UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
ReliaStar Financial Corp.
--------------------------------
(Name of Issuer)
Common Stock, par value $0.01
---------------------------------
(Title of Class of Securities)
75952U10
------------------------------------
(CUSIP Number)
B. Scott Burton
Chief Counsel
ING America Insurance Holdings, Inc.
5780 Powers Ferry Road, NW
Atlanta, GA 30327-4823
(770) 980-5637
------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 30, 2000
----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
(Continued on following pages)
(Page 1 of 8 Pages)
<PAGE>
- ------------------ ----------------------
CUSIP NO. 75952U10 13D PAGE 2 OF 8 PAGES
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ING Groep N.V.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A) [ ]
(B) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
The Netherlands
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 8,873,630 (See Item 4)
EACH ------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,873,630 (See Item 4)
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
8,873,630
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.9% (See Item 5)
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
HC
- --------------------------------------------------------------------------------
<PAGE>
- ------------------ ----------------------
CUSIP NO. 75952U10 13D PAGE 3 OF 8 PAGES
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
ING America Insurance Holdings, Inc. 52-1222820
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A) [ ]
(B) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 8,873,630 (See Item 4)
EACH ------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,873,630 (See Item 4)
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
8,873,630
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.9% (See Item 5)
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
HC
- --------------------------------------------------------------------------------
<PAGE>
Item 1. SECURITY AND ISSUER.
This statement relates to the common stock of ReliaStar Financial
Corp., a Delaware corporation (the "Company"), par value $0.01 per share (the
"Common Stock"), including the associated right to purchase one-twentieth of a
share of Series A Preferred Stock, par value $0.01 per share, of the Company
(each a "Right" and, together with the Common Stock, a "Share"). The Company has
its principal executive offices at 20 Washington Avenue South, Minneapolis, MN
55401.
Item 2. IDENTITY AND BACKGROUND.
(a) and (b) This Schedule 13D is filed on behalf of ING Groep N.V.
("ING"), a corporation organized under the laws of the
Netherlands, and ING America Insurance Holdings, Inc.
("AIH"), a Delaware corporation and a wholly-owned subsidiary
of ING. AIH and ING are sometimes referred to herein as
"Reporting Persons".
AIH is an insurance holding company whose subsidiaries
are engaged principally in insurance and related businesses.
The principal executive office and principal place of
business of AIH is located at 5780 Powers Ferry Rd, N.W.,
Atlanta, Georgia 30327-4823.
ING is a financial services holding company whose
subsidiaries are engaged principally in the insurance and
banking businesses. The principal executive office and
principal place of business of ING is located at
Strawinskylaan 2631, 1077 ZZ Amsterdam, P.O. Box 810, 1000
Av. Amsterdam, The Netherlands.
99.9% of the ordinary shares of ING are owned by, and
registered in the name of, Stichting Administratiekantoor ING
Groep, a Netherlands Trustee (the "Trust") and the issuer of
Bearer Depositary Receipts of ING Groep N.V.
Other than the executive officers and directors of AIH,
the executive officer's and the members of the Executive and
Supervisory Boards of ING, and the members of the Management
Board of the Trust, there are no persons or corporations
controlling or ultimately in control of AIH or ING,
respectively. The name and business address of each executive
officer and director of AIH, each executive officer and
member of each of the Supervisory or Executive Boards of ING
and each member of the Management Board of the Trust are set
forth in Exhibit 1 hereto and incorporated herein by
reference.
(c) The present principal occupation of each executive
officer and director of AIH, each executive officer and
member of each of the Supervisory or Executive Boards of ING
and each member of the Management Board of the Trust is set
forth in Exhibit 1 hereto and incorporated herein by
reference.
(d) During the last five years, neither AIH or ING nor, to the
best of their knowledge, any of the persons listed in Exhibit
1 hereto has been convicted in any criminal
<PAGE>
proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither AIH or ING nor, to the
best of their knowledge, any of the persons listed in Exhibit
1 hereto has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or
State securities laws, or finding any violation with respect
to such laws, and which judgment, decree or final order was
not subsequently vacated.
(f) The citizenship of each of the directors and executive
officers of AIH, the executive officers and members of the
Executive and Supervisory Boards of ING and each member of
the Management Board of the Trust is set forth on Exhibit 1
hereto and incorporated herein by reference.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4 below, pursuant to a stock option
agreement, dated as of April 30, 2000, by and between AIH and the Company (the
"Stock Option Agreement"), the Company has granted AIH an irrevocable right to
purchase (the "Option") up to 8,873,630 Shares at a price equal to $54.00 per
share. The source of funds, if any, that AIH will use to pay the exercise price
under the Stock Option Agreement will be determined at the time of such
exercise.
Item 4. PURPOSE OF THE TRANSACTION.
A. MERGER AGREEMENT
On April 30, 2000, the Company, ING, AIH and SHP Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of AIH ("Merger Sub"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant
to which, subject to certain conditions, each Share (other than Shares held by
the Company's ESOP) shall be converted into the right to receive $54.00 in cash
and Merger Sub shall be merged with and into the Company with the Company being
the surviving corporation. The consummation of the Merger contemplated by the
Merger Agreement (the "Closing") will take place two business days after the
satisfaction of certain conditions, including the expiration of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the vote of the stockholders of the Company.
Contemporaneously with the execution of the Merger Agreement, as a
condition and inducement to ING's, AIH's and Merger Sub's willingness to enter
into the Merger Agreement, the Company and AIH entered into the Stock Option
Agreement. Pursuant to the Stock Option Agreement, the Company granted to AIH
the Option to purchase up to 8,873,630 Shares of the Company, subject to
adjustment in certain circumstances to prevent dilution; provided, however, in
no event shall the number of Shares for which the Option is exercisable exceed
9.9% of the Shares issued and outstanding at the time of exercise. The Option is
exercisable at $54.00 per Share, subject to adjustments to account for
adjustments made in the number of Shares that may be purchased upon exercise of
such Option. The Option is non transferable, except to an affiliate of AIH.
<PAGE>
AIH may not exercise the Option unless a Triggering Event has occurred.
A "Triggering Event" shall have occurred if the Merger Agreement is terminated
and AIH thereby becomes entitled to receive the termination fee pursuant to
Section 8.5(b) of the Merger Agreement.
A conformed copy of the Merger Agreement is attached hereto as Exhibit
2. A conformed copy of the Stock Option Agreement is attached hereto as Exhibit
3.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The total number of Shares that AIH and ING would beneficially own upon
exercise of the Option is 8,873,630, which represents 9.9% of the total
outstanding Shares.1 The foregoing calculation is based on the
89,632,632 Shares of the Company outstanding as of April 28, 2000. To
the knowledge of the Reporting Persons, except as set forth in this
Schedule 13D, none of the Reporting Persons nor any of the persons
listed on Exhibit 1, beneficially owns any Shares other than for the
account of customers in the normal course of business of ING's
broker-dealer, asset management and insurance operations.
(b) The Reporting Persons will share the power to vote and to dispose of
all of the Shares and the power to dispose of the Option.
(c) To the best of their knowledge, other than for the account of customers
in the normal course of business of ING's broker-dealer, asset
management and insurance operations no transactions in the Shares were
effected by ING or AIH during the past sixty days.2
(d) Except as set forth in this Schedule 13D, to the knowledge of the
Reporting Persons, no person other than the Reporting Persons has the
right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of Shares covered by this Schedule 13D.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERTAKINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Other than the Merger Agreement and the Stock Option Agreement (each as
described in Item 4), there are no contracts, arrangements, understandings or
relationships between ING and AIH, or among ING, AIH and any other person with
respect to any securities of the Company.
- --------------------
1 ING Barings Furman Selz holds approximately 365,261 (.43%) Shares in a
custodial account and two ING Mutual Funds, GCG Trust Total Return Series
and GCG Trust Research Series, own 99,000 and 103,000 Shares, respectively.
2 GCG Trust Total Return Series, an ING Mutual Fund, sold 2000 Shares on
May 1, 2000 in the normal course of business.
<PAGE>
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Identity of executive officers and directors of AIH, the executive
officers and members of the Executive and Supervisory Boards of
ING and the members of the Management Board of the Trust.
Exhibit 2 Agreement and Plan of Merger, dated as of April 30, 2000, by and
among the Company, ING, AIH and SHP Acquisition Corp.
Exhibit 3 Stock Option Agreement, dated as of April 30, 2000, by and between
the Company and AIH.
Exhibit 4 Joint Filing Agreement.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ING GROEP N.V.
By: /s/ B. Scott Burton
-----------------------------
AUTHORIZED SIGNATORY
ING AMERICA INSURANCE
HOLDINGS, INC.
By: /s/ B. Scott Burton
-----------------------------
B. Scott Burton
(Senior Vice President,
Chief Counsel and
Assistant Secretary)
Dated: May 9, 2000
Exhibit 1
DIRECTORS AND EXECUTIVE OFFICERS OF ING AMERICA INSURANCE HOLDINGS, INC.,
EXECUTIVE OFFICERS AND MEMBERS OF THE SUPERVISORY AND EXECUTIVE BOARDS
OF ING GROEP N.V. AND MEMBERS OF THE MANAGEMENT BOARD
OF STICHTING ADMINISTRATIEKANTOOR ING GROEP
The name, present principal occupation or employment, and the name of
any corporation or other organization in which such employment is conducted, of
each director and executive officer of ING America Insurance Holdings, Inc.
("AIH"), each executive officer and member of the Supervisory Board and the
Executive Board of ING Groep N.V. ("ING") and each member of the Management
Board of the Trust, as applicable, is set forth below. Except as set forth
below, each of the directors and executive officers of AIH is a citizen of the
United States and each of the executive officer and members of the Supervisory
and Executive Board of ING and the Management Board of the Trust are citizens of
the Netherlands. The business address of each director and executive officer of
AIH is 5780 Powers Ferry Road, N.W., Atlanta, Georgia 30327-4823, unless
otherwise noted. The business address of each executive officer and member of
the Supervisory and the Executive Board and each member of the Management Board
is Strawinskylaan 2631, 1077 ZZ Amsterdam, the Netherlands. Unless otherwise
indicated, each occupation set forth opposite an executive officer's or
Director's name refers to employment with ING.
<TABLE>
<CAPTION>
NAME AND POSITION WITH ING GROEP N.V. PRESENT PRINCIPAL
AND CITIZENSHIP OCCUPATION OR EMPLOYMENT
- ----------------------------------------------------------- --------------------------------------------------
<S> <C>
E. Kist, Chairman of Executive Board since May 2, 2000.
Chairman of Executive Board Vice-Chairman of Executive Board since April 1,
Dutch 1999, and member of Executive Board since 1993.
J.H.M. Lindenbergh, Member of Executive Board since 1995.
Member of Executive Board Vice-Chairman of the Executive Committee of ING
Dutch Nederland since 1988.
C. Maas, Chief Financial Officer since 1996 and member of
Member of Executive Board the Executive Board since 1992.
Dutch
A.H.G. Rinnooy Kan, Member of Executive Board since September 1996.
Member of Executive Board
Dutch
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH ING GROEP N.V. PRESENT PRINCIPAL
AND CITIZENSHIP OCCUPATION OR EMPLOYMENT
- ----------------------------------------------------------- --------------------------------------------------
<S> <C>
M. Tilmant, Member of Executive Board since 1998. Chairman
Member of Executive Board of Executive Board of Bank Brussels Lambert from
Belgian 1997 to 1998. Employed by Bank Brussels since
1992, where he was appointed Chairman of its
Executive Board in 1997.
F.S. Hubbell, Member of Executive Board. Chairman of
Member of Executive Board Executive Committee of ING Financial Services
American International since October 1, 1999.
D. Robins, Member of Executive Board. Chairman of ING
Member of Executive Board Baring since January 1, 2000, and Chief
British Executive Officer of ING Baring since October 1,
1998.
Godfried van der Lugt Member of Executive Board
Member of Executive Board
Dutch
C.A.J. Herkstroter, Chairman of Supervisory Board since May 7, 1999
Chairman of Supervisory Board and member since May 8, 1998.
Dutch
G. Verhagen, Vice-Chairman of Supervisory Board since 1996
Vice-Chairman of Supervisory Board and member since 1994.
Dutch
M. Ververs, Vice-Chairman of Supervisory Board since May
Vice-Chairman of Supervisory Board 1996 and member since 1994.
Dutch
L.A.A. van der Berghe, Member of Supervisory Board since 1994.
Member of Supervisory Board Partner in the De Vlerick Louvain Ghent
Belgian Management School and Professor of Financial
Conglomerates at Erasmus University, located
at Bellevue 6, 9050 Ledeberge-Gent, Rotterdam.
J.W. Berghuis, Member of Supervisory Board since 1987.
Member of Supervisory Board
Dutch
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH ING GROEP N.V. PRESENT PRINCIPAL
AND CITIZENSHIP OCCUPATION OR EMPLOYMENT
- ----------------------------------------------------------- --------------------------------------------------
<S> <C>
P.F. van der Heijden, Member of Supervisory Board since 1995.
Member of Supervisory Board Director and Professor of the Hugo Sinzheimer
Dutch Institute for Labour and Law at the University
of Amsterdam; PO Box 1030, 1000 BA Amsterdam.
Adrianus Gerardus Jacobs, Member of Supervisory Board since 1998.
Member of Supervisory Board
Dutch
J. Kamminga, Member of Supervisory Board since 1994;
Member of Supervisory Board Queen's Commissioner for the Province of
Dutch Gelderland since 1997, Oude Oeverstraat 120,
6811 JZ Arnhem.
P.J.A. baron de Meester, Member of Supervisory Board since 1998.
Member of Supervisory Board Chairman of the Executive Board of Besix N.V.
Belgian Chairman of Belgische Beton Maatschappij,
Gemeenschappenlaan 100, 1200 Brussel.
O.H.A. van Royen, Member of Supervisory Board since 1994.
Member of Supervisory Board
Dutch
J. Stekelenburg, Member of Supervisory Board since 1997. Mayor
Member of Supervisory Board of Tilburg, Stadhuisplein 130, 5038 TC,
Dutch Tilburg.
J.D. Timmer, Member of Supervisory Board since October 1,
Member of Supervisory Board 1996.
Dutch
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH ING AMERICA INSURANCE PRESENT PRINCIPAL OCCUPATION OR
HOLDINGS, INC. AND CITIZENSHIP EMPLOYMENT
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
R. Glenn Hilliard Director, Chairman and Chief
Director Executive Officer of ING North American Insurance
American Corporation.
Fred A. Deering Director.
Director
American
Robert P. Forrestal Director; of Counsel, Smith, Gambrell & Russell,
Director 1230 Peachtree Street, N.E., Atlanta, GA 30309.
American
Gayle L. Greer Director; Chief Executive Officer - gF2.NET, Inc.
Director C/o Donernet
American 655 Broadway, Ste. 725
Denver, CO 80203.
James L. Heskett Director; UPS Foundation Professor Emeritus of
Director Business Logistics - Harvard University Graduate
American School of Business, Humphrey House II,
Soldiers Field Road
Boston, MA 02163.
Frederick S. Hubbell Director, Member of Executive Board of ING Groep N.V.
Director
American
Richard S. Ingham, Jr. Director, Asterik, Inc.
2848 E. Oakland Park Boulevard
Ft. Lauderdale, FL 33306.
Lynn H. Johnston Director.
Ewald Kist Director. Member of Executive Board of ING Groep N.V.
Director
Dutch
E. Cody Laird, Jr. Director.
Robert E. Lee Director.
Michael Shannan Director; President & CEO - KSL Recreation
Corporation
55-880 PGA West Boulevard
La Quinta, CA 92253.
Stephen K. West Director; Senior Counsel, Sullivan & Cromwell, 125
Broad Street, NY, NY 10004-2498.
Richard S. White Director.
Joseph H. Youngs Director.
</TABLE>
<PAGE>
EXECUTIVE OFFICERS OF AIH
- -------------------------
R. Glenn Hilliard Chairman and Chief Executive Officer
Michael W. Cunningham Executive Vice President-
Chief Financial Officer
Keith Gubbay Executive Vice President-
Corporate Development
P. Randall Lowery Executive Vice President-
Chief Actuary
Mark A. Tullis Executive Vice President-
General Manager-Strategy and Operations
<PAGE>
NAME AND POSITION WITH PRESENT PRINCIPAL OCCUPATION OR
THE TRUST AND CITIZENSHIP EMPLOYMENT
- -------------------------- --------------------------------------------------
J.H. Hulshof, 68 Member since January 22, 1991.
"B" Member
Dutch
H. de Korver, 68 Member since May 13, 1995.
"B" Member
Dutch
M. Ververs, 67 Member since November 21, 1996. Member of
"A" Member Supervisory Board of ING Groep N.V.
Dutch
J.W.M. Simons, 65 Member since September 22, 1998.
"B" Member
Dutch
T. Regtuijt, 62 Member since February 1, 1999.
"B" Member
Dutch
H.J. Blaisse, 47 Member since December 14, 1999. Partner of Schut &
"B" Member Grosheide, van Boshuizenstraat 12
Dutch Amsterdam, the Netherlands
C.A.J. Herkstroter, 62 Member since December 14, 1999. Member of
"A" Member Supervisory Board of ING Groep N.V.
Dutch
EXECUTION COPY
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
Among
ING GROEP N.V.,
ING AMERICA INSURANCE HOLDINGS, INC.,
SHP ACQUISITION CORP.
and
RELIASTAR FINANCIAL CORP.
Dated as of April 30, 2000
EXECUTION COPY
<PAGE>
TABLE OF CONTENTS
Page
RECITALS
ARTICLE I
The Merger; Closing; Effective Time
1.1 The Merger...............................................................1
1.2 Closing..................................................................2
1.3 Effective Time...........................................................2
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1 The Certificate of Incorporation.........................................2
2.2 The By-Laws..............................................................2
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1 Directors................................................................3
3.2 Officers.................................................................3
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1 Effect on Capital Stock..................................................3
(a) Merger Consideration..............................................3
(b) Cancellation of Shares............................................4
(c) Merger Sub........................................................4
4.2 Exchange of Cash for Shares..............................................4
(a) Paying Agent......................................................4
(b) Payment Procedures................................................4
-i-
EXECUTION COPY
<PAGE>
(c) Transfers.........................................................5
(d) Termination of Payment Fund.......................................5
(e) Lost, Stolen or Destroyed Certificates............................5
(f) Withholding of Tax................................................6
4.3 Dissenters' Rights.......................................................6
4.4 Adjustments to Prevent Dilution..........................................6
4.5 ESOP Shares..............................................................7
ARTICLE V
Representations and Warranties
5.1 Representations and Warranties of the Company............................8
(a)(i) Organization, Good Standing and Qualification.....................8
(b) Capital Structure.................................................9
(c) Corporate Authority; Approval and Fairness.......................10
(d) Governmental Filings; No Violations..............................11
(e) Statutory Reports; Company Reports; Financial Statements.........12
(f) Absence of Certain Changes.......................................13
(g) Litigation and Liabilities.......................................14
(h) Employee Benefits................................................15
(i) Compliance with Laws; Permits....................................18
(j) Takeover Statutes................................................20
(k) Environmental Matters............................................20
(l) Taxes............................................................21
(m) Labor Matters....................................................23
(n) Insurance........................................................24
(o) Intellectual Property............................................24
(p) Rights Plan......................................................25
(q) Brokers and Finders..............................................25
(r) Insurance Business...............................................25
(s) Liabilities and Reserves.........................................26
(t) Separate Accounts; Investment Advisor............................27
(u) Material Contracts...............................................28
(v) Investment Contracts, Fund Clients and Advisory Clients..........28
(w) Company Broker/Dealers...........................................30
(v) Bank Regulatory Matters..........................................31
5.2 Representations and Warranties of ING, Parent and Merger Sub............32
(a) Capitalization...................................................32
(b) Organization, Good Standing and Qualification....................33
(c) Corporate Authority..............................................33
(d) Governmental Filings; No Violations..............................33
-ii-
EXECUTION COPY
<PAGE>
(e) ING Reports......................................................34
(g) Adequate Funds...................................................35
ARTICLE VI
Covenants
6.1 Interim Operations; Operation of Businesses.............................35
6.2 Acquisition Proposals...................................................38
6.3 Accuracy of Prospectus/Proxy Statement..................................40
6.4 Shareholders Meeting....................................................40
6.5 Filings; Other Actions; Notification....................................40
6.6 Access..................................................................42
6.7 Stock Exchange..........................................................43
6.8 Publicity...............................................................43
6.9 Benefits; Company Options...............................................43
6.10 Expenses................................................................45
6.11 Indemnification; Directors' and Officers' Insurance.....................45
6.12 Compliance with 1940 Act Section 15.....................................47
6.13 Fund Client Contracts, Distribution Plans and Boards....................47
6.14 Non-Fund Advisory Contracts.............................................48
6.15 Qualification of the Fund Clients; Fund Client Boards...................48
6.16 Other Actions by the Company and Parent.................................48
(a) Rights...........................................................48
(b) Takeover Statute.................................................48
6.17 Appointments............................................................49
ARTICLE VII
Conditions
7.1 Conditions to Each Party's Obligation to Effect the Merger..............49
(a) Shareholder Approval.............................................49
(b) Regulatory Consents..............................................49
(c) Litigation.......................................................50
(d) ADS Listing......................................................50
(e) F-4 Registration Statement.......................................50
(f) Blue Sky.........................................................50
7.2 Conditions to Obligations of Parent and Merger Sub......................50
(a) Representations and Warranties...................................50
(b) Performance of Obligations of the Company........................51
(c) Consents Under Agreements........................................51
-iii-
EXECUTION COPY
<PAGE>
(d) Client Approvals.................................................52
7.3 Conditions to Obligation of the Company.................................52
(a) Representations and Warranties...................................52
(b) Performance of Obligations of ING, Parent and Merger Sub.........52
(c) Consents Under Agreements........................................52
ARTICLE VIII
Termination
8.1 Termination by Mutual Consent...........................................53
8.2 Termination by Either Parent or the Company.............................53
8.3 Termination by the Company..............................................53
8.4 Termination by Parent...................................................54
8.5 Effect of Termination and Abandonment...................................54
ARTICLE IX
Miscellaneous and General
9.1 Survival................................................................55
9.2 Modification or Amendment...............................................56
9.3 Waiver of Conditions....................................................56
9.4 Counterparts............................................................56
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL...........................56
9.6 Notices.................................................................57
9.7 Entire Agreement; NO OTHER REPRESENTATIONS..............................59
9.8 No Third Party Beneficiaries............................................59
9.9 Obligations of Parent and of the Company................................59
9.10 Transfer Taxes..........................................................59
9.11 Severability............................................................59
9.12 Interpretation..........................................................60
9.13 Assignment..............................................................60
-iv-
EXECUTION COPY
<PAGE>
INDEX OF DEFINED TERMS
Section
1940 Act...............................................................5.1(d)(i)
1999 10-K.............................................................5.1(e)(ii)
1999 20-F..............................................................5.2(e)(i)
A Shares...............................................................5.2(a)(i)
Acquisition Proposal......................................................6.2(a)
ADSs......................................................................4.5(a)
Advisers Act...........................................................5.1(d)(i)
Advisory Client......................................................5.1(v)(iii)
Advisory Entities....................................................5.1(v)(iii)
Advisory Entity......................................................5.1(v)(iii)
Affiliates............................................................5.1(c)(ii)
Agent.................................................................5.1(r)(ii)
Agreement...............................................................Recitals
Audit Date............................................................5.1(e)(ii)
Average Closing Price.....................................................4.5(a)
B Shares...............................................................5.2(a)(i)
Banking Authorities....................................................5.1(d)(i)
Bankruptcy and Equity Exception........................................5.1(c)(i)
Bearer Receipt............................................................4.5(a)
By-Laws......................................................................2.2
Certificate...............................................................4.1(a)
Certificate of Merger........................................................1.3
Charter......................................................................2.1
Client.................................................................5.1(v)(i)
Closing......................................................................1.2
Closing Date.................................................................1.2
Code......................................................................4.2(f)
Common Stock..............................................................4.1(a)
Company.................................................................Recitals
Company Actuarial Analyses............................................5.1(r)(iv)
Company Broker/Dealers.................................................5.1(w)(i)
Company Disclosure Letter....................................................5.1
Company Employees ........................................................6.9(c)
Company Life Insurance Companies......................................5.1(a)(ii)
Company Life Insurance Contracts.......................................5.1(r)(i)
Company Life SAP Statements............................................5.1(e)(i)
Company Material Adverse Effect........................................5.1(a)(i)
Company Option............................................................5.1(b)
-v-
EXECUTION COPY
<PAGE>
Company Reports.......................................................5.1(e)(ii)
Company Requisite Vote.................................................5.1(c)(i)
Company Separate Accounts..............................................5.1(t)(i)
Compensation and Benefit Plans.........................................5.1(h)(i)
Confidentiality Agreement....................................................9.7
Constituent Corporations................................................Recitals
Contracts.............................................................5.1(d)(ii)
Costs....................................................................6.11(a)
Cumulative Preference Shares...........................................5.2(a)(i)
Current Premium..........................................................6.11(c)
D&O Insurance............................................................6.11(c)
DGCL.........................................................................1.1
Dissenting Shares.........................................................4.1(a)
Dissenting Stockholders...................................................4.1(a)
Effective Time...............................................................1.3
Environmental Law......................................................5.1(k)(i)
ERISA..................................................................5.1(h)(i)
ERISA Affiliate......................................................5.1(h)(iii)
ERISA Affiliate Plan.................................................5.1(h)(iii)
ESOP Consideration........................................................4.5(a)
ESOP Plan.................................................................4.1(a)
ESOP Shares...............................................................4.1(a)
Exchange Act...........................................................5.1(a)(i)
Excluded Share............................................................4.1(a)
Excluded Shares...........................................................4.1(a)
Extended Date.............................................................8.2(i)
F-4 Registration Statement...................................................6.3
Fund Client............................................................5.1(v)(i)
GAAP.................................................................5.1(e)(iii)
Governmental Consents..................................................7.1(b)(i)
Governmental Entity....................................................5.1(d)(i)
HSR Act...................................................................5.1(b)
Indemnified Parties......................................................6.11(a)
ING.....................................................................Recitals
ING Companies.............................................................4.1(a)
ING Reports............................................................5.2(e)(i)
ING Shares................................................................4.5(a)
Insurance Authorities..................................................5.1(d)(i)
Insurance Laws.........................................................5.1(i)(i)
Intellectual Property..................................................5.1(o)(i)
Investment Contract....................................................5.1(v)(i)
IRS...................................................................5.1(h)(ii)
-vi-
EXECUTION COPY
<PAGE>
Laws..................................................................5.1(i)(ii)
Lexington Agreement..........................................................4.4
MEC...................................................................5.1(l)(ii)
Merger..................................................................Recitals
Merger Consideration......................................................4.1(a)
Merger Sub..............................................................Recitals
NASD...................................................................5.1(d)(i)
New Plans.................................................................6.9(c)
Notice of Superior Proposal...............................................6.2(b)
NYSE......................................................................4.5(a)
Old Plans.................................................................6.9(d)
open taxable years...................................................5.1(l)(iii)
Order..................................................................7.1(c)(i)
Out-of-Pocket Expenses....................................................8.5(b)
Parent..................................................................Recitals
Parent Material Adverse Effect............................................5.2(b)
Paying Agent..............................................................4.2(a)
Payment Fund..............................................................4.2(a)
PBGC.................................................................5.1(h)(iii)
Pension Plan..........................................................5.1(h)(ii)
Person....................................................................4.2(b)
Preference Shares......................................................5.2(a)(i)
Preferred Shares..........................................................5.1(b)
Prospectus/Proxy Statement...................................................6.3
Qualified Plan........................................................5.1(h)(ii)
Representatives..............................................................6.6
Right.....................................................................4.1(a)
Rights Agreement..........................................................4.1(a)
SEC..........................................................................5.1
Securities Act........................................................5.1(e)(ii)
Series A Preferred Stock..................................................4.1(a)
Share.....................................................................4.1(a)
Shareholders Meeting.........................................................6.4
Shares....................................................................4.1(a)
Significant Subsidiaries...............................................5.1(a)(i)
Stock Based Plans.........................................................6.9(d)
Stock Option Agreement..................................................Recitals
Stock Plans...............................................................5.1(b)
Subsidiary.............................................................5.1(a)(i)
Superior Proposal.........................................................6.2(a)
Surviving Corporation........................................................1.1
Takeover Statute..........................................................5.1(j)
-vii-
EXECUTION COPY
<PAGE>
Tax....................................................................5.1(l)(i)
Tax Authority..........................................................5.1(l)(i)
Tax Return.............................................................5.1(l)(i)
Tax Sharing Agreement..................................................5.1(l)(i)
Taxable................................................................5.1(l)(i)
Taxes..................................................................5.1(l)(i)
Termination Date.............................................................8.2
Termination Fee...........................................................8.5(b)
Total assets under management.............................................7.2(d)
Voting Debt...............................................................5.1(b)
-viii-
EXECUTION COPY
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of April 30, 2000, among RELIASTAR FINANCIAL CORP., a Delaware
corporation (the "Company"), ING GROEP N.V., a corporation organized under the
laws of the Netherlands ("ING"), ING AMERICA INSURANCE HOLDINGS, INC., a
Delaware corporation ("Parent"), and SHP ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub," the Company
and Merger Sub sometimes being hereinafter collectively referred to as the
"Constituent Corporations").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger
Sub and the Company have approved the merger of Merger Sub with and into the
Company (the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to ING's, Parent's and Merger Sub's
willingness to enter into this Agreement, the Company is entering into a stock
option agreement with Parent (the "Stock Option Agreement"), pursuant to which
the Company has granted to Parent an option to purchase Shares (as defined in
Section 4.1(a)) under the terms and conditions set forth in the Stock Option
Agreement; and
WHEREAS, the Company, ING, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be
EXECUTION COPY
<PAGE>
merged with and into the Company and the separate corporate existence of Merger
Sub shall thereupon cease. The Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and
the separate corporate existence of the Company with all its rights, privileges,
powers and franchises shall continue unaffected by the Merger, except as set
forth in Article II. The Merger shall have the effects specified in the Delaware
General Corporation Law, as amended (the "DGCL").
1.2 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
at 9:00 A.M. on the second business day on which the last to be fulfilled or
waived of the conditions set forth in Article VII (other than those conditions
that by their nature are to be fulfilled at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be fulfilled or waived in
accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3 Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Certificate of
Merger") to be executed, acknowledged and filed with the Secretary of State of
Delaware as provided in Section 251 of the DGCL. The Merger shall become
effective at the time when the Certificate of Merger has been duly filed with
the Secretary of State of Delaware (the "Effective Time").
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1 The Certificate of Incorporation. The certificate of incorporation
of Merger Sub as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"),
provided that the Charter shall be amended to change the name of the Surviving
Corporation to the name of the Company, and as so amended, shall be the
certificate of incorporation of the Surviving Corporation until duly amended as
provided therein or by applicable law.
2.2 The By-Laws. The by-laws of Merger Sub in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
-2-
EXECUTION COPY
<PAGE>
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1 Directors. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
3.2 Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1 Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each share of the Common Stock, par value
$0.01 per share, of the Company (the "Common Stock"), including the associated
right to purchase one-twentieth of a share of Series A Preferred Stock, par
value $0.01 per share ("Series A Preferred Stock"), of the Company (each a
"Right" and, together with the Common Stock, a "Share" or, collectively, the
"Shares") issued pursuant to the Amended and Restated Rights Agreement, dated as
of February 11, 1999, between the Company and Norwest Bank Minnesota, National
Association, as Rights Agent (the "Rights Agreement"), issued and outstanding
immediately prior to the Effective Time (other than (i) Shares owned by ING,
Parent, Merger Sub or any other Subsidiary (as defined in Section 5.1(a)(i)) of
ING (collectively, the "ING Companies") or Shares that are owned by the Company
or any Subsidiary of the Company and in each case not held on behalf of third
parties, or (ii) Shares ("ESOP Shares") held by the Reliastar Financial Corp.
Success Sharing Plan and ESOP (the "ESOP Plan") or (iii) Shares ("Dissenting
Shares") that are owned by stockholders ("Dissenting Stockholders") exercising
appraisal rights pursuant to Section 262 of the DGCL (each, an "Excluded Share"
and collectively, "Excluded Shares")) shall be converted into the right to
receive $54.00 in cash (the "Merger Consideration"). At the Effective Time, all
Shares issued and outstanding
-3-
EXECUTION COPY
<PAGE>
immediately prior to the Effective Time shall no longer be outstanding and shall
be canceled and retired and shall cease to exist, and each certificate (a
"Certificate") formerly representing any of such Shares (other than Excluded
Shares) shall thereafter represent only the right to the Merger Consideration.
(b) Cancellation of Shares. Each Share issued and outstanding
immediately prior to the Effective Time and owned by any of the ING Companies or
owned by the Company or any Subsidiary of the Company (in each case other than
Shares that are held on behalf of third parties) shall, by virtue of the Merger
and without any action on the part of the holder thereof, no longer be
outstanding and shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
4.2 Exchange of Cash for Shares.
---------------------------
(a) Paying Agent. At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a paying agent selected by Parent
with the Company's prior approval, which shall not be unreasonably withheld (the
"Paying Agent"), for the benefit of the holders of Shares, cash sufficient to
pay the aggregate Merger Consideration in exchange for Shares outstanding
immediately prior to the Effective Time (other than Excluded Shares) upon due
surrender of the Certificates (or affidavits of loss in lieu thereof) pursuant
to the provisions of this Article IV (such cash being hereinafter referred to as
the "Payment Fund").
The funds deposited with the Paying Agent shall be invested by the
Paying Agent as Parent shall reasonably direct, and any net profit resulting
from, or interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs.
(b) Payment Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates (or
affidavits of loss in lieu thereof) to the Paying Agent, such letter of
transmittal to be in such form and have such other provisions as Parent and the
Company may reasonably agree, and (ii) instructions for use in effecting the
surrender of the Certificates (and affidavits of loss in lieu thereof) in
exchange for the Merger
-4-
EXECUTION COPY
<PAGE>
Consideration. Upon surrender of a Certificate for cancellation (or due
submission of an affidavit of loss in lieu thereof) to the Paying Agent together
with such letter of transmittal, duly executed, the holder of such Certificate
(or submitter of such affidavit, as the case may be) shall be entitled to
receive in exchange therefor, a check in the amount (after giving effect to any
required tax withholdings) of the number of Shares represented by such
Certificate (or affidavit of loss in lieu thereof) multiplied by the Merger
Consideration, and the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on any amount payable upon due surrender of
the Certificates. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, a check for any cash to be
paid upon due surrender of the Certificate may be paid to such a transferee if
the Certificate formerly representing such Shares is presented to the Paying
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been paid
or are not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the
Surviving Corporation or Parent for transfer, they shall be canceled and
exchanged for a check in the proper amount pursuant to this Article IV.
(d) Termination of Payment Fund. Any portion of the Payment Fund
(including the profit, interest or income from any investments thereof) that
remains unclaimed by the holders of Shares (other than Excluded Shares) for one
year after the Effective Time shall be returned to Parent or as directed by
Parent. Any holders of Shares (other than Excluded Shares) who have not
theretofore complied with this Article IV shall thereafter look only to Parent
for payment of (after giving effect to any required tax withholdings) the Merger
Consideration upon due surrender of their Certificates (or affidavits of loss in
lieu thereof), without any interest thereon. Notwithstanding the foregoing, none
of Parent, the Surviving Corporation, the Paying Agent or any other Person shall
be liable to any former holder of Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by
-5-
EXECUTION COPY
<PAGE>
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such Person of a bond in customary amount as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate a check in the amount (after giving effect to any required
tax withholdings) of the number of Shares represented by such lost, stolen or
destroyed Certificate multiplied by the Merger Consideration upon due surrender
of and deliverable in respect of the Shares represented by such Certificate
pursuant to this Agreement.
(f) Withholding of Tax. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
former holder of Shares such amounts as Parent (or any affiliate thereof) is
required to deduct and withhold with respect to the making of such payment under
the U.S. Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code") or any provision of state, local
or foreign tax Law (as defined in Section 5.1(i)(ii)). Such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holders of Shares in respect of which such deduction and withholding was
made.
4.3 Dissenters' Rights. Any Person who otherwise would be deemed a
Dissenting Stockholder shall not be entitled to receive the Merger Consideration
(or, if eligible under applicable law, the ESOP Consideration) with respect to
the Shares owned by such Person unless and until such Person shall have failed
to perfect or shall have effectively withdrawn or lost such holder's right to
dissent from the Merger under the DGCL. Each Dissenting Stockholder shall be
entitled to receive only the payment provided by Section 262 of the DGCL with
respect to Shares owned by such Dissenting Stockholder. The Company shall give
Parent (i) prompt notice of any written demands for appraisal, attempted
withdrawals of such demands, and any other instruments served pursuant to
applicable Law received by the Company relating to stockholders' rights of
appraisal and (ii) the opportunity to direct all negotiations and proceedings
with respect to demand for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
with respect to any demands for appraisals of Dissenting Shares, offer to settle
or settle any such demands or approve any withdrawal of any such demands.
4.4 Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), stock
dividend or distribution, recapitalization, merger (other than with respect to
the Company's pending acquisition of Lexington Global Asset Managers, Inc.
pursuant to the existing terms of the Agreement and Plan of Merger, dated
February 28, 2000, between the Company, Pilgrim Capital
-6-
EXECUTION COPY
<PAGE>
Corporation and Lexington Global Asset Managers, Inc. (the "Lexington
Agreement")), subdivision, issuer tender or exchange offer, or other similar
transaction, the Merger Consideration and the ESOP Consideration shall be
equitably adjusted to reflect such change.
4.5 ESOP Shares
(a) At the Effective Time, each ESOP Share issued and outstanding
immediately prior to the Effective Time shall be cancelled and converted into
that number of American Depositary Shares ("ADSs"), evidenced by American
Depositary Receipts (with each ADS representing one Bearer Depositary Receipt
("Bearer Receipt"), each of which in turn represents an interest in one Ordinary
Share, nominal value NLG 1.00 per Ordinary Share ("ING Shares")), of ING equal
to the number derived by dividing (x) $54.00 by (y) the average of the closing
prices for the ADSs (the "Average Closing Price") as reported on the New York
Stock Exchange, Inc. (the "NYSE") composite transactions reporting system (as
reported in the New York City edition of The Wall Street Journal or, if not
reported thereby, another authoritative source) for the ten trading days ending
on the last trading day prior to the Closing Date (the "ESOP Consideration").
(b) As of the Effective Time, ING shall, upon delivery to the Surviving
Corporation or its designee of the Certificates(s) (or affidavits of loss in
lieu thereof) representing the ESOP Shares for cancellation, together with any
documentation to effect such transfer as may reasonably be requested by ING,
issue to the ESOP Plan the ESOP Consideration to be issued pursuant to Section
4.5(a) and a check for any cash to be paid pursuant to Section 4.5(d), together
with any dividends or other distributions payable with respect thereto.
(c) No Person holding a Certificate representing ESOP Shares will be
entitled after the Effective Time to receive any dividend or distribution that
may be declared or paid in respect of ADSs receivable by such Person upon
conversion of ESOP Shares represented by such Certificate in the Merger until
such Certificate is surrendered in exchange for the ESOP Consideration as
provided herein, at which time any dividends with a record date after the
Effective Time with respect to ADSs shall, subject to applicable Law, be paid
without interest to such Person as though it had been a record holder of such
ADSs at the time of such record date.
(d) Notwithstanding any other provision of this Agreement, no
fractional ADS will be issued and any holder of ESOP Shares entitled to receive
a fractional ADS but for this Section 4.5(d) shall be entitled to receive a cash
payment in lieu thereof, which payment shall represent such holder's
proportionate interest in an ADS based on the Average Closing Price.
-7-
EXECUTION COPY
<PAGE>
ARTICLE V
Representations and Warranties
5.1 Representations and Warranties of the Company. Except as disclosed
in the Company's Annual Report on Form 10-K for the year ended December 31,
1999, filed with the Securities and Exchange Commission (the "SEC") on March 20,
2000, the Company's Annual Proxy Statement on Schedule 14A, filed with the SEC
on March 28, 2000, or as set forth in the corresponding sections or subsections
of the disclosure letter, dated the date hereof, delivered to Parent by the
Company on or prior to entering into this Agreement (the "Company Disclosure
Letter"), the Company hereby represents and warrants to Parent and Merger Sub
that:
(a)(i) Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is an entity duly organized, validly existing and
in good standing under the Laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing in each
jurisdiction where the ownership or operation of its assets or properties or
conduct of its business requires such qualification, except where the failure to
be so organized, qualified or in good standing, or to have such power or
authority is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect (as defined below). The Company has made
available to Parent complete and correct copies of the certificate of
incorporation and by-laws or other comparable governing instruments of the
Company and each of its "Significant Subsidiaries" (as defined in Rule 1.02(w)
of Regulation S-X promulgated pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), each as amended. The Company's and its
Significant Subsidiaries' certificates of incorporation and by-laws or other
comparable governing instruments so delivered are in full force and effect.
Section 5.1(a)(i) of the Company Disclosure Letter contains a correct and
complete list of each jurisdiction where the Company and each of its
Subsidiaries is organized.
As used in this Agreement, the term (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries or by such party and any one or more of
its respective Subsidiaries and (ii) "Company Material Adverse Effect" means a
material adverse effect on the financial condition, properties, business or
annual results of operations of the Company and its Subsidiaries taken as a
whole, except
-8-
EXECUTION COPY
<PAGE>
to the extent that such adverse effect results from (i) general economic
conditions or changes therein, (ii) financial market fluctuations or conditions,
(iii) adverse economic or regulatory changes or effects in or affecting the
financial services industry, insurance industry or asset management industry
generally or (iv) the announcement of the transactions contemplated herein.
(ii) The Company conducts its insurance and reinsurance operations
exclusively through Reliastar Life Insurance Company, Northern Life Insurance
Company, Security-Connecticut Life Insurance Company, Reliastar Life Insurance
Company of New York, Reliastar Reinsurance Group (UK) Ltd., Arrowhead Ltd. and
The New Providence Insurance Company, Limited (collectively, the "Company Life
Insurance Companies"). Section 5.1(a)(ii) of the Company Disclosure Letter sets
forth the jurisdictions where the Company Life Insurance Companies are domiciled
or "commercially domiciled" and licensed to do an insurance or reinsurance
business for insurance regulatory purposes. Each of the Company Life Insurance
Companies is (A) duly licensed or authorized as an insurance company or, where
applicable, a reinsurer in its jurisdiction of incorporation, (B) duly licensed
or authorized as an insurance company or, where applicable, a reinsurer in each
other jurisdiction where it is required to be so licensed or authorized, and (C)
duly authorized in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business reported as being written in the
Company Life SAP Statements (as defined in Section 5.1(e)), except, in each
case, where the failure to be so licensed or authorized is not reasonably likely
to have a Company Material Adverse Effect. The Company and each of the Company
Life Insurance Companies have made all required filings under applicable
Insurance Laws (as defined in Section 5.1(i)) except where the failure to file
is not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(b) Capital Structure. The authorized capital stock of the Company
consists of 200,000,000 Shares, of which 89,632,632 Shares were outstanding as
of the close of business on April 28, 2000, and 7,000,000 shares of Preferred
Stock, par value $0.01 per share (the "Preferred Shares"), of which no shares
were outstanding as of the close of business on April 28, 2000. All of the
outstanding Shares have been duly authorized and are validly issued, fully paid
and nonassessable. Other than 8,873,630 Shares reserved for issuance under the
Stock Option Agreement, the Company has no Shares or Preferred Shares reserved
for issuance, except that, as of April 28, 2000, there were 8,429,530 Shares
reserved for issuance pursuant to those plans identified as "Stock Plans" in
Section 5.1(b) of the Company Disclosure Letter (collectively, the "Stock
Plans"), and 6,000,000 Series A Preferred Shares reserved for issuance pursuant
to the Rights Agreement. The Company has provided to Parent a correct and
complete list of each outstanding option to purchase Shares under the Stock
Plans (each a "Company Option"), including the holder, date of grant, exercise
price and number of Shares subject thereto. Section 5.1(b) of the Company
Disclosure Letter contains a correct and complete
-9-
EXECUTION COPY
<PAGE>
list of each Subsidiary of the Company. Each of the outstanding shares of
capital stock or other securities of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and owned by the
Company or a direct or indirect wholly- owned subsidiary of the Company, free
and clear of any lien, pledge, security interest, claim or other encumbrance.
Except as set forth above, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind that obligate the Company or any of its Subsidiaries to issue
or sell any shares of capital stock or other securities of the Company or any of
its Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. The Shares issuable pursuant to the Stock Option Agreement have
been duly reserved for issuance by the Company, and upon any issuance of such
Shares in accordance with the terms of the Stock Option Agreement, such Shares
will be duly authorized, validly issued, fully paid and nonassessable and free
and clear of any lien, pledge, security interest, claim or other encumbrance.
The Company does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter ("Voting Debt"). Section 5.1(b) of the Company
Disclosure Letter contains a true and complete list of each person in which the
Company owns, directly or indirectly, any voting interest that may require a
filing by Parent under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"). No joint ventures between the Company and another
Person or Persons, are, individually or in the aggregate, material to the
business of the Company and its Subsidiaries, taken as a whole.
(c) Corporate Authority; Approval and Fairness. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate, subject only to
approval of this Agreement by the holders of a majority of the outstanding
Shares (the "Company Requisite Vote"), the Merger. This Agreement is a valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception").
(ii) The board of directors of the Company (A) has unanimously approved
this Agreement and the Stock Option Agreement and the Merger and the other
transactions contemplated hereby and thereby (B) has declared that this
Agreement and the Stock Option Agreement and the Merger and the other
transactions contemplated
-10-
EXECUTION COPY
<PAGE>
hereby and thereby, taken as a whole, are fair to, advisable and in the best
interests of the holders of Shares and (C) has received the opinion of its
financial advisors, Merrill Lynch, Pierce, Fenner & Smith Incorporated, to the
effect that the consideration to be received by the holders of the Shares in the
Merger is fair from a financial point of view to such holders (other than Parent
and its "Affiliates" (as defined in Rule 12b-2 under the Exchange Act)).
(d) Governmental Filings; No Violations. (i) Other than the reports,
filings, registrations, consents, approvals, permits, authorizations,
applications and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act,
(C) under any foreign competition laws, (D) under the Exchange Act, (E) under
the Investment Company Act of 1940, as amended (the "1940 Act"), (F) under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), (G) with the
NYSE, (H) with the National Association of Securities Dealers, Inc. (the
"NASD"), (I) with foreign, federal and state regulatory authorities governing
banking (including the Office of Thrift Supervision and the Office of the
Comptroller of the Currency), insurance premium finance, commercial collections,
leasing, consumer finance, commercial finance and mortgage lending or servicing
(the "Banking Authorities"), (J) with applicable foreign, federal and state
regulatory authorities governing insurance (including the Commissioners of
Insurance of Arizona, Connecticut, Minnesota, New York, Washington, and the
insurance regulatory authorities and other applicable regulatory authorities in
the United Kingdom, Mexico, Denmark, Canada, Japan, Puerto Rico, Guam, the
Netherlands and the Cayman Islands) (the "Insurance Authorities") and (K) as
otherwise set forth in Section 5.1(d) of the Company Disclosure Letter, no
notices, reports or other filings are required to be made by the Company or any
of its Subsidiaries with, nor are any consents, registrations, approvals,
permits, applications or authorizations required to be obtained by the Company
or any of its Subsidiaries from, any U.S. or non-U.S. governmental or regulatory
authority, agency, commission, tribunal, body or other governmental,
quasi-governmental or self-regulatory entity ("Governmental Entity"), in
connection with the execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
Merger and the other transactions contemplated hereby and thereby, except those
that the failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
transactions contemplated by this Agreement and the Stock Option Agreement.
(ii) The execution, delivery and performance of this Agreement and the
Stock Option Agreement by the Company do not, and the consummation by the
Company of the Merger and the other transactions contemplated hereby and thereby
will not, constitute or result in (A) a breach or violation of, or a default
under, the certificate or by-laws of the Company or the comparable governing
instruments of any of its Subsidiaries, (B) a breach or violation of, or a
default under, the acceleration of any rights
-11-
EXECUTION COPY
<PAGE>
or obligations or the creation of a lien, pledge, security interest, claim or
other encumbrance on the assets of the Company or any of its Subsidiaries (with
or without notice, lapse of time or both) pursuant to, any agreement, lease,
license, contract, note, mortgage, indenture, franchise, permit, concession,
arrangement or other obligation ("Contracts") binding upon the Company or any of
its Subsidiaries or any Law (as defined in Section 5.1(i)) or governmental or
non-governmental permit or license to which the Company or any of its
Subsidiaries is subject or (C) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change that
is not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement and the Stock Option Agreement.
(e) Statutory Reports; Company Reports; Financial Statements. (i) Since
January 1, 1997, each of the Company Life Insurance Companies has filed all
annual or quarterly statements, together with all exhibits, interrogatories,
notes, actuarial opinions, affirmations, certifications, schedules or other
supporting documents in connection therewith, required to be filed with or
submitted to the appropriate regulatory authorities of the jurisdiction in which
it is domiciled or "commercially domiciled" on forms prescribed or permitted by
such authority (collectively, the "Company Life SAP Statements"). The Company
has delivered to Parent all Company Life SAP Statements for each Company Life
Insurance Company for the five-year period ended December 31, 1999 each in the
form (including exhibits, annexes and any amendments thereto) filed with the
applicable state insurance regulatory agency. Since January 1, 1997, the
financial statements included in the Company Life SAP Statements and purported
to be prepared on a statutory basis, including the notes thereto, have been
prepared in accordance with statutory accounting practices prescribed or
permitted by applicable regulatory authorities in effect as of the date of the
respective statements, and such accounting practices have been applied on a
substantially consistent basis throughout the periods involved, except as
expressly set forth in the notes or schedules thereto. Such financial statements
present fairly in all material respects the respective statutory financial
positions and results of operations of each of the Company Life Insurance
Companies as of their respective dates and for the respective periods presented
therein. The Company Life SAP Statements complied in all material respects with
all applicable laws, rules and regulations when filed, and no material
deficiency has been asserted with respect to any Company Life SAP Statements by
the applicable insurance regulatory body or any other governmental agency or
body. Except as indicated therein, all assets that are reflected on the Company
Life SAP Statements comply with all applicable Insurance Laws (as defined in
Section 5.1(i)) with respect to admitted assets and are in an amount at least
equal to the minimum amounts required by applicable Insurance Laws. The
statutory balance sheets and income statements included in the Company Life SAP
-12-
EXECUTION COPY
<PAGE>
Statements for 1999 have been audited by Deloitte & Touche LLP and the Company
has delivered or made available to Parent true and complete copies of all audit
opinions related thereto. The Company has delivered to Parent true and complete
copies of all examination and market conduct reports of insurance departments
and any insurance regulatory agencies since January 1, 1998 relating to the
Company Life Insurance Companies.
(ii) The Company has filed with the SEC each registration statement,
report, proxy statement or information statement required to be filed by it
since January 1, 1997, including the Company's Annual Report on Form 10-K for
the year ended December 31, 1999 (the "Audit Date", and such report on Form
10-K, the "1999 10-K"), each in the form (including exhibits, annexes and any
amendments thereto) promulgated by the SEC under the Securities Act of 1933, as
amended (the "Securities Act") or the Exchange Act (collectively, with any other
filings made with the SEC since January 1, 1997, and including any such
registration statements, reports, proxy statements and information statements
filed subsequent to the date hereof and as amended, the "Company Reports"). As
of their respective dates, (or, if amended, as of the date of such amendment)
the Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
in which they were made, not misleading.
(iii) Each of the consolidated balance sheets included in the Company
Reports (including the related notes and schedules) fairly presents in all
material respects, or will fairly present in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of income and of changes in
financial position included in the Company Reports (including any related notes
and schedules) fairly presents in all material respects, or will fairly present
in all material respects, the results of operations, retained earnings and
changes in financial position, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year- end audit adjustments that will
not be material in amount or effect), in each case in accordance with U.S.
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted therein.
(f) Absence of Certain Changes. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date, the Company and
its Subsidiaries have conducted their respective businesses only in, and have
not engaged in any material transaction other than according to, the ordinary
course of such businesses consistent with prior practice and there has not been
(i) any Company Material Adverse Effect or any development or combination of
developments of which the Company has
-13-
EXECUTION COPY
<PAGE>
knowledge that has had or is reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect; (ii) any damage, destruction or
other casualty loss with respect to any material asset or property owned, leased
or otherwise used by the Company or any of its Subsidiaries, whether or not
covered by insurance, which is reasonably likely to have a Company Material
Adverse Effect; (iii) any change by the Company or any of its Subsidiaries in
accounting principles, practices or methods, 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;
(iv) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of the Company, except for
dividends or other distributions on its capital stock publicly announced prior
to the date hereof and except as expressly permitted hereby; (v) any material
addition, or any development involving a prospective material addition, to the
Company's consolidated reserves for future insurance policy benefits or other
insurance policy claims and benefits other than as a result of new business
produced in the ordinary course of business since the Audit Date; (vi) any
material change in the actuarial, investment, reserving, underwriting or claims
administration policies, practices or principles of any Company Life Insurance
Company, 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; (vii) any amendment of any of the
Compensation and Benefit Plans (as defined in Section 5.1(h)) other than
amendments in the ordinary course of business consistent with prior practice;
(viii) any granting by the Company or any of its Subsidiaries to any executive
officer of the Company or any of its Subsidiaries of any increase in
compensation, except (A) for increases in the ordinary course of business
consistent with prior practice, (B) as was required under employment agreements
in effect as of the Audit Date or (C) in connection with a promotion; (ix) any
granting by the Company or any of its Subsidiaries 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 prior practice in any one case not
in excess of $100,000, (C) as was required under any employment, severance or
termination agreement in effect as of the Audit Date or (D) in connection with a
promotion; or (x) any entry by the Company or any of its Subsidiaries into any
new severance or termination agreement with any such executive officer, except
(A) for obligations which have been satisfied prior to the date hereof, (B) new
severance or termination obligations in the ordinary course of business
consistent with prior practice in any one case not in excess of $100,000, (C) in
connection with a promotion or (D) any new severance or termination agreement
entered into at Parent's request or with Parent's consent.
(g) Litigation and Liabilities. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the
-14-
EXECUTION COPY
<PAGE>
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or assets except for those
that are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement and the Stock Option Agreement. Set forth in Section 5.1(g) of
the Company Disclosure Letter is a complete list of all civil, criminal or
administrative actions, suits, claims (other than individual customer complaints
which are received in the ordinary course of business, consistent with past
practice, and as to which no suit, action or arbitration has been commenced),
hearings, investigations or proceedings, pending or, to the knowledge of the
Company, threatened against the Company or any of its Affiliates or any of their
respective properties or assets as of the date hereof. The Company has delivered
to Parent a true and complete copy of its customer complaint log which is
maintained in the ordinary course of business. Except for those obligations and
liabilities that are fully reflected or reserved against on the consolidated
balance sheet of the Company included in the 1999 10-K, and for obligations and
liabilities incurred in the ordinary course of business consistent with prior
practice since December 31, 1999, neither the Company nor any of its
Subsidiaries has incurred any obligations or liabilities of any nature
whatsoever, whether absolute, accrued, contingent, known, unknown or otherwise
and whether or not required to be disclosed on a balance sheet prepared in
accordance with GAAP or statutory accounting principles, including those
relating to matters involving any Environmental Law (as defined in Section
5.1(k)), or any other facts or circumstances of which the Company has knowledge
that could result in any claims against, or obligations or liabilities of, the
Company or any of its Affiliates, except for those that are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement. As used in the Agreement, the phrase "knowledge of the Company" means
the actual knowledge of those people set forth on Section 5.1(g) of the Company
Disclosure Letter.
(h) Employee Benefits.
-----------------
(i) A true and complete copy of each material employment benefit and
compensation plan, contract, policy or arrangement, including each "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), bonus, incentive, deferred
compensation, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, stock appreciation rights, stock based, termination and
severance plan, agreement, policy or arrangement (whether oral or in writing)
that covers employees, directors, consultants, former employees or former
directors of the Company and its Subsidiaries (the "Compensation and Benefit
Plans") and any trust agreement or insurance contract forming a part of such
Compensation and Benefit Plans has been made available to Parent
-15-
EXECUTION COPY
<PAGE>
prior to the date hereof. The Compensation and Benefit Plans are listed in
Section 5.1(h) of the Company Disclosure Letter and any "change of control" or
similar provisions therein are specifically identified in Section 5.1(h) of the
Company Disclosure Letter. Neither the Company nor any of its Subsidiaries has
any commitment, oral or written, to create any additional material Compensation
and Benefit Plan or to modify or change any existing Compensation and Benefit
Plan in a material respect.
(ii) All Compensation and Benefit Plans are in substantial compliance
with all applicable law, including the Code and ERISA, and all required filings
and disclosures with respect to any Compensation and Benefit Plan have been
timely made. More specifically, the Company and the Compensation and Benefit
Plans have at all times complied with Section 407 of ERISA with respect to the
holding and acquiring of "employer securities" and "qualifying employer
securities" as defined under ERISA. Each Compensation and Benefit Plan that is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
(a "Pension Plan") and that is intended to be qualified under Section 401(a) of
the Code (each, a "Qualified Plan"), has received a favorable determination
letter (including a determination that the related trust under such Compensation
and Benefit Plan is exempt from tax under Section 501(a) of the Code) from the
Internal Revenue Service (the "IRS") with respect to "TRA" (as defined in
Section 1 of Revenue Procedure 93-39), and the Company is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no material pending or, to the knowledge of the Company,
threatened legal action, suit, claim or governmental investigation relating to
any of the Compensation and Benefit Plans, other than routine claims for
benefits. Neither the Company nor any of its Subsidiaries has engaged in a
transaction, or omitted to take any action, with respect to any Compensation and
Benefit Plan that, assuming the taxable period of such transaction expired as of
the date hereof, could subject the Company or any of its Subsidiaries to a
material tax or penalty imposed by either Section 4975 of the Code or Section
502 of ERISA.
(iii) There is no material liability under Subtitle C or D of Title IV
of ERISA that has been incurred which has not been satisfied and no such
material liability is expected to be incurred by the Company or any Subsidiary
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(such entity an "ERISA Affiliate" and such plan an "ERISA Affiliate Plan"). The
Company and its Subsidiaries have not incurred any material withdrawal liability
that has not been satisfied and the Company does not expect that they will incur
any such material withdrawal liability with respect to any multiemployer plan
under Subtitle E to Title IV of ERISA. Neither the Company, its Subsidiaries nor
any ERISA Affiliate has contributed, or been obligated to
-16-
EXECUTION COPY
<PAGE>
contribute, to a "multiemployer plan" within the meaning of Section 3(37) of
ERISA at any time since September 26, 1980. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any Pension
Plan or any ERISA Affiliate Plan within the 12-month period ending on the date
hereof or will be required to be filed in connection with the transactions
contemplated by this Agreement and the Stock Option Agreement. The Pension
Benefit Guaranty Corporation (the "PBGC") has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan, and, to the knowledge of the
Company, no condition exists that presents a material risk that such proceedings
will be instituted.
(iv) All material contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan as of the date hereof
have been timely made or have been reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company Reports prior to
the date hereof. Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA, and no ERISA Affiliate has an
outstanding funding waiver. Neither the Company nor its Subsidiaries or ERISA
Affiliates (x) has provided, or is required to provide, security to any Pension
Plan or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code
or (y) has taken any action, or omitted to take any action, that has resulted,
or is reasonably likely to result, in the imposition of a lien under Section
412(a) of the Code or pursuant to ERISA.
(v) Under each Pension Plan which is a single-employer plan and ERISA
Affiliate Plan, as of the last day of the most recent plan year ended prior to
the date hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the Pension Plan's most
recent actuarial valuation), did not exceed the then current value of the assets
of such Plan, and as of the date hereof, there has been no material adverse
change in the financial condition of such Plan nor any amendment or other change
to such Plan that would materially increase the amount of benefits thereunder
which reasonably could be expected to change such result.
(vi) Except as required by applicable law or pursuant to individual
agreements, neither the Company nor any of its Subsidiaries or ERISA Affiliates
have any obligations for retiree health and life benefits under any Compensation
and Benefit Plan. No action taken by the Company or its Subsidiaries alters the
Company's or its Subsidiaries' ability to amend or terminate any retiree health
or life plan in accordance with the written terms of such plan.
-17-
EXECUTION COPY
<PAGE>
(vii) The consummation of the Merger and the other transactions
contemplated by this Agreement or the Stock Option Agreement will not (w)
entitle any employee, consultant or director of the Company or any of its
Subsidiaries to any payment (including severance pay or similar compensation) or
any increase in compensation, (x) accelerate the time of payment or vesting or
trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans, (y) result in any breach or violation of, or a
default under, any of the Compensation and Benefit Plans or (z) result in any
payments by the Company or the Surviving Corporation being non-deductible as an
"excess parachute payment" pursuant to Section 280G of the Code.
(viii) With respect to each Compensation and Benefit Plan, if
applicable, the Company has provided or made available to Parent true and
complete copies of (i) the two most recent Forms 5500 filed with the IRS; (ii)
the most recent actuarial report and financial statement; (iii) the most recent
summary plan description; (iv) the forms filed with the PBGC (other than for
premium payments); (v) the most recent determination letter issued by the IRS;
(vi) any Form 5310 or Form 5330 filed with the IRS; and (vii) the most recent
nondiscrimination tests performed under ERISA and the Code (including 401(k) and
401(m) tests).
(ix) The disallowance of a deduction under Section 162(m) of the Code
for employee remuneration does not apply to any amount payable to a "covered
individual" with respect to the Company.
(i) Compliance with Laws; Permits. (i) The business and operations of
the Company and its Subsidiaries have been conducted in compliance with all
applicable foreign, federal, state and local statutes and regulations regulating
the business and products of insurance and reinsurance and all applicable orders
and directives of insurance regulatory authorities (including federal
authorities with respect to health maintenance organization and other health and
workmen's compensation products and variable insurance and annuity products) and
market conduct recommendations resulting from market conduct examinations of
insurance regulatory authorities (including federal authorities with respect to
health maintenance organization and other health and workmen's compensation
products and variable insurance and annuity products) (collectively, "Insurance
Laws"), except where the failure to so conduct such business and operations is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. Without limiting the generality of the preceding
sentence, except where the failure to do so is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, each of
the Company and its Subsidiaries and, to the knowledge of the Company as of the
date hereof, its Agents (as defined in Section 5.1(r)(ii)) have marketed, sold
and issued insurance, reinsurance and annuity products and guaranteed investment
contracts in compliance with all
-18-
EXECUTION COPY
<PAGE>
applicable Insurance Laws, including (A) all applicable prohibitions against
withdrawal of business lines and "redlining", (B) all applicable requirements
relating to the disclosure of the nature of insurance products as policies of
insurance, (C) all applicable requirements relating to insurance product
projections and illustrations and (D) all applicable requirements relating to
the advertising, sales and marketing of insurance and annuity products and
guaranteed investment contracts. In addition, (X) there is no pending or, to the
knowledge of the Company, threatened charge by any insurance regulatory
authority that any of the Company or any of its Subsidiaries has violated, nor
any pending or, to the knowledge of the Company, threatened investigation by any
insurance regulatory authority with respect to possible violations of, any
applicable Insurance Laws where such violations are, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect; (Y) none
of the Company or any of its Subsidiaries is subject to any order or decree of
any insurance regulatory authority relating specifically to such Person (as
opposed to insurance companies generally) which is individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect; and (Z)
the Company and its Subsidiaries have filed all reports required to be filed
with any insurance regulatory authority as to which the failure to file such
reports is, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
(ii) In addition to Insurance Laws, except as set forth in the Company
Reports filed prior to the date hereof, the businesses of each of the Company
and its Subsidiaries have not been, and are not being, conducted in violation of
any applicable federal, state, local or foreign law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity (collectively,
"Laws"), except for violations or possible violations that are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse Effect
or prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement. No investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries which would be reasonably likely to have
a Company Material Adverse Effect is pending or, to the knowledge of the
Company, threatened, nor has any Governmental Entity indicated an intention to
conduct the same. To the knowledge of the Company, no change is required in the
Company's or any of its Subsidiaries' processes, properties or procedures in
connection with any such Laws, and the Company has not received any notice or
communication of any noncompliance with any such Laws that has not been cured as
of the date hereof other than any such failure to make changes or non-compliance
which is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. The Company and its Subsidiaries each has all
permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted except those the absence of which are not,
individually or
-19-
EXECUTION COPY
<PAGE>
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement. None of the Company's Subsidiaries which is a
registered broker-dealer has entered into or is subject to a restrictions
letter agreement with the NASD as of the date hereof.
(j) Takeover Statutes. No restrictive provision of any "fair price,"
"moratorium," "control share acquisition," "interested stockholder" or other
similar anti- takeover statute or regulation (each a "Takeover Statute") or any
restrictive provision of any anti-takeover provision in the Company's
certificate of incorporation and by-laws is, or at or following the Effective
Time will be, applicable to the Company, the Shares, the Merger or the other
transactions contemplated by this Agreement or the Stock Option Agreement.
Without limiting the generality of the foregoing, the board of directors of the
Company has taken all action so that Parent will not be prohibited from, or
require any subsequent approval or consent in connection with, entering into or
consummating a "business combination" with the Company as an "interested
stockholder" or "interested shareholder" (in each case as such terms are used in
Section 203 of the DGCL and Article SEVENTH of the Company's certificate of
incorporation) as a result of the execution of this Agreement the Stock Option
Agreement, or the consummation of the transactions contemplated hereby or
thereby.
(k) Environmental Matters. Except as would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i) the Company and its Subsidiaries have at all times been in
compliance with all Orders of any Governmental Entity and all Laws, in each case
related to human health or the environment ("Environmental Law");
(ii) 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 of its Subsidiaries, including but not limited to on-site or
off-site disposal presence or release of or exposure to any chemical substance,
product or waste or any other condition or circumstance which has resulted in or
could have resulted in or could reasonably be expected to give rise to: (a)
liabilities, fines, penalties, costs, capital expenditures or obligations for
any violation, noncompliance, cleanup, remediation, disposal or corrective
action under any Environmental Law or (b) claims arising for personal injury,
property damage, or damage to natural resources; and
(iii) neither the Company nor any of its Subsidiaries has (a) received
any notice of noncompliance with, violation of, or liability or potential
liability relating to any Environmental Law or (b) entered into any consent
decree, agreement or order or is
-20-
EXECUTION COPY
<PAGE>
subject to any order of any court or governmental authority or tribunal or any
indemnity with any third party relating to any Environmental Law or relating to
the cleanup of any hazardous materials contamination.
(l) Taxes.
-----
(i) Except as would not have a Company Material Adverse Effect, the
Company and each of its Subsidiaries (A) have duly and timely filed (taking into
account any extension of time (to the extent validly received) within which to
file) all Tax Returns (as defined below) required to be filed by any of them and
all such filed Tax Returns are complete and accurate; (B) all Taxes (as defined
below) owed (whether or not shown on any Tax Return) have been paid, including
any Taxes that the Company or any of its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith; and (C) have not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. As of the date hereof, there are not
pending or threatened any audits, examinations, investigations or other
proceedings in respect of Taxes or Tax matters. There are not any unresolved
questions or claims concerning the Company's or any of its Subsidiaries' Tax
liability that are reasonably likely to have a Company Material Adverse Effect.
There are no Tax liens against the Company or any of its Subsidiaries or liens
for Taxes not yet due or Taxes being contested in good faith. The Company has
made available to Parent true and correct copies of the United States federal
income Tax Returns filed by the Company and its Subsidiaries for each of the
fiscal years ended December 31, 1996, 1997 and 1998.
As used in this Agreement, (y) "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") means (i) all federal, state, local
and foreign income, profits, franchise, premium, gross receipts, environmental,
customs duty, capital stock, severances, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions and (ii) any liability for the payment of any amount of the type
described in clause (i) as a result of being or having been before the Closing
Date a member of an affiliated, consolidated, combined or unitary group, or a
party to any agreement or arrangement, as a result of which liability of the
Company and each of its subsidiaries to a Tax Authority is determined or taken
into account with reference to the liability of any other Person (including,
e.g., liability under Treasury Regulation 1.1502-6 or similar liability under
any other Law), and (iii) any liability for the payment of any amount as a
result of being party to any Tax Sharing Agreement or with respect to the
payment of any amount of the type described in (i) or (ii) as a result of any
existing express or implied obligation (including, but not limited to, an
indemnification
-21-
EXECUTION COPY
<PAGE>
obligation). "Tax Return" means all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax Authority relating to Taxes.
"Tax Sharing Agreement" means all existing agreements or arrangements
(whether or not written) binding the Company or any of its Subsidiaries that
provide for the allocation, apportionment, sharing or assignment of any Tax
liability or benefit, or the transfer or assignment of income, revenues,
receipts, or gains for the principal purpose of determining any Person's Tax
liability.
"Tax Authority" means the Internal Revenue Service and any other
domestic or foreign Governmental Entity or Person responsible for the
administration of any taxes.
(ii) Except for situations which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, (A)
the Tax treatment under the Code of all Company Life Insurance Contracts (as
defined in Section 5.1(r)(i)) is and at all times has been in all material
respects the same or more favorable to the purchaser, policyholder or intended
beneficiaries thereof as the Tax treatment under the Code for which such Company
Life Insurance Contracts qualified or purported to qualify at the time of their
issuance or purchase, except for changes resulting from changes to the Code
which do not affect such Company Life Insurance Contracts due to the effective
date thereof, (B) each hardware, software and firmware product used by the
Company Life Insurance Companies to maintain such Company Life Insurance
Contracts' qualification for the Tax treatment under the Code for which such
Company Life Insurance Contracts qualified or purported to qualify at the time
of their issuance or purchase is and at all relevant times has been properly
designed and implemented to maintain such qualification, (C) each annuity
contract issued by the Company Life Insurance Companies qualifies as an annuity
contract under Section 72 of the Code, (D) each life insurance policy issued by
the Company Life Insurance Companies qualifies as a life insurance contract for
federal income Tax purposes and any such policy which is a modified endowment
contract under Section 7702A of the Code (each, a "MEC") has been marketed as
such at all relevant times or the policyholder otherwise has consented to such
MEC status and (e) each of the Company Life Insurance Companies is and at all
times has been the owner for federal income Tax purposes of the assets in any
segregated asset account underlying or supporting each variable annuity contract
and each variable insurance policy issued by it. For purposes of this Section,
the provisions of the Code relating to the Tax treatment of such contracts shall
include Sections 72, 79, 101, 104, 105, 106, 125, 130, 264, 401, 403, 404, 408,
408A, 412, 415, 419, 419A, 457, 501, 505, 817, 818, 1035, 7702, 7702A and 7702B.
-22-
EXECUTION COPY
<PAGE>
(iii) Except for situations which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, each
Fund Client (as defined in Section 5.1(v)(i)) has elected to qualify and, for
all taxable years that an Advisory Entity (as defined in Section 5.1(v)(iii))
served as investment adviser and with respect to which the applicable statute of
limitations (including any extensions) has not expired ("open taxable years"),
has continuously qualified to be treated as a "regulated investment company"
under Subchapter M of the Code and has continuously been eligible to compute,
and has for each such taxable year computed, its federal income tax under
Section 852 of the Code and has no earnings and profits accumulated in any
taxable year. At the Closing Date, all Tax Returns with respect to any taxable
period for which the applicable statute of limitations (including any
extensions) has not expired and during which an Advisory Entity has served as
investment adviser that were or are required to be filed on or before such date
by or on behalf of a Fund Client were or shall have been filed and were or shall
be complete and correct and all federal and other Taxes, shown or required to be
shown as due on such returns, shall have been paid or provided for. No such Tax
Return or other filing is currently under audit, no assessment has been asserted
with respect to such Tax Returns or other filings, and no requests for waivers
of the time to make any such assessment are pending. None of the Fund Clients is
delinquent in the payment of any material Tax assessment or governmental charge.
(iv) In providing recordkeeping and administrative services in the
ordinary course of business consistent with prior practice 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 Life Insurance Company as of the Closing Date, each Company Life
Insurance Company 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 those failure to comply that are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(v) The merger of IB Holdings, Inc. into IB Holdings LLC qualifies as a
liquidation for purposes of Section 332 of the Code.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of any material proceeding
asserting that the Company or any of its Subsidiaries has committed an unfair
labor practice or seeking to compel it to bargain with any labor union or labor
organization nor is there pending or, to the knowledge of the Company,
threatened, nor has there been for the past five years, any
-23-
EXECUTION COPY
<PAGE>
labor strike, dispute, walk-out, work stoppage, slow-down or lockout involving
the Company or any of its Subsidiaries.
(n) Insurance. All material fire and casualty, general liability,
directors' and officers', errors and omissions and product liability insurance
policies maintained by the Company or any of its Subsidiaries are with reputable
insurance carriers and provide insurance coverage reasonably customary or
adequate for the operation of their respective businesses, except for any such
failures to maintain insurance policies that are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect. The
Company and its Subsidiaries have given notice to insurance carriers of all
material claims that may be covered, and the Company and its Subsidiaries have
not received any refusal of coverage or any notice that a defense will be
afforded with reservation of rights or any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(o) Intellectual Property.
---------------------
(i) The Company and each of its Subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all material patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, trade secrets, computer software programs or
applications, and tangible or intangible proprietary information or materials
("Intellectual Property") that is used in the business of the Company and its
Subsidiaries as currently conducted, except for any such failures to own, be
licensed or possess that are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, and to the knowledge of the
Company all material patents, trademarks, trade names, service marks and
copyrights held by the Company and its Subsidiaries are valid and subsisting.
(ii) Except as is not reasonably likely to have a Company Material
Adverse Effect:
(A) the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to
which the Company is authorized to use any third-party Intellectual
Property;
(B) the Company has not received any notice of any bona fide
claims (I) to the effect that the Company or any of its Subsidiaries is
infringing on any copyright, patent, trademark, trade name, service
mark or trade secret; (II) against
-24-
EXECUTION COPY
<PAGE>
the use by the Company or any of its Subsidiaries, of any Intellectual
Property used in the business of the Company or any of its Subsidiaries
as currently conducted or as proposed to be conducted or (III)
challenging the ownership, validity or effectiveness of any of the
Company Intellectual Property Rights or other trade secret material to
the Company; and
(C) to the knowledge of the Company, there is no infringement
of any of the Company Intellectual Property Rights by any third party,
including any employee or former employee of the Company or any of its
Subsidiaries.
(p) Rights Plan. (i) The board of directors of the Company has taken
all necessary action to render the Rights Agreement inapplicable to the Merger
and the other transactions contemplated by this Agreement and the Stock Option
Agreement.
(ii) The Company has taken all necessary action with respect to all of
the outstanding Rights so that, as of immediately prior to the Effective Time,
(A) neither the Company nor Parent will have any obligations under the Rights or
the Rights Agreement and (B) the holders of the Rights will have no rights under
the Rights or the Rights Agreement.
(q) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement or the
Stock Option Agreement except that the Company has employed Merrill Lynch & Co.
and Lehman Brothers Inc. as its financial advisors, the arrangements with which
have been disclosed to Parent prior to the date hereof.
(r) Insurance Business. (i) Except as otherwise is not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect,
all policies, binders, slips, certificates, guaranteed investment contracts,
annuity contracts and participation agreements and other agreements of insurance
and reinsurance, whether individual or group, in effect as of the date hereof
(including all applications, supplements, endorsements, riders and ancillary
agreements in connection therewith) that are issued by the Company Life
Insurance Companies (the "Company Life Insurance Contracts") and any and all
marketing materials, are, to the extent required under applicable Law, on forms
approved by applicable insurance regulatory authorities or which have been filed
and not objected to by such authorities within the period provided for
objection, and such forms comply in all material respects with the insurance
statutes, regulations and rules applicable thereto. Premium rates established by
the Company Life Insurance Companies that are required to be filed with or
approved by insurance regulatory authorities have been so filed or approved, the
premiums charged conform
-25-
EXECUTION COPY
<PAGE>
thereto in all material respects, and such premiums comply in all material
respects with the insurance statutes, regulations and rules applicable thereto,
except where the failure to be so filed or approved, or to so conform or comply,
is not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(ii) To the knowledge of the Company as of the date hereof, each
insurance agent, third party administrator, manager, marketer, underwriter,
broker, reinsurance intermediary and distributor (each an "Agent"), at the time
such Agent wrote, sold, produced or managed business for any Company Life
Insurance Company was duly licensed (for the type of business written, sold,
produced or managed) and no such Agent violated (or with or without notice or
lapse of time or both, would have violated) any term or provision of any Law
applicable to the writing, sale, production or management of business for any
Company Life Insurance Company, except for such failures to be licensed or such
violations which have been cured, which have been resolved or settled through
agreements with applicable Governmental Entities or which are barred by an
applicable statute of limitations, or that have not had or are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect.
(iii) Prior to the date hereof, the Company has delivered to Parent a
true and correct summary of each material Contract between any Company Life
Insurance Company and any reinsurance intermediary and of each material pooling
agreement to which a Company Life Insurance Company is a party, including all
agreements relating to or arising out of or in connection with the Unicover
pool.
(iv) Prior to the date hereof, the Company has delivered to Parent a
true and complete copy of any actuarial reports prepared by independent
actuaries with respect to reserve adequacy of any Company Life Insurance Company
since December 31, 1997, and all attachments, addenda, supplements and
modifications thereto (the "Company Actuarial Analyses"). To the knowledge of
the Company, the information and data furnished by the Company or any Company
Life Insurance Company to its independent actuaries in connection with the
preparation of the Company Actuarial Analyses were accurate in all material
respects.
(v) To the knowledge of the Company as of the date hereof, all amounts
recoverable under reinsurance, coinsurance or other similar Contracts to which
any Company Life Insurance Company is a party (including, but not limited to,
amounts based on paid and unpaid losses) are fully collectible.
(vi) As of the date hereof, none of Standard & Poor's Corporation,
Moody's Investors Service, Inc. or A.M. Best Company has told the Company that
any rating presently held by the Company Life Insurance Companies is likely to
be modified, qualified, lowered or placed under such surveillance or review for
any reason.
-26-
EXECUTION COPY
<PAGE>
(s) Liabilities and Reserves. (i) The reserves carried on the Company
Life SAP Statements of each Company Life Insurance Company for the year ended
December 31, 1999 for future insurance policy benefits, losses, claims and
similar purposes are in compliance in all material respects with the
requirements for reserves established by the insurance departments of the
jurisdiction of domicile of such Company Life Insurance Company, were determined
in all material respects in accordance with generally accepted actuarial
standards consistently applied and are fairly stated in all material respects in
accordance with sound actuarial principles utilizing actuarial assumptions in
accordance with or more conservative than called for in relevant policy and
contract provisions. The Company has delivered to Parent true, correct and
complete copies of the actuarial valuation reports delivered to the insurance
department of the domiciliary jurisdiction of each Company Life Insurance
Company for the years ended December 31, 1999 and 1998.
(ii) Except for regular periodic assessments in the ordinary course of
business consistent with prior practice or assessments based on developments
which are publicly known within the insurance industry, to the knowledge of the
Company, no claim or assessment is pending or threatened against any Company
Life Insurance Company which is peculiar or unique to such Company Life
Insurance Company by any state insurance guaranty associations in connection
with such association's fund relating to insolvent insurers which if determined
adversely, is, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
(t) Separate Accounts; Investment Advisor. (i) Except as otherwise is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect, each separate account maintained by a Company Life
Insurance Company (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 1940 Act or is duly registered as an investment company
under the 1940 Act. Except as otherwise is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, each
such Company Separate Account, if registered, is operated in compliance with the
1940 Act, has filed all reports and amendments of its registration statement
required to be filed, and has been granted all exemptive relief necessary for
its operations as presently conducted. Except as otherwise is not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect, the Company Life Insurance Contracts under which the Company Separate
Accounts assets are held are duly and validly issued and are binding obligations
of the Company Life Insurance Companies 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
-27-
EXECUTION COPY
<PAGE>
effect to the extent necessary to allow the appropriate Company Life Insurance
Company to receive contributions under such Company Life Insurance Contracts.
(ii) The assets of each Company Separate Account are adequately
diversified within the meaning of, and to the extent required by, Section 817(h)
of the Code.
(iii) Each of the Company Life Insurance Companies is treated for
federal tax purposes as the owner of the assets underlying the respective life
insurance policies and annuity contracts issued, entered into or sold by it.
(u) Material Contracts. All of the material Contracts of the Company
and its Subsidiaries that are required to be described in the Company Reports or
to be filed as exhibits thereto are described in the Company Reports or filed as
exhibits thereto, respectively, and are in full force and effect. True and
complete copies of all such material Contracts have been delivered or made
available by the Company to Parent. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other party is in breach
of or in default under any such Contract except for such breaches and defaults
as are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. Except as are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, neither
the Company nor any of its Subsidiaries is party to any Contract containing any
provision or covenant limiting in any material respect the ability of the
Company or any of its Subsidiaries or, except as specifically identified in
Section 5.1(u) of the Company Disclosure Letter, assuming the consummation of
the transactions contemplated by this Agreement, Parent or any of its
Subsidiaries to (A) sell any products or services of or to any other person, (B)
engage in any line of business or (C) compete with or to obtain products or
services from any person or limiting the ability of any person to provide
products or services to the Company or any of its Subsidiaries.
(v) Investment Contracts, Fund Clients and Advisory Clients.
-------------------------------------------------------
(i) Certain of the Company's Subsidiaries provide investment
management, investment advisory, sub-advisory, administration, distribution or
certain other services (each Contract for such services being referred to as an
"Investment Contract", each other party thereto being referred to as a "Client",
and each Client which is registered as an investment company under the 1940 Act
being referred to as a "Fund Client") to the Clients, a complete list of which
has previously been made available by the Company to Parent. Each of the Fund
Clients (or the company or trust of which it is a series) is duly organized,
validly existing and in good standing under the Laws of its respective
jurisdiction of organization. The Boards of Trustees or Directors of the Fund
-28-
EXECUTION COPY
<PAGE>
Clients operate in all material respects in conformity with the requirements and
restrictions of Sections 9, 10 and 16 of the 1940 Act.
(ii) Except as would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect, each of the Fund
Clients is in compliance with all applicable Laws of the SEC, the NASD, the IRS
and any other governmental agency or self-regulatory body having jurisdiction
over such Fund Client or its distributor or investment adviser and of any state
in which such Fund Client is registered, qualified or sold and with its
prospectus and statement of additional information. Except as would not be,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect, each Fund Client has elected to be treated as, and has
continuously qualified as, a "regulated investment company" under subchapter M
of Chapter 1 of Subtitle A of the Code. Except as would not be, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect,
each Fund Client that is intended to be a tax-exempt municipal bond fund has
satisfied the requirements of Section 852(b)(5) of the Code and is qualified to
pay exempt interest dividends as defined therein.
(iii) Each of the Company's Subsidiaries (each an "Advisory Entity"
and, collectively "Advisory Entities"), a complete list of which has previously
been made available by the Company to the Parent, that provides investment
management, investment advisory or sub-advisory services to any Fund Client or
any other Person (each such other Person, an "Advisory Client") is duly
registered with the SEC as an investment adviser and is not subject to state
regulation. The Company is not an Advisory Entity. No Advisory Client relies
upon the exemptions from registration provided by Sections 3(c)(1), 3(c)(7) or
(except Company Separate Accounts) 3(c)(11) of the 1940 Act.
(iv) Each Fund Client and Advisory Entity has operated and is currently
operating in compliance with all Laws, and with the investment objectives,
policies and restrictions, that are applicable to it or its business except for
such noncompliance as would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect. Each Advisory Entity has been
and is in compliance with each Investment Contract to which it is a party,
except as would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect.
(v) The accounts of each Advisory Client subject to ERISA have been
managed by the applicable Company Subsidiary in compliance in all material
respects with the applicable requirements of ERISA.
-29-
EXECUTION COPY
<PAGE>
(vi) All issued and outstanding shares of common stock and shares or
units of beneficial interest of each Fund Client (collectively, "shares") are,
and at the Effective Time will be, and all of the authorized but unissued shares
of each Fund Client when issued for the consideration described in the current
registration statement relating to that Fund Client will be, duly and legally
issued and outstanding, fully paid, and non- assessable by the Fund Client. No
Fund Client has outstanding any options, warrants, or other rights to subscribe
for or purchase any of its shares, nor is there outstanding any security
convertible into shares of any Fund Client.
(vii) The current prospectus and related registration statement,
including the current statement of additional information, for each of the Fund
Clients (copies of which have been delivered to Parent) conform in all material
respects to the applicable requirements of the Securities Act, the 1940 Act, and
the rules and regulations of the SEC thereunder, as well as the applicable
requirements of the various state securities Laws, and do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(viii) Each Fund Client has filed with the SEC all material contracts,
including all agreements and arrangements for the distribution of shares, to
which a Fund Client is a party or by which a Fund Client or its property is
bound, other than contracts for the purchase or sale of portfolio securities
entered into in the ordinary course of business consistent with prior practice,
that are required to be filed with the SEC. Each contract subject to Section
12(b) or 15 of the 1940 Act has been duly approved at all times in compliance in
all material respects with Section 12(b) or 15 of the 1940 Act and all other
applicable Laws. Each such contract is currently in full force and effect and
has been performed by the relevant entity in accordance with the 1940 Act and
all other applicable Laws. No material default or condition or event that, after
notice or lapse of time or both, would constitute a material default on the part
of the Company or any of its Subsidiaries or, to the knowledge of the Company,
on the part of the other parties to such advisory and sub-advisory agreements,
exists under any of those material contracts.
(ix) All proxy statements to be prepared for use by the Fund Clients in
connection with the transactions contemplated by this Agreement will, with
respect to information provided by the Company, any of its Subsidiaries, or a
Fund Client, not contain any untrue statement of a material fact, or omit to
state any material fact required to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(w) Company Broker/Dealers.
----------------------
-30-
EXECUTION COPY
<PAGE>
(i) The Company operates its broker/dealer operations exclusively
through Washington Square Securities, Inc., Pilgrim Securities Inc., Granite
Investment Services, Inc., Split Rock Financial, Inc., Bancwest Investment
Services, Inc., Financial Northeastern Securities, Inc. and PrimeVest Financial
Services, Inc. (collectively, the "Company Broker/Dealers"). Each Company
Broker/Dealer that is required to be registered as a broker-dealer with the SEC
or under applicable state Laws, is so registered and is registered with each
other Governmental Entity with which it is required to register in order to
conduct its business as now conducted, and is and has been since January 1, 1997
in full compliance with all applicable Laws thereunder, except for any failures
to register or comply which are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect. Each Company
Broker/Dealer is a member organization in good standing of the NASD and such
other organizations in which its membership is required in order to conduct its
business as now conducted except such failures to be in good standing or such
memberships the failure to have or maintain which are not, individually or in
the aggregate, reasonably likely to have a Company Material Adverse Effect.
(ii) Except as are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, no Company Broker/Dealer is,
nor is any "associated person" of it, subject to a "statutory disqualification"
(as such terms are defined in the Exchange Act) or subject to a disqualification
that would be a basis for censure, limitations on the activities, functions or
operations of, or suspension or revocation of the registration of the Company as
broker-dealer, municipal securities dealer, government securities broker or
government securities dealer under Section 15, Section 15B or Section 15C of the
Exchange Act and, to the Company's knowledge, there are no proceedings or
investigations pending by any Governmental Entity or self-regulatory
organization that is reasonably likely to result in any such censure,
limitations, suspension or revocation.
(iii) Except as are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, since its inception, each
Company Broker/Dealer has had net capital (as such term is defined in Rule
15c3-1 under the Exchange Act) that satisfies the minimum net capital
requirements of the Exchange Act and of the laws of any jurisdiction in which
such company conducts business.
(x) Bank Regulatory Matters. (i) Neither the Company nor any of its
Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or
extraordinary supervisory letter from, any Banking Authority.
(ii) Neither the Company nor any of its Subsidiaries has been advised
by any Banking Authority that such Banking Authority is contemplating issuing or
-31-
EXECUTION COPY
<PAGE>
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, supervisory letter
or similar submission.
(iii) At its most recent Community Reinvestment Act examination,
Reliastar Bank received at least a "satisfactory" rating.
5.2 Representations and Warranties of ING, Parent and Merger Sub. ING,
Parent and Merger Sub each hereby represent and warrant to the Company that:
(a) Capitalization. (i) The authorized capital stock of ING consists of
1,500,000,000 ING Shares, of which 966,975,000 ING Shares were issued and
outstanding as of the close of business on December 31, 1999, 100,000,000 A
preference shares, nominal value NLG 2.50 ("A Shares"), 200,000,000 B preference
shares, nominal value NLG 2.50 ("B Shares"), and 900,000,000 cumulative
preference shares, nominal value NLG 2.50 (the "Cumulative Preference Shares"),
of which 87,080,000 A Shares, no B Shares and no Cumulative Preferred Shares
were issued and outstanding as of the close of business on December 31, 1999.
The A Shares, B Shares and Cumulative Preference Shares are sometimes
collectively referred to as the "Preference Shares". All of the outstanding ING
Shares and A Shares have been duly authorized and are validly issued and fully
paid. As of December 31, 1999, 36,848,244 ADSs had been offered and sold in the
United States by or on behalf of ING. At December 31, 1999 ING had no options or
warrants to acquire ING Shares, other than 261,070,062 authorized Warrants A, of
which 47,016,271 were outstanding as of such date; 17,317,132 authorized
Warrants B, of which 17,119,828 were outstanding as of such date; and 23,085,476
options issued pursuant to employee stock option plans. At all times from the
date hereof through consummation of the Merger or termination of this Agreement
ING will have available a number of ING Shares which will be sufficient to
permit consummation of the Merger. Each such ING Share will be validly issued
and fully paid, and will not be subject to any preemptive rights. The ADSs which
will comprise the ESOP Consideration, the Bearer Receipts represented by such
ADSs, and the ING Shares represented by such Bearer Receipts will be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under any applicable "blue sky" or state securities Laws or
insurance securities Laws. Except as set forth above, as of December 31, 1999
there were no ING Shares authorized, reserved, issued or outstanding and no
outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued share capital or other ownership interest of ING.
(ii) The authorized capital stock of Merger Sub consists of 1,000
shares of Common Stock, par value $0.01 per share, all of which are validly
issued and outstanding. All of the issued and outstanding capital stock of
Merger Sub is, and at the
-32-
EXECUTION COPY
<PAGE>
Effective Time will be, owned by Parent, and there are (i) no other shares of
capital stock or voting securities of Merger Sub, (ii) no securities of Merger
Sub convertible into or exchangeable for shares of capital stock or voting
securities of Merger Sub and (iii) no options or other rights to acquire from
Merger Sub, and no obligations of Merger Sub to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Merger Sub. Merger Sub has not conducted any business prior
to the date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident to
its formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of ING, Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its assets or properties
or conduct of its business requires such qualification, except where the failure
to be so organized, qualified or in such good standing, or to have such power or
authority when taken together with all other such failures, is not reasonably
likely to have a Parent Material Adverse Effect. As used herein, the term
"Parent Material Adverse Effect" means a material adverse effect on the
financial condition, properties, business or annual results of operations of ING
and its Subsidiaries taken as a whole, except to the extent that such adverse
effect results from (i) general economic conditions or changes therein, (ii)
financial market fluctuations or conditions, (iii) adverse economic or
regulatory changes or effects in or affecting the financial services industry,
insurance industry, banking industry, or asset management industry generally,
(iv) the announcement of the transactions contemplated herein, or any effect
which would prevent, materially delay or materially impair the ability of Parent
to consummate the transactions contemplated hereby.
(c) Corporate Authority. Each of ING, Parent and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger. This Agreement is a valid and binding
agreement of ING, Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(d) Governmental Filings; No Violations. (i) Other than the reports,
filings, registrations, consents, approvals, permits, authorizations,
applications and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act,
(C) under any foreign competition laws, (D) under the Exchange Act, (E) under
the 1940 Act, (F) under the
-33-
EXECUTION COPY
<PAGE>
Advisers Act, (G) with the NYSE, (H) with the NASD, (I) with the Banking
Authorities, (I) with the Insurance Authorities and (J) with applicable Dutch
regulatory authorities (notice filings), no notices, reports or other filings
are required to be made by ING, Parent or Merger Sub with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
ING, Parent or Merger Sub from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by ING, Parent and Merger Sub and the
consummation by ING, Parent and Merger Sub of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement by ING,
Parent and Merger Sub do not, and the consummation by ING, Parent and Merger Sub
of the Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
governing instruments of ING, Parent and Merger Sub, (B) a breach or violation
of, or a default under, the acceleration of any rights or obligations or the
creation of a lien, pledge, security interest, claim or other encumbrance on the
assets of ING or any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to, any Contracts binding upon ING or any of its Subsidiaries
or any Law or governmental or non-governmental permit or license to which ING or
any of its Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any of the Contracts, except, in the case of
clause (B) or (C) above, for breach, violation, default, acceleration, creation
or change that, individually or in the aggregate, is not reasonably likely to
have a Parent Material Adverse Effect.
(e) ING Reports. (i) ING has filed with the SEC each registration
statement, report, or information statement required to be filed by it since
June 30, 1997, including ING's Annual Report on Form 20-F for the year ended
December 31, 1999 (such report on Form 20-F, the "1999 20-F"), each in the form
(including exhibits, annexes and any amendments thereto) promulgated by the SEC
under the Securities Act or the Exchange Act (collectively, including any such
registration statements, reports, proxy statements and information statements
filed subsequent to the date hereof and as amended and any other filings made
with the SEC since June 30, 1997, the "ING Reports"). As of their respective
dates (or, if amended, as of the date of such amendment), the ING Reports did
not, and any ING Reports filed with the SEC under the Exchange Act subsequent to
the date hereof will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances in which they
were made, not misleading.
-34-
EXECUTION COPY
<PAGE>
(ii) Each of the consolidated balance sheets included in the ING
Reports (including the related notes and schedules) fairly presents in all
material respects, or will fairly present in all material respects, the
consolidated financial position of ING and its Subsidiaries as of its date and
each of the consolidated statements of income and of changes in financial
position included in the ING Reports (including any related notes and schedules)
fairly presents in all material respects, or will fairly present in all material
respects, the results of operations, retained earnings and changes in financial
position, as the case may be, of ING and its Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with accounting principles generally accepted in the
Netherlands consistently applied during the periods involved, except as may be
noted therein, together with any reconciliations therein to GAAP.
(f) Except as disclosed in the ING Reports filed prior to the date
hereof, since the Audit Date until the date hereof, there has not been any
Parent Material Adverse Effect or any development or combination of developments
of which ING has knowledge that has had or is reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(g) Adequate Funds. Parent has and will have at the Effective Time
sufficient funds for the payment of the Merger Consideration and to perform its
obligations under this Agreement.
ARTICLE VI
Covenants
6.1 Interim Operations; Operation of Businesses. The Company covenants
and agrees as to itself and its Subsidiaries that after the date hereof and
prior to the Effective Time (unless Parent shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except as set
forth in the corresponding section of the Company Disclosure Letter or as
otherwise expressly contemplated by this Agreement and the Stock Option
Agreement):
(a) its and its Subsidiaries' business shall be conducted in the
ordinary course of business consistent with prior practice and, to the extent
consistent therewith, it shall use all reasonable efforts to (i) preserve its
business organization intact and maintain its existing relations and goodwill
with customers, suppliers, distributors, agents, regulators, creditors, lessors,
employees and business associates, (ii) maintain and keep material properties
and assets in good repair and condition, ordinary wear and tear
-35-
EXECUTION COPY
<PAGE>
excepted and (iii) maintain in effect all existing governmental permits that are
required for the continued operation of the business of the Company and its
Subsidiaries in all material respects as they are currently conducted;
(b) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries; (ii) amend its certificate
of incorporation or by-laws or comparable governing instruments; (iii) split,
combine or reclassify its outstanding shares of capital stock; (iv) declare, set
aside or pay any dividend payable in cash, stock or property in respect of any
capital stock other than dividends from its direct or indirect wholly-owned
Subsidiaries and other than regular quarterly cash dividends not in excess of
$0.22 per Share; or (v) repurchase, redeem or otherwise acquire, except in
connection with the Stock Plans, or permit any of its Subsidiaries to purchase
or otherwise acquire, any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock;
(c) neither it nor its Subsidiaries shall (i) issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments,
rights or any agreements of any kind to acquire, any shares of its capital stock
of any class or any Voting Debt or any other property or assets (other than
Shares issuable pursuant to options outstanding on the date hereof under the
Stock Plans); (ii) other than in the ordinary course of business consistent with
prior practice, transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any other property or assets (including capital stock of
any of its Subsidiaries) or incur or modify any material indebtedness or other
liability; (iii) incur any indebtedness with a maturity of one year or more; or
(iv) make or authorize or commit for any capital expenditures in excess of five
million dollars ($5,000,000) in the aggregate in excess of those set forth in or
expressly contemplated by the Company's financial plans furnished to Parent or,
by any means, make any acquisition of, or investment in, assets or stock of or
other interest in, any other Person or entity other than portfolio investments
made in the ordinary course of business consistent with past practice;
(d) neither it nor its Subsidiaries shall terminate, establish, adopt,
enter into, make any new, or accelerate the vesting or payment of any existing,
grants or awards under, amend or otherwise modify, any Compensation and Benefit
Plans, except as may be required by law or contractual obligations in effect as
of the date of this Agreement, or increase the salary, wage, bonus or other
compensation of any employees except increases occurring in the ordinary course
of business consistent with prior practice (which shall include normal periodic
performance reviews and related compensation and benefit increases);
-36-
EXECUTION COPY
<PAGE>
(e) neither it nor its Subsidiaries shall (i) (x) settle or compromise
the litigation specified in Section 6.1(e) of the Company Disclosure Letter or
(y) settle or compromise any other claims or litigation for an amount in excess
of two million dollars ($2,000,000) individually with respect to each such other
claim or litigation, (ii) pay, discharge, settle or satisfy any material
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
liabilities and obligations in the ordinary course of business consistent with
prior practice and within the amounts reflected or reserved on the most recent
consolidated financial statements contained in the Company Reports prior to the
date hereof; or (iii) except in the ordinary course of business consistent with
prior practice, enter into, modify, amend or terminate any of its material
Contracts or waive, release or assign any material rights or claims;
(f) it shall not make any Tax election or permit any insurance policy
naming it as a beneficiary or loss-payable payee to be cancelled or terminated
except in the ordinary course of business consistent with prior practice;
(g) neither it nor any of its Subsidiaries shall enter into any
agreement containing any provision or covenant limiting in any material respect
the ability of the Company or any Subsidiary or Affiliate to (i) sell any
products or services of or to any other person, (ii) engage in any line of
business or (iii) compete with or to obtain products or services from any person
or limiting the ability of any person to provide products or services to the
Company or any of its Subsidiaries or Affiliates;
(h) neither it nor its Subsidiaries shall 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 its Subsidiaries on a
consolidated basis, or enter into any new material agreement, treaty or
arrangement which is material to the Company and its Subsidiaries on a
consolidated basis or to the Company Life Insurance Companies on a consolidated
basis (other than the renewal of any existing agreements, treaties or
arrangements);
(i) neither it nor its Subsidiaries shall 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;
(j) neither it nor its Subsidiaries shall, other than as would not be
inconsistent with the Company's or its Subsidiaries' respective investment
guidelines (or following consultation with Parent, consistent with industry
standards), intentionally and materially alter the mix of investment assets of
the Company or the duration or credit quality of such assets;
-37-
EXECUTION COPY
<PAGE>
(k) neither it nor its Subsidiaries shall, other than consistent with
past practices (or following consultation with Parent consistent with industry
standards), intentionally and materially alter the profile of the insurance
liabilities of the Company Life Insurance Companies or materially alter the
pricing practices or policies of the Company Life Insurance Companies;
(l) amend or modify in any material respect or terminate the Lexington
Agreement or waive any material provision thereof;
(m) neither it nor any of its Subsidiaries shall take any action or
omit to take any action that would cause any of the Company's representations
and warranties herein to become untrue in any material respect; and
(n) neither it nor any of its Subsidiaries shall authorize or enter
into an agreement to do any of the foregoing.
6.2 Acquisition Proposals. (a) The Company agrees that neither it nor
any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit or encourage any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or 10% or more of the assets or any equity securities of,
it or any of its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company further agrees that
neither it nor any of its Subsidiaries nor any of the officers and directors of
it or its Subsidiaries shall, and that it shall direct and use its best efforts
to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
provided, however, that nothing contained in this Agreement shall prevent the
Company or its board of directors from (A) complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal; (B)
providing information in response to a request therefor by a Person who has made
an unsolicited bona fide written Acquisition Proposal if the board of directors
receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreement (as defined in Section 9.7), except that such
confidentiality agreement may provide that such Person shall not be prohibited
from submitting an Acquisition Proposal to the board of directors of the
Company; (C) engaging in any
-38-
EXECUTION COPY
<PAGE>
negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal; or (D) recommending such an Acquisition
Proposal to the stockholders of the Company, if and only to the extent that, (i)
in each such case referred to in clause (B), (C) or (D) above, the board of
directors of the Company determines in good faith after consultation with
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under applicable law and (ii)
in each case referred to in clause (C) or (D) above, the board of directors of
the Company determines in good faith (after consultation with its financial
advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal and would, if consummated,
result in a transaction more favorable to the Company's stockholders from a
financial point of view than the transaction contemplated by this Agreement (any
such more favorable Acquisition Proposal being referred to in this Agreement as
a "Superior Proposal"). The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal. The
Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.2. The Company agrees that it will
notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep Parent informed, on a current basis, on the status and
terms of any such proposals or offers and the status of any such discussions or
negotiations. The Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring it or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries.
(b) Notwithstanding anything in this Section 6.2 to the contrary, if,
at any time prior to obtaining the Company Requisite Vote, the Company's board
of directors determines in good faith, on the basis of the advice of its
financial advisors and outside counsel, in response to an Acquisition Proposal
that was unsolicited and that did not otherwise result from a breach of Section
6.2(a), that such proposal is a Superior Proposal, the Company or its board of
directors may terminate this Agreement if, and only if, the Company shall
substantially concurrently with such termination enter into a definitive
agreement containing the terms of a Superior Proposal; provided, however, that
the Company shall not terminate this Agreement pursuant to this sentence, and
any purported termination pursuant to this sentence shall be void and of no
force or effect, unless the Company shall have complied with (i) all the
provisions of this Section 6.2, including the notification provisions in this
Section 6.2, (ii) the following proviso, and
-39-
EXECUTION COPY
<PAGE>
(iii) all applicable requirements of Section 8.3, including the payment of the
termination fee described in Section 8.5(b) prior to or concurrently with such
termination; and provided further, however, that the Company shall not exercise
its right to terminate this Agreement pursuant to this Section 6.2 until after
five business days following Parent's receipt of written notice (a "Notice of
Superior Proposal") advising Parent that the Company's board of directors has
received a Superior Proposal and that such board of directors will, subject to
any action taken by Parent pursuant to this sentence, cause the Company to
accept such Superior Proposal, specifying the material terms and conditions of
the Superior Proposal and identifying the person making such Superior Proposal
(it being understood and agreed that any amendment to the price or any other
material term of a Superior Proposal shall require an additional Notice of
Superior Proposal and a new five business day period).
6.3 Accuracy of Prospectus/Proxy Statement. The Company, ING and Parent
each agrees that none of the information supplied or to be supplied by it or its
Subsidiaries or Affiliates for inclusion or incorporation by reference in (i)
the Registration Statement on Form F-4 to be filed with the SEC in connection
with the issuance of ADSs in the Merger (including the proxy statement and
prospectus (the "Prospectus/Proxy Statement") constituting a part thereof) (the
"F-4 Registration Statement") will, at the time the F-4 Registration Statement
becomes effective under the Securities Act or (ii) the Prospectus/Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to holders of Shares and at the time of the meeting of holders of Shares of the
Company to be held in connection with the Merger, in either such case contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company, ING and Parent each agree that the Form F-4
Registration Statement will comply in all material respects with the applicable
provisions of the of Securities Act and the Exchange Act and the rules and
regulations thereunder.
6.4 Shareholders Meeting. The Company will take, in accordance with
applicable law and its certificate of incorporation and by-laws, all action
necessary to convene a meeting of holders of Shares (the "Shareholders Meeting")
as promptly as reasonably practicable after the execution of this Agreement to
consider and vote upon the approval of this Agreement. Subject to fiduciary
obligations and the requirements of applicable Law, the Company's board of
directors shall recommend such approvals and shall take all lawful action to
solicit such approvals.
6.5 Filings; Other Actions; Notification. (a) ING, Parent and the
Company shall use their respective best reasonable efforts to promptly prepare
and file with the SEC the Prospectus/Proxy Statement as promptly as practicable
after the date hereof, and ING shall use its reasonable best efforts to prepare
and file with the SEC the
-40-
EXECUTION COPY
<PAGE>
F-4 Registration Statement as promptly as practicable after the date hereof.
ING, Parent and the Company each shall use its best reasonable efforts to have
the F-4 Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and promptly thereafter mail the
Prospectus/Proxy Statement to the holders of Shares of the Company. The Company,
ING and Parent shall promptly notify each other of any request by the SEC for
any amendment or supplement to the Proxy Statement/Prospectus and the Form F-4
Registration Statement, respectively, and shall provide each other copies of all
correspondence between the Company, ING or Parent and/or any of their respective
representatives and the SEC. Each of ING and Parent shall also use their best
reasonable efforts to obtain prior to the effective date of the F-4 Registration
Statement all necessary state securities Laws, insurance securities Laws or
"blue sky" permits and approvals required in connection with the Merger and to
consummate the other transactions contemplated by this Agreement and the Stock
Option Agreement.
(b) The Company, ING and Parent shall cooperate with each other and use
(and shall cause their respective subsidiaries to use) their respective best
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on its part under this
Agreement, the Stock Option Agreement and applicable Laws to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
notices, applications, petitions, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals, waivers,
licenses, permits, qualifications, orders and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement and the Stock Option Agreement; provided, however, that nothing
in this Section 6.5 shall require, or be construed to require, ING or Parent, in
connection with the receipt of any regulatory approval, to proffer to, or agree
to (i) sell or hold separate and agree to sell, divest or to discontinue to or
limit, before or after the Effective Time, any assets, businesses, or interest
in any assets or businesses of ING, Parent, the Company or any of their
respective affiliates (or to consent to any sale, or agreement to sell, or
discontinuance or limitation by ING or Parent or the Company, as the case may
be, of any of its assets or businesses) or (ii) agree to any conditions relating
to, or changes or restriction in, the operations of any such asset or businesses
which, in either case, is reasonably likely to have a material adverse effect on
the financial condition, properties, business or annual results of operations of
the Company and its Subsidiaries, taken as a whole, or a material adverse effect
on the financial condition, properties, business or annual results of operations
of ING and its Subsidiaries, taken as a whole. Subject to applicable Laws
relating to the exchange of information (including any obligations pursuant to
any listing agreement with or rules of any securities exchange), ING, Parent
-41-
EXECUTION COPY
<PAGE>
and the Company shall have the right to review and approve (such approval not to
be unreasonably withheld or delayed) in advance, and to the extent practicable
each will consult the other on, all the information relating to ING, Parent or
the Company, as the case may be, and any of their respective Affiliates, that
appear in any filing made with, or written materials submitted to, any third
party and/or any Governmental Entity (including any securities exchange) in
connection with the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreement.
(c) The Company, ING and Parent each shall, upon request by the other,
furnish the other with all true and accurate information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Prospectus/Proxy
Statement or Form F-4 Registration Statement or any other statement, filing,
notice or application made by or on behalf of ING, Parent or the Company or any
of their respective Subsidiaries to any third party and/or any Governmental
Entity in connection with the Merger and the transactions contemplated by this
Agreement and the Stock Option Agreement.
(d) The Company, ING and Parent each shall promptly provide the other
party with copies of all filings made by either the Company, ING or Parent with
any state or federal court, administrative agency, commission or other
Governmental Entity in connection with this Agreement and the Stock Option
Agreement and the transactions contemplated hereby. The Company, ING and Parent
each shall keep the other apprised of the status of matters relating to
completion of the transactions contemplated hereby and thereby, including
promptly furnishing the other with copies of any notices or other communications
received by ING, Parent or the Company, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Merger the other transactions contemplated by this Agreement and the
Stock Option Agreement. The Company shall give prompt notice to the Parent of
any change that is reasonably likely to result in a Company Material Adverse
Effect.
(e) In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person or other legal or
administrative proceeding is commenced that questions the validity or legality
of this Agreement, the Stock Option Agreement, the Merger or the other
transactions contemplated by this Agreement or claims damages in connection
therewith, the Company, ING and Parent each agree to cooperate and use their
best reasonable efforts to defend against and respond thereto.
6.6 Access. Upon reasonable notice, and subject to applicable law, the
Company shall (and shall cause its Subsidiaries and Fund Clients to) afford
Parent's officers, employees, counsel, accountants and other authorized
representatives
-42-
EXECUTION COPY
<PAGE>
("Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to its properties, books, contracts and
records and, during such period, shall (and shall cause its Subsidiaries to)
furnish promptly to the other all information concerning its business,
properties and personnel as may reasonably be requested, provided that no
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company, and provided further that the
foregoing shall not require the Company to permit any inspection, or to disclose
any information, that in the reasonable judgment of the Company would result in
the disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Company shall have used best
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure. All requests for information made pursuant to this Section shall
be directed to an executive officer of the Company or such Person as may be
designated by its officers, as the case may be.
6.7 Stock Exchange. Each of ING and Parent shall use its reasonable
best efforts to cause the ADSs to be issued pursuant to Section 4.5 to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date. The Surviving Corporation shall use its best efforts to
cause the Shares to be de-listed from the NYSE and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
6.8 Publicity. The initial press release with respect to the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement shall be a joint press release. Thereafter, neither the Company, ING
nor Parent shall (i) issue any press release or otherwise make any public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and the Stock Option Agreement or (ii) make any filings with
any third party and/or any Governmental Entity (including any securities
exchange) with respect thereto, in each case without consulting with, and
obtaining the prior consent of, the other party (which consent shall not be
unreasonably withheld or delayed). Notwithstanding the foregoing, a party may,
without consulting with or obtaining the consent of the other party, issue a
press release or otherwise make a public announcement as may be required by Law
or under the applicable rules of any securities exchange if it has used its best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner.
6.9 Benefits; Company Options.
-------------------------
(a) Prior to the Effective Time, the Company will use its reasonable
best efforts so that immediately prior to the Effective Time each Company
Option, whether or not then exercisable, shall be cancelled and only entitle the
holder thereof, as soon as reasonably practicable after surrender thereof, to
receive an amount in cash equal
-43-
EXECUTION COPY
<PAGE>
to the product of (x) the total number of Shares subject to the Company Option
and (y) the excess of the Merger Consideration over the exercise price per Share
under such Company Option. Such cash payment shall be treated as compensation
and shall be subject to any applicable federal or state withholding tax.
(b) Prior to the Effective Time, the Company shall use its reasonable
best efforts so that (i) immediately prior to the Effective Time, each right of
any kind to acquire or receive Shares that may be held, awarded, outstanding,
payable or reserved for issuance under any stock-based Company plan, program or
arrangement (the "Stock Based Plans") and any other Compensation and Benefit
Plans, except with respect to Company Options and the ESOP Plan, shall entitle
the holder thereof to receive an amount in cash equal to the product of (x) the
total number of Shares subject to the right and (y) the Merger Consideration,
and such rights shall otherwise be subject to the terms and conditions
applicable to the rights under the relevant Stock Based Plan or Compensation and
Benefit Plan and (ii) awards under all Stock Based Plans and Compensation and
Benefit Plans (other than the ESOP Plan) providing for cash payments measured by
the value of Shares shall be valued at the Merger Consideration, and such cash
payments shall otherwise be made on the terms and conditions applicable under
the relevant Stock Based Plan or other Compensation and Benefit Plan. At or
prior to the Effective Time, the Company shall adopt appropriate amendments to
the Stock Based Plans and Compensation and Benefit Plans to effectuate the
provisions of this Section.
(c) Parent agrees that during the period commencing at the Effective
Time and ending on December 31st of the year during which the Effective Time
occurs, the individuals who are, as of the Effective Time, employees of the
Company and its Subsidiaries (the "Company Employees") will continue to be
provided with benefits under employee benefit plans which in the aggregate are
substantially comparable to those benefits currently provided to such Company
Employees. Thereafter, it is the intent of Parent that such benefits be
integrated with those benefits provided to other United States-based employees
of Parent's Subsidiaries. Parent will cause each employee benefit plan of Parent
and its Subsidiaries in which Company Employees are eligible to participate (the
"New Plans") to take into account for all purposes thereunder (except for
benefit accruals under any defined benefit pension plan) the service of such
employees with the Company and its Subsidiaries as if such service were with
Parent and its Subsidiaries, to the same extent that such service was credited
under a comparable plan of the Company and its Subsidiaries, except to the
extent duplicative benefits would result. Parent will, and will cause the
Surviving Corporation to, honor in accordance with their terms the Compensation
and Benefit Plans as in effect as of the Effective Time, subject to any
amendment or termination thereof that may be permitted by such terms.
(d) In addition, and without limiting the generality of the foregoing:
(i) each Company Employee shall be immediately eligible to participate without
any
-44-
EXECUTION COPY
<PAGE>
waiting time in each New Plan, to the extent coverage under such New Plan
replaces coverage under a comparable Compensation and Benefit Plan in which such
Company Employee participated immediately before the Effective Time (such plans,
collectively, the "Old Plans"); and (ii) for purposes of each New Plan providing
medical, dental, pharmaceutical and/or vision benefits to any Company Employee,
Parent shall cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan (to the extent such requirement was satisfied
under the comparable Compensation and Benefit Plans) to be waived for such
employee and his or her covered dependents, and Parent shall cause any eligible
expenses incurred by such employee and his or her covered dependents during the
portion of the plan year of the Old Plan ending on the date such employee's
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such employee and his or her
covered dependents for the applicable plan year as if such amounts had been paid
in accordance with such New Plan.
(e) Each bonus payable after the Effective Time with respect to the
Company's Executives' Long-Term Incentive Compensation Program and the Company's
Executives' Annual Incentive Compensation Program and the Company's Annual
Incentive Bonus Plan for Designated Executive Officers to Company Employees
shall be paid entirely in cash.
6.10 Expenses. Except as otherwise provided in Section 8.5(b), whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Stock Option Agreement and the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement shall
be paid by the party incurring such expense, except that expenses incurred in
connection with the filing fee and printing and mailing the Form F-4
Registration Statement and Prospectus/Proxy Statement shall be shared equally by
Parent and the Company. The aggregate fees and expenses paid by the Company to
the financial advisors named in Section 5.1(q) hereof and to the Company's
outside legal counsel in connection with the transactions contemplated by this
Agreement and the Stock Option Agreement shall not exceed twenty-seven million
dollars ($27,000,000).
6.11 Indemnification; Directors' and Officers' Insurance. (a) From and
after the Effective Time, ING agrees that it will indemnify and hold harmless
each present and former director and officer of the Company (when acting in such
capacity), determined as of immediately prior to the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to
-45-
EXECUTION COPY
<PAGE>
the Effective Time, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that the Company would have been permitted
under Delaware law and its certificate of incorporation or by-laws or pursuant
to other agreements in effect on the date hereof to indemnify such Person (and
ING shall also advance expenses as incurred to the fullest extent permitted
under applicable law; provided the Person to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
Person is not entitled to indemnification); and provided further that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Delaware law and
the Company's certificate of incorporation and by-laws shall be made by
independent counsel selected by the Surviving Corporation.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.11, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify ING thereof. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) ING or the Surviving
Corporation shall have the right to assume the defense thereof and ING shall not
be liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if ING or the Surviving
Corporation elects not to assume such defense or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of interest between
ING or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and ING or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that ING shall be obligated pursuant to this paragraph (b) to pay for
only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) ING shall not be liable for any settlement effected without its prior
written consent; and provided, further, that ING shall not have any obligation
hereunder to any Indemnified Party if and when a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law.
(c) ING shall cause the Surviving Corporation to either (i) maintain
the Company's existing officers' and directors' liability insurance for a period
of six years after the Effective Time or (ii) maintain a run-off or tail policy
or endorsement with respect to covering claims asserted within six years after
the Effective Time arising from facts or events that occurred at or before the
Effective Time (either, "D&O Insurance"), in each case so long as the annual
premium therefor is not in excess of 175% of the last annual premium paid prior
to the date hereof (the "Current Premium"); provided,
-46-
EXECUTION COPY
<PAGE>
however, that if the existing D&O Insurance expires, is terminated or cancelled
during such six-year period, the Surviving Corporation will use its reasonable
efforts to obtain as much D&O Insurance as can be obtained for the remainder of
such period for a premium not in excess (on an annualized basis) of 175% of the
Current Premium.
(d) If the Surviving Corporation or any of its successors or assigns
(i) shall consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then, and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in this Section.
(e) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
6.12 Compliance with 1940 Act Section 15. (a) Prior to the Closing, the
Company shall use reasonable best efforts to ensure compliance with Section
15(f) of the 1940 Act, so that the transactions contemplated by this Agreement
will be in compliance immediately after the Closing with Section 15(f) of the
1940 Act, including, to assure that at the time of the Closing at least 75% of
the Board of Directors or Trustees of each Fund Client are not "interested
persons" (as such term is defined in the 1940 Act) of the Surviving Corporation
or the Company.
(b) Parent will use reasonable best efforts to assure compliance with
the conditions of Section 15(f) of the 1940 Act as it applies to the
transactions contemplated by the Agreement. From and after the Closing, Parent
shall conduct the business of the Surviving Corporation, so as to assure that,
insofar as within the control of Parent: (i) for a period of three years after
the Closing Date, at least 75% of the members of the Board of Directors or
Trustees of each Fund Client which enters into a replacement Investment Contract
with an Advisory Entity that constitutes an investment advisory agreement are
not (A) "interested persons" of the Surviving Corporation, or (B) "interested
persons" of the Company; and (ii) there is not imposed on any Fund Client an
"unfair burden" (within the meaning of Section 15(f) of the 1940 Act) as a
result of the transactions contemplated by this Agreement, or any express or
implied terms, conditions or understandings applicable thereto.
6.13 Fund Client Contracts, Distribution Plans and Boards. The Company
shall use its reasonable best efforts to cause (a) the consideration and due
approval by the Board of Directors of each Fund Client and (b) to the extent
required by the 1940 Act, the consideration and due approval by such Fund
Client's securityholders,
-47-
EXECUTION COPY
<PAGE>
of (X) a new Investment Contract (or, where permitted, approval of continuation
of the existing Investment Contract) with the same Advisory Entity to become
effective upon the Closing, in each case, on the same material terms as in
effect on the date hereof under such Investment Contract for the performance by
the relevant Advisory Entity of investment management, investment advisory,
investment subadvisory, distribution or administration services and (Y) an
amended Rule 12b-1 distribution plan, in each case, on the same material terms
as in effect on the date hereof. In addition, the Company shall use its
reasonable best efforts to encourage the Board of Directors of each Fund Client
(or, to the extent required by the 1940 Act, the independent Directors thereof)
(X) to select and nominate, so as to constitute a majority of the independent
Directors of such Board, individuals who are currently serving as independent
directors of investment companies that are advised by an Affiliate of Parent,
and (Y) to nominate one director (who shall not be an independent director) that
is selected by Parent.
6.14 Non-Fund Advisory Contracts. The Company or relevant Advisory
Entity shall notify each Advisory Client of the transactions contemplated by
this Agreement and use its reasonable best efforts to obtain, prior to the
Closing, any necessary consent of each Advisory Client to the "assignment" (as
such term is used in the Advisers Act) of its Investment Contract involving
investment advisory services as a result of the transactions contemplated hereby
in a form reasonably satisfactory to Parent. The Company and Advisory Entity
shall consult with Parent regarding all written communications with Advisory
Clients concerning the obtaining of such assignments.
6.15 Qualification of the Fund Clients; Fund Client Boards. Subject to
applicable fiduciary duties to the Fund Clients, the Company will use its
reasonable best efforts to cause the Fund Clients to take no action (i) that
would prevent any Fund Client from qualifying as a "regulated investment
company", within the meaning of Section 851 of the Code, or (ii) that would be
inconsistent with any Fund Client's prospectus and other offering, advertising
and marketing materials.
6.16 Other Actions by the Company and Parent.
---------------------------------------
(a) Rights. Prior to the Effective Time, the board of directors of the
Company shall take all necessary action to terminate all of the outstanding
Rights, effective immediately prior to the Effective Time.
(b) Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement or the Stock Option Agreement, ING, Parent and its board of directors
and the Company and its board of directors shall each grant such approvals and
take such actions as are necessary so that such transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement or by the
Stock Option Agreement, as the case may be,
-48-
EXECUTION COPY
<PAGE>
or by the Merger and otherwise act to eliminate or minimize the effects of such
statute or regulation on such transactions.
6.17 Appointments. Following the Effective Time, ING will take such
reasonable action as may be necessary or appropriate to seek an invitation by
the Supervisory Board of ING to the person named in Section 6.17 of the Company
Disclosure Letter to join such Supervisory Board at the next meeting of ING's
stockholders as a full member, recognizing that under Dutch law the Supervisory
Board is responsible for appointing its own members and that appointment to the
Supervisory Board requires approval of ING's stockholders and Works Council.
Following the Effective Time, Parent shall cause to be elected to the board of
directors of Parent four of the current directors of the Company reasonably
acceptable to Parent.
ARTICLE VII
Conditions
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly approved
by holders of Shares constituting the Company Requisite Vote in accordance with
applicable law and the certificate and by-laws of the Company.
(b) Regulatory Consents. (i) The waiting period applicable to the
consummation of the Merger under the HSR Act and applicable Insurance Laws shall
have expired or been terminated and (ii) other than the filing provided for in
Section 1.3, all notices, reports and other filings required to be made prior to
the Effective Time by the Company or Parent or any of their respective
Subsidiaries with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby by the
Company, Parent and Merger Sub shall have been made or obtained (as the case may
be), other than (in the case of jurisdictions other than the United States, the
United Kingdom and the Netherlands) those the failure of which to make or obtain
are not, individually or in the aggregate, reasonably likely (as compared to the
situation in which they are made or obtained and taking into account all
possible consequences to the Parent and its Subsidiaries and the Company and its
Subsidiaries of consummating the transactions contemplated by this Agreement
without making or obtaining them) (i) to be material to the Company and its
Subsidiaries, taken as a whole, (ii) to be material to the
-49-
EXECUTION COPY
<PAGE>
Parent and its Subsidiaries, taken as a whole, (iii) to materially and adversely
impact the reasonably anticipated economic and business benefits to the Parent
and its Subsidiaries of the transactions contemplated hereby, (iv) to result in
criminal liability or a more than de minimis civil fine or other penalty against
Parent or any of its Subsidiaries, Affiliates or employees or against the
Company or any of its Subsidiaries, Affiliates or employees, or (v) to result in
Parent and its Subsidiaries being prohibited from conducting, or materially
limited in their ability to conduct, business in any jurisdiction (collectively,
"Governmental Consents").
(c) Litigation.
----------
(i) No court or Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law (including any
Insurance Law) (whether temporary, preliminary or permanent) that is in effect
and restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order").
(ii) No Governmental Entity shall have instituted or threatened to
institute any proceeding that seeks an Order.
(d) ADS Listing. The ADSs issuable pursuant to Section 4.5 of this
Agreement shall have been authorized for listing on the NYSE upon official
notice of issuance.
(e) F-4 Registration Statement. The F-4 Registration Statement shall
have become effective under the Securities Act. No stop order suspending the
effectiveness of the F-4 Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or be threatened, by the
SEC.
(f) Blue Sky. ING and Parent shall have received all state securities
Law, insurance securities Law and "blue sky" permits and approvals necessary to
consummate the Merger.
7.2 Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company set forth in this Agreement which are qualified by
"Company Material Adverse Effect" shall each be true and correct as so qualified
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent any such representation or
warranty expressly speaks as of an earlier
-50-
EXECUTION COPY
<PAGE>
date), (ii) the representations and warranties of the Company set forth in
Sections 5.1(a), 5.1(b), 5.1(c), 5.1(j), 5.1(p) and 5.1(q) of this Agreement
which are not qualified by "Company Material Adverse Effect" shall each be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent any such representation or warranty expressly speaks as of an earlier
date) and (iii) the representations and warranties of the Company set forth in
this Agreement other than those contemplated by clauses (i) and (ii) hereof
(without giving effect to any qualifications as to "materiality" or other
similar qualifications) shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent any such representation or warranty expressly speaks
as of an earlier date), except where the failure of such representations and
warranties to be true and correct (without giving effect to any qualifications
as to "materiality" or other similar qualifications) would not be, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect. Parent shall have received a certificate signed on behalf of the Company
by an executive officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement and the Stock Option Agreement at or prior to the
Closing Date, and Parent shall have received a certificate signed on behalf of
the Company by an executive officer of the Company to such effect.
(c) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the transactions contemplated by this Agreement under any
Contract to which the Company or any of its Subsidiaries is a party, except
those for which the failure to obtain such consent or approval is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or is not reasonably likely to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement and no such consent or approval, and no
Governmental Consent shall require ING to (i) sell or hold separate and agree to
sell, divest or to discontinue to or limit, before or after the Effective Time,
any assets, businesses, or interest in any assets or businesses of Parent, the
Company or any of their respective Affiliates (or to consent to any sale, or
agreement to sell, or discontinuance or limitation by Parent or the Company, as
the case may be, of any of its assets or businesses) or (ii) agree to any
conditions relating to, or changes or restriction in, the operations of any such
asset or businesses which, in either case, is reasonably likely to have a
material adverse effect on the financial condition, properties, business or
annual results of operations of the Company and its Subsidiaries, taken as a
whole, or a material adverse effect on the financial condition, properties,
business or annual results of operations of ING and its Subsidiaries, taken as a
whole.
-51-
EXECUTION COPY
<PAGE>
(d) Client Approvals. The approvals contemplated in Section 6.13 shall
have been obtained for Fund Clients representing at least 75% of the total
assets under management of Fund Clients as of the date hereof. "Total assets
under management" means the aggregate of the net assets of the open-end and
closed end Fund Clients, as adjusted to eliminate increases or decreases
attributable exclusively to positive or negative changes in the market value of
portfolio assets as of the date hereof.
7.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of ING, Parent and Merger Sub set forth in this Agreement which are
qualified by "Parent Material Adverse Effect" shall each be true and correct as
so qualified as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date), (ii) the
representations and warranties of ING, Parent and Merger Sub set forth in
Section 5.2(a), 5.2(b) and 5.2(c) of this Agreement which are not qualified by
"Parent Material Adverse Effect" shall each be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent any such representation
or warranty expressly speaks as of an earlier date), and (iii) the
representations and warranties of ING, Parent and Merger Sub set forth in this
Agreement other than those contemplated by clauses (i) and (ii) hereof (without
giving effect to any qualifications as to "materiality" or other similar
qualifications) shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except to
the extent any such representation or warranty expressly speaks as of an earlier
date), except where the failure of such representations and warranties to be
true and correct (without giving effect to any qualifications as to
"materiality" or other similar qualifications) would not be, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect.
(b) Performance of Obligations of ING, Parent and Merger Sub. Each of
ING, Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of ING, Parent and Merger Sub by authorized officers of ING and Parent to
such effect.
(c) Consents Under Agreements. ING shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any Contract to
which ING or any of its Subsidiaries is a party, except those for which failure
to obtain
-52-
EXECUTION COPY
<PAGE>
such consents and approvals, individually or in the aggregate, is not reasonably
likely to have a Parent Material Adverse Effect.
ARTICLE VIII
Termination
8.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by holders of Shares of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective boards of directors.
8.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either the Company or Parent (and
written notice to the other party) if (a) the Merger shall not have been
consummated by March 31, 2001 whether such date is before or after the date of
approval by the holders of Shares of the Company (the "Termination Date");
provided, however, that the Termination Date shall be automatically extended for
two (2) months (the "Extended Date"), if, on March 31, 2001: (i) any of the
Governmental Consents described in 7.1(b) have not been obtained or waived, (ii)
each of the other conditions to the consummation of the Merger set forth in
Article VII has been satisfied or waived or remains capable of satisfaction, and
(iii) any Governmental Consent that has not yet been obtained is being pursued
diligently and in good faith; (b) the approval of the holders of Shares required
by Section 7.1(a) shall not have been obtained at a meeting duly convened
therefor or at any adjournment or postponement thereof; (c) any Order
permanently restraining, enjoining or otherwise prohibiting consummation of the
Merger shall become final and non- appealable (whether before or after the
approval by the stockholders of the Company); or (d) any Law is in effect or is
adopted or issued which has the effect of prohibiting the Merger; provided that
the right to terminate this Agreement pursuant to clause (a) above shall not be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the occurrence of the failure of the Merger to be consummated.
8.3 Termination by the Company. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval of the holders of Shares referred to in Section
7.1(a), by action of the board of directors of the Company and written notice to
Parent if: (a) there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement that
is not curable and such breach would give
-53-
EXECUTION COPY
<PAGE>
rise to a failure of the condition set forth in Section 7.3(a) or Section 7.3(b)
or (b) in accordance with, and subject to the terms and conditions of, Section
6.2(b).
8.4 Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
board of directors of Parent and written notice to the Company if: (a) the board
of directors of the Company shall have withdrawn or adversely modified its
adoption or recommendation of this Agreement or shall have approved or
recommended a Superior Proposal, or (b) there has been a material breach by the
Company of any representation, warranty, covenant or agreement contained in this
Agreement that is not curable and such breach would give rise to a failure of
the condition set forth in Section 7.2(a) or Section 7.2(b) or (c) Shares or
other securities or assets are issued or delivered pursuant to the terms of the
Rights Agreement upon or following the occurrence of a Section 13 Triggering
Event (as defined in the Rights Agreement) or an Acquiring Person (as defined in
the Rights Agreement) becoming such.
8.5 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, that no such termination
shall relieve any party hereto of any liability or damages resulting from any
deliberate breach of this Agreement occurring prior to such termination. The
parties further agree that if the Company is or becomes obligated to pay a
termination fee pursuant to Section 8.5(b), the right of Parent to receive such
termination fee shall be the sole remedy for damages of Parent with respect to
the facts and circumstances giving rise to such payment obligation except for
any deliberate breach of this Agreement. No party may assert a claim for damages
for any inaccuracy of any representation or warranty contained in this Agreement
(whether by direct claim or counterclaim) except in connection with the
termination of this Agreement.
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 8.4(a), or (ii) this Agreement is terminated by the Company
pursuant to Section 8.3(b), then the Company shall, promptly, but in no event
later than one business day after the date of such termination, pay Parent a
termination fee of one hundred and forty million dollars ($140,000,000) (the
"Termination Fee") and shall promptly, but in no event later than one business
day after being notified of the amount of all documented out-of-pocket charges
and expenses incurred by Parent or Merger Sub in connection with this Agreement
and the transactions contemplated by this Agreement up to a maximum of five
million dollars ($5,000,000) ("Out-of-Pocket Expenses"), pay to Parent an amount
equal to the Out-of-Pocket Expenses, in each case payable by wire transfer of
same day funds. In the event that (i) this Agreement is terminated by Parent or
-54-
EXECUTION COPY
<PAGE>
the Company pursuant to Section 8.2(b) or (ii) this Agreement is terminated by
Parent pursuant to Section 8.4(b), then (A) the Company shall promptly, but in
no event later than one business day after being notified of the Out-of-Pocket
Expenses by Parent, pay to Parent an amount equal to the Out-of-Pocket Expenses,
payable by wire transfer of same day funds and (B) if, in the case of clause
(i), a bona fide Acquisition Proposal shall have become public or any Person
shall have publicly announced an intention (whether or not conditional) to make
a proposal or offer relating to an Acquisition Proposal prior to the date of the
Shareholders Meeting or if, in the case of clause (ii), this Agreement is
terminated by Parent pursuant to Section 8.4(b) as a result of a deliberate
breach by the Company and a bona fide Acquisition Proposal shall have been made
to the Company or become public or any Person shall have announced to the
Company or publicly announced an intention (whether or not conditional) to make
a proposal or offer relating to an Acquisition Proposal prior to the date of
termination, and in the case of each of clause (i) and clause (ii), within
fifteen (15) months from the date of termination, the Company executes and
delivers a definitive agreement with respect to any Acquisition Proposal or an
Acquisition Proposal is consummated (it being understood that in the event the
board of directors of the Company recommends the acceptance by the shareholders
of the Company of a third-party tender offer or exchange offer for at least a
majority of the outstanding Shares, such recommendation shall be treated as
though an agreement with respect to an Acquisition Proposal had been executed),
the Company shall promptly, but in no event later than one business day after
the date of such execution and delivery, or consummation, as the case may be,
pay Parent the Termination Fee. The Company acknowledges that the agreements
contained in this Section 8.5(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent and
Merger Sub would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to this Section 8.5(b), and, in
order to obtain such payment, Parent or Merger Sub commences a suit which
results in a judgment against the Company for the fee set forth in this
paragraph (b), the Company shall pay to Parent or Merger Sub its costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Citibank N.A. in effect
on the date such payment was required to be made.
ARTICLE IX
Miscellaneous and General
9.1 Survival. This Article IX and the agreements of the Company, ING,
Parent and Merger Sub contained in Article IV, Sections 6.7 (Stock Exchange),
6.9 (Benefits; Company Options), 6.10 (Expenses) and 6.11 (Indemnification;
Directors' and Officers' Insurance) shall survive the consummation of the
Merger. This Article IX, the
-55-
EXECUTION COPY
<PAGE>
agreements of the Company, Parent and Merger Sub contained in Section 6.10
(Expenses) and Section 8.5 (Effect of Termination and Abandonment) shall survive
the termination of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement shall not survive the consummation of
the Merger or the termination of this Agreement.
9.2 Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties
hereby irrevocably submit to the jurisdiction of the Federal courts of the
United States of America located in the State of Delaware solely in respect of
the interpretation and enforcement of the provisions of this Agreement and the
Stock Option Agreement and of the documents referred to in this Agreement and
the Stock Option Agreement, and in respect of the transactions contemplated
hereby and thereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement and the Stock
Option Agreement or any such document may not be enforced in or by such courts,
and the parties hereto irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in such a Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
-56-
EXECUTION COPY
<PAGE>
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE STOCK OPTION AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE STOCK OPTION AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE STOCK OPTION AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE STOCK OPTION AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to ING, Parent or Merger Sub
ING America Insurance Holdings, Inc.
5780 Powers Ferry Road, NW
Atlanta, Georgia 30327-4390
Attention: Michael W. Cunningham,
Executive Vice President &
Chief Financial Officer
Fax: 770-980-3303
B. Scott Burton
Senior Vice President &
Chief Counsel
Fax: 770-850-7660
with copies to:
Strawinskylaan 2631, 1077 ZZ Amsterdam,
-57-
EXECUTION COPY
<PAGE>
P.O. Box 810,
1000 Av. Amsterdam, the Netherlands
Attention: Fred Hubbell
Executive Board Member
Fax: +31-20-541-5402
Diederik van Wassenaer
General Counsel
Fax: +31-20-541-8723
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Stephen M. Kotran, Esq.,
William D. Torchiana, Esq.,
Fax: 212-558-3588
if to the Company
Reliastar Financial Corp.,
20 Washington Avenue South
Minneapolis, Minnesota 55401
Attention: Richard R. Crowl, Esq.
Fax: 612-342-3160
with copies to:
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10019
Attention: Elliott V. Stein, Esq.
Fax: 212-403-2000
and
Faegre & Benson LLP
2200 Norwest Center
90 South 7th Street
Minneapolis, Minnesota 55402
Attention: Thomas G. Morgan, Esq.
-58-
EXECUTION COPY
<PAGE>
Fax: 612-336-3026
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7 Entire Agreement; NO OTHER REPRESENTATIONS. This Agreement
(including any exhibits hereto), the Company Disclosure Letter, the Stock Option
Agreement and the Confidentiality Agreement, dated March 9, 2000 (the
"Confidentiality Agreement"), between Parent and the Company constitute the
entire agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties, with
respect to the subject matter hereof.
9.8 No Third Party Beneficiaries. Except as provided in Section 6.11
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9 Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including penalties and interest)
incurred in connection with the Merger shall be paid by Parent and Merger Sub
when due, and Parent and Merger Sub will indemnify the Company against liability
for any such taxes.
9.11 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
-59-
EXECUTION COPY
<PAGE>
9.12 Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Unless the context otherwise requires, the use of the singular
shall include the plural, the use of the masculine shall include the feminine,
and vice versa. As used in this Agreement, the antecedent of any personal
pronoun shall be deemed to be only the next preceding proper noun or nouns, as
appropriate for such pronoun. As used in this Agreement, any reference to any
law, rule or regulation shall be deemed to include a reference to any
amendments, revisions or successor provisions to such law, rule or regulation.
9.13 Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Parent may designate, by written
notice to the Company, another wholly owned direct or indirect subsidiary to be
a Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other subsidiary, except
that all representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other subsidiary as of the date of such designation.
-60-
EXECUTION COPY
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
RELIASTAR FINANCIAL CORP.
By: /s/ Richard R. Crowl
---------------------------------
Richard R. Crowl
Senior Vice President
General Counsel and Secretary
ING GROEP, N.V.
By: /s/ Michael W. Cunningham
---------------------------------
Michael W. Cunningham
Attorney-in-fact
ING AMERICA INSURANCE HOLDINGS, INC.
By: /s/ Michael W. Cunningham
---------------------------------
Michael W. Cunningham
Executive Vice President and
Chief Financial Officer
SHP ACQUISITION CORP.
By: /s/ Michael W. Cunningham
---------------------------------
Michael W. Cunningham
President
-61-
EXECUTION COPY
EXHIBIT 3
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of April 30, 2000 (this
"Agreement"), is between Reliastar Financial Corp., a Delaware corporation
("Issuer") and ING America Insurance Holdings, Inc., a Delaware corporation
("Grantee").
RECITALS
A. The Merger Agreement. Prior to the entry into this Agreement and
prior to the grant of the Option, Issuer, ING Groep N.V., Grantee, and SHP
Acquisition Corp., a wholly-owned subsidiary of Grantee ("Merger Sub") have
entered into an Agreement and Plan of Merger, dated as of the date of this
Agreement (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement), pursuant to which
Grantee and Issuer intend to effect a merger of Merger Sub with and into Issuer
(the "Merger").
B. The Stock Option Agreement. As an inducement and condition to
Grantee's and Merger Sub's willingness to enter into the Merger Agreement, and
in consideration thereof, the board of directors of Issuer has approved the
grant to Grantee of the Option pursuant to this Agreement and the acquisition of
Shares by Grantee pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth in this Agreement and in the Merger
Agreement, the parties agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms of this
Agreement, up to 8,873,630 fully paid and nonassessable Shares at a price per
share in cash equal to $54.00 (the "Option Price"); provided, however, that in
no event shall the number of shares for which the Option is exercisable exceed
9.9% of the Shares issued and outstanding at the time of exercise (without
giving effect to the Shares issued or issuable under the Option) (the "Maximum
Applicable Percentage"). The number of Shares purchasable upon exercise of the
Option and the Option Price are subject to adjustment as set forth in this
Agreement.
(b) In the event that any additional Shares are issued or otherwise
become outstanding after the date of this Agreement (other than pursuant to an
event described in Section 7 of this Agreement), the aggregate number of Shares
purchasable upon exercise of the Option (inclusive of Shares, if any, previously
purchased upon exercise of the Option) shall automatically be increased (without
any further action on the part of Issuer
<PAGE>
or Grantee being necessary) so that, after such issuance, it equals the
Maximum Applicable Percentage. Any such increase shall not affect the Option
Price.
2. Exercise; Closing. (a) Conditions to Exercise; Termination. Grantee
or any other person that shall become a holder of all or a part of the Option in
accordance with the terms of this Agreement (each such person being referred to
in this Agreement as the "Holder") may exercise the Option, in whole or in part,
by delivering a written notice thereof as provided in Section 2(d) at any time
following the occurrence of a Triggering Event unless prior to such Triggering
Event the Effective Time shall have occurred. If no notice pursuant to the
preceding sentence has been delivered prior thereto, the Option shall terminate
upon either (I) the occurrence of the Effective Time or (ii) the close of
business on the earlier of (x) the day 180 days after the date that Grantee
becomes entitled to receive the Termination Fee under Section 8.5(b) of the
Merger Agreement (or if, at the expiration of such 180 days, the Option cannot
be exercised by reason of any applicable judgment, decree, order, law or
regulation, 10 business days after such impediment to exercise shall have been
removed) and (y) the date that Grantee is no longer potentially entitled to
receive the Termination Fee under Section 8.5(b) of the Merger Agreement for a
reason other than that Grantee has already received the Termination Fee.
(b) Triggering Event. A "Triggering Event" shall have occurred if the
Merger Agreement is terminated and Grantee thereby becomes entitled to receive
the Termination Fee pursuant to Section 8.5(b) of the Merger Agreement.
(c) Notice of Triggering Event by Issuer. Issuer shall notify Grantee
promptly in writing of the occurrence of any Triggering Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of the Holder to exercise the Option.
(d) Notice of Exercise by Grantee. If a Holder shall be entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
date of which is referred to in this Agreement as the "Notice Date") specifying
(i) the total number of shares that the Holder will purchase pursuant to such
exercise and (ii) a place and date (a "Closing Date") not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase (a "Closing"); provided, that if a filing is required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or any other notice, report, filing or approval is required with
respect to any Governmental Entity in connection with such purchase, (x) the
Holder or Issuer, as required, promptly after the giving of such notice shall
file the required notice, report, filing or application for approval and shall
expeditiously process the same and (y) the period of time referred to in clause
(ii) above shall commence on the date on which the Holder furnishes to Issuer a
supplemental written notice setting forth the Closing Date,
-2-
<PAGE>
which notice shall be furnished as promptly as practicable after all required
notification, reporting or filing periods shall have expired or been terminated,
all required approvals shall have been obtained and all requisite waiting
periods shall have passed. Each of the Holder and the Issuer agrees to use its
reasonable best efforts to cooperate with and provide information to Issuer or
Holder, as the case may be, for the purpose of any required notice, report,
filing or application for approval.
(e) Payment of Purchase Price. At each Closing, the Holder shall pay to
Issuer the aggregate purchase price for the Shares purchased pursuant to the
exercise of the Option in immediately available funds by a wire transfer to a
bank account designated by Issuer; provided, that failure or refusal of Issuer
to designate such a bank account shall not preclude the Holder from exercising
the Option, in whole or in part.
(f) Delivery of Common Stock. At such Closing, simultaneously with the
payment of the purchase price by the Holder, Issuer shall deliver to the Holder
a certificate or certificates representing the number of Shares purchased by the
Holder, which Shares shall be free and clear of all liens, charges, encumbrances
or security interests ("Liens") and, if the Option shall be exercised in part
only, a new Option evidencing the rights of the Holder to purchase the balance
(as adjusted pursuant to Section 1(b)) of the Shares then purchasable under this
Agreement.
(g) Restrictive Legend. Certificates for Shares delivered at a Closing
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of
1933, as amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act of 1933, as amended (the "Securities
Act"). In addition, such certificates shall bear any other legend as may be
required by applicable law.
(h) Ownership of Record; Tender of Purchase Price; Expenses. Upon the
giving by the Holder to Issuer of a written notice of exercise referred to in
Section 2(d) and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of Issuer shall then be closed or that certificates representing such
Shares shall not have been delivered to the Holder. Issuer
-3-
<PAGE>
shall pay all expenses, and any and all United States federal, state and local
taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and
covenants in this Agreement, Issuer agrees:
(a) Shares Reserved for Issuance. It will maintain, free from
preemptive rights, sufficient authorized but unissued or treasury Shares to
issue the appropriate number of Shares pursuant to the terms of this Agreement
so that the Option may be fully exercised without additional authorization of
Shares after giving effect to all other options, warrants, convertible
securities and other rights of third parties to purchase Shares from Issuer.
(b) No Avoidance. It will not avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger, issuance of
rights, dissolution or sale of assets, or by any other voluntary act) the
observance or performance of any of the covenants, agreements or conditions to
be observed or performed under this Agreement by Issuer.
(c) Further Assurances. Promptly after the date of this Agreement it
will take all actions as may from time to time be required (including (i)
complying with all applicable premerger notification, reporting and waiting
period requirements under the HSR Act and (ii) in the event that prior notice,
report, filing or approval with respect to any Governmental Entity is necessary
under any applicable foreign or United States federal, state or local law before
the Option may be exercised, cooperating fully with the Holder in preparing and
processing the required applications or notices) in order to permit each Holder
to exercise the Option and purchase Shares pursuant to such exercise and to take
all action necessary to protect the rights of the Holder against dilution.
(d) Stock Exchange Listing. It will use its reasonable best efforts to
cause the Shares to be issued pursuant to the Option to be approved for listing
(to the extent they are not already listed) on the New York Stock Exchange
("NYSE") and on all other stock exchanges on which Shares of the Issuer are then
listed, subject to official notice of issuance.
4. Representations and Warranties of Issuer. Issuer represents and
warrants to Grantee as follows:
(a) Merger Agreement. Issuer hereby makes each of the
representations and warranties contained in Sections 5.1(a)(i), (b),
(c) (first
-4-
<PAGE>
sentence), (d)(i), (d)(ii), (j), (p) and (q) of the Merger
Agreement as they relate to Issuer and this Agreement, as if such
representations were set forth in this Agreement.
(b) Shares Reserved for Issuance; Capital Stock. Issuer has taken
all necessary corporate action to authorize and reserve, free from
preemptive rights, and permit it to issue, at all times from the date
hereof until the obligation to deliver Shares upon the exercise of the
Option terminates, sufficient authorized but unissued or treasury
Shares so that the Option may be fully exercised without additional
authorization of Shares after giving effect to all other options,
warrants, convertible securities and other rights of third parties to
purchase Shares from Issuer, and all such Shares, upon issuance
pursuant to the Option, will be duly authorized, validly issued, fully
paid and nonassessable, and will be delivered free and clear of all
claims, Liens (other than those created by this Agreement) and not
subject to any preemptive rights.
5. Representations and Warranties of Grantee. Grantee represents and
warrants to Issuer that Grantee has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute, deliver and
perform its obligations under and to consummate the transactions contemplated by
this Agreement. This Agreement has been duly and validly executed and delivered
by Grantee and constitutes a valid and binding agreement of Grantee enforceable
against Grantee in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
6. Exchange; Replacement. This Agreement and the Option granted by this
Agreement are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of Shares
purchasable at such time under this Agreement, subject to corresponding
adjustments in the number of Shares purchasable upon exercise so that the
aggregate number of such Shares under all stock option agreements issued in
respect of this Agreement shall not exceed the Maximum Applicable Percentage.
Unless the context shall require otherwise, the terms "Agreement" and "Option"
as used in this Agreement include any stock option agreements and related
Options for which this Agreement (and the Option granted by this Agreement) may
be exchanged. Upon (i) receipt by Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction of this Agreement, or mutilation of this
Agreement, (ii) receipt by Issuer of reasonably satisfactory indemnification in
the case of loss, theft or destruction of this Agreement and (iii) surrender and
cancellation of this Agreement in the case of mutilation, Issuer will execute
and deliver a new Agreement of
-5-
<PAGE>
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by any person other than the holder of the new Agreement.
7. Adjustments. In addition to the adjustment to the total number of
Shares purchasable upon exercise of the Option pursuant to Section 1(b), the
total number of Shares purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as follows:
(a) In the event of any change in the outstanding shares of Common
Stock by reason of stock dividends, stock splits, split-ups, mergers,
recapitalizations, reclassifications, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of
Shares purchasable upon exercise of the Option shall be appropriately
adjusted, and proper provision shall be made in the agreements
governing any such transaction, so that (i) any Holder shall receive
upon exercise of the Option the number and class of shares, other
securities, property or cash that such Holder would have received in
respect of the Shares purchasable upon exercise of the Option if the
Option had been exercised and such Shares had been issued to such
Holder immediately prior to such event or the record date therefor, as
applicable, and (ii) in the event any additional Shares are to be
issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of
Shares purchasable upon exercise of the Option shall be increased so
that, after such issuance and together with Shares previously issued
pursuant to the exercise of the Option (as adjusted on account of any
of the foregoing changes in the Shares), the number of Shares so
purchasable equals the Maximum Applicable Percentage of the number of
Shares issued and outstanding immediately after the consummation of
such change.
(b) Whenever the number of Shares purchasable upon exercise of the
Option is adjusted as provided in this Section 7, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which is equal to the number of Shares purchasable prior
to the adjustment and the denominator of which is equal to the number
of Shares purchasable after the adjustment.
8. Registration. (a) Upon the occurrence of a Triggering Event, Issuer
shall, at the request of Grantee delivered in the written notice of exercise of
the Option provided for in Section 2(d), as promptly as practicable prepare,
file and keep current a shelf registration statement under the Securities Act
covering any or all Shares issued and issuable pursuant to the Option and shall
use its best efforts to cause such registration statement to become effective
and remain current in order to permit the sale or other
-6-
<PAGE>
disposition of any Shares issued upon total or partial exercise of the Option
("Option Shares") in accordance with any plan of disposition requested by
Grantee; provided, however, that Issuer may postpone filing a registration
statement relating to a registration request by Grantee under this Section 8 for
a period of time (not in excess of 30 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective as soon
as practicable and then to remain effective for one year from the day such
registration statement first becomes effective or until such earlier date as all
Shares registered shall have been sold by Grantee. In connection with any such
registration, Issuer and Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in connection
with such registrations. If requested by Grantee in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such Shares, but only to the extent of obligating Issuer in
respect of representations, warranties, indemnities, contribution and other
agreements customarily made by issuers in such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the sale or
other disposition of the Shares or other securities pursuant to a registration
statement filed pursuant to Section 8(a) shall occur substantially
simultaneously with the exercise of the Option. Any registration statement
prepared and filed under this Section 8, and any sale covered thereby, shall be
at Issuer's expense, except for underwriting discounts or commissions and
brokers fees.
9. Repurchase of Option and/or Shares. (a) Repurchase; Repurchase
Price. Upon the occurrence of a Triggering Event, (i) at the request of a
Holder, delivered in writing within 180 days of such occurrence (or such later
period as provided in Section 2(d) with respect to any required notice or
application or in Section 10), Issuer shall repurchase the Option from the
Holder, in whole or in part, at a price (the "Option Repurchase Price") equal to
the number of Shares then purchasable upon exercise of the Option (or such
lesser number of Shares as may be designated in the Repurchase Notice)
multiplied by the amount by which the market/offer price exceeds the Option
Price and (ii) at the request of a Holder or any person who has been a Holder
(for purposes of this Section 9 only, each such person being referred to as a
"Holder"), delivered in writing within 180 days of such occurrence (or such
later period as provided in Section 2(d) with respect to any required notice or
application or in Section 10), Issuer shall repurchase such number of Option
Shares from such Holder as the Holder shall designate in the Repurchase Notice
at a price (the "Option Share Repurchase Price") equal to the number of Shares
designated multiplied by the market/offer price. The term "market/offer
price" shall mean the highest of (x) the highest price per Share at which an
Acquisition Proposal for Shares has been made, (y) the price per Share to be
paid by any third party pursuant to an agreement relating to an Acquisition
Proposal with Issuer and (z) the
-7-
<PAGE>
highest trading price for Shares on the NYSE (or, if the Shares are not then
listed on the NYSE, any other national securities exchange or automated
quotation system on which the Shares are then listed or quoted) within the
120-day period immediately preceding the delivery of the Repurchase Notice. In
the event that an Acquisition Proposal is made for the Shares or an agreement is
entered into relating to an Acquisition Proposal involving consideration other
than cash, the value of the securities or other property issuable or deliverable
in exchange for the Shares shall (I) if such consideration is in securities and
such securities are listed on a national securities exchange, be determined to
be the highest trading price for such securities on such national securities
exchange within the 120-day period immediately preceding the delivery of the
Repurchase Notice or (II) if such consideration is not securities, or if in
securities and such securities are not traded on a national securities exchange,
be determined in good faith by a nationally recognized investment banking firm
selected by an investment banking firm designated by Grantee and an investment
banking firm designated by Issuer.
(b) Method of Repurchase. A Holder may exercise its right to require
Issuer to repurchase the Option, in whole or in part, and/or any Option Shares
then owned by such Holder pursuant to this Section 9 by surrendering for such
purpose to Issuer, at its principal office, this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices stating
that the Holder elects to require Issuer to repurchase the Option and/or such
Option Shares in accordance with the provisions of this Section 9 (each such
notice, a "Repurchase Notice"). As promptly as practicable, and in any event
within two business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of the Repurchase Notice relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the
applicable Option Repurchase Price and/or the Option Share Repurchase Price. Any
Holder shall have the right to require that the repurchase of Option Shares
shall occur immediately after the exercise of all or part of the Option. In the
event that the Repurchase Notice shall request the repurchase of the Option in
part, Issuer shall deliver with the Option Repurchase Price a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock purchasable pursuant to the Option at the time of delivery of
the Repurchase Notice minus the number of Shares represented by that portion of
the Option then being repurchased.
(c) Effect of Statutory or Regulatory Restraints on Repurchase. To the
extent that, upon or following the delivery of a Repurchase Notice, Issuer is
prohibited under applicable law or regulation from repurchasing the Option (or
portion thereof) and/or any Option Shares subject to such Repurchase Notice (and
Issuer will undertake to use its reasonable best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), Issuer shall immediately so
notify the Holder in writing and thereafter deliver or cause to be delivered,
from time to time, to the Holder the portion of the Option Repurchase Price
-8-
<PAGE>
and the Option Share Repurchase Price that Issuer is no longer prohibited from
delivering, within two business days after the date on which it is no longer so
prohibited; provided, however, that upon notification by Issuer in writing of
such prohibition, the Holder may, within five days of receipt of such
notification from Issuer, revoke in writing its Repurchase Notice, whether in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder that portion of the Option Repurchase
Price and/or the Option Share Repurchase Price that Issuer is not prohibited
from delivering; and (ii) deliver to the Holder, as appropriate, (A) with
respect to the Option, a new stock option agreement evidencing the right of the
Holder to purchase that number of Shares for which the surrendered stock option
agreement was exercisable at the time of delivery of the Repurchase Notice less
the number of shares as to which the Option Repurchase Price has theretofore
been delivered to the Holder, and/or (B) with respect to Option Shares, a
certificate for the Option Shares as to which the Option Share Repurchase Price
has not theretofore been delivered to the Holder. Notwithstanding anything to
the contrary in this Agreement, including, without limitation, the time
limitations on the exercise of the Option, the Holder may give notice of
exercise of the Option for 180 days after a notice of revocation has been issued
pursuant to this Section 9(c) and thereafter exercise the Option in accordance
with the applicable provisions of this Agreement.
(d) Acquisition Transactions. In addition to any other restrictions or
covenants, Issuer agrees that, in the event that a Holder delivers a Repurchase
Notice, Issuer shall not enter or agree to enter into an agreement or series of
agreements relating to a merger with or into or the consolidation with any other
person or entity, the sale of all or substantially all of the assets of Issuer
or any similar disposition unless the other party or parties to such agreement
or agreements agree to assume in writing Issuer's obligations under Section 9(a)
and, notwithstanding any notice of revocation delivered pursuant to the proviso
to Section 9(c), a Holder may require such other party or parties to perform
Issuer's obligations under Section 9(a) unless such party or parties are
prohibited by law or regulation from such performance, in which case such party
or parties shall be subject to the obligations of the Issuer under Section 9(c).
(e) Repurchase at the Option of the Issuer. (i) To the extent the
Grantee shall not have previously exercised its rights under Section 9(a), at
the request of the Issuer made at any time after the tenth day following a
Closing pursuant to Section 2 hereof and for a period ending 120 days after the
termination of the Option in accordance with Section 2 hereof (the "Call
Period"), the Issuer may repurchase from the Grantee, and the Grantee shall
sell, or cause to be sold, to the Issuer, all (but not less than all) of the
Option Shares acquired by the Grantee pursuant hereto and with respect to which
the Grantee has ownership at the time of such repurchase at a price per Option
Share equal to the greater of (A) the market/offer price and (B) the Option
Price per share in respect of the Option Shares so acquired (such price per
Option Share multiplied by the number of
-9-
<PAGE>
Option Shares to be repurchased pursuant to this Section 9(e) being herein
called the "Call Consideration"). The date on which the Issuer exercises its
rights under this Section 9(e) is referred to as the "Call Date."
(ii) If the Issuer exercises its rights under this Section 9(e), the
Issuer shall, within ten business days pay the Call Consideration in immediately
available funds, and the Grantee shall surrender to the Issuer certificates
evidencing the Option Shares purchased hereunder, and the Grantee shall warrant
to the Issuer that, immediately prior to the repurchase thereof pursuant to this
Section 9(e), the Grantee had sole record and beneficial ownership of such
Option Shares and that such shares were then held free and clear of all Liens.
(iii) To the extent that the Grantee shall exercise the Option, the
Grantee shall, unless the Grantee shall exercise its rights under Section 9(a)
or the Issuer shall exercise the Call Right, retain sole ownership of the Option
Shares so acquired through the end of the Call Period.
10. Extension of Exercise Periods. The 180-day periods for exercise of
certain rights under Sections 2 and 9 shall be extended in each such case at
there quest of the Holder to the extent necessary to avoid liability by the
Holder under Section 16(b) of the Securities Exchange Act of 1934, as amended,
by reason of such exercise.
11. Assignment. Neither party may assign any of its rights or
obligations under this Agreement or the Option to any other person without the
express written consent of the other party except that Grantee may, without the
prior written consent of Issuer assign the Option, in whole or in part, to any
affiliate of Grantee. Any attempted assignment in contravention of the preceding
sentence shall be null and void.
12. Filings; Other Actions. Issuer and Grantee each will use its best
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary for the consummation of the transactions
contemplated by this Agreement.
13. Specific Performance. The parties acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party and that the
obligations of the parties shall be specifically enforceable through injunctive
or other equitable relief.
14. Severability. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated. If for any reason such
-10-
<PAGE>
court or regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to Section 9, the
full number of Shares provided in Section 1(a) of this Agreement (as adjusted
pursuant to Sections 1(b) and 7 of this Agreement), it is the express intention
of Issuer to allow the Holder to acquire or to require Issuer to repurchase such
lesser number of Shares as may be permissible, without any amendment or
modification of this Agreement.
15. Notices. Notices, requests, instructions, or other documents to be
given under this Agreement shall be in writing and shall be deemed given (i)
three business days following sending by registered or certified mail, postage
prepaid, (ii) when sent, if sent by facsimile, provided that a copy of the fax
is promptly sent by U.S. mail, (iii) when delivered, if delivered personally to
the intended recipient, and (iv) one business day later, if sent by overnight
delivery via a national courier service, in each case at the respective
addresses of the parties set forth in the Merger Agreement.
16. Expenses. Except as otherwise expressly provided in this Agreement
or in the Merger Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expense, including fees and expenses of its own
financial consultants, investment bankers, accountants, and counsel.
17. Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter of this Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties and their respective successors and permitted assigns. Nothing in
this Agreement, is intended to confer upon any person or entity, other than the
parties to this Agreement, and their respective successors and permitted
assigns, any rights or remedies under this Agreement.
18. Governing Law and Venue; Waiver of Jury Trial.
---------------------------------------------
(a) This Agreement shall be deemed to be made in and in all respects
shall be interpreted, construed and governed by and in accordance with Delaware
law without regard to the conflict of law principles thereof. The parties
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States of America
located in Wilmington, Delaware (the "Delaware Courts") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
by this Agreement (and agree not to commence any litigation relating thereto
except in such Delaware Courts), waive any objection to the laying of venue of
any such litigation in the Delaware Courts and agree not to plead or claim in
any
-11-
<PAGE>
Delaware Court that such litigation brought therein has been brought in an
inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.
19. Captions. The Section and paragraph captions in this Agreement are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions of this
Agreement.
20. Limitation on Profit. (a) Notwithstanding any other provision of
this Agreement, in no event shall the Grantee's Total Profit (as defined
herein)exceed in the aggregate $150 million (the "Maximum Amount") and, if it
otherwise would exceed such amount, the Grantee, at its sole election, shall
either: (i) reduce the number of Shares subject to this Option; (ii) deliver to
the Issuer for cancellation Option Shares previously purchased by Grantee; (iii)
pay cash to the Issuer; or (iv) any combination thereof, so that Grantee's
actually realized Total Profit shall not exceed the Maximum Amount taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) which would
exceed the Maximum Amount and, if exercise of the Option otherwise would result
in the Notional Total Profit exceeding such amount, Grantee, at its discretion,
may (in addition to any of the actions specified in Section 20(a) above) (i)
reduce the number of Shares subject to the Option or (ii) increase the Option
Price for that number of Shares set forth in the exercise notice so that the
Notional Total Profit shall not exceed the Maximum Profit; provided, that
nothing in this
-12-
<PAGE>
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date.
(c) As used in this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) (x) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
or any Option Shares pursuant to Section 9, less, in the case of any repurchase
of Option Shares, (y) the Grantee's purchase price for such Option Shares, as
the case may be plus (ii) (x) the net cash amounts received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party, less (y) the
Grantee's purchase price of such Option Shares plus (iii) any Termination Fee
paid by the Issuer and received by the Grantee pursuant to Section 8.5(b) of the
Merger Agreement minus (iv) (x) the amounts of any cash previously paid by
Grantee to Issuer pursuant to this Section 20 plus the value of the Option
Shares (or other securities) previously delivered by Grantee to Issuer for
cancellation pursuant to this Section 20.
(d) As used in this Agreement, the term "Notional Total Profit" with
respect to any number of Shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such proposal
assuming that this Option were exercised on such date for such number of Shares
and assuming that such Shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Shares as of the close of business on the preceding trading
day (less customary brokerage commissions).
(e) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, any Termination Fee provided for in Section 8.5(b)
of the Merger Agreement; provided that if and to the extent the Total Profit
received by Grantee would exceed the Maximum Profit following receipt of such
payment, Grantee shall be obligated to promptly comply with the terms of Section
20(a).
(f) For purposes of Section 20(a) and clause (iv) of Section 20(c), the
value of any Option Shares delivered by Grantee to Issuer shall be the
market/offer price of such Option Shares.
-13-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by duly authorized officers of the parties as of the day and year first written
above.
RELIASTAR FINANCIAL CORP.
By: /s/ Richard R. Crowl
---------------------------------
Richard R. Crowl
Senior Vice President
General Counsel and Secretary
ING AMERICA INSURANCE HOLDINGS, INC.
By: /s/ Michael W. Cunningham
---------------------------------
Michael W. Cunningham
Executive Vice President and
Chief Financial Officer
-14-
EXHIBIT 4
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) promulgated under the Securities
Exchange Act of 1934, the undersigned agree to the joint filing of a Statement
on Schedule 13D (including any and all amendments thereto) with respect to the
shares of ReliaStar Financial Corporation and further agree to the filing of
this agreement as an Exhibit thereto. In addition, each party to this Agreement
expressly authorizes each other party to this Agreement to file on its behalf
any and all amendments to such Statement on Schedule 13D.
Date: May 5, 2000
ING GROEP N.V.
By: /s/ B. Scott Burton
--------------------------------------
Attorney-in-fact
ING AMERICA INSURANCE HOLDINGS, INC.
By: /s/ B. Scott Burton
--------------------------------------
