
23.6 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.2)
24.1 Powers of Attorney (included on signature page to Registration
Statement)
99.1 Opinion of Goldman, Sachs & Co. (included as Appendix B to the proxy
statement-prospectus included in this Registration Statement)
99.2 Proxy for holders of Transamerica Corporation common stock
</TABLE>
(b) Schedules
Not required.
Item 22. Undertakings
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's Annual Report pursuant to section 13(a) or
II-1
<PAGE>
section 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 herein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Act 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 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 as follows: that prior to 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 the immediately preceding paragraph, 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 Act, 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.
The Registrant hereby undertakes: (i) to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 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; and (ii) to arrange or provide for a facility in the U.S.
for the purpose of responding to such requests. The undertaking in subparagraph
(i) above includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding to
the request.
The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction and the company being
acquired involved herein, that was not the subject of any included in the
Registration Statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in The Hague, The Netherlands on June
17, 1999.
AEGON N.V.
/s/ K.J. Storm
By:----------------------------------
Name: K.J. Storm
Office: Chairman of the Executive
Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints K.J. Storm, D.J. Shepard and Craig D. Vermie,
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same with all
exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
following capacities on June 17, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ K.J. Storm Chairman of the
___________________________________________ Executive Board (Chief
K.J. Storm Executive Officer)
/s/ H.B. Van Wijk Executive Board Member
___________________________________________ (Principal Financial
H.B. Van Wijk and Accounting Officer)
/s/ P. Van De Geijn Executive Board Member
___________________________________________ (Executive Officer)
P. Van De Geijn
/s/ D.J. Shepard Executive Board Member
___________________________________________
D.J. Shepard
/s/ G. Van Schaik Chairman of the
___________________________________________ Supervisory Board of
G. Van Schaik Directors
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
/s/ H. De Ruiter Supervisory Board Member
___________________________________________ (Vice Chairman)
H. De Ruiter
/s/ F.J. De Wit Supervisory Board Member
___________________________________________
F.J. De Wit
/s/ O.J. Olcay Supervisory Board Member
___________________________________________
O.J. Olcay
/s/ G.A. Posthumus Supervisory Board Member
___________________________________________
G.A. Posthumus
/s/ M. Tabaksblat Supervisory Board Member
___________________________________________
M. Tabaksblat
/s/ K.M. H. Peijs Supervisory Board Member
___________________________________________
K.M. H. Peijs
/s/ D.G. Eustace Supervisory Board Member
___________________________________________
D.G. Eustace
/s/ J.F.M. Peters Supervisory Board Member
___________________________________________
J.F.M. Peters
/s/ Sir Michael Jenkins Supervisory Board Member
___________________________________________
Sir Michael Jenkins
/s/ W.F.C. Stevens Supervisory Board Member
___________________________________________
W.F.C. Stevens
</TABLE>
II-4
<PAGE>
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on June 17, 1999 by the
undersigned as the duly authorized representative of AEGON N.V. in the United
States.
/s/ Craig D. Vermie
_____________________________________
Craig D. Vermie
Cedar Rapids, Iowa
II-5
<PAGE>
Exhibit 5.1
June 16, 1999
Re: AEGON N.V.
Registration Statement on Form F-4
---------------------------------
Ladies and Gentlemen:
I am General Counsel to AEGON N.V. ("AEGON"), a Netherlands
corporation and am issuing this opinion in connection with the registration of
Common Shares, par value fifty cents NLG per share, (the "Shares") of AEGON
under the Securities Act of 1933, as amended, pursuant to the above-referenced
registration statement (the "Registration Statement").
I have not investigated the laws of any jurisdiction but The
Netherlands, and do not express an opinion on the laws of any jurisdiction but
The Netherlands.
I have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as I have deemed necessary or advisable
for the purpose of rendering this opinion, including the Articles of
Incorporation of AEGON.
Based upon the foregoing, I am of the opinion that:
(i) AEGON is duly incorporated, validly existing and in good standing
under the laws of The Netherlands; and
(ii) upon approval of the issuance of the Shares by the shareholders of
AEGON, the Shares will have been duly authorized and, when issued and delivered
thereof pursuant to the merger as described in the Registration Statement, will
be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to my name under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
<PAGE>
This opinion is rendered solely to you in connection with the filing
of the Registration Statement. This opinion may not be relied upon by you for
any other purpose or relied upon by or furnished to any other person without my
prior written consent.
Very truly yours,
/s/ Willem Van Vliet
<PAGE>
Exhibit 8.1
[Letterhead of LeBoeuf, Lamb, Greene & MacRae, L.L.P.]
[Form of Tax Opinion]
D R A F T
June 17, 1999
AEGON N.V.
Mariahoeveplein 50
2591 TV The Hague
The Netherlands
Ladies/Gentlemen:
We have acted as special counsel to AEGON N.V., a company formed under
the laws of the Netherlands ("AEGON"), in connection with the proposed merger
(the "Merger") of Transamerica Corporation, a Delaware corporation
("Transamerica") with and into Tony Merger Corp., a Delaware corporation
("Merger Sub") and a direct wholly-owned subsidiary of AEGON pursuant to the
Agreement and Plan of Merger and Reorganization dated as of February 17, 1999,
among AEGON, Merger Sub and Transamerica (the "Agreement"). At your request, in
regard to the filing of the Registration Statement of AEGON on Form F-4 filed
with the Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), we are rendering our opinion concerning certain U.S.
federal income tax consequences of the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of AEGON and the consent of Transamerica, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of AEGON and Transamerica
dated the date hereof, and have assumed that such statements and representations
will be complete and accurate as of the Effective Time and that all
representations made to the knowledge of any person or entity or with similar
qualification are and will be true and correct as if made without such
qualification. We have also relied upon the accuracy of the Registration
Statement and the proxy statement-prospectus of AEGON and Transamerica (the
"Proxy Statement-Prospectus") included therein. Furthermore, we have made no
independent investigation with regard to the facts set forth in the Proxy
Statement-Prospectus and the Registration Statement. Any capitalized term used
and not defined herein has the meaning given to it in the Proxy Statement-
Prospectus or the appendices thereto (including the Agreement).
<PAGE>
In connection with our opinion addressing the transactions
contemplated by the Agreement, we have assumed, with the consent of AEGON, that:
(i) the transactions contemplated by the Agreement will be consummated in
accordance therewith and as described in the Proxy Statement-Prospectus (and no
transaction or condition found therein and material to this opinion will be
waived by any party); (ii) all representations and facts set forth in the
Agreement are true, complete and accurate as of the date hereof and will be as
of the Effective Time, (iii) the Merger will qualify as a statutory merger under
the applicable laws of the State of Delaware; and (iv) the Merger will be
reported by AEGON, Merger Sub and Transamerica on their respective U.S. federal
income tax returns in a manner consistent with the opinion set forth below.
Based upon and subject to the foregoing, it is our opinion, under
currently applicable U.S. federal income tax law, that the Merger will be
treated as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986,as amended.
It should be noted that although this letter represents our opinion
concerning the matters specifically discussed, it is not binding on the courts
or on any administrative agency, including the Service, and a court or agency
may act or hold to the contrary. We undertake no obligation to update this
letter or our opinion at any time after the Closing Date. Our opinion is
provided to you as a legal opinion only, and not as a guaranty or warranty, and
is limited to the specific transactions, documents and matters described above.
We express no opinion as to the truth, accuracy or completeness of any facts set
forth in the Proxy Statement-Prospectus or the Registration Statement or any
representation relied upon in rendering our opinion and no opinion may be
implied or inferred beyond that which is expressly stated in this letter. If
any fact, representation or assumption described above or contained in the
Agreement, the Proxy Statement-Prospectus or Registration Statement is not true,
correct and complete, or in the event of a change in law after the date hereof
adversely affecting the conclusions reached in this letter, our opinion shall be
void and of no force or effect.
This opinion does not address the U.S. federal income tax consequences
of the Merger to Transamerica stockholders in special situations, such as
dealers in securities, traders in securities who elect to apply a mark-to-market
method of accounting, financial institutions, tax-exempt organizations,
insurance companies, persons holding shares of Transamerica common stock or
shares of AEGON common shares as part of a hedging, straddle, conversion or
other integrated transaction, non-U.S. persons, persons whose functional
currency is not the U.S. dollar, persons subject to the U.S. alternative minimum
tax, persons who acquired shares of Transamerica common stock pursuant to an
employee stock option or otherwise as compensation and any Transamerica
stockholder that owns (actually or constructively) five percent or more of
either the total voting power or the total value of the stock of AEGON
immediately after the Merger. Moreover, this opinion relates solely to certain
U.S. federal income tax consequences of the Merger, and no opinion is expressed
as to the tax consequences of the Merger under any state, local or foreign laws
or under any U.S. federal
<PAGE>
AEGON N.V.
______________, 1999
Page 3
laws other than those pertaining to the income tax or with respect to matters
not expressly referenced herein.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
reference to us under the caption "THE PROPOSED MERGER - Material Federal Income
Tax Consequences." In giving such consent, we do not hereby admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
We are furnishing this opinion to you solely in connection with the
filing of the Registration Statement, and our opinion may not be relied upon,
circulated, distributed, provided to, quoted or otherwise referred to by any
person other than you for any other purpose and no person may be subrogated to
any rights you have in connection with our opinion, provided, however, without
limiting the generality of the foregoing, you may provide our opinion to
governmental regulatory authorities for their inspection, provided, further,
however, that in no event may this opinion be relied upon, circulated or quoted
by any such governmental regulatory authority or by any other party as a result
of any such inspection.
Very truly yours,
/s/ LeBoeuf, Lamb, Greene & MacRae, L.L.P
<PAGE>
EXHIBIT 8.2
[Letterhead of Wachtell, Lipton, Rosen & Katz]
[Form of Tax Opinion]
June 17, 1999
Transamerica Corporation
The Transamerica Pyramid
600 Montgomery Street
San Francisco, California 94111
Ladies/Gentlemen:
We have acted as special counsel to Transamerica Corporation, a Delaware
corporation ("Transamerica"), in connection with the proposed merger (the
"Merger") of Transamerica with and into Tony Merger Corp., a Delaware
corporation ("Merger Sub") and a direct wholly-owned subsidiary of AEGON N.V., a
company formed under the laws of the Netherlands ("AEGON"), pursuant to the
Agreement and Plan of Merger and Reorganization (the "Agreement") dated as of
February 17, 1999, among AEGON, Merger Sub and Transamerica. At your request,
in connection with the filing of the Registration Statement of AEGON on Form F-4
filed with the Securities and Exchange Commission in connection with the Merger
(the "Registration Statement"), we are rendering our opinion concerning certain
federal income tax consequences of the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of Transamerica and the consent of AEGON, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of Transamerica and AEGON
dated the date hereof, and have assumed that such statements and representations
will be complete and accurate as of the Effective Time and that all
representations made to the knowledge of any person or entity or with similar
qualification are and will be true and correct as if made without such
qualification. We have also relied upon the accuracy of the Registration
Statement and the proxy statement-prospectus of Transamerica and AEGON included
therein (the "Proxy Statement-Prospectus"). Any capitalized term used and not
defined herein has the meaning given to it in the Proxy Statement-Prospectus or
the appendices thereto (including the Agreement).
<PAGE>
Transamerica Corporation
_________ __, 1999
Page 2
We have also assumed that: (i) the transactions contemplated by the
Agreement will be consummated in accordance therewith and as described in the
Proxy Statement-Prospectus (and no transaction or condition found therein and
material to this opinion will be waived by any party); (ii) the Merger will
qualify as a statutory merger under the applicable laws of the State of
Delaware; and (iii) the Merger will be reported by AEGON, Merger Sub and
Transamerica on their respective federal income tax returns in a manner
consistent with the opinion set forth below.
Based upon and subject to the foregoing, it is our opinion, under currently
applicable United States federal income tax law, that the Merger will be treated
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended.
This opinion does not address the federal income tax consequences of the
Merger to Transamerica stockholders in special situations, such as dealers in
securities, traders in securities who elect to apply a mark-to-market method of
accounting, financial institutions, tax-exempt organizations, insurance
companies, persons holding shares of Transamerica common stock or shares of
AEGON common shares as part of a hedging, straddle, conversion or other
integrated transaction, non-U.S. persons, persons whose functional currency is
not the U.S. dollar, persons subject to the U.S. alternative minimum tax,
persons who acquired shares of Transamerica common stock pursuant to an employee
stock option or otherwise as compensation and any Transamerica stockholder that
owns (actually or constructively) five percent or more of either the total
voting power or the total value of the stock of AEGON immediately after the
Merger. Moreover, this opinion relates solely to certain federal income tax
consequences of the Merger, and no opinion is expressed as to the tax
consequences of the Merger under any state, local or foreign laws or under any
federal laws other than those pertaining to the income tax.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement, and to the
reference to us under the caption "THE PROPOSED MERGER -- Material Federal
Income Tax Consequences of the Merger." In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
<PAGE>
Transamerica Corporation
_________ __, 1999
Page 3
We are furnishing this opinion to you solely in connection with the filing
of the Registration Statement, and this opinion is not to be relied upon,
circulated, quoted or otherwise referred to by any person for any other purpose.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Kat
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary
Historical Financial Information" and "Experts" and to the incorporation by
reference of our report on the consolidated financial statements of Transamerica
Corporation dated January 22, 1999 in the Registration Statement for the
registration of the Common Shares, par value fifty cents Dutch Guilder per share
on Form F-4 filed by AEGON N.V.
/s/ Ernst & Young LLP
San Francisco, California
June 17, 1999
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Summary Historical Financial Information" and to the incorporation by reference
in the Proxy Statement of Transamerica Corporation, that is made a part of the
Registration Statement (Form F-4) and Prospectus of AEGON N.V. for the
registration of its common shares to be issued for the acquisition of
Transamerica Corporation, of our report dated March 3, 1999, with respect to the
consolidated financial statements and schedules of AEGON N.V. included in its
Annual Report (Form 20-F) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
The Hague, June 16, 1999
/s/ Ernst & Young
- --------------------------------
Ernst & Young Accountants
<PAGE>
Exhibit 23.4
Goldman
Sachs
PERSONAL AND CONFIDENTIAL
June 16, 1999
Board of Directors
Transamerica Corporation
600 Montgomery Street
24th Floor
San Francisco, California 94111
Re: Registration Statement of Aegon N.V. relating to shares of Aegon Stock
being registered in connection with the Agreement and Plan of Merger between
Transamerica Corporation and Aegon, N.V.
Ladies and Gentlemen:
Reference is made to our opinion letter dated February 17, 1999, with respect to
the fairness from a financial point of view to the holders of the outstanding
shares of Common Stock, par value $1.00 per share (the "Shares"), of
Transamerica Corporation (the "Company") of the Consideration (as defined below)
to be received by the holders of Shares pursuant to the Agreement and Plan of
Merger, dated as of February 17, 1999, between the Company and Aegon N.V.
("Aegon") (the "Agreement"). Pursuant to the Agreement, the Company will be
merged into a wholly owned subsidiary of Aegon, and each Share not owned by the
Company, Aegon or Merger Sub or their respective wholly owned subsidiaries will
be converted into the right to receive (i) $23.40 in cash and (ii) that number
of shares, or fraction thereof, of voting common stock, par value of fifty cents
Dutch Guilder per share ("Aegon Stock"), of Aegon equal to the Exchange Ratio
(as defined in the Agreement) (collectively, the "Consideration"). Pursuant to
the Agreement, the Exchange Ratio shall provide for such a number of shares, or
fraction thereof, of Aegon Stock equal to a value of $54.60 in the event that
the Share Price (as defined in the Agreement) of the Aegon Stock is greater than
or equal to $76.16 or lesser than or equal to $114.24, and equal to such other
amounts as set forth in the Agreement in all other circumstances.
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of the Company 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
<PAGE>
Board of Directors
Transamerica Corporation
June 16, 1999
Page Two
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 Transamerica's Financial Advisor," "THE
PROPOSED MERGER-Background of the Merger," "-Recommendation of the The
Transamerica Board of Directors" and "-Opinion of Financial Advisor" 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.
Very truly yours,
/s/ Goldman, Sachs & Co.
- --------------------------------
(GOLDMAN, SACHS & CO.)
<PAGE>
EXHIBIT 99.2
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
TRANSAMERICA CORPORATION
The undersigned hereby appoints Shirley H. Buccieri, Edgar H. Grubb and Frank C.
Herringer, each with power of substitution, as proxies of the undersigned, to
attend the Special Meeting of Stockholders of Transamerica Corporation, to be
held at the Wattis Theater, San Francisco Museum of Modern Art, 151 Third
Street, San Francisco, California, on July 20, 1999 at 10:00 a.m., and any
adjournment or postponement thereof, and to vote the number of shares of common
stock, $1.00 par value, of Transamerica Corporation which the undersigned would
be entitled to vote if personally present in the manner indicated on this form
and in their discretion on any other matter which may properly come before the
Special Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, WILL BE
VOTED FOR THE FOLLOWING PROPOSAL. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN
AND RETURN THIS CARD, VOTE BY TELEPHONE OR ATTEND THE MEETING AND VOTE IN
PERSON.
PROXY
TRANSAMERICA
CORPORATION
SPECIAL
MEETING OF
STOCKHOLDERS
JULY [ ], 1999
[LOGO]
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
/\ DETACH ABOVE CARD, MARK, DATE, SIGN AND MAIL IN THE POSTAGE-PAID ENVELOPE
PROVIDED /\
<PAGE>
Please mark your 9395
[X] votes as in this
example.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, WILL BE
VOTED FOR THE FOLLOWING PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.
<TABLE>
<S> <C>
FOR AGAINST ABSTAIN
1. Approving and adopting the Agreement and Plan of Merger and Reorganization, [_] [_] [_]
dated as of February 17, 1999, among AEGON N.V., Tony Merger Corp. and
Transamerica Corporation.
Receipt of the accompanying Notice of
Special Meeting of Stockholders and the
related Proxy Statement/Prospectus is
hereby acknowledged.
Please mark, date, sign and return in the
accompanying envelope. Please sign
exactly as name(s) appear hereon. Joint
owners should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such.
------------------------------------------------
------------------------------------------------
SIGNATURE(S) DATE
</TABLE>
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL /\
TRANSAMERICA CORPORATION
***IF YOU WISH TO TELEPHONICALLY AUTHORIZE A PROXY TO VOTE YOUR SHARES, PLEASE
READ THE INSTRUCTIONS BELOW
Have your proxy card in hand. Decide how you wish your shares to be voted.
. On a Touch Tone Telephone, call toll-free 1-877-779-8683: 24 hours per day, 7
days a week.
. You will be asked to enter the control number listed in the box above.
. Follow the telephone voting instructions.
Your telephone vote authorizes the named proxies in the same manner as if you
marked, dated, signed and returned the proxy card.
If you choose to vote your shares by telephone, there is no need for you to mail
back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
