SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported): DECEMBER 23, 1997
(December 9, 1997)
STANDARD MANAGEMENT CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 0-20882 35-1773567
(State or other (Commission File Number) (IRS Employer Identification No.)
jurisdication of
incorporation)
9100 Keystone Crossing, Indianapolis, Indiana 46240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 574-6200
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
Standard Management Corporation ("SMC" or the "Registrant") and Savers
Life Insurance Company ("Savers Life") entered into an Amended and Restated
Agreement and Plan of Merger ("Agreement") dated as of December 9, 1997.
This Agreement is attached hereto as Exhibit 2.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
2.1 Amended and Restated Agreement and Plan of Merger dated as of
December 9, 1997 among SMC, Standard Acquisition Corporation,
and Savers Life.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
STANDARD MANAGEMENT CORPORATION
(Registrant)
Date: DECEMBER 23, 1997 By: RONALD D. HUNTER
Ronald D. Hunter
Chairman of the Board, President and
Chief Executive Officer
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
among
STANDARD MANAGEMENT CORPORATION,
STANDARD ACQUISITION CORPORATION
and
SAVERS LIFE INSURANCE COMPANY
Dated as of December 9, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 1
1.1 TERMS DEFINED 1
1.2 OTHER DEFINITIONAL PROVISIONS 2
ARTICLE II THE MERGER 2
2.1 MERGER 2
2.2 EFFECTIVE TIME 2
2.3 TERMS OF THE MERGER 2
2.4 ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS AND OFFICERS 2
2.5 CONVERSION OF SECURITIES 3
2.6 STOCK ELECTION 3
2.7 ELECTION PROCEDURE 4
2.8 EXCHANGE AGENT 4
2.9 DIVIDENDS; TRANSFER TAXES 5
2.10 NO FRACTIONAL SECURITIES 6
2.11 RETURN OF EXCHANGE FUND AND FRACTIONAL SECURITIES FUND 6
2.12 ADJUSTMENT OF EXCHANGE RATIO 6
2.13 NO FURTHER OWNERSHIP RIGHTS IN SAVERS COMMON STOCK 7
2.14 DISSENTING SHARES 7
2.15 LOST CERTIFICATES 7
2.16 CLOSING OF COMPANY TRANSFER BOOKS 7
2.17 FURTHER ASSURANCES 8
2.18 CLOSING 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SAVERS 8
3.1 ORGANIZATION 8
3.2 AUTHORITY. 9
3.3 CAPITAL STOCK 9
3.4 NO SUBSIDIARIES 9
3.5 NO CONFLICTS OR VIOLATIONS 9
3.6 BOOKS AND RECORDS 10
3.7 SAP STATEMENTS 10
3.8 GAAP STATEMENTS 11
3.9 REGISTRATION STATEMENT AND PROXY STATEMENT 11
3.10 AVAILABILITY OF ASSETS 11
3.11 NO OTHER FINANCIAL STATEMENTS 12
3.12 RESERVES 12
3.13 ABSENCE OF CHANGES 12
3.14 NO UNDISCLOSED LIABILITIES 15
3.15 TAXES 15
3.16 LITIGATION 17
3.17 COMPLIANCE WITH LAWS 18
3.18 BENEFIT PLANS, ERISA 19
3.19 EMPLOYEE RELATIONS 22
3.20 PROPERTIES 22
3.21 ENVIRONMENTAL MATTERS 23
3.22 CONTRACTS 24
3.23 INSURANCE ISSUED BY SAVERS 27
3.24 THREATS OF CANCELLATION 28
3.25 LICENSES AND PERMITS 28
3.26 OPERATIONS INSURANCE 28
3.27 INTERCOMPANY ACCOUNTS 29
3.28 BANK ACCOUNTS 29
3.29 BROKERS 29
3.30 DISCLOSURE 29
3.31 STATE TAKEOVER STATUTES 29
3.32 SENSITIVE PAYMENTS 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SMC 30
4.1 ORGANIZATION 30
4.2 AUTHORITY 30
4.3 NO CONFLICTS OR VIOLATIONS 31
4.4 REGISTRATION STATEMENT AND PROXY STATEMENT 31
4.5 LITIGATION 32
4.6 CAPITALIZATION 32
4.7 BROKERS 32
4.8 DISCLOSURE 33
ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING SAC 33
5.1 ORGANIZATION AND STANDING 33
5.2 CAPITAL STRUCTURE 33
5.3 AUTHORITY 33
5.4 NO CONFLICTS OR VIOLATIONS 33
ARTICLE VI COVENANTS OF SAVERS 34
6.1 CONDUCT OF BUSINESS 35
6.2 FINANCIAL STATEMENTS AND REPORTS 36
6.3 INVESTMENTS 37
6.4 EMPLOYEE MATTERS 37
6.5 NO CHARTER AMENDMENTS 38
6.6 NO ISSUANCE OF SECURITIES 38
6.7 NO DIVIDENDS 38
6.8 NO DISPOSAL OF PROPERTY 38
6.9 NO BREACH OR DEFAULT 38
6.10 NO INDEBTEDNESS 39
6.11 NO ACQUISITIONS 39
6.12 INTERCOMPANY LIABILITIES 39
6.13 TAX MATTERS 39
6.14 NOTICE AND CURE 39
ARTICLE VII COVENANTS OF SMC 39
7.1 NOTICE AND CURE 40
7.2 FORM A FILING 40
7.3 JERRY E. FRANCIS TO BE APPOINTED A DIRECTOR 40
7.4 NOTICE OF MATERIAL CHANGES 40
ARTICLE VIII ADDITIONAL AGREEMENTS 40
8.1 STOCKHOLDER APPROVAL 40
8.2 REGISTRATION STATEMENT AND PROXY STATEMENT 41
8.3 STOCK EXCHANGE LISTING 41
8.4 REASONABLE EFFORTS 41
8.5 STATE TAKEOVER LAWS 42
8.6 IMPROVEMENTS ACT FILINGS 42
8.7 FINANCIAL STATEMENTS 42
8.8 CERTAIN NOTICES 42
ARTICLE IX CONDITIONS OF BOTH PARTIES 43
9.1 STOCKHOLDER APPROVAL 43
9.2 NASDAQ LISTING 43
9.3 REGULATORY APPROVALS 43
9.4 REGISTRATION STATEMENT 43
ARTICLE X CONDITIONS TO OBLIGATIONS OF SMC AND SAC 43
10.1 REPRESENTATIONS AND WARRANTIES 43
10.2 PERFORMANCE 44
10.3 CERTIFICATES OF OFFICER OF SAVERS 44
10.4 NO INJUNCTION 44
10.5 NO PROCEEDING OR LITIGATION 44
10.6 CONSENTS, AUTHORIZATIONS, ETC. 44
10.7 NO ADVERSE CHANGE 45
10.8 OPINION OF COUNSEL 45
10.9 APPROVAL BY FLEET AND CONSECO 45
10.10 CONSULTING AGREEMENT 45
10.11 LOCKUP AGREEMENTS 45
10.12 DISSENTERS' RIGHTS 45
10.13 SMC STOCKHOLDERS APPROVAL 45
10.14 SAVERS ADJUSTED CAPITAL AND SURPLUS 45
10.15 SAVERS STOCKHOLDERS APPROVAL 45
ARTICLE XI CONDITIONS TO OBLIGATIONS OF SAVERS 46
11.1 REPRESENTATIONS AND WARRANTIES 46
11.2 PERFORMANCE 46
11.3 OFFICERS' CERTIFICATES 46
11.4 NO INJUNCTION 46
11.5 NO PROCEEDING OR LITIGATION 46
11.6 CONSENTS, AUTHORIZATIONS, ETC. 47
11.7 OPINION OF COUNSEL 47
ARTICLE XII SURVIVAL OF PROVISIONS; REMEDIES 47
12.1 SURVIVAL 47
12.2 AVAILABLE REMEDIES 47
ARTICLE XIII TERMINATION 48
13.1 TERMINATION 48
13.2 EFFECT OF TERMINATION 49
13.3 CERTAIN PAYMENTS 49
ARTICLE XIV MISCELLANEOUS 50
14.1 NOTICES 50
14.2 ENTIRE AGREEMENT 51
14.3 EXPENSES 51
14.4 PUBLIC ANNOUNCEMENTS 52
14.5 CONFIDENTIALITY 52
14.6 WAIVER 52
14.7 AMENDMENT 52
14.8 COUNTERPARTS 53
14.9 NO THIRD PARTY BENEFICIARY 53
14.10 GOVERNING LAW 53
14.11 BINDING EFFECT 53
14.12 ASSIGNMENT 53
14.13 HEADINGS, ETC. 53
14.14 INVALID PROVISIONS 53
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
December 9, 1997, among STANDARD MANAGEMENT CORPORATION, an Indiana
corporation ("SMC"), STANDARD ACQUISITION CORPORATION, a North Carolina
corporation ("SAC") and SAVERS LIFE INSURANCE COMPANY, a North Carolina
domestic stock insurance company ("Savers") (SAC and Savers being
hereinafter collectively referred to as the "Constituent Corporations").
RECITALS
WHEREAS, the parties acknowledge that, because of events that have
transpired since the execution of the Agreement and Plan of Merger dated as
of December 19, 1996, and amended as of February 17, 1997, as of May 7,
1997, as of June 27, 1997 and as of July 31, 1997 they now desire to amend
and restate the Merger Agreement in its entirety.
WHEREAS, subject to the terms hereof, SMC, SAC and Savers have agreed
to the statutory merger (the "Merger") of SAC and Savers upon the terms and
conditions set forth herein, pursuant to which each issued and outstanding
share of common stock, no par value, of Savers (the "Savers Common Stock")
will be converted into shares of the common stock, no par value, of SMC
("SMC Common Stock") and cash.
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a purchase; and
WHEREAS, SMC, SAC and Savers desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants made herein and of the mutual benefits to be
derived herefrom, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 TERMS DEFINED. The capitalized terms used in this Amended and
Restated Merger Agreement and not otherwise defined herein shall have the
meanings specified in EXHIBIT A, which Exhibit is incorporated herein by
reference.
1.2 OTHER DEFINITIONAL PROVISIONS. Unless the context otherwise
requires, (a) references in this Amended and Restated Merger Agreement to
the singular number shall include the plural, and the plural number shall
include the singular; (b) words denoting gender shall include the
masculine, feminine and neuter; (c) the words "hereof," "herein" and
"hereunder" and words of similar import refer to this Amended and Restated
Merger Agreement as a whole and not to any particular provision of this
Amended and Restated Merger Agreement, (d) unless otherwise specified, all
Article and Section references pertain to this Amended and Restated Merger
Agreement, and all references to Exhibits or Schedules are to the Exhibits
or Schedules to this Amended and Restated Merger Agreement; (e) the term
"or" means "and/or"; and (f) the phrase "ordinary course of business and
consistent with past practice" refers to the business and practice of
Savers.
ARTICLE II
THE MERGER
2.1 MERGER. Upon the terms and subject to the conditions hereof, and
in accordance with the North Carolina Business Corporation Act (the
"NCBCA"), SAC shall be merged with and into Savers at the Effective Time
(as hereinafter defined). At the election of SMC, any direct wholly-owned
subsidiary of SMC may be substituted for SAC as a constituent corporation
in the Merger. In such event, the parties agree to execute an appropriate
amendment to this Amended and Restated Merger Agreement in order to reflect
the foregoing. Following the Merger, the separate corporate existence of
SAC shall cease, and Savers shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of SAC in accordance with the NCBCA.
2.2 EFFECTIVE TIME. The Merger shall become effective when the
Articles of Merger (the "Articles of Merger"), executed in accordance with
the relevant provisions of the NCBCA, are filed with the Secretary of State
of the State of North Carolina; PROVIDED, HOWEVER, that, upon mutual
consent of the Constituent Corporations the Articles of Merger may provide
for a later date of effectiveness of the Merger not more than 90 days after
the date the Articles of Merger are filed. When used in this Amended and
Restated Merger Agreement, the term "Effective Time" shall mean the later
of the date and time at which the Articles of Merger are accepted for
record or such later time established by the Articles of Merger. The
filing of the Articles of Merger shall be made as soon as practicable after
the satisfaction or waiver of the conditions to the Merger set forth
herein.
2.3 TERMS OF THE MERGER. The Merger shall have the effects set forth
in Section 55-11-06 of the NCBCA.
2.4 ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS AND OFFICERS.
The Articles of Incorporation and Bylaws of SAC, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation and
Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law. The directors and officers of SAC
at the Effective Time shall be the directors and officers, respectively, of
the Surviving Corporation until their respective successors have been duly
elected or appointed in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation or by applicable law.
2.5 CONVERSION OF SECURITIES. As of the Effective Time, by virtue of
the Merger and without any action on the part of any stockholder of Savers:
(a) All shares of Savers Common Stock that are held in the
treasury of Savers or by any wholly-owned Subsidiary of Savers and any
shares of Savers Common Stock owned by SMC, SAC or any other wholly-
owned Subsidiary of SMC shall be cancelled, and no capital stock of
SMC or other consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding share of capital stock of SAC
shall be converted into and become one fully paid and nonassessable
share of Common Stock, no par value per share, of the Surviving
Corporation.
(c) Subject to the provisions of SECTIONS 2.10 and 2.12 hereof,
each share of Savers Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be canceled in
accordance with SECTION 2.5(A)) shall be converted into (i) subject to
SECTION 2.6, below, $1.50 in cash, plus (ii) 1.2 shares of SMC Common
Stock, the number of such shares, to be rounded to the nearest
hundredth of a share. All such shares of Savers Common Stock, when so
converted, shall no longer be outstanding and shall automatically be
cancelled and retired and each holder of a Certificate (as defined in
SECTION 2.8(A)) representing any such shares shall cease to have any
rights with respect thereto, except the right to receive shares of SMC
Common Stock, cash as provided in this SECTION 2.5 and SECTION 2.6,
certain dividends and other distributions as contemplated by SECTION
2.9 and any cash, without interest, in lieu of fractional shares to be
issued or paid in consideration therefor upon the surrender of such
Certificate in accordance with SECTION 2.8.
(d) Each option to purchase Savers Common Stock ("Savers Stock
Option") outstanding immediately prior to the Effective Time shall be
converted into the right to receive cash from Savers equal in amount
with respect to each such option to the difference between 1.2 times
the Average Trading Price (as defined in SECTION 2.6, below) plus
$1.50 per option share and the exercise price for each such option.
2.6 STOCK ELECTION. Each holder of Savers Common Stock may elect to
receive SMC Common Stock in lieu of the cash to which such holder would
otherwise be entitled pursuant to SECTION 2.5(C). In the event that any
holder of Savers Common Stock shall make such election, such holder shall
be entitled to receive, in lieu of the cash into which such Savers Common
Stock would otherwise be converted pursuant to SECTION 2.5(C), an
additional number of shares of SMC Common Stock, rounded to the nearest
hundredth of a share, determined by dividing $1.50 by the average of the
closing prices as reported by the NASDAQ National Market (the "Average
Trading Price") of SMC Common Stock for the ten (10) consecutive trading
days ending on the fifth day prior to the Savers Stockholders Meeting.
2.7 ELECTION PROCEDURE. Each holder of shares of Savers Common Stock
may indicate (an "Election") in a request made in accordance with this
SECTION 2.7 whether such holder wishes to receive cash or SMC Common Stock
pursuant to SECTION 2.5(C)(II):
(a) SMC and Savers shall prepare a form (the "Form of Election")
pursuant to which each holder of Savers Common Stock may make an Election.
The Form of Election shall be mailed to stockholders of record of Savers as
of the record date for the Savers Stockholder Meeting and shall accompany
the Proxy Statement.
(b) Savers shall use reasonable commercial efforts to make the Form
of Election available to all persons who become stockholders of record of
Savers during the period between such record date and the fifth Business
Day prior to the date of the Savers Stockholders Meeting.
(c) An Election shall have been properly made only if the Exchange
Agent shall have received, by 5:00 p.m. on the last Business Day preceding
the date of the Savers Stockholders Meeting (the "Election Date") a Form of
Election properly completed and signed.
(d) Any holder of record of shares of Savers Common Stock may at any
time prior to the Election Date change his Election by written notice
received at or prior to the Election Date accompanied by a properly
completed Form of Election. SMC shall have the right in its sole
discretion to permit changes in Elections after the Election Date.
(e) Any holder of record of shares of Savers Common Stock may at any
time prior to the Election Date revoke his Election by written notice
received at or prior to the Election Date. Any Election relating to shares
of Savers Common Stock which become Dissenting Shares shall be deemed
automatically revoked as of the Election Date.
(f) SMC and Savers shall have the right to make rules, not
inconsistent with the terms of this Amended and Restated Merger Agreement,
governing the validity of Forms of Election, the issuance and delivery of
certificates for shares of SMC Common Stock into which shares of Savers
Common Stock are converted in the Merger and the payment for the portion of
shares of Savers Common Stock converted into the right to receive cash in
the Merger.
2.8 EXCHANGE AGENT.
(a) DELIVERY OF CERTIFICATES AND CASH. SMC shall authorize a
commercial bank (or such other person or persons as shall be acceptable to
SMC and Savers) to act as Exchange Agent hereunder (the "Exchange Agent").
As soon as practicable after the Effective Time, (i) SMC shall deposit with
the Exchange Agent in trust for the holders of certificates which
immediately prior to the Effective Time represented shares of Savers Common
Stock (the "Certificates") certificates representing the shares of SMC
Common Stock, into which the outstanding shares of Savers Common Stock have
been converted pursuant to SECTION 2.5(C)(I) and SECTION 2.6 and (ii) SMC
shall make available to the Surviving Corporation, which in turn shall
deposit with the Exchange Agent in trust for the holders of the
Certificates, the cash into which the outstanding shares of Savers Common
Stock have been converted pursuant to SECTION 2.5(C)(II), (such shares of
SMC Common Stock, together with any dividends or distributions with respect
thereto and such cash, being hereinafter referred to as the "Exchange
Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted pursuant to SECTION 2.5 and SECTION
2.6 a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon actual delivery of the Certificates to the Exchange Agent and shall
contain instructions for use in effecting the surrender of the Certificates
in exchange for certificates representing shares of SMC Common Stock and
cash). Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of SMC Common Stock
plus any cash which such holder has the right to receive pursuant to this
Article II, and the Certificate so surrendered shall forthwith be
cancelled. Until surrendered as contemplated by this SECTION 2.8, each
Certificate shall, at and after the Effective Time, be deemed to represent
only the right to receive, upon surrender of such Certificate, certificates
representing the appropriate number of shares of SMC Common Stock and the
appropriate amount of cash, cash in lieu of fractional shares as
contemplated by SECTION 2.10 and certain dividends and other distributions
as contemplated by SECTION 2.9.
2.9 DIVIDENDS; TRANSFER TAXES. No dividends or other distributions
that are declared on or after the Effective Time on SMC Common Stock or are
payable to the holders of record thereof on or after the Effective Time
will be paid to persons entitled by reason of the Merger to receive
certificates representing SMC Common Stock until such persons surrender
their Certificates, as provided in SECTION 2.8, and no cash payment
pursuant to SECTION 2.5(C)(II) or in lieu of fractional shares pursuant to
SECTION 2.10 shall be paid to any such holder until such holder of such
Certificate shall so surrender such Certificate. Subject to the effect of
applicable law, there shall be paid to the record holder of the
certificates representing such SMC Common Stock (i) at the time of such
surrender or as promptly as practicable thereafter, the amount of any
dividends or other distributions theretofore paid with respect to whole
shares of such SMC Common Stock and having a record date on or after the
Effective Time and a payment date prior to such surrender and (ii) at the
appropriate payment date or as promptly as practicable thereafter, the
amount of dividends or other distributions payable with respect to whole
shares of SMC Common Stock and having a record date on or after the
Effective Time but prior to surrender and a payment date subsequent to
surrender. In no event shall the person entitled to receive such dividends
or other distributions be entitled to receive interest on such dividends or
other distributions. If any cash or certificate representing shares of SMC
Common Stock is to be paid to or issued in a name other than that in which
the Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates
for such shares of SMC Common Stock or delivery of such cash to a Person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable.
2.10 NO FRACTIONAL SECURITIES. No certificates or scrip representing
fractional shares of SMC Common Stock shall be issued upon the surrender
for exchange of Certificates pursuant to this Article II, and no SMC
dividend or other distribution or stock split shall relate to any
fractional security, and such fractional interests shall not entitle the
owner thereof to vote or to any rights of a security holder of SMC. In
lieu of any such fractional securities, each holder of Savers Common Stock
who would otherwise have been entitled to a fraction of a share of SMC
Common Stock upon surrender of Certificates for exchange pursuant to this
Article II will be paid, in addition to the cash to which such holder is
entitled pursuant to SECTION 2.5(C)(II), an amount in cash (without
interest) equal to such holder's proportionate interest in the net proceeds
from the sale or sales in the open market by the Exchange Agent, on behalf
of all such holders, of the aggregate fractional shares of SMC Common Stock
issued pursuant to this Article II. As soon as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (x) the
number of full shares of SMC Common Stock delivered to the Exchange Agent
by SMC over (y) the aggregate number of full shares of SMC Common Stock to
be distributed to holders of Savers Common Stock pursuant to SECTION 2.8(B)
(such excess being herein called the "Excess Shares") and the Exchange
Agent, as agent for the former holders of Savers Common Stock, shall sell
the Excess Shares at the prevailing prices on the NASDAQ National Market.
The sale of the Excess Shares by the Exchange Agent shall be executed on
the NASDAQ National Market through one or more member firms of NASDAQ and
shall be executed in round lots to the extent practicable. SMC shall pay
all commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of Excess Shares. Until the net proceeds of such
sale have been distributed to the former stockholders of Savers, the
Exchange Agent will hold such proceeds in trust for such former
stockholders (the "Fractional Securities Fund"). As soon as practicable
after the determination of the amount of cash to be paid to former
stockholders of Savers in lieu of any fractional interests, the Exchange
Agent shall make available in accordance with this Amended and Restated
Merger Agreement such amounts to such former stockholders.
2.11 RETURN OF EXCHANGE FUND AND FRACTIONAL SECURITIES FUND. Any
portion of the Exchange Fund and the Fractional Securities Fund which
remains undistributed to the former stockholders of Savers for one year
after the Effective Time shall be delivered to SMC, upon demand of SMC, and
any former stockholders of Savers who have not theretofore complied with
this Article II shall thereafter look only to SMC for payment of their
claim for SMC Common Stock, cash, including any cash in lieu of fractional
shares of SMC Common Stock, and any dividends or distributions with respect
to SMC Common Stock.
2.12 ADJUSTMENT OF EXCHANGE RATIO. In the event of any
reclassification, stock split or stock dividend with respect to SMC Common
Stock (or if a record date with respect to any of the foregoing should
occur) between the date of this Amended and Restated Merger Agreement and
the Effective Time, appropriate and proportionate adjustments, if any,
shall be made to the exchange ratios referred to in SECTIONS 2.5 and 2.6.
2.13 NO FURTHER OWNERSHIP RIGHTS IN SAVERS COMMON STOCK. All shares
of SMC Common Stock and cash issued or delivered upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any
cash paid pursuant to SECTIONS 2.5(C)(II), 2.9 or 2.10) shall be deemed to
have been issued or delivered in full satisfaction of all rights pertaining
to the shares of Savers Common Stock, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other
distribution with a record date prior to the Effective Time which may have
been declared or made by Savers on such shares of Savers Common Stock in
accordance with the terms of this Amended and Restated Merger Agreement.
2.14 DISSENTING SHARES. Notwithstanding anything in this Amended and
Restated Merger Agreement to the contrary, shares of Savers Common Stock
which immediately prior to the Effective Time are held by shareholders who
have properly exercised dissenters' rights under Article 13 of the NCBCA
(the "Dissenting Shares") shall not be converted as provided in SECTION 2.5
hereof, but the holders of Dissenting Shares shall be entitled to receive
such consideration as shall be determined pursuant to Article 13 of the
NCBCA; PROVIDED, HOWEVER, that, if any such holder shall withdraw or lose
such holder's right to dissent and payment under the NCBCA, such holder's
outstanding shares of Savers Common Stock shall thereupon be deemed to have
been converted as of the Effective Time as provided in SECTION 2.5, without
any adjustment for interest, and such shares shall no longer be Dissenting
Shares. Savers shall give SMC prompt notice of any demands for payment
under Section 55-13-21 of Article 13 of the NCBCA received by Savers.
Except as required by applicable law, prior to the Effective Time, Savers
shall not, except with the prior written consent of SMC, make any payment
with respect to, or settle or offer to settle, any such demands.
2.15 LOST CERTIFICATES. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such certificate to be lost, stolen or destroyed, the
Exchange Agent shall deliver to such person the certificates representing
the SMC Common Stock and the amount of cash to which the holder of such
lost, stolen or destroyed certificate is entitled pursuant to this Article
II. When authorizing such payment in exchange for any lost, stolen or
destroyed Certificate, the person to whom such certificates and cash are to
be delivered shall, as a condition precedent to such delivery, give the
Surviving Corporation an affidavit of lost certificate and indemnity
agreement, indemnifying the Surviving Corporation against loss, or a bond
satisfactory to the Surviving Corporation in such sum as it may direct or
otherwise indemnify the Surviving Corporation in a manner satisfactory to
the Surviving Corporation against any claim that may be made against SMC,
SAC or the Surviving Corporation with respect to the Certificate alleged to
have been lost, stolen or destroyed.
2.16 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of Savers shall be closed, and no transfer of shares
of Savers Common Stock shall thereafter be made. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall
be cancelled and exchanged as provided in this Article II.
2.17 FURTHER ASSURANCES. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties
or assets of either of the Constituent Corporations, or (b) otherwise to
carry out the purposes of this Amended and Restated Merger Agreement, the
Surviving Corporation and its proper officers and directors or their
designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations in the Merger, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title
or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and
otherwise to carry out the purposes of this Amended and Restated Merger
Agreement.
2.18 CLOSING. The closing of the transactions contemplated by this
Amended and Restated Merger Agreement (the "Closing") shall take place at
the offices of Womble Carlyle Sandridge & Rice, PLLC, in Winston-Salem,
North Carolina at 10:00 a.m. local time, on the second business day after
the day on which the last of the conditions set forth in ARTICLES IX, X and
XI hereof shall have been fulfilled or waived or at such other time and
place as SMC and Savers shall agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SAVERS
Savers hereby represents and warrants to SMC as follows:
3.1 ORGANIZATION. Savers is a domestic stock insurance company duly
organized, validly existing and in good standing under the laws of the
State of North Carolina and has full corporate power and authority to enter
into this Amended and Restated Merger Agreement and to perform its
obligations under this Amended and Restated Merger Agreement. Except as
disclosed in SECTION 3.1 of the Disclosure Schedule, Savers is duly
licensed, qualified, or admitted to do business as an insurance company and
is in good standing in all jurisdictions in which the failure to be so
licensed, qualified, or admitted and in good standing, individually or in
the aggregate with other such failures, has or may reasonably be expected
to have a material adverse effect on the validity or enforceability of this
Amended and Restated Merger Agreement, on the ability of Savers to perform
its obligations under this Amended and Restated Merger Agreement, or on the
Business or Condition of Savers. SECTION 3.1 of the Disclosure Schedule
contains a true and complete list of the states in which Savers is licensed
to write life and health insurance. Savers has furnished to SMC true and
complete copies of the Articles of Incorporation (as certified by the
appropriate governmental or regulatory authorities) and the Bylaws of
Savers, including all amendments thereto. Savers has made available to SMC
the minute books and stock records of Savers. Such minute books do not
omit any material minutes of meetings or written resolutions of the board
of directors, committees of the board of directors or shareholders of
Savers. Such stock records are accurate and complete in all material
respects.
3.2 AUTHORITY. The Board of Directors of Savers has duly and validly
approved this Amended and Restated Merger Agreement and the transactions
contemplated hereby. The shareholders of Savers must approve the Merger.
Subject to and upon the prior approval by the shareholders of Savers, this
Amended and Restated Merger Agreement constitutes a legal, valid, and
binding obligation of Savers and is enforceable against Savers in
accordance with its terms, except to the extent that (a) enforcement may be
limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar Laws now or hereafter in effect relating to or
limiting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject
to certain equitable defenses and to the discretion of the court or other
similar Person before which any proceeding therefor may be brought.
3.3 CAPITAL STOCK. The authorized common capital stock of Savers
consists of 20,000,000 shares of common stock, no par value per share, of
which 1,779,908 shares are issued and outstanding at the date hereof, all
of which shares are validly issued and outstanding, fully paid and
nonassessable. Except as disclosed in SECTION 3.3 of the Disclosure
Schedule, there are no outstanding securities, obligations, rights,
subscriptions, warrants, options, charter or founders insurance policies,
phantom stock rights, or (except for this Amended and Restated Merger
Agreement) other Contracts of any kind that give any Person the right to
(a) purchase or otherwise receive or be issued any shares of capital stock
of Savers (or any interest therein) or any security or Liability of any
kind convertible into or exchangeable for any shares of capital stock of
Savers (or any interest therein) or (b) receive any benefits or rights
similar to any rights enjoyed by or accruing to a holder of the Common
Stock, or any rights to participate in the equity, income, or election of
directors or officers of Savers. There are no obligations of Savers to
repurchase, redeem or otherwise acquire any of Savers' securities.
3.4 NO SUBSIDIARIES. Savers does not control (whether directly or
indirectly, whether through the ownership of securities or by Contract or
proxy, and whether alone or in combination with others) any corporation,
partnership, business organization, or other similar Person.
3.5 NO CONFLICTS OR VIOLATIONS. The execution and delivery of this
Amended and Restated Merger Agreement by Savers does not, and the
performance by Savers of its obligations under this Amended and Restated
Merger Agreement will not:
(a) subject to obtaining the approvals contemplated by SECTION
3.5(E) of the Disclosure Schedule hereof, violate any term or
provisions of any Law or any writ, judgment, decree, injunction, or
similar order applicable to Savers;
(b) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
under, any of the terms, conditions, or provisions of the Articles of
Incorporation or Bylaws of Savers;
(c) result in the creation or imposition of any Lien upon Savers
or any of its Assets and Properties that individually or in the
aggregate with any other Liens has or may reasonably be expected to
have a material adverse effect on the validity or enforceability of
this Amended and Restated Merger Agreement, on the ability of Savers
to perform its obligations under this Amended and Restated Merger
Agreement, or on the Business or Condition of Savers or the Surviving
Corporation;
(d) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
under, or give to any Person any right of termination, cancellation,
acceleration, or modification in or with respect to, any Contract to
which Savers is a party or by which any of its Assets or Properties
may be bound and as to which any such conflicts, violations, breaches,
defaults, or rights individually or in the aggregate have or may
reasonably be expected to have a material adverse effect on the
validity or enforceability of this Amended and Restated Merger
Agreement, on the ability of Savers to perform its obligations under
this Amended and Restated Merger Agreement, or on the Business or
Condition of Savers or the Surviving Corporation; or
(e) require Savers to obtain any consent, approval, or action of,
or make any filing with or give any notice to, any Person except: (i)
as disclosed in SECTION 3.5(E) of the Disclosure Schedule; or
(ii) those which the failure to obtain, make, or give individually or
in the aggregate with any other such failures has or may reasonably be
expected to have no material adverse effect on the validity or
enforceability of this Amended and Restated Merger Agreement, on the
ability of Savers to perform its obligations under this Amended and
Restated Merger Agreement, or on the Business or Condition of Savers
or the Surviving Corporation.
3.6 BOOKS AND RECORDS. Except as disclosed in SECTION 3.6 of the
Disclosure Schedule, the minute books and other similar records of Savers
contain a true and complete record, in all material respects, of all
actions taken at all meetings and by all written consents in lieu of
meetings of the stockholders, Board of Directors, and each committee
thereof of Savers. The Books and Records of Savers accurately reflect in
all material respects the Business or Condition of Savers, and have been
maintained in all material respects in accordance with good business and
bookkeeping practices.
3.7 SAP STATEMENTS. Savers has previously delivered to SMC true and
complete copies of the Annual Statements, and audited SAP basis financial
statements of Savers for each of the years ended December 31, 1993, 1994,
1995 and 1996, and unaudited SAP basis financial statements of Savers for
the nine months ended September 30, 1997 (and the notes relating thereto,
whether or not included therein). Except as disclosed in SECTION 3.7 of
the Disclosure Schedule, each such SAP Statement complied in all material
respects with all applicable Laws when so filed, and all material
deficiencies known to Savers with respect to any such SAP Statement have
been cured or corrected. Each such SAP Statement (and the notes relating
thereto, whether or not included therein), including, without limitation,
each balance sheet and each of the statements of operations, capital and
surplus account, and cash flow contained in the respective SAP Statement,
was prepared in accordance with SAP, is true and complete in all material
respects, and fairly presents the financial condition, the Assets and
Properties, and the Liabilities of Savers as of the respective dates
thereof and the results of operations and changes in capital and surplus
and in cash flow of Savers for and during the respective periods covered
thereby.
3.8 GAAP STATEMENTS. SECTION 3.8 of the Disclosure Schedule contains
(i) the audited balance sheets of Savers as of December 31, 1993, 1994,
1995 and 1996 and the related statements of income, stockholders' equity
and cash flows for the years then ended, together with the appropriate
notes to such financial statements, and (ii) the unaudited balance sheet of
Savers as of September 30, 1997, 1996 and 1995 and the related statements
of income and cash flows for the nine months then ended. Except as set
forth therein or in the notes thereto, such balance sheets and statements
of income and cash flows, have been prepared in conformity with generally
accepted accounting principles consistently applied except as otherwise
noted, and such balance sheets and related statements of income and cash
flows present fairly the financial position and results of operations of
Savers as of their respective dates and for the respective periods covered
thereby.
3.9 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information supplied or to be supplied by Savers for inclusion or
incorporation by reference in the Registration Statement or the proxy
statement (together with any amendments or supplements thereto, the "Proxy
Statement") relating to the Stockholders Meetings will (i) in the case of
the Registration Statement, at the time it becomes effective and at the
Effective Time, 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 not misleading or (ii) in the case of the
Proxy Statement, at the time of the mailing of the Proxy Statement and at
the time of each Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to Savers or its
officers and directors should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the Registration
Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Savers and/or SMC as appropriate. The
Registration Statement will comply (with respect to Savers) as to form in
all material respects with the provisions of the Securities Act, and the
Proxy Statement will (with respect to Savers) comply as to form in all
material respects with the requirements of the Exchange Act.
3.10 AVAILABILITY OF ASSETS. Except as set forth in SECTION 3.10 of
the Disclosure Schedule, Savers owns all of the assets used in its Business
(including, but not limited to, all books, records, computers and computer
programs and data processing systems) and all such assets are in good
condition (subject to normal wear and tear) and serviceable condition and
are suitable for the uses for which intended.
3.11 NO OTHER FINANCIAL STATEMENTS. Except for the financial
statements described in SECTION 3.7 and SECTION 3.8 (collectively, the
"Financial Statements"), since September 30, 1997 no other financial
statements have been prepared by or with respect to Savers (whether on a
GAAP, SAP, or other basis).
3.12 RESERVES. All reserves and other similar amounts with respect to
insurance and annuities as established or reflected in the SAP Statements
of Savers dated as of September 30, 1997 (including, without limitation,
the reserves and amounts reflected respectively on lines 1 through 11.3 of
page 3 of the September 30, 1997 Quarterly Statement), were determined in
accordance with generally accepted actuarial principles that are in
accordance with those called for by the provisions of the related insurance
and annuity Contracts and in the related reinsurance, coinsurance, and
other similar Contracts of Savers, and meet the requirements of the
insurance Laws of the State of North Carolina and states in which such
insurance and annuity Contracts were issued or delivered. All such
reserves and other similar amounts will be adequate (under generally
accepted actuarial principles consistently applied) to cover the total
amount of all reasonably anticipated matured and unmatured benefits,
dividends, claims, and other Liabilities of Savers under all insurance and
annuity Contracts under which Savers has or will have any Liability
(including, without limitation, any Liability arising under or as a result
of any reinsurance, coinsurance, or other similar Contract) on the
respective dates of such SAP Statements. Savers owns assets that qualify
as legal reserve assets under applicable insurance Laws in an amount at
least equal to all such required reserves and other similar amounts.
3.13 ABSENCE OF CHANGES. Except as disclosed in SECTION 3.13 of the
Disclosure Schedule or as specifically reflected in the September 30, 1997
SAP Statement, or except for changes or developments relating to the
conduct of the Business of Savers after the date of this Amended and
Restated Merger Agreement in conformity with this Amended and Restated
Merger Agreement, since December 31, 1996, there has not been, occurred, or
arisen any change in, or any event (including without limitation any
damage, destruction, or loss whether or not covered by insurance),
condition, or state of facts of any character that individually or in the
aggregate has or may reasonably be expected to have a material adverse
effect on the Business or Condition of Savers. Except as disclosed in
SECTION 3.13 of the Disclosure Schedule (with paragraph references
corresponding to those set forth below), or except as specifically
reflected in the September 30, 1997 SAP Statement, since December 31,
1996, Savers has operated only in the ordinary course of business and
consistent with past practice, and (without limiting the generality of the
foregoing) there has not been, occurred, or arisen:
(a) any declaration, setting aside, or payment of any dividend or
other distribution in respect of the capital stock of Savers or any
direct or indirect redemption, purchase, or other acquisition by
Savers of any such stock or of any interest in or right to acquire any
such stock;
(b) any employment, deferred compensation, or other salary, wage,
or compensation Contract entered into between Savers and any of its
officers, directors, employees, agents, consultants, or similar
representatives, except for normal and customary Contracts with
officers, employees, agents and consultants in the ordinary course of
business and consistent with past practices; or any increase in the
salary, wages, or other compensation of any kind, whether current or
deferred, of any officer, director, employee, agent, consultant, or
other similar representative of Savers other than routine increases
that were made in the ordinary course of business and consistent with
past practices; or any creation of any Benefit Plan or any
contribution to or amendment or modification of any Benefit Plan;
(c) any issuance, sale, or disposition by Savers of any
debenture, note, stock, or other security issued by Savers, or any
modification or amendment of any right of the holder of any
outstanding debenture, note, stock, or other security issued by
Savers;
(d) any Lien created on or in any of the Assets and Properties of
Savers, or assumed by Savers with respect to any of such Assets and
Properties, which Lien relates to Liabilities individually or in the
aggregate exceeding $25,000 for Savers or which Lien individually or
in the aggregate with any other Liens has or may reasonably be
expected to have a material adverse effect on the Business or
Condition of Savers or the Surviving Corporation;
(e) any prepayment of any Liabilities individually or in the
aggregate exceeding $10,000;
(f) any Liability involving the borrowing of money by Savers;
(g) any Liability incurred by Savers in any transaction (other
than pursuant to any insurance or annuity Contract entered into in the
ordinary course of business and consistent with past practice) not
involving the borrowing of money;
(h) any damage, destruction, or loss (whether or not covered by
insurance) affecting any of the Assets and Properties of Savers, which
damage, destruction, or loss individually exceeds $25,000 or the
result of which individually or in the aggregate has or may reasonably
be expected to have a material adverse effect on the Business or
Condition of Savers or the Surviving Corporation;
(i) any work stoppage, strike, slowdown, other labor difficulty,
or (to the best knowledge of Savers) union organizational campaign (in
process or threatened) at or affecting Savers;
(j) any material change in any underwriting, actuarial,
investment, financial reporting, or accounting practices or policies
followed by Savers, or in any assumption underlying such a practices
or policies, or in any method of calculating any bad debt,
contingency, or other reserve for financial reporting purposes or for
any other accounting purposes;
(k) any payment, discharge, or satisfaction by Savers of any Lien
or Liability other than Liens or Liabilities that were paid,
discharged, or satisfied since December 31, 1996 in the ordinary
course of business and consistent with past practice, or were paid,
discharged, or satisfied as required under this Amended and Restated
Merger Agreement;
(l) any cancellation of any Liability owed to Savers by any other
Person;
(m) any write-off or write-down of, or any determination to
write off or down any of, the Assets and Properties of Savers or any
portion thereof, except for write-offs or write-downs that do not
exceed $10,000 individually or in the aggregate for Savers;
(n) any sale, transfer, or conveyance of any investments, or any
other Assets and Properties, of Savers with an individual book value
or with an aggregate book value in excess of $10,000, except as
contemplated in SECTION 6.3, and except in the ordinary course of
business and consistent with past practices;
(o) any amendment, termination, waiver, disposal, or lapse of, or
other failure to preserve, any license, permit, or other form of
authorization of Savers, the result of which individually or in the
aggregate has or may reasonably be expected to have a material adverse
effect on the Business or Condition of Savers or the Surviving
Corporation;
(p) any transaction or arrangement under which Savers paid, lent,
or advanced any amount to or in respect of, or sold, transferred, or
leased any of its Assets and Properties or any service to, (i) any
employee, officer, director or shareholder of Savers (except for
payments of salaries and wages in the ordinary course of business and
consistent with past practice, and except for payments made pursuant
to any Contract disclosed in SECTION 3.13(B) or SECTION 3.22(A) of the
Disclosure Schedule), or of any Affiliate of Savers, or of any such
employee, officer, director or shareholder; (ii) any business or other
Person in which Savers, any such employee, officer, director or
shareholder, or any such Affiliate has any material interest, except
for advances made to, or reimbursements of, officers or directors of
Savers for travel and other business expenses in reasonable amounts in
the ordinary course of business and consistent with past practice; or
any Affiliate of Savers pursuant to any Contract of the type described
in SECTION 3.22(G);
(q) any material amendment of, or any failure to perform all of
its obligations under, or any default under, or any waiver of any
right under, or any termination (other than on the stated expiration
date) of, any Contract that involves or reasonably would involve the
annual expenditure or receipt by Savers of more than $25,000 or that
individually or in the aggregate is material to the Business or
Condition of Savers or the Surviving Corporation;
(r) any decrease in the amount of, or any material change in the
nature of, the insurance or annuities in force of Savers or any
material change in the amount or nature of the reserves, liabilities
or other similar amounts of Savers with respect to insurance and
annuity Contracts (including, without limitation, reserves and other
similar amounts of a type required to be reflected respectively on
lines 1 through 11.3 on page 3 of an Annual Statement of Savers);
(s) any amendment to the Articles of Incorporation or Bylaws of
Savers;
(t) any termination, amendment, or execution by Savers of any
reinsurance, coinsurance, or other similar Contract, as ceding or
assuming insurer;
(u) any expenditure or commitment for additions to property,
plant, equipment or other tangible or intangible capital assets of
Savers, except for any expenditure or commitment that does not exceed
$10,000 individually or the result of which individually or in the
aggregate does not have and may not reasonably be expected to have a
material adverse effect on the Business or Condition of Savers or the
Surviving Corporation;
(v) any amendment or introduction by Savers of any insurance or
annuity Contract other than in the ordinary course of business and
consistent with past practice; or
(w) any Contract to take any of the actions described in this
Section other than actions expressly permitted under this Section.
3.14 NO UNDISCLOSED LIABILITIES. Except to the extent specifically
reflected in the balance sheet included in the September 30, 1997 SAP
Statement (or in the notes relating thereto), or except as disclosed in
SECTION 3.14 of the Disclosure Schedule, there were no Liabilities (other
than policyholder benefits payable in the ordinary course of business and
consistent with past practices) against, relating to, or affecting Savers
as of September 30, 1997 that individually or in the aggregate have or may
reasonably be expected to have a material adverse effect on the Business or
Condition of Savers or the Surviving Corporation. Except to the extent
specifically reflected in the balance sheet included in the September 30,
1997 SAP Statement (or in the notes relating thereto), or except as
disclosed in SECTION 3.14 of the Disclosure Schedule, since September 30,
1997, Savers has not incurred any Liabilities (other than policyholder
benefits payable in the ordinary course of business and consistent with
past practice) that individually or in the aggregate have or may reasonably
be expected to have a material adverse effect on the Business or Condition
of Savers or the Surviving Corporation.
3.15 TAXES. Except as disclosed in SECTION 3.15 of the Disclosure
Schedule (with paragraph references corresponding to those set forth
below):
(a) All Tax Returns required to be filed with respect to Savers
have been duly and timely filed, and all such Tax Returns are true and
complete in all material respects. Savers has duly and timely paid
all Taxes that are due, or claimed or asserted by any taxing authority
to be due, from Savers for the periods covered by such Tax Returns or
has duly provided for all such Taxes in the Books and Records of
Savers and in accordance with GAAP and SAP, including, without
limitation, in the Financial Statements. There are no Liens with
respect to Taxes (except for Liens with respect to real and personal
property Taxes not yet due) upon any of the Assets and Properties of
Savers.
(b) With respect to any period for which Tax Returns have not yet
been filed, or for which Taxes are not yet due or owing, Savers have
made due and sufficient current accruals for such Taxes in its Books
and Records and in accordance with SAP and GAAP, and such current
accruals through the Closing Date are duly and fully provided for in
the SAP and GAAP Financial Statements of Savers for the period then
ended.
(c) The United States federal income Tax Returns of Savers and of
each affiliated group (within the meaning of the Code) of which Savers
is or has been a member have not been audited or examined by the IRS,
and the statute of limitations for all periods through the year 1989
has expired. The state, local, and foreign income Tax Returns of
Savers have not been audited or examined, and all statutes of
limitation for all applicable state, local, and foreign taxable
periods through the respective years specified in SECTION 3.15(C) of
the Disclosure Schedule have expired. There are no outstanding
agreements, waivers, or arrangements extending the statutory period of
limitation applicable to any claim for, or the period for the
collection or assessment of, Taxes due from Savers for any taxable
period. Savers has previously delivered to SMC true and complete
copies of each of the United States federal, state, local, and
foreign income Tax Returns, for each of the last three taxable years,
filed by Savers (insofar as such returns relate to either Savers)
filed by any affiliated or consolidated group of which Savers was then
a member.
(d) No audit or other proceeding by any court, governmental or
regulatory authority, or similar Person is pending or (to the
knowledge of Savers) threatened with respect to any Taxes due from
Savers or any Tax Return filed by or relating to Savers. To the best
knowledge of Savers, no assessment of Tax is proposed against Savers
or any of its Assets and Properties.
(e) No election under any of Sections 108, 168, 338, 441, 463,
472, 1017, 1033, or 4977 of the Code (or any predecessor provisions)
has been made or filed by or with respect to Savers or any of its
Assets and Properties. No consent to the application of
Section 341(f)(2) of the Code (or any predecessor provision) has been
made or filed by or with respect to Savers or any of its Assets and
Properties. None of the Assets and Properties of Savers is an asset
or property that SMC or any of its Affiliates is or will be required
to treat as being owned by any other Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately before the enactment of the Tax
Reform Act of 1986, or tax-exempt use property within the meaning of
Section 168(h)(1) of the Code. No closing agreement pursuant to
Section 7121 of the Code (or any predecessor provision) or any similar
provision of any state, local, or foreign Law has been entered into by
or with respect to Savers or any of its Assets and Properties.
(f) Savers has not agreed to nor is required to make any
adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision) by reason of any change in any accounting method of Savers,
and Savers does not have any application pending with any taxing
authority requesting permission for any changes in any accounting
method of Savers. To the best knowledge of Savers, the IRS has not
proposed any such adjustment or change in accounting method.
(g) Savers has not been or is in violation (or with notice or
lapse of time or both, would be in violation) of any applicable Law
relating to the payment or withholding of Taxes. Savers has duly and
timely withheld from employee salaries, wages, and other compensation
and paid over to the appropriate taxing authorities all amounts
required to be so withheld and paid over for all periods under all
applicable Laws.
(h) Savers is not a party to, is not bound by, and has no
obligation under, any Tax sharing Contract or similar Contract;
notwithstanding any disclosure contained in the Disclosure Schedule,
Savers represents and warrants that, at the Closing, Savers shall not
be a party to, be bound by or have any obligation under, any Tax
sharing Contract or similar Contract or arrangement. Savers is not a
foreign person within the meaning of Section 1445(f)(3) of the Code.
(i) Savers has not made any direct, indirect, or deemed
distributions that have been or could be taxed under Section 815 of
the Code.
(j) All ceding commission expenses paid or accrued by Savers in
connection with any reinsurance arrangement or Contract or transaction
have been capitalized and amortized over the life or lives of such
reinsurance arrangement or Contract in accordance with the decision of
the United States Supreme Court in COLONIAL AMERICAN LIFE INSURANCE
COMPANY V. COMMISSIONER OF INTERNAL REVENUE, 109 S.Ct. 240 (1980).
(k) No material Liabilities have been proposed in connection with
any audit or other proceeding by any court, governmental or regulatory
authority, or similar Person with respect to any Taxes due from Savers
or any Tax Return filed by or relating to Savers.
(l) Savers is a not party to any agreement, contract, plan or
arrangement that has resulted, or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code.
3.16 LITIGATION. Except as disclosed in SECTION 3.16 of the
Disclosure Schedule (with paragraph references corresponding to those set
forth below):
(a) There are no actions, suits, investigations, or proceedings
pending, or (to the best knowledge of Savers) threatened, against or
affecting Savers or any of its Assets and Properties, at law or in
equity, in, before, or by any Person that individually or in the
aggregate have or may reasonably be expected to have a material
adverse effect on the validity or enforceability of this Amended and
Restated Merger Agreement, on the ability of Savers to perform its
obligations under this Amended and Restated Merger Agreement, or on
the Business or Condition of Savers or the Surviving Corporation.
(b) There are no actions, suits, investigations, or proceedings
pending, or (to the best knowledge of Savers) threatened, against
Savers or any of its Assets and Properties, at law or in equity, in,
before, or by any Person that individually involve a claim or claims
for any injunction or similar relief or for Damages exceeding $25,000
or an unspecified amount of Damages.
(c) There are no writs, judgments, decrees, or similar orders of
any Person outstanding against Savers that individually exceed $10,000
or that individually or in the aggregate have or may reasonably be
expected to have a material adverse effect on the Business or
Condition of Savers, and there are no injunctions or similar orders of
any Person outstanding against Savers or the Surviving Corporation.
3.17 COMPLIANCE WITH LAWS. To the best knowledge of Savers and except
as disclosed in SECTION 3.17 of the Disclosure Schedule, Savers has not
been and is not in violation (or with or without notice or lapse of time or
both, would be in violation) of any term or provision of any Law or any
writ, judgment, decree, injunction, or similar order applicable to Savers
or any of its Assets and Properties, the result of which violation
individually or violations in the aggregate has or may reasonably be
expected to have a material adverse effect on the Business or Condition of
Savers or the Surviving Corporation. Without limiting the generality of the
foregoing:
(a) Since January 1, 1997, Savers has duly and validly filed or
caused to be so filed all reports, statements, documents,
registrations, filings, or submissions that were required by Law to be
filed with any Person and as to which the failure to so file,
individually in the aggregate with other such failures, has or may
reasonably be expected to have a material adverse effect on the
Business or Condition of Savers or the Surviving Corporation; all such
filings complied with applicable Laws in all material respects when
filed and, no material deficiencies have been asserted by any Person
with respect to any such filings.
(b) Savers has previously delivered to SMC the reports reflecting
the results of the most recent financial examination of Savers issued
by the North Carolina Department of Insurance. All material
deficiencies or violations in such previously issued reports have been
resolved to the satisfaction of the State of North Carolina Department
of Insurance.
(c) Except as disclosed in SECTION 3.17(C) of the Disclosure
Schedule, all outstanding insurance and annuity Contracts issued,
reinsured, or underwritten by Savers are, to the extent required under
applicable Laws, on forms approved by the insurance regulatory
authority of the jurisdiction where issued or have been filed with and
not objected to by such authority within the period provided for
objection.
(d) (1) SECTION 3.17(D) of the Disclosure Schedule contains a
true and complete list of each master or prototype (as well as any
individually designed) pension, profit sharing, defined benefit, Code
Section 401(k), and other retirement or employee benefit plan or
Contract (including, but not limited to, simplified employee pension
plans, Code Section 403(a), (b) and (c) annuities, Keogh plans, and
individual retirement accounts and annuities) offered or sold by
Savers to, or maintained or sponsored for the benefit of any employees
of, any other Person, and each determination letter relating to the
creation or amendment of any such plan or Contract. Except as
disclosed in SECTION 3.17(D) of the Disclosure Schedule, each such
plan or Contract in all material respects conforms with, and has been
offered, sold, maintained, and sponsored in accordance with, all
applicable Laws. Except as disclosed in SECTION 3.17(D) of the
Disclosure Schedule, Savers is not a fiduciary with respect to any
plan or Contract referenced in this SECTION 3.17(D).
(2) Savers does not provide administrative or other
contractual services for any plan or Contract referenced in this
SECTION 3.17(D), including, but not limited to, any third party
administrative services for an Employee Welfare Benefit Plan.
(3) To the extent that Savers maintains any collective or
commingled funds or accounts which restrict the Persons who may invest
therein to tax-exempt entities or qualified plans, each such fund or
account (of which a true and complete list and description is
disclosed in SECTION 3.17(D)(3) of the Disclosure Schedule) has been
established, maintained and operated in accordance with all applicable
Laws, has maintained its tax-exempt status and has no nonqualified
plans or trusts or other taxable entities investing in it.
(4) In addition to the representations and warranties
contained in SECTION 3.16, there are no claims pending, or (to the
best knowledge of Savers) threatened, against Savers or any of its
Assets and Properties, under any fiduciary liability insurance policy
issued by or to Savers that individually or in the aggregate has or
may reasonably be expected to have a material adverse effect on the
Business or Condition of Savers or the Surviving Corporation.
3.18 BENEFIT PLANS, ERISA.
Except as disclosed in SECTION 3.18 of the Disclosure Schedule,
Savers has not had within the past six (6) years and does not
currently have any Benefit Plan or any commitment or obligation to
create any Benefit Plan.
(a) Neither Savers, nor any of its respective Affiliates has any
Contract, plan, or commitment, whether legally binding or not, to
create any additional Benefit Plan or to modify or change any existing
Benefit Plan. Each contribution or other payment required to be made
or to be voluntarily made by Savers on or before December 31, 1995
with respect to any of the Benefit Plans has been made.
(b) None of the Benefit Plans is or has been a multi-employer
plan, as that term is defined in Section 3(37) of ERISA. There has
been no transaction, action, or omission involving Savers, any ERISA
Affiliate, or (to the best knowledge of Savers) any fiduciary,
trustee, or administrator of any Benefit Plan, or any other Person
dealing with any such Benefit Plan or the related trust or funding
vehicle, that in any manner violates or will result in a violation
(with or without notice or lapse of time or both) of Sections 404 or
406 of ERISA or constitutes or will constitute (with or without notice
or lapse of time or both) a prohibited transaction (as defined in
Section 4975(c)(I) of the Code or Section 406 of ERISA) for which
there exists neither a statutory nor a regulatory exemption and which
could subject Savers or any party in interest (as defined in
Section 3(14) of ERISA) to criminal or civil sanctions under
Section 501 or 502 of ERISA, or to Taxes under Code Section 4975, or
to any other Liability.
(c) There has been no reportable event (as defined in
Section 4043(b) of ERISA) with respect to any Employee Pension Benefit
Plan or any Employee Welfare Benefit Plan for which notice to the PBGC
has not been waived by rule or regulation. Neither Savers, nor any
ERISA Affiliate has any Liability to the PBGC (other than any
Liability for insurance premiums not yet due to the PBGC), to any
present or former participant in or beneficiary of any Benefit Plan
(or any beneficiary of any such participant or beneficiary), or to any
Employee Pension Benefit Plan or any Employee Welfare Benefit Plan.
No event, fact, or circumstance has arisen or occurred that has
resulted or may reasonably be expected to result in any such Liability
or a claim against Savers by the PBGC, by any present or former
participant in or any beneficiary of any Employee Pension Benefit Plan
or any Employee Welfare Benefit Plan (or any beneficiary of any such
participant or beneficiary), or by any such Benefit Plan. No filing
has been or will be made by Savers, or any ERISA Affiliate, and no
proceeding has been commenced, for the complete or partial termination
of any Employee Pension Benefit Plan or any Employee Welfare Benefit
Plan, and no complete or partial termination of any such Benefit Plan
has occurred or, as a result of the execution or delivery of this
Amended and Restated Merger Agreement or the consummation of the
transactions contemplated hereby, will occur.
(d) All amounts that Savers is required to pay by Law or under
the terms of the Benefit Plans as a contribution or other payment to
or in respect of such Benefit Plans as of December 31, 1996 have been
paid. The funding method used in connection with each Benefit Plan
that is or at any time has been subject to the funding requirements of
Title I, Subtitle B, Part 3 of ERISA, meets the requirements of ERISA
and the Code. No Benefit Plan subject to Title IV of ERISA (or any
trust established thereunder) has ever incurred any accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, as of the last day of the most
recent fiscal year of such Benefit Plan. With respect to any period
for which any contribution or other payment to or in respect of any
Benefit Plan is not yet due or owing, Savers has made due and
sufficient current accruals for such contributions and other payments
in accordance with GAAP and SAP, and such current accruals through the
Closing will be duly and fully provided for in the SAP Statement of
Savers for the period then ended.
(e) Each Benefit Plan is and has been operated and administered
in all material respects in accordance with all applicable Laws,
including, without limitation, ERISA and the Code. Each of the
Employee Pension Benefit Plans and Employee Welfare Benefit Plans that
is intended to be qualified within the meaning of Section 401(a) of
the Code is so qualified and satisfies the requirements of Sections
401(a) and 501(a) of the Code. There exists no fact, condition, or
set of circumstances that has or may reasonably be expected to have a
material adverse effect on the qualified status of any Employee
Pension Benefit Plan or any Employee Welfare Benefit Plan intended to
be so qualified or the intended United States federal income Tax
treatment or consequences of any Employee Pension Benefit Plan or any
Employee Welfare Benefit Plan. None of the Benefit Plans, or any
related trust or funding vehicle, conducts or has conducted any
unrelated trade or business as that term is defined in Section 513 of
the Code. All necessary governmental approvals, determinations, and
notifications for all Employee Pension Benefit Plans and all Employee
Welfare Benefit Plans have been obtained.
(f) Any actuarial assumptions utilized by Savers in connection
with determining the funding of each Employee Pension Benefit Plan (as
set forth in the actuarial report for such Benefit Plan) are
reasonable in all material respects. The fair market value of the
Assets or Properties held under each Employee Pension Benefit Plan
exceeds the actuarially determined present value of all accrued
benefits of such Benefit Plan (whether or not vested) determined on an
ongoing-Benefit Plan basis.
(g) Except as disclosed in SECTION 3.18(G) of the Disclosure
Schedule, and except for claims by third parties for benefits owed to
participants or beneficiaries under the Benefit Plans, and except for
divorce proceedings, there are no pending or (to the best knowledge of
Savers) threatened actions, suits, investigations, or other
proceedings by any present or former participant or beneficiary under
any Benefit Plan (or any beneficiary of any such participant or
beneficiary) involving any Benefit Plan or any rights or benefits
under any Benefit Plan or any rights or benefits under any Benefit
Plan other than ordinary and usual claims for benefits by participants
or beneficiaries thereunder. There is no writ, judgment, decree,
injunction, or similar order of any court, governmental or regulatory
authority, or other similar Person outstanding against or in favor of
any Benefit Plan or any fiduciary thereof.
(h) Except as disclosed in SECTION 3.18(H) of the Disclosure
Schedule, Savers is not a party to any employee collective bargaining
agreement, advisory or service agreement, deferred compensation
agreement, confidentiality agreement or covenant not to compete.
(i) Except as disclosed in SECTION 3.18(I) of the Disclosure
Schedule, Savers does not have any stock option, stock purchase, bonus
or other incentive plan or agreement.
(j) SECTION 3.18(J) of the Disclosure Schedule contains: (i) a
list of all employees of Savers as of September 30, 1997 whose then
current annual compensation was in excess of $50,000; (ii) the then
current annual compensation of, and a description of the fringe
benefits (other than those generally available to employees of Savers)
provided by Savers to any such employees; (iii) a list of all present
or former employees of Savers paid in excess of $50,000 in calendar
year 1996 who have terminated or given notice of their intention to
terminate their relationship with Savers since January 1, 1997; (iv) a
list of any increase, effective after December 31, 1996, in the rate
of compensation of any employees if such increase exceeds 10% of the
previous annual salary of such employee; and (v) a list of all
substantial changes in job assignments of, or arrangements with, or
promotions or appointments of, any employees whose compensation as of
December 31, 1996 was in excess of $50,000 per annum.
3.19 EMPLOYEE RELATIONS. Except as set forth in SECTION 3.19 of the
Disclosure Schedule, Savers has complied in respect of the Business with
all applicable laws, rules and regulations which relate to prices, wages,
hours, discrimination in employment and collective bargaining and to the
operation of the Business of Savers and is not liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the
foregoing. Savers believes that its relations with the employees are
satisfactory. Savers is not a party to, and is not affected by or
threatened with, any dispute or controversy with a union or with respect to
unionization or collective bargaining. Savers is not materially affected
by any dispute or controversy with a union or with respect to unionization
or collective bargaining involving any supplier or customer of Savers.
3.20 PROPERTIES. Except as disclosed in SECTION 3.20 of the
Disclosure Schedule (with paragraph references corresponding to those set
forth below):
(a) Savers has good and valid title to all debentures, notes,
stocks, securities, and other assets that are of a type required to be
disclosed in Schedules B through DB of its Annual Statement and that
are owned by it, free and clear of all Liens.
(b) Savers owns good and indefeasible title to, or has a valid
leasehold interest in, all real property used in the conduct of its
business, operations, or affairs or of a type required to be disclosed
in Schedule A of Savers' Annual Statement, free and clear of all
Liens. All such real property, other than raw land, is in good
operating condition and repair and is suitable for its current uses.
No improvement on any such real property owned, leased, or held by
Savers encroaches upon any real property of any other Person. Savers
owns, leases, or has a valid right under Contract to use adequate
means of ingress and egress to, from, and over all such real property.
SECTION 3.20(B) of the Disclosure Schedule contains a brief
description of (i) each parcel of real property owned by Savers (the
"Owned Real Property") (showing the record title holder, legal
description, permanent index number, location, improvements, the uses
being made thereof and any indebtedness secured by a mortgage or other
Lien thereon) and (ii) each option held by Savers to acquire any real
property. Complete and correct copies of any title opinions, surveys
and appraisals Savers' possession or any policies of title insurance
currently in force and in the possession of Savers with respect to
each such parcel have heretofore been delivered to SMC.
(c) Savers owns good and indefeasible title to, or has a valid
leasehold interest in or has a valid right under Contract to use, all
tangible personal property that is used in the conduct of its
business, operations, or affairs, free and clear of all Liens. All
such tangible personal property is in good operating condition and
repair and is suitable for its current uses.
(d) Savers has, and at all times after the Closing will have, the
right to use, free and clear of any royalty or other payment
obligations, claims of infringement or alleged infringement, or other
Liens, all marks, names, trademarks, service marks, patents, patent
rights, assumed names, logos, trade secrets, copyrights, trade names,
and service marks that are used in the conduct of its business,
operations, or affairs (of which a true and complete list and
description is disclosed in SECTION 3.20(D) of the Disclosure
Schedule), and all computer software, programs, and similar systems
owned by or licensed to Savers, or any Affiliate of Savers or used in
the conduct of its business, operations, or affairs (of which a true
and complete list and description is disclosed in SECTION 3.20(D) of
the Disclosure Schedule). Savers is not in conflict with or in
violation or infringement of, and Savers has not received any notice
of any conflict with or violation or infringement of or any claimed
conflict with, any asserted rights of any other Person with respect to
any intellectual property or any computer software, programs, or
similar systems, including, without limitation, any of such items
disclosed in SECTION 3.20(D) of the Disclosure Schedule.
3.21 ENVIRONMENTAL MATTERS. Except as set forth in SECTION 3.21 of
the Disclosure Schedule:
(a) The operations of Savers comply with all applicable
Environmental Laws.
(b) Savers has obtained all environmental, health and safety
Governmental Permits necessary for its operation, and all such
Governmental Permits are in good standing and Savers is in compliance
with all terms and conditions of such permits.
(c) None of Savers nor any of its Property or operations, or its
past Property or operations, is subject to any on-going investigation
by, order from or agreement with any Person(including without
limitation any prior owner or operator of Property) respecting (i) any
Environmental Law, (ii) any Remedial Action or (iii) any claim of
Losses and Expenses arising from the Release or threatened Release of
a Contaminant into the environment.
(d) Savers is not subject to any judicial or administrative
proceeding, order, judgment, decree or settlement alleging or
addressing a violation of or liability under any Environmental Law.
(e) Savers has not with respect to the Business of Savers:
(i) reported a Release of a hazardous substance pursuant to
Section 103(a) of CERCLA, or any state equivalent;
(ii) filed a notice pursuant to Section 103(c) of CERCLA;
(iii) filed notice pursuant to Section 3010 of RCRA,
indicating the generation of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any state equivalent; or
(iv) filed any notice under any applicable Environmental
Law reporting a substantial violation of any applicable
Environmental Law.
(f) There is not now, nor to the best knowledge of Savers has
there ever been, on or in any of its Property:
(i) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 CFR Part 261 or
any state equivalent, that requires or required a Governmental
Permit pursuant to Section 3005 of RCRA; or
(ii) any underground storage tank or surface impoundment or
landfill or waste pile.
(g) There is not now on or in any of its Property any
polychlorinated biphenyls (PCB) used in pigments, hydraulic oils,
electrical transformers or other equipment.
(h) Savers has not received any notice or claim to the effect
that it is or may be liable to any Person as a result of the Release
or threatened Release of a Contaminant.
(i) No Environmental Encumbrance has attached to any Property of
Savers.
(j) Any asbestos-containing material which is on or part of any
Property of Savers is in good repair according to the current
standards and practices governing such material, and its presence or
condition does not violate any currently applicable Environmental Law.
3.22 CONTRACTS. SECTION 3.22 of the Disclosure Schedule (with
paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts or other
documents or arrangements (true and complete copies, or, if none, written
descriptions, of which have been made available to SMC, together with all
amendments thereto), to which Savers is a party or by which any of its
Assets and Properties is or may be bound:
(a) all employment, agency, consultation, or representation
Contracts or other Contracts of any type (including, without
limitation, loans or advances) with any present officer, director,
employee, agent, consultant, or other similar representative of Savers
(or former officer, director, employee, agent, consultant or similar
representative of Savers, if there exists any present or future
liability with respect to such Contract, whether now existing or
contingent) (other than Contracts with consultants and similar
representatives who do not receive compensation of $25,000 or more per
year and other than employment or agency Contracts, not containing
terms which are unduly burdensome to Savers, with agents who do not
receive compensation of $25,000 or more per year), and the name,
position, and rate of compensation of each such Person and the
expiration date of each such Contract, as well as all sick leave,
vacation, holiday, and other similar practices, procedures, and
policies of Savers established or administered other than as Benefit
Plans;
(b) all Contracts with any Person containing any provision or
covenant limiting the ability of Savers to engage in any line of
business or to compete with or to obtain products or services from any
Person or limiting the ability of any Person to compete with or to
provide products or services to Savers;
(c) all partnership, joint venture, profit-sharing, alliance or
similar Contracts with any Person (other than Benefit Plans);
(d) all Contracts relating to the borrowing of money by Savers or
to the direct or indirect guarantee by Savers of any obligation for
borrowed money in excess of $25,000 in the aggregate for Savers or any
of its Affiliates, or any other Liability in respect of indebtedness
of any other Person, including without limitation any Contract
relating to the maintenance of compensating balances that are not
terminable by Savers without penalty upon not more than sixty (60)
calendar days' notice, any line of credit or similar facility, the
payment for property, products, or services of any other Person even
if such property, products, or services are not conveyed, delivered,
or rendered, or the obligation to take-or-pay, keep-well, make-whole,
or maintain surplus or earnings levels or perform other financial
ratios or requirements; SECTION 3.22(D) of the Disclosure Schedule
contains a true and complete list of any requirements for consents or
approvals of creditors needed to consummate the transactions
contemplated hereby;
(e) all leases or subleases of real property used in Savers'
business, operations, or affairs, and all other leases, subleases, or
rental or use Contracts for which Savers is liable;
(f) all Contracts relating to the future disposition or
acquisition of any investment in or security of any Person or of any
interest in any business enterprise (other than the disposition or
acquisition of investments in the ordinary course of business and
consistent with past practice);
(g) all Contracts or arrangements (including, without limitation,
those relating to the sharing or allocation of expenses, personnel,
services, or facilities) between or among Savers and any of its
Affiliates or any other Person who is described in SECTION 4.13(P);
(h) all reinsurance, coinsurance, or other similar Contracts
indicating, with respect to each such Contract, the information
required to be disclosed in Schedule S of Savers' Annual Statement;
(i) all outstanding proxies, powers of attorney, or similar
delegations of authority of Savers, except for powers of attorney for
the service of process pursuant to applicable insurance Laws, except
as incident to participation by Savers in the insurance guaranty fund
of any State wherein Savers is required or elects to participate in
such fund.
(j) all Contracts for any product, service, equipment, facility,
or similar item (other than insurance and annuity Contracts issued,
reinsured, or underwritten by Savers and other than reinsurance,
coinsurance, and other similar Contracts) that by their respective
terms do not expire or terminate or are not terminable by Savers,
without penalty or other Liability, within six (6) months after
December 31, 1997; and
(k) all other Contracts (other than insurance and annuity
Contracts issued, reinsured, or underwritten by Savers) that involve
the payment or potential payment pursuant to the terms of such
Contracts, by or to Savers of more than $10,000 individually or in the
aggregate or that are otherwise material to the Business or Condition
of Savers or the Surviving Corporation.
Except as set forth in SECTION 3.22 of the Disclosure Schedule, each of the
leases, contracts and other agreements listed the Disclosure Schedule
(collectively, the "Savers Agreements") constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and
(except for those Savers Agreements which by their terms will expire or are
otherwise terminated prior to the Effective Time in accordance with the
provisions hereof) and will continue in full force and effect after the
Effective Time, in each case without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder and
without the consent, approval or act of, or the making of any filing with,
any other party. Savers has fulfilled and performed its obligations under
each of the Savers Agreements, and Savers is not in, or alleged to be in,
breach or default under, nor is there or is there alleged to be any basis
for termination of, any of the Savers Agreements, and no other party to any
of the Savers Agreements has breached or defaulted thereunder, and no event
has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a
default or breach by Savers or by any such other party. Savers is not
currently renegotiating any of the Savers Agreements or paying liquidated
damages in lieu of performance thereunder. None of the Savers Agreements
contains terms unduly burdensome to Savers or is harmful to the Business.
Complete and correct copies of each of the Savers Agreements have
heretofore been made available to SMC.
3.23 INSURANCE ISSUED BY SAVERS. Except as required by Law or except
as disclosed in SECTION 3.23 of the Disclosure Schedule (with paragraph
references corresponding to those set forth below):
(a) All insurance or annuity Contract benefits payable to Savers
by any other Person that is a party to or bound by any reinsurance,
coinsurance, or other similar Contract with Savers have in all
material respects been paid in accordance with the terms of the
insurance, annuity, and other Contracts under which they arose.
(b) No outstanding insurance or annuity Contract issued,
reinsured, or underwritten by Savers entitles the holder thereof or
any other Person to receive dividends, distributions, or to share in
the income of Savers or receive any other benefits based on the
revenues or earnings of Savers or any other Person.
(c) The underwriting standards utilized and ratings applied by
Savers and (to the best knowledge of Savers) by any other Person that
is a party to or bound by any reinsurance, coinsurance, or other
similar Contract with Savers conform in all material respects to
industry accepted practices and to the standards and ratings required
pursuant to the terms of the respective reinsurance, coinsurance or
other similar Contracts.
(d) To the best knowledge of Savers all amounts to which Savers
is entitled under reinsurance, coinsurance, or other similar Contracts
(including without limitation amounts based on paid and unpaid losses)
are fully collectible.
(e) To the best knowledge of Savers, each insurance agent, at the
time such agent wrote, sold, or produced business for Savers, was duly
licensed as an insurance agent (for the type of business written,
sold, or produced by such insurance agent) in the particular
jurisdiction in which such agent wrote, sold or produced such business
for Savers.
(f) To the best knowledge of Savers, no such insurance agent
violated (or with or without notice or lapse of time or both, would
have violated) any term or provision of any Law or any writ, judgment,
decree, injunction, or similar order applicable to the writing, sale
or production of business for Savers.
(g) The tax treatment under the Code of all insurance, annuity or
investment policies, plans, or contracts; all financial products,
employee benefit plans, individual retirement accounts or annuities;
or any similar or related policy, contract, plan, or product, whether
individual, group, or otherwise, issued or sold by Savers is and at
all times has been the same or more favorable to Savers, policyholder
or intended beneficiaries thereof as the tax treatment under the Code
for which such contracts qualified or purported to qualify at the time
of its issuance or purchase. For purposes of this SECTION 3.23(G),
the provisions of the Code relating to the tax treatment of such
contracts shall include, but not be limited to, Sections 72, 79, 89,
101, 104, 105, 106, 125, 130, 401, 402, 403, 404, 408, 412, 415, 419,
419A, 501, 505, 817, 818, 7702, and 7702A of the Code.
(h) There are no reinsurance, coinsurance or other similar
Contracts under which Savers receives or has received surplus relief.
3.24 THREATS OF CANCELLATION. Except as disclosed in SECTION 3.24 of
the Disclosure Schedule, since December 31, 1996, no policyholder, group of
policyholder Affiliates, or Persons writing, selling, or producing
insurance business that individually or in the aggregate accounted for five
percent 5% or more of the premium or annuity income of Savers for the year
ended December 31, 1996, has terminated or (to the best knowledge of
Savers) threatened to terminate its relationship with Savers.
3.25 LICENSES AND PERMITS. Except as disclosed in SECTION 3.25 of the
Disclosure Schedule (with paragraph references corresponding to those set
forth below):
(a) Savers owns or validly holds, all licenses, franchises,
permits, approvals, authorizations, exemptions, classifications,
certificates, registrations and similar documents or instruments that
are required for its business, operations and affairs and that the
failure to so own or hold has or may reasonably be expected to have a
material adverse effect on its Business or Condition.
(b) All such licenses, franchises, permits, approvals,
authorizations, exemptions, classifications, certificates,
registrations and similar documents or instruments are valid and in
full force and effect and free of any restrictions imposed by any
Person.
(c) Savers is in compliance in all material respects with its
obligations under the foregoing, with only such exceptions as,
individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on the Business or Condition of Savers,
and no event has occurred that allows, or after notice or lapse of
time, or both, would allow, revocation or termination of any of the
foregoing.
3.26 OPERATIONS INSURANCE. SECTION 3.26 of the Disclosure Schedule
contains a true and complete list and description of all liability,
property, workers' compensation, directors and officers liability and other
similar insurance Contracts that insure the business, operations, or
affairs of Savers or affect or relate to the ownership, use, or operations
of any of the Assets and Properties of Savers and that have been issued to
Savers or any of its Affiliates (including, without limitation, the names
and addresses of the insurers, the expiration dates thereof, and the annual
premiums and payment terms thereof) or that are held by Savers or by any
Affiliate of Savers for the benefit of the Surviving Corporation following
the Effective Time. All such insurance is in full force and effect and (to
the best knowledge of Savers) is with financially sound and reputable
insurers and, in light of the business, operations, and affairs of Savers,
is in amounts and provides coverage that are reasonable and customary for
Persons in similar businesses.
3.27 INTERCOMPANY ACCOUNTS. Except as reflected in the December 31,
1996 SAP Statement, or except as disclosed in SECTION 3.27 of the
Disclosure Schedule, there are no accounts between Savers and any of its
Affiliates, and none of its Affiliates provides or causes to be provided
to Savers any products, services, equipment, facilities, or similar items.
Except as disclosed in SECTION 3.27 of the Disclosure Schedule, since
December 31, 1996, no such intercompany accounts in excess of $10,000 have
been paid or received, and all settlements of such intercompany accounts
have been made, and all allocations of such intercompany expenses have been
applied, in the ordinary course of business and consistent with past
practice. All intercompany accounts shall be written off prior to the
Effective Time and, if constituting an admitted asset, taken into account
in calculating the Adjusted Capital and Surplus of Savers.
3.28 BANK ACCOUNTS. SECTION 3.28 of the Disclosure Schedule contains
a true and complete list of the names and locations of all banks, trust
companies, securities brokers, and other financial institutions at which
Savers has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship and a true and complete
list and description of each such account, box and relationship, indicating
in each case the account number and the names of the officers, employees,
agents or other similar representatives of Savers transacting business with
respect thereto.
3.29 BROKERS. All negotiations relative to this Amended and Restated
Merger Agreement and the transactions contemplated hereby have been carried
out by Savers directly with SMC, without the intervention of any Person on
behalf of Savers in such manner as to give rise to any valid claim by any
Person against SMC, Savers or the Surviving Corporation for a finder's fee,
brokerage commission, or similar payment. Notwithstanding the foregoing,
Savers is a party to an agreement with Daiwa Securities America, Inc.,
pursuant to which a fee may be owing as a result of the transaction
contemplated by this Amended and Restated Merger Agreement
3.30 DISCLOSURE. Neither this Amended and Restated Merger Agreement
nor any certificate furnished by Savers or Savers to SMC in connection with
this Amended and Restated Merger Agreement or the transactions contemplated
hereby contains any untrue statement of a material fact by Savers or omits
to state a material fact by Savers necessary to make the statements herein
or therein not misleading in light of the circumstances in which they were
made. There is no fact which adversely affects or in the future is likely
to adversely affect the Business or Condition of Savers in any material
respect which has not been set forth or referred to in this Amended and
Restated Merger Agreement or the Disclosure Schedule.
3.31 STATE TAKEOVER STATUTES. Valid and irrevocable exemptions from
the Control Share Acquisition Act (Article 9A) and the Shareholder
Protection Act (Article 9) of the NCBCA exist and are applicable to all of
the transactions contemplated by this Amended and Restated Merger
Agreement. No other similar laws are applicable to the Merger, this
Amended and Restated Merger Agreement or the transactions contemplated
hereby.
3.32 SENSITIVE PAYMENTS. Except as disclosed in SECTION 3.32 of the
Disclosure Schedule, (i) to the best knowledge of Savers, Savers is not
involved in any transaction or other situation with any employee, officer,
director or Affiliate of Savers which may be generally characterized as a
"conflict of interest", including, but not limited to, direct or indirect
interests in the business of competitors, suppliers or customers of Savers,
and (ii) there are no situations which involved or involves (A) the use of
any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to political activity, (B) the making of
any direct or indirect unlawful payments to government officials or others
from corporate funds or the establishment or maintenance of any unlawful or
unrecorded funds, (C) the violation of any of the provisions of The Foreign
Corrupt Practices Act of 1977, or any rules or regulations promulgated
thereunder, (D) the receipt of any illegal discounts or rebates or any
other violation of the antitrust laws or (E) any investigation by the
Securities and Exchange Commission or any other federal, foreign, state or
local government agency or authority.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SMC
SMC hereby represents and warrants to Savers as follows:
4.1 ORGANIZATION. SMC is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Indiana and
has full corporate power and authority to enter into this Amended and
Restated Merger Agreement and to perform its obligations under this Amended
and Restated Merger Agreement. SMC is duly licensed, qualified, or
admitted to do business and is in good standing in all jurisdictions in
which the failure to be so licensed, qualified or admitted and in good
standing, individually or in the aggregate with other such failure, has or
may reasonably be expected to have a material adverse effect on the
validity or enforceability of this Amended and Restated Merger Agreement,
on the ability of SMC to perform its obligations under this Amended and
Restated Merger Agreement or on the Business or Condition of SMC.
4.2 AUTHORITY. The Board of Directors of SMC has duly and validly
approved this Amended and Restated Merger Agreement and the transactions
contemplated hereby. Except for the approval of the shareholders of SMC,
the execution and delivery of this Amended and Restated Merger Agreement by
SMC and the performance by SMC of its obligations under this Amended and
Restated Merger Agreement have been duly and validly authorized by all
necessary corporate action on the part of SMC. This Amended and Restated
Merger Agreement constitutes a legal, valid, and binding obligation of SMC
and is enforceable against SMC in accordance with its terms, except to the
extent that enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium or similar Laws now or hereafter in
effect relating to or limiting creditors' rights generally, and the remedy
of specific performance and injunctive and other forms of equitable relief
are subject to certain equitable defenses and to the discretion of the
court or other similar Person before which any proceeding therefor may be
brought.
4.3 NO CONFLICTS OR VIOLATIONS. The execution and delivery of this
Amended and Restated Merger Agreement by SMC do not, and the performance by
SMC of its obligations under this Amended and Restated Merger Agreement
will not:
(a) subject to obtaining the approvals contemplated by ARTICLE IX
of this Amended and Restated Merger Agreement, violate any term or
provision of any Law or any writ, judgment, decree, injunction, or
similar order applicable to SMC;
(b) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
under, any of the terms, conditions, or provisions of the articles of
incorporation or Bylaws of SMC;
(c) except as disclosed in writing to Savers, result in the
creation or imposition of any Lien upon SMC or any of its Assets and
Properties that individually or in the aggregate with any other Liens
has or may reasonably be expected to have a material adverse effect on
the validity or enforceability of this Amended and Restated Merger
Agreement or on the ability of SMC to perform its obligations under
this Amended and Restated Merger Agreement;
(d) except as disclosed in writing to Savers, conflict with or
result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or give to any
person any right of termination, cancellation, acceleration, or
modification in or with respect to, any Contract to which SMC is a
party or by which any of its Assets and Properties may be bound and as
to which any such conflicts, violations, breaches, defaults, or rights
individually or in the aggregate have or may reasonably be expected to
have a material adverse effect on the validity or enforceability of
this Amended and Restated Merger Agreement or on the ability of SMC to
perform its obligations under this Amended and Restated Merger
Agreement; or
(e) require SMC to obtain any consent, approval, or action of, or
make any filing with or give any notice to, any Person except as
contemplated in ARTICLES IX and X of this Amended and Restated Merger
Agreement, as disclosed in writing to Savers, or those which the
failure to obtain, make, or give individually or in the aggregate with
other such failures has or may reasonably be expected to have no
material adverse effect on the validity or enforceability of this
Amended and Restated Merger Agreement or on the ability of SMC to
perform its obligations under this Amended and Restated Merger
Agreement.
4.4 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by SMC or SAC for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement will (i) in
the case of the Registration Statement, at the time it becomes effective
and at the Effective Time, 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 not misleading or (ii) in
the case of the Proxy Statement, at the time of the mailing of the Proxy
Statement and at the time of each Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If
at any time prior to the Effective Time any event with respect to SMC, its
officers and directors or any of its Subsidiaries shall occur which is
required to be described in the Proxy Statement or the Registration
Statement, such event shall be so described, and an amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated
to the stockholders of Savers and/or SMC, as appropriate. The Registration
Statement will comply (with respect to SMC and SAC) as to form in all
material respects with the provisions of the Securities Act, and the Proxy
Statement will comply (with respect to SMC and SAC) as to form with the
provisions of the Exchange Act.
4.5 LITIGATION. There are no actions, suits, investigations, or
proceedings pending against SMC, or (to the best knowledge of SMC)
threatened against SMC, at law or in equity, in, before, or by any Person,
that individually or in the aggregate have or may reasonably be expected to
have a material adverse effect on the validity or enforceability of this
Amended and Restated Merger Agreement, on the ability of SMC to perform its
obligations under this Amended and Restated Merger Agreement or on the
Business and Condition of SMC.
4.6 CAPITALIZATION. The authorized capital stock of SMC consists of
20,000,000 shares of common stock and 1,000,000 shares of preferred stock.
As of September 30, 1997, there were issued and outstanding: 5,752,499
shares of common stock, of which 882,259 shares are in the treasury; stock
options to acquire 1,338,595 shares of common stock of which options to
acquire 1,199,399 shares of common stock were exercisable; and warrants to
acquire 752,358 shares of common stock, all of which were exercisable. All
outstanding shares of capital stock of SMC have been duly authorized and
validly issued and are fully paid and nonassessable and free of preemptive
rights. Except as set forth in this SECTION 4.6, there are outstanding (a)
no other shares of capital stock or other voting securities of SMC, (b) no
securities of SMC convertible into or exchangeable for shares of capital
stock or voting securities of SMC and (c) no other options or other rights
to acquire from SMC, and there is no obligation of SMC to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for, or options or warrants to purchase capital stock or
voting securities of SMC (the items in clauses (a), (b) and (c) being
referred to, together with the common stock, collectively as the "SMC
Securities"). Except as disclosed in SECTION 4.6 of the Disclosure
Schedule, there are no outstanding obligations of SMC to repurchase, redeem
or otherwise acquire any SMC Securities.
4.7 BROKERS. All negotiations relative to this Amended and Restated
Merger Agreement and the transactions contemplated hereby have been carried
out by SMC directly with Savers, without the intervention of any Person on
behalf of SMC in such manner as to give rise to any valid claim by any
Person against Savers, SMC or the Surviving Corporation for a finder's fee,
brokerage commission or similar payment, except that a fee may be owing to
Daiwa Securities America, Inc. pursuant to its agreement with Savers as
disclosed in SECTION 3.29.
4.8 DISCLOSURE. Neither this Amended and Restated Merger Agreement
nor any certificate furnished by SMC to Savers in connection with this
Amended and Restated Merger Agreement or the transactions contemplated
hereby contains any untrue statement by SMC of material fact or omits to
state a material fact by SMC necessary to make the statements herein or
therein not misleading in light of the circumstances in which they were
made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SAC
SMC and SAC jointly and severally represent and warrant to Savers as
follows:
5.1 ORGANIZATION AND STANDING. SAC is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of North
Carolina and has full corporate power and authority to enter into this
Amended and Restated Merger Agreement and to perform its obligations under
this Amended and Restated Merger Agreement. SAC was organized solely for
the purpose of acquiring Savers and engaging in the transactions
contemplated by this Amended and Restated Merger Agreement and has not
engaged in any business since it was incorporated which is not in
connection with the acquisition of Savers and this Amended and Restated
Merger Agreement.
5.2 CAPITAL STRUCTURE. The authorized capital stock of SAC consists
of 1,000 shares of common stock, no par value per share, all of which are
validly issued and outstanding, fully paid and nonassessable and are owned
by SMC free and clear of all Liens, claims and encumbrances.
5.3 AUTHORITY. The Board of Directors of SAC has duly and validly
approved this Amended and Restated Merger Agreement and the transactions
contemplated hereby. The execution and delivery of this Amended and
Restated Merger Agreement by SAC and the performance by SAC of its
obligations under this Amended and Restated Merger Agreement have been duly
and validly authorized by all necessary corporate action on the part of SAC
except stockholder approval. This Amended and Restated Merger Agreement
constitutes a legal, valid and binding obligation of SAC and is enforceable
against SAC in accordance with its terms, except to the extent that
enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar Laws now or hereafter in effect
relating to or limiting creditors' rights generally, and the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be brought.
5.4 NO CONFLICTS OR VIOLATIONS. The execution and delivery of this
Amended and Restated Merger Agreement by SAC do not, and the performance by
SAC of its obligations under this Amended and Restated Merger Agreement
will not:
(a) subject to obtaining the approvals contemplated by ARTICLES
IX and X of this Amended and Restated Merger Agreement, violate any
term or provision of any Law or any writ, judgment, decree,
injunction, or similar order applicable to SAC;
(b) violate any term or provision of any Law or any writ,
judgment, decree, injunction, or similar order applicable to SAC;
(c) except as disclosed in writing to Savers, result in the
creation or imposition of any Lien upon SAC or any of its Assets and
Properties that individually or in the aggregate with any other Liens
has or may reasonably be expected to have a material adverse effect on
the validity or enforceability of this Amended and Restated Merger
Agreement or on the ability of SAC to perform its obligations under
this Amended and Restated Merger Agreement;
(d) except as disclosed in writing to Savers, conflict with or
result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or give to any
person any right of termination, cancellation, acceleration or
modification in or with respect to, any Contract to which SAC is a
party or by which any of its Assets and Properties may be bound and as
to which any such conflicts, violations, breaches, defaults or rights,
individually or in the aggregate, have or may reasonably be expected
to have a material adverse effect on the validity or enforceability of
this Amended and Restated Merger Agreement or on the ability of SAC to
perform its obligations under this Amended and Restated Merger
Agreement; or
(e) require SAC to obtain any consent, approval, or action of, or
make any filing with or give any notice to, any Person except as
contemplated in ARTICLES IX and X of this Amended and Restated Merger
Agreement, as disclosed in writing to Savers, or those which the
failure to obtain, make, or give individually or in the aggregate with
other such failures has or may reasonably be expected to have no
material adverse effect on the validity or enforceability of this
Amended and Restated Merger Agreement or on the ability of SAC to
perform its obligations under this Amended and Restated Merger
Agreement.
ARTICLE VI
COVENANTS OF SAVERS
Savers covenants and agrees with SMC and SAC that, at all times before
the Effective Time, Savers will comply with all of the covenants and
provisions of this Article VI, except to the extent SMC may otherwise
consent in writing or to the extent otherwise required or permitted by this
Amended and Restated Merger Agreement.
6.1 CONDUCT OF BUSINESS. Savers will conduct its business only in
the ordinary course and consistent with past practices. Without limiting
the generality of the foregoing:
(a) Savers will use all commercially reasonable efforts to
(i) preserve intact Savers' present business organization, reputation,
and policyholder relations; (ii) keep available the services of
Savers' present officers, directors, employees, agents, consultants,
and other similar representatives; (iii) maintain all licenses,
qualifications, and authorizations of Savers to do business in each
jurisdiction in which it is so licensed, qualified, or authorized;
(iv) maintain in full force and effect all Contracts, documents, and
arrangements referred to in SECTION 3.22 hereof, (v) maintain all
Assets and Properties of Savers in good working order and condition,
ordinary wear and tear excepted and (vi) continue all current
marketing and selling activities relating to the business, operations
or affairs of Savers.
(b) Savers will cause the Books and Records of Savers to be
maintained in the usual manner and consistent with past practices and
will not permit a material change in any underwriting, investment,
actuarial, financial reporting, or accounting practices or policies of
Savers or in any assumption underlying such practices or policies, or
in any method of calculating any bad debt, contingency, or other
reserve for financial reporting purposes or for other accounting
purposes (including, without limitation, any practice, policy,
assumption, or method relating to or affecting the determination of
Savers' investment income, reserves or other similar amounts, or
operating ratios with respect to expenses, losses, or lapses).
(c) Savers will: (i) properly prepare and duly and timely file
all reports and all Tax Returns required to be filed with any
governmental or regulatory authorities with respect to the business,
operations, or affairs of Savers; and (ii) duly and fully pay all
Taxes indicated by such Tax Returns or otherwise levied or assessed
upon Savers or any of its Assets and Properties and withhold or
collect and pay to the proper taxing authorities or hold in separate
bank accounts for such payment all Taxes that Savers is required to so
withhold or collect and pay, unless such Taxes are being contested in
good faith and, if appropriate, reasonable reserves therefor have been
established and reflected in the Books and Records of Savers in
accordance with GAAP and SAP.
(d) Savers will: (i) cause all reserves and other similar amounts
with respect to insurance and annuity Contracts established or
reflected in Savers' Books and Records to be (A) established and
reflected on a basis consistent with those reserves and other similar
amounts and reserving methods followed by Savers at December 31, 1996
and (B) good, sufficient and adequate (under generally accepted
actuarial principles consistently applied) to cover the total amount
of all reasonably anticipated matured and unmatured benefits,
dividends, losses, claims, expenses, and other Liabilities of Savers
under all insurance and annuity Contracts pursuant to which Savers has
or will have any Liability (including, without limitation, any
Liability arising under or as a result of any reinsurance,
coinsurance, or other similar Contract); and (ii) continue to own
assets that qualify as legal reserve assets under all applicable
insurance Laws in an amount at least equal to the required reserves of
Savers and other similar amounts.
(e) Savers will use all commercially reasonable efforts to
maintain in full force and effect substantially the same levels of
coverage as the insurance afforded under the Contracts listed in
SECTION 3.26 of the Disclosure Schedule. Any and all benefits under
such Contracts paid or payable (whether before or after the effective
date of this Amended and Restated Merger Agreement) with respect to
the business, operations, affairs, or Assets and Properties of Savers
will be paid to Savers.
(f) Savers will continue to comply, in all material respects,
with all Laws applicable to its business, operations, or affairs.
(g) Savers will determine its Adjusted Capital and Surplus
consistent with past practices for determining capital and surplus on
its SAP Statements for any interim period and will not take any
actions the effect of which may be to cause the Adjusted Capital and
Surplus of the Surviving Corporation to be less than $7,390,000
immediately after the Effective Time less all amounts paid by Savers
pursuant to SECTION 2.5(D).
(h) Savers will not enter into any reinsurance Contracts (whether
as the ceding company or the assuming company).
6.2 FINANCIAL STATEMENTS AND REPORTS. (a) As promptly as
practicable after December 31, 1997, Savers will deliver to SMC a true and
complete copy of the SAP Statement filed by Savers for the year ended
December 31, 1997, and for each quarter thereafter until the Effective
Time, prepared in accordance with SAP and which shall present fairly the
financial condition, the Assets and Properties, and the Liabilities of
Savers as of the date thereof and the results of operations, changes in the
capital and surplus account and cash flows of Savers for and during each of
the periods covered thereby.
(b) Savers will promptly deliver to SMC audited financial
statements for the year ended December 31, 1997, and for each quarter
thereafter until the Effective Time unaudited financial statements,
prepared in accordance with GAAP which shall present fairly the
financial condition, the Assets and Properties, and the Liabilities of
Savers as of the date thereof and the results of operations, changes
in shareholders' equity and cash flows of Savers for and during each
of the periods covered thereby. Such audited statements shall be
delivered by February 28, 1998, and such unaudited statements shall be
delivered within thirty-five (35) days after the date of the end of
any such quarter.
(c) As promptly as practicable, Savers will deliver to SMC a true
and complete copy of unaudited financial statements for the month
ended November 30, 1997, and for each month thereafter until the
Effective Time, prepared in accordance with SAP which shall present
fairly the financial condition, the Assets and Properties and the
Liabilities of Savers as of the date thereof and the results of
operations, changes in the capital and surplus account and cash flows
of Savers for and during each of the periods covered thereby.
6.3 INVESTMENTS. Savers will invest its future cash flow, any cash
from matured and maturing investments, any cash proceeds from the sale of
its Assets and Properties and any cash funds currently held by Savers,
exclusively in cash equivalent assets, short-term investments or fixed
maturity securities (all of which permissible investments shall consist
only of United States government issued or guaranteed securities,
commercial paper rated A-I or PI, or bonds currently rated NAIC 1 or 2 by
the Standard Valuation office, except as otherwise required by Law or
except as required to provide cash (in the ordinary course of business and
consistent with past practice) to meet Savers' reasonably anticipated
current obligations or except as consented to or required by SMC. Savers
will take such steps as are necessary to ensure that such investment Assets
that are classified as Non-Admitted Assets under SAP or by the applicable
insurance regulatory authorities for Savers, do not at any time exceed the
respective amounts of Non-Admitted assets for Savers as of December 31,
1996.
6.4 EMPLOYEE MATTERS. Except as may be required by Law or as
disclosed in SECTION 6.4 of the Disclosure Schedule, or except for such
representations, promises, changes, alterations, or amendments that do not
and will not result in any Liability to Savers or SMC, Savers will refrain
from directly or indirectly:
(a) making any representation or promise, oral or written, to any
officer, director, employee, agent, consultant or other similar
representative of Savers concerning any Benefit Plan;
(b) making any change to, or amending in any way, the
Contracts, salaries, wages, or other compensation of any officer,
director, employee, agent, consultant or other similar representative
of Savers whose annual compensation exceeds $25,000, other than
routine changes or amendments that (a) are made in the ordinary course
of business and consistent with past practices, (b) do not and will
not result in increases of more than five percent (5%) in the salary,
wages or other compensation of any such Person and (c) do not and will
not exceed, in the aggregate, five percent (5%) of the total salaries,
wages and other compensation of all employees of Savers;
(c) adopting, entering into, amending, altering or terminating,
partially or completely, any Benefit Plan;
(d) adopting, entering into, amending, altering or terminating,
partially or completely, any employment, agency, consultation, or
representation Contract that is, or had it been in existence on the
effective date of this Amended and Restated Merger Agreement would
have been, required to be disclosed in SECTION 3.22(A) of the
Disclosure Schedule;
(e) approving any general or company-wide pay increases for
officers, directors, employees, agents, consultants, or other similar
representatives of Savers; or
(f) entering into any Contract with any officer, director,
employee, agent, consultant, or other similar representative of Savers
that is not terminable by Savers, without penalty or other Liability,
upon not more than sixty (60) calendar days' notice.
6.5 NO CHARTER AMENDMENTS. Savers will not amend its Articles of
Incorporation or Bylaws and will refrain from taking any action with
respect to any such amendment.
6.6 NO ISSUANCE OF SECURITIES. Except upon the exercise of stock
options outstanding at the date hereof, Savers will refrain from
authorizing or issuing any shares of capital stock or other equity
securities of Savers, or from entering into any Contract or granting any
option, warrant, or right calling for the authorization or issuance of any
such shares or other equity securities, or creating or issuing any
securities directly or indirectly convertible into or exchangeable for any
such shares or other equity securities or issuing any options, warrants or
rights to purchase any such convertible securities.
6.7 NO DIVIDENDS. Except for dividends and distributions which have
been approved in writing by SMC and for which any required regulatory
approvals have been received, Savers will refrain from declaring, setting
aside or paying any dividend or other distribution in respect of its
capital stock and from directly or indirectly redeeming, purchasing, or
otherwise acquiring any of its capital stock or any interest in or right to
acquire any such stock.
6.8 NO DISPOSAL OF PROPERTY. Except as set forth in SECTION 6.8 of
the Disclosure Schedule or as expressly provided in this Amended and
Restated Merger Agreement, Savers will not (a) dispose of any of its Assets
and Properties or permit any of its Assets and Properties to be subjected
to any Liens, except to the extent any such disposition or any such Lien is
made or incurred in the ordinary course of the business and consistent with
past practices, (b) sell any part of its insurance products, operations or
business to any third party (other than sales of insurance products in the
ordinary course of business consistent with past practices pursuant to
SECTION 6.1(A)), (c) enter into any Contracts obligating Savers to
administer the insurance operations of any Person other than any Affiliate,
(d) enter into any Contracts permitting any Person other than any Affiliate
of Savers to administer Savers' insurance operations or (e) enter into or
assume any Contract, if doing so could involve a loss, cost, expense or
commitment in excess of $10,000 unless in the ordinary course of business
and consistent with past practices.
6.9 NO BREACH OR DEFAULT. Savers will not violate or breach, and
will not take or fail to take any action that (with or without notice or
lapse of time or both) would constitute a violation, breach or default in
any way under any term or provision of any Contract to which it is a party
or by which any of its Assets and Properties is or may be bound.
6.10 NO INDEBTEDNESS. Savers will not create, incur, assume,
guarantee or otherwise become liable for, and will not cancel, pay, agree
to cancel or pay, or otherwise provide for a complete or partial discharge
in advance of a scheduled payment date with respect to, any Liability, and
will not waive any right to receive any direct or indirect payment or other
benefit under any Liability owing to it.
6.11 NO ACQUISITIONS. Savers will not (a) merge, consolidate or
otherwise combine or agree to merge, consolidate or otherwise combine with
any other Person, (b) acquire or agree to acquire blocks of business of, or
all or substantially all the Assets and Properties or capital stock or
other equity securities of any other Person or (c) otherwise acquire or
agree to acquire control or ownership of any other Person.
6.12 INTERCOMPANY LIABILITIES. At least five Business Days before the
Effective Time, Savers will deliver to SMC a true and complete list and
description of all Liabilities between Savers and any Affiliate of Savers
to be outstanding at the Effective Time. Savers will not enter into any
Contract or, except as required by any Contract disclosed in
SECTION 3.22(G) of the Disclosure Schedule, engage in any transaction with
any of its Affiliates.
6.13 TAX MATTERS. Savers will refrain (a) from making, filing or
entering into any election, consent or agreement described in
SECTION 3.15(E) or SECTION 3.15(F) with respect to Savers or any of its
Assets and Properties and (b) from amending or cancelling any reinsurance
or coinsurance Contract.
6.14 NOTICE AND CURE. Savers will notify SMC promptly in writing of,
and contemporaneously will provide SMC with true and complete copies of any
and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Effective Time, any event,
transaction or circumstance occurring after the date of this Amended and
Restated Merger Agreement that causes or will cause any covenant or
agreement of Savers under this Amended and Restated Merger Agreement to be
breached, or that renders or will render untrue any representation or
warranty of Savers contained in this Amended and Restated Merger Agreement
as if the same were made on or as of the date of such event, transaction or
circumstance. Savers also will use all commercially reasonable efforts to
cure, before the Effective Time, any violation or breach of any
representation, warranty, covenant or agreement made by it in this Amended
and Restated Merger Agreement, whether occurring or arising before or after
the date of this Amended and Restated Merger Agreement.
ARTICLE VII
COVENANTS OF SMC
SMC covenants and agrees with Savers that, at all times before the
Effective Time, SMC will comply with all covenants and provisions of this
Article VII, except to the extent Savers may otherwise consent in writing
or to the extent otherwise required or permitted by this Amended and
Restated Merger Agreement.
7.1 NOTICE AND CURE. SMC will notify Savers promptly in writing of,
and contemporaneously will provide Savers with true and complete copies of
any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Effective Time, any
event, transaction or circumstance occurring after the date of this Amended
and Restated Merger Agreement that causes or will cause any covenant or
agreement of SMC under this Amended and Restated Merger Agreement to be
breached, or that renders or will render untrue any representation or
warranty of SMC contained in this Amended and Restated Merger Agreement as
if the same were made on or as of the date of such event, transaction or
circumstance. SMC also will use all commercially reasonable efforts to
cure, before the Effective Time, any violation or breach of any
representation, warranty, covenant or agreement made by it in this Amended
and Restated Merger Agreement, whether occurring or arising before or after
the date of this Amended and Restated Merger Agreement.
7.2 FORM A FILING. Within thirty (30) days of the execution of this
Amended and Restated Merger Agreement, SMC will file an Amended Form A with
the North Carolina Department of Insurance relating to the proposed Merger.
7.3 JERRY E. FRANCIS TO BE APPOINTED A DIRECTOR. Imediately
following the Effective Time, Jerry E. Francis shall be appointed to the
Board of Directors of SMC.
7.4 NOTICE OF MATERIAL CHANGES. SMC shall promptly advise Savers
orally and in writing of any change or event having, or which would
reasonably be expected to have, a material adverse effect on the Business
or Condition of SMC.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 STOCKHOLDER APPROVAL.
(a) Savers shall call a meeting of its stockholders (the "Savers
Stockholder Meeting") for the purpose of voting upon the Merger and
shall use its best efforts to obtain stockholder approval of the
Merger. The Savers Stockholder Meeting shall beheld as soon as
practicable following the date upon which the Registration Statement
becomes effective, and Savers will, through its Board of Directors,
recommend to its stockholders the approval of the Merger and not
rescind its declaration that the Merger is advisable. At the Savers
Stockholder Meeting, all shares of Savers Common Stock held by each
officer and each director of Savers, shall be voted in favor of this
Amended and Restated Merger Agreement. The vote required for the
adoption of this Amended and Restated Merger Agreement shall be the
affirmative vote of the holders of a majority of the outstanding
shares of Savers Common Stock as required by the NCBCA. No officer
and director of Savers shall, prior to the Effective Time, sell,
transfer, assign or otherwise dispose of any shares of Savers Common
Stock.
(b) SMC shall promptly call a meeting of its stockholders (the
"SMC Stockholder Meeting" and, together with Savers Stockholder
Meeting, the "Stockholder Meetings") for the purpose of voting upon
the issuance of SMC Common Stock in connection with the Merger and
shall use its best efforts to obtain stockholder approval of such
issuance. The SMC Stockholder Meeting shall be on the date following
the Savers Stockholder Meeting or, if such date is not practicable, on
the closest date practicable.
8.2 REGISTRATION STATEMENT AND PROXY STATEMENT. SMC shall prepare
and file with the SEC as soon as practicable the Registration Statement and
shall use all reasonable efforts to have the Registration Statement
declared effective by the SEC as soon as practicable. Savers and SMC shall
prepare and file with the SEC as soon as practicable the Proxy Statement.
SMC shall also take any action required to be taken under state securities
or "Blue Sky" laws in connection with the issuance of the SMC Common Stock
pursuant to the Merger. Savers shall furnish SMC all information
concerning Savers and the holders of Savers Common Stock required for use
in the Registration Statement, and Savers shall take such other actions as
SMC may reasonably request in connection with the preparation of such
Registration Statement and the actions to be taken by SMC pursuant to this
SECTION 8.2. Savers and SMC shall each furnish to the other all
information concerning itself and its subsidiaries required for use in the
Proxy Statement, and shall take such other action as the other party may
reasonably request in connection with the preparation of the Proxy
Statement.
8.3 STOCK EXCHANGE LISTING. SMC shall use its best efforts to
list on the NASDAQ National Market, upon official notice of issuance, the
shares of SMC Common Stock to be issued in connection with the Merger.
8.4 REASONABLE EFFORTS. Upon the terms and subject to the
conditions set forth in this Amended and Restated Merger Agreement, each of
the parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Amended and Restated Merger Agreement, including (a) obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and making of all necessary registrations and filings
and taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by any
Governmental Entity, including but not limited to any filing under the
Improvements Act and any required approvals of the insurance regulatory
authorities in the State of North Carolina and the State of Indiana, (b)
obtaining of all necessary consents, approvals or waivers from third
parties, (c) defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Amended and Restated Merger
Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed, (d)
providing such other information and communications to such Governmental
Entities as the other party or such Governmental Entities may reasonably
request, (e) cooperate with the other party in obtaining, as promptly as
practicable, all actions of Governmental Entities referred to above and (d)
the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by this Amended and Restated
Merger Agreement. Notwithstanding anything to the contrary in this SECTION
8.4, Savers shall not commit to any divestiture transaction without SMC's
prior consent.
8.5 STATE TAKEOVER LAWS. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, the members of the
Board of Directors of Savers shall use their best efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to minimize the effects of such
statute or regulations on the transactions contemplated hereby.
8.6 IMPROVEMENTS ACT FILINGS. SMC and Savers shall promptly, if
required, make their respective amended filings, and shall thereafter
promptly make any required submissions, under the Improvements Act with
respect to the Merger. Each of SMC, SAC and Savers will use its best
efforts to cause the satisfaction of the waiting period under the
Improvements Act. SMC and Savers will furnish to each other such necessary
information and reasonable assistance as may be requested in connection
with their respective preparation of necessary filings or submissions to
any governmental agency, including, without limitation, any filings
necessary under the provisions of the Improvements Act. Savers and SMC
will supply each other with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between
either of them or their respective representatives and the Federal Trade
Commission, the Antitrust Division of the United States Department of
Justice or any other governmental agency or authority or members of their
respective staffs with respect to this Amended and Restated Merger
Agreement or the transactions contemplated hereby.
8.7 FINANCIAL STATEMENTS. Savers shall use reasonable efforts to
assist SMC in obtaining the services of D.E. Gatewood and Company and any
required consent to the use of their report regarding audited financial
statements of Savers as of the Effective Time in such form that they can be
used in connection with SMC's required filings with the Securities and
Exchange Commission. The fees and expenses of D.E. Gatewood and Company
and all other costs and expenses associated with the preparation of such
audited financial statements shall be paid by Savers.
8.8 CERTAIN NOTICES. Each party shall give prompt written notice to
the other of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would cause any representation or warranty of Savers
contained in this Amended and Restated Merger Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or that will result in the failure to satisfy any of the
conditions specified in ARTICLES IX, X or XI and (ii) any failure of Savers
or SMC, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder or
under any other agreement or instrument contemplated hereby.
ARTICLE IX
CONDITIONS OF BOTH PARTIES
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the
following conditions:
9.1 STOCKHOLDER APPROVAL. The Merger shall have been approved by
the requisite vote of the holders of Savers Common Stock, and the issuance
of shares of SMC Common Stock in connection with the Merger shall have been
approved by the requisite vote of the holders of SMC Common Stock.
9.2 NASDAQ LISTING. The SMC Common Stock issuable in the Merger
shall have been authorized for listing on the NASDAQ National Market, upon
official notice of issuance.
9.3 REGULATORY APPROVALS. All regulatory approvals necessary to
consummation of the Merger shall have been obtained or relevant waiting
periods shall have expired.
9.4 REGISTRATION STATEMENT. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and remain in effect. All necessary
state securities or "Blue Sky" authorizations shall have been received.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SMC AND SAC
The obligations of SMC and SAC hereunder are subject to the
fulfillment, at or before the Effective Time, of each of the following
conditions (all or any of which may be waived in whole or in part by SMC):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Savers in this Amended and Restated Merger Agreement and
the statements of Savers contained in the Disclosure Schedule shall be true
as of the effective date of this Amended and Restated Merger Agreement, the
certifications given pursuant to SECTION 10.3 shall be true as of the date
given, and all of such representations, warranties, certifications and
statements shall be true at the Effective Time as though such
representations, warranties, certifications and statements were made at the
Effective Time.
10.2 PERFORMANCE. Savers shall have performed and complied with all
agreements, covenants, obligations, and conditions required by this Amended
and Restated Merger Agreement to be so performed or complied with by Savers
at or before the Effective Time.
10.3 CERTIFICATES OF OFFICER OF SAVERS. Savers shall have delivered
to SMC a certificate, dated the Effective Time in the form of EXHIBIT C
hereto and executed by the chief executive officer or chief financial
officer of Savers, certifying (with respect to Savers) as to the
fulfillment of the conditions set forth in ARTICLE IX and this ARTICLE X.
In addition, Savers shall have delivered to SMC a certificate, dated the
Effective Time and executed by the secretary or any assistant secretary of
Savers, certifying that Savers has duly and validly taken all corporate
action necessary to authorize its execution and delivery of this Amended
and Restated Merger Agreement and its performance of its obligations under
this Amended and Restated Merger Agreement and that the resolutions (true
and complete copies of which shall be attached to the certificate) of the
Board of Directors and the stockholders of Savers with respect to this
Amended and Restated Merger Agreement and the transactions contemplated
hereby have been duly and validly adopted and are in full force and effect.
10.4 NO INJUNCTION. There shall not be in effect at the Effective
Time any writ, judgment, injunction, decree or similar order of any court
or similar Person restraining, enjoining or otherwise preventing
consummation of any of the transactions contemplated by this Amended and
Restated Merger Agreement.
10.5 NO PROCEEDING OR LITIGATION. There shall not be instituted,
pending or (to the best knowledge of SMC or Savers) threatened any action,
suit, investigation, or other proceeding in, before, or by any court,
governmental or regulatory authority or other Person to restrain, enjoin or
otherwise prevent consummation of any of the transactions contemplated by
this Amended and Restated Merger Agreement or to recover any Damages or
obtain other relief as a result of this Amended and Restated Merger
Agreement or any of the transactions contemplated hereby or as a result of
any Contract entered into in connection with or as a condition precedent to
the consummation hereof, which action, suit, investigation or other
proceeding may, in the reasonable opinion of SMC, result in a decision,
ruling or finding that individually or in the aggregate has or may
reasonably be expected to have a material adverse effect on the validity or
enforceability of this Amended and Restated Merger Agreement, on the
ability of Savers or SMC to perform its respective obligations under this
Amended and Restated Merger Agreement or on the Business or Condition of
SMC or Savers. There shall not be in effect at the Effective Time any
voluntary or involuntary bankruptcy, receivership, conservatorship or
similar proceeding with respect to Savers.
10.6 CONSENTS, AUTHORIZATIONS, ETC. All orders, consents, permits,
authorizations, approvals, and waivers of every Person disclosed pursuant
to SECTIONS 3.5 and 10.10 and necessary to permit SMC to perform its
obligations under this Amended and Restated Merger Agreement and to
consummate the transactions contemplated hereby (including, without
limitation, any requisite action of the insurance regulatory authorities in
the State of North Carolina and the State of Indiana, in each case without
the abrogation or diminishment of Savers's authority or license or the
imposition of significant restrictions upon the transactions contemplated
hereby) shall have been obtained and shall be in full force and effect, and
Savers shall have obtained all consents, approvals, authorizations and
clearances referred to in ARTICLE IX, and SMC shall have received evidence
satisfactory to it of the receipt of such consents, approvals,
authorizations and clearances.
10.7 NO ADVERSE CHANGE. Since December 31, 1996, there shall not
have been, occurred, or arisen any change in, or any event (including,
without limitation, any damage, destruction or loss, whether or not covered
by insurance), condition or state of facts of any character that
individually or in the aggregate has or may reasonably be expected to have
a material adverse effect on the Business or Condition of Savers.
10.8 OPINION OF COUNSEL. Savers shall have delivered to SMC the
opinion, dated the Effective Time, of Womble Carlyle Sandridge & Rice,
PLLC, counsel to Savers, to the effect set forth in EXHIBIT D hereto.
10.9 APPROVAL BY FLEET AND CONSECO. Fleet National Bank of
Connecticut and Conseco, Inc. shall have consented to the consummation of
the transactions contemplated under this Amended and Restated Merger
Agreement and one or both of them have agreed to loan SMC the sum of
$4,000,000 upon terms and conditions satisfactory to SMC.
10.10 CONSULTING AGREEMENT. The Consulting Agreement by and between
Savers and Jerry D. Stoltz, Sr. shall have been executed and delivered in
substantially the form of EXHIBIT G hereto.
10.11 LOCKUP AGREEMENTS. All holders of 5% or more of Saver's issued
and outstanding capital stock and each officer of Savers shall have
executed and delivered Lockup Agreements with SMC substantially in the form
of EXHIBIT H hereto.
10.12 DISSENTERS' RIGHTS. Holders of not more than 5% of Savers
Common Stock outstanding immediately prior to the Effective Time shall be
eligible to exercise appraisal rights under Section 55-13-01, et seq., of
the NCBCA.
10.13 SMC STOCKHOLDERS APPROVAL. The Stockholders of SMC shall have
approved the Amended and Restated Merger Agreement and the issuance of SMC
Common Stock.
10.14 SAVERS ADJUSTED CAPITAL AND SURPLUS. The Adjusted Capital and
Surplus of the Surviving Corporation, calculated as provided in EXHIBIT B
hereto, shall not be less than $7,390,000 immediately after the Effective
Time.
10.15 SAVERS STOCKHOLDERS APPROVAL. The Stockholders of Savers shall
have approved the Amended and Restated Merger Agreement.
<PAGE>
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF SAVERS
The obligations of Savers hereunder are subject to the fulfillment,
at or before the Effective Time, of each of the following conditions (all
or any of which may be waived in whole or in part by Savers).
11.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by SMC and SAC in this Amended and Restated Merger
Agreement shall be true as of the effective date of this Amended and
Restated Merger Agreement and shall be true at the Effective Time as though
such representations and warranties were made at the Effective Time.
11.2 PERFORMANCE. SMC and SAC shall have performed and complied with
all agreements, covenants, obligations, and conditions required by this
Amended and Restated Merger Agreement to be so performed or complied with
by SMC and SAC at or before the Effective Time.
11.3 OFFICERS' CERTIFICATES. SMC shall have delivered to Savers a
certificate, dated the Effective Time in the form of EXHIBIT E hereto and
executed by the chief executive officer or the chief financial officer of
SMC, certifying with respect to SMC as to the fulfillment of the conditions
set forth in ARTICLE IX and this ARTICLE XI. In addition, SMC shall have
delivered to Savers a certificate, dated the Effective Time and executed by
the secretary or any assistant secretary of SMC certifying that SMC has
duly and validly taken all corporate action necessary to authorize its
execution and delivery of this Amended and Restated Merger Agreement and
its performance of its obligations under this Amended and Restated Merger
Agreement and that the resolutions (true and complete copies of which shall
be attached to the certificate) of the Board of Directors and the
stockholders of SMC with respect to this Amended and Restated Merger
Agreement and the transactions contemplated hereby have been duly and
validly adopted and are in full force and effect.
11.4 NO INJUNCTION. There shall not be in effect at the Effective
Time any writ, judgment, injunction, decree or similar order of any court
or similar Person restraining, enjoining or otherwise preventing
consummation of any of the transactions contemplated by this Amended and
Restated Merger Agreement.
11.5 NO PROCEEDING OR LITIGATION. There shall not be instituted,
pending or (to the best knowledge of SMC or of Savers) threatened any
action, suit, investigation or other proceeding in, before, or by any
court, governmental or regulatory authority or other Person to restrain,
enjoin, or otherwise prevent consummation of any of the transactions
contemplated by this Amended and Restated Merger Agreement or to recover
any Damages or obtain other relief as a result of this Amended and Restated
Merger Agreement or any of the transactions contemplated hereby or as a
result of any Contract entered into in connection with or as a condition
precedent to the consummation hereof, which action, suit, investigation or
other proceeding may, in the reasonable opinion of Savers, result in a
decision, ruling or finding that individually or in the aggregate has or
may reasonably be expected to have a material adverse effect on the
validity or enforceability of this Amended and Restated Merger Agreement or
on the ability of SMC or Savers to perform its obligations under this
Amended and Restated Merger Agreement.
11.6 CONSENTS, AUTHORIZATIONS, ETC. All orders, consents, permits,
authorizations, approvals, and waivers of every Person disclosed pursuant
to SECTION 3.5 and necessary to permit Savers to perform its obligations
under this Amended and Restated Merger Agreement and to consummate the
transactions contemplated hereby shall have been obtained and shall be in
full force and effect, and SMC shall have obtained all consents, approvals,
authorizations and clearances referred to in ARTICLE IX and SECTION 10 and
Savers shall have received evidence satisfactory to it of the receipt of
such consents, approvals, authorizations and clearances.
11.7 OPINION OF COUNSEL. SMC shall have delivered to Savers the
opinion, dated the Effective Time, of Stephen M. Coons, counsel to SMC, to
the effect set forth in EXHIBIT F hereto.
11.8 TAX-FREE REORGANIZATION. The Merger shall qualify
as a tax-free reorganization within the meaning of Section 368(a) of the
Code, in the opinion of Womble Carlyle Sandridge & Rice.
ARTICLE XII
SURVIVAL OF PROVISIONS; REMEDIES
12.1 SURVIVAL. The representations, warranties, covenants, and
agreements respectively made by Savers, SMC and SAC in this Amended and
Restated Merger Agreement, in the Disclosure Schedule or in any certificate
respectively delivered by Savers, SMC or SAC pursuant hereto will survive
the Merger for a period of 25 months following the Effective Time.
12.2 AVAILABLE REMEDIES. Each party expressly agrees that,
consistent with its intention and agreement to be bound by the terms of
this Amended and Restated Merger Agreement and to consummate the
transactions contemplated hereby, subject only to the performance or
satisfaction of precedent conditions or of precedent requirements imposed
upon another party hereto, the remedy of specific performance shall be
available to a non-breaching and non-defaulting party to enforce
performance of this Amended and Restated Merger Agreement by a breaching or
defaulting party, including, without limitation, to require the
consummation of the Merger.
<PAGE>
ARTICLE XIII
TERMINATION
13.1 TERMINATION. This Amended and Restated Merger Agreement may be
terminated, and the transaction contemplated hereby may be abandoned, at
any time prior to the Effective Time, whether before or after any approval
by the stockholders of Savers or SMC:
(a) by mutual written consent of SMC and Savers;
(b) by SMC if (i) Savers shall have failed to comply in any
material respect with any of its covenants or agreements contained in
this Amended and Restated Merger Agreement required to be complied
with by Savers prior to the date of such termination, which failure
to comply has not been cured within five Business Days following
receipt by Savers of notice of such failure to comply, (ii) the
stockholders of Savers shall have failed to approve the Merger at the
Savers Stockholder Meeting, provided that, at the time of such
termination, SMC has not breached any of its covenants set forth in
ARTICLES VII or VIII; or (iii) the stockholders of SMC shall have
failed to approve the issuance of the SMC Common Stock at the SMC
Stockholder Meeting provided that at the time of such termination
SMC has not breached any of its covenants set forth in ARTICLES VII
or VII.
(c) by Savers if (i) SMC or SAC shall have failed to comply in
any material respect with any of its covenants or agreements
contained in this Agreement required to be complied with by SMC or
SAC prior to the date of such termination, which failure to comply
has not been cured within five Business Days following receipt by SMC
of notice of such failure to comply, (ii) the stockholders of Savers
shall have failed to approve the Merger at the Savers Stockholder
Meeting provided that at the time of such termination, Savers has not
breached any of its covenants set forth in ARTICLES VI or VIII, or
(iii) the stockholders of SMC shall have failed to approve the
issuance of the SMC Common Stock at the SMC Stockholders Meeting,
provided that, at the time of such termination, Savers has not
breached any of its covenants set forth in ARTICLES VI or VIII.
(d) by either SMC or Savers if (i) the Merger has not been
effected on or prior to the close of business on April 30, 1998;
provided, however, that the right to terminate this Amended and
Restated Merger Agreement pursuant to this clause shall not be
available to any party whose failure to fulfill any obligation of
this Amended and Restated Merger Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior
to the aforesaid date, or (ii) any court of competent jurisdiction or
any governmental, administrative or regulatory authority, agency or
body shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Amended and Restated Merger
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable.
(e) by either SMC or Savers if there has been (i) a material
breach by the other of any representation or warranty that is not
qualified as to materiality or (ii) a breach by the other of any
representation or warranty that is qualified as to materiality, in
each case which breach has not been cured within five Business Days
following receipt by the breaching party of notice of the breach.
(f) by SMC, (i) if the Board of Directors of Savers shall not
have recommended, or shall have resolved not to recommend, or shall
have modified or withdrawn its recommendation of the Merger or
declaration that the Merger is advisable or (ii) if the Board of
Directors of Savers shall have recommended, or shall have resolved to
recommend, to the stockholders of Savers any takeover proposal or
offer of any other Person.
13.2 EFFECT OF TERMINATION. If this Amended and Restated Merger
Agreement is validly terminated pursuant to SECTION 13.1, this Amended and
Restated Merger Agreement will forthwith become null and void, and there
will be no Liability on the part of Savers or SMC (or any of their
respective officers, directors, employees, agents, consultants or other
representatives), except that the provisions relating to confidentiality in
SECTION 14.5 will continue to apply following any such termination;
PROVIDED, HOWEVER, that notwithstanding anything in this Section to the
contrary, no party electing to terminate this Amended and Restated Merger
Agreement pursuant to SECTION 13.1 will be relieved of any Liability for
Damages that the electing party may have to the other party by reason of
the electing party's breach of this Amended and Restated Merger Agreement
(or any representation, warranty, covenant or agreement included herein).
13.3 CERTAIN PAYMENTS. Notwithstanding any provision in this
Amended and Restated Merger Agreement to the contrary, (x) if this Amended
and Restated Merger Agreement is terminated pursuant to Sections
13.1(B)(I), 13.1(C)(I) or 13.1(E) on the grounds that the other party has
failed to proceed in good faith, the party terminating this Amended and
Restated Merger Agreement shall be entitled to reimbursement from the other
party hereto upon demand for all out-of-pocket fees and expenses incurred
or paid by or on behalf of the terminating party or any of its Affiliates
in connection with this Amended and Restated Merger Agreement or the
consummation of the Merger, including, but not limited to, all fees and
expenses of counsel, investment banking firms, accountants, printers,
experts and consultants to the terminating party or any of its Affiliates;
provided, however, that the other party hereto shall not be obligated to
make payments pursuant to this clause (x) in excess of $800,000 in the
aggregate; and (y)(i) if the Board of Directors of Savers fails to make a
favorable recommendation or withdraws, amends or modifies its favorable
recommendation to its stockholders of this Amended and Restated Merger
Agreement and the Merger and (ii) on or prior to twelve months after the
event described in clause (y)(i) above, a Third Party Acquisition Event (as
defined below) occurs, Savers shall promptly, but in no event later than
the second Business Day following the later to occur of the events referred
to in clauses (i) and (ii), pay to SMC (without prejudice to any other
rights of SMC against Savers) a fee of $500,000 in cash (inclusive of
expenses). In the event that Savers is obligated to make any payment under
clause (y) of this paragraph, it shall be relieved of its obligations, if
any, under clause (x). For purposes of clause (x) above, a refusal by any
party to perform any of its obligations hereunder based upon a failure of
one or more conditions to such obligations shall constitute a breach of
SECTION 8.4 if such condition may be waived by such party and if such a
wavier is unreasonably withheld by such party. A "Third Party Acquisition
Event" means any of the following events: (A) any Person or group of
Persons, other than SMC or its Affiliates, acquires or becomes the
beneficial owner of 25% or more of the outstanding shares of Savers Common
Stock; (B) any new group is formed which beneficially owns 25% or more of
the outstanding shares of Savers Common Stock (other than a group which
includes or may reasonably be deemed to include SMC or any of its
Affiliates); (C) any Person or group of Persons (other than SMC or its
Affiliates) shall have commenced a tender or exchange offer for 25% or more
of the then outstanding shares of Savers Common Stock or publicly proposed
any bona fide merger, consolidation or acquisition of all or substantially
all the assets of Savers or other similar business combination involving
Savers; (D) Savers enters into an agreement, including, without limitation,
an agreement in principle, providing for a merger or other business
combination involving Savers or the acquisition of a substantial interest
in, or a substantial portion of the assets, business or operations of
Savers (other than the transactions contemplated by this Amended and
Restated Merger Agreement); (E) any Person or group of Persons (other than
SMC or its Affiliates) is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner of shares of
Savers Common Stock, which, together with all shares of Savers Common Stock
beneficially owned by such Person or group of Persons, results or would
result in such Person or group of Persons being the beneficial owner of 25%
or more of the outstanding shares of Savers Common Stock. For purposes of
this SECTION 13.3, the terms "group" and "beneficial owner" shall be
defined by reference to Section 13(d) of the Exchange Act.
ARTICLE XIV
MISCELLANEOUS
14.1 NOTICES. All notices and other communications under this
Amended and Restated Merger Agreement must be in writing and will be deemed
to have been duly given if delivered, telecopied or mailed, by certified
mail, return receipt requested, first class postage prepaid, to the parties
at the following addresses:
If to Savers, to:
Savers Life Insurance Company
8064 North Point Boulevard
Winston Salem, North Carolina 27106
Attention: Jerry D. Stoltz, Sr., President
Telecopy: (910) 759-3999
<PAGE>
With a copy to:
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston Salem, North Carolina 27101
Attention: Zeb E. Barnhardt, Jr., Esq.
Telecopy: (910) 733-8372
If to SMC or SAC, to:
Standard Management Corporation
9100 Keystone Crossing, #600
Indianapolis, Indiana 46240
Attention: Ronald D. Hunter, Chairman & CEO
Telecopy: (317)574-6227
With a copy to:
Stephen M. Coons, Esq.
9100 Keystone Crossing, #600
Indianapolis, Indiana 46240
Telecopy: (317) 574-6227
All notices and other communications required or permitted under this
Amended and Restated Merger Agreement that are addressed as provided in
this ARTICLE XIV will, if delivered personally, be deemed given upon
delivery, will, if delivered by telecopy, be deemed delivered when
confirmed and will, if delivered by mail in the manner described above, be
deemed given on the third Business Day after the day it is deposited in a
regular depository of the United States mail. Any party from time to time
may change its address for the purpose of notices to that party by giving a
similar notice specifying a new address, but no such notice will be deemed
to have been given until it is actually received by the party sought to be
charged with the contents thereof.
14.2 ENTIRE AGREEMENT. Except for documents executed by Savers, SMC
and SAC pursuant hereto, this Amended and Restated Merger Agreement
supersedes all prior discussions and agreements between the parties with
respect to the subject matter of this Amended and Restated Merger
Agreement, and this Amended and Restated Merger Agreement (including the
exhibits thereto, the Disclosure Schedule and other Contracts and documents
delivered in connection herewith) contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.
14.3 EXPENSES. Except as otherwise expressly provided in this
Amended and Restated Merger Agreement, each of Savers, SMC and SAC will pay
its own costs and expenses in connection with this Amended and Restated
Merger Agreement and the transactions contemplated hereby.
14.4 PUBLIC ANNOUNCEMENTS. At all times at or before the Effective
Time, Savers and SMC will each consult with the other before issuing or
making any reports, statements, or releases to the public with respect to
this Amended and Restated Merger Agreement or the transactions contemplated
hereby and will use good faith efforts to agree on the text of a joint
public report, statement or release or will use good faith efforts to
obtain the other party's approval of the text of any public report,
statement, or release to be made solely on behalf of a party. If Savers
and SMC are unable to agree on or approve any such public report, statement
or release and such report, statement or release is, in the opinion of
legal counsel to a party, required by Law or may be appropriate in order to
discharge such party's disclosure obligations, then such party may make or
issue the legally required report, statement or release. Any such report,
statement, or release approved or permitted to be made pursuant to this
SECTION 14.4 may be disclosed or otherwise provided by Savers or SMC to any
Person, including without limitation to any employee or customer of either
party hereto and to any governmental or regulatory authority.
14.5 CONFIDENTIALITY. Each of Savers and SMC will hold, and will
cause its respective officers, directors, employees, agents, consultants
and other representatives to hold, in strict confidence, unless compelled
to disclose by judicial or administrative process (including, without
limitation, in connection with obtaining the necessary approval of
insurance regulatory authorities) or by other requirements of Law, all
confidential documents and confidential information concerning the other
party furnished to it by the other party or such other party's officers,
directors, employees, agents, consultants or representatives in connection
with this Amended and Restated Merger Agreement or the transactions
contemplated hereby, except to the extent that such documents or
information can be shown to have been (a) previously lawfully known by the
party receiving such documents or information, (b) in the public domain
through no fault of such receiving party or (c) later acquired by the
receiving party from other sources not themselves bound by, and in breach
of, a confidentiality agreement. Neither Savers nor SMC will disclose or
otherwise provide any such confidential documents or confidential
information to any other Person, except to SMC's lenders and investors and
to either party's respective auditors, actuaries, attorneys, financial
advisors and other consultants and advisors who need such documents or
information in connection with this Amended and Restated Merger Agreement.
14.6 WAIVER. Any term or condition of this Amended and Restated
Merger Agreement may be waived at any time by the party that is entitled to
the benefit thereof. Such waiver must be in writing and must be executed
by the chief executive officer or the chief operating officer of such
party. A waiver on one occasion will not be deemed to be a waiver of the
same or any other breach on a future occasion. All remedies, either under
this Amended and Restated Merger Agreement, or by Law or otherwise
afforded, will be cumulative and not alternative.
14.7 AMENDMENT. This Amended and Restated Merger Agreement may be
modified or amended only by a writing duly executed by or on behalf of
Savers, SMC and SAC.
14.8 COUNTERPARTS. This Amended and Restated Merger Agreement may
be executed simultaneously in any number of counterparts, each of which
will be deemed an original, but all of which will constitute one and the
same instrument.
14.9 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Amended and Restated Merger Agreement are intended solely for the benefit
of Savers and SMC, and their respective successors or assigns, and it is
not the intention of the parties to confer third-party beneficiary rights
upon any other Person.
14.10 GOVERNING LAW. THIS AMENDED AND RESTATED MERGER AGREEMENT WILL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA (EXCLUSIVE OF CONFLICTS OF LAW PRINCIPLES) .
14.11 BINDING EFFECT. This Amended and Restated Merger Agreement is
binding upon and will inure to the benefit of the parties and their
respective successors and assigns.
14.12 ASSIGNMENT. Except as otherwise provided herein, this Amended
and Restated Merger Agreement or any right hereunder or part hereof may not
be assigned by any party hereto without the prior written consent of the
other parties hereto.
14.13 HEADINGS, ETC. The headings used in this Amended and Restated
Merger Agreement have been inserted for convenience and do not constitute
matter to be construed or interpreted in connection with this Amended and
Restated Merger Agreement.
14.14 INVALID PROVISIONS. If any provision of this Amended and
Restated Merger Agreement is held to be illegal, invalid or unenforceable
under any present or future Law, and if the rights or obligations of
Savers, SMC or SAC under this Amended and Restated Merger Agreement will
not be materially and adversely affected thereby, (a) such provision will
be fully severable; (b) this Amended and Restated Merger Agreement will be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; (c) the remaining provisions
of this Amended and Restated Merger Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom; and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Amended and Restated Merger Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
<PAGE>
IN WITNESS WHEREOF, this Amended and Restated Merger Agreement has
been duly executed and delivered by the parties hereto, effective as of the
date first written above.
STANDARD ACQUISITION CORPORATION
By:
Name:
Title:
SAVERS LIFE INSURANCE COMPANY
By:
Name:
Title:
STANDARD MANAGEMENT CORPORATION
By: _______________________________________
Name:_________________________________
Title:__________________________________
<PAGE>
EXHIBIT A
DEFINITIONS OF TERMS
"ADJUSTED CAPITAL AND SURPLUS" as of any date shall mean Savers'
statutory capital and surplus as of such date, adjusted pursuant to the
Formula set forth on EXHIBIT B hereto and determined based on SAP
consistently applied throughout the specified period and in the immediately
prior comparable period.
"AFFILIATE" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with the Person specified.
"AMENDED AND RESTATED MERGER AGREEMENT" shall mean this Amended and
Restated Merger Agreement, together with the exhibits and the Disclosure
Schedule attached hereto, and the Contracts and other documents to be
executed and delivered by Savers pursuant hereto.
"ANNUAL STATEMENT" shall mean any annual statement of Savers filed
with or submitted to the insurance regulatory authority in the State of
North Carolina on forms prescribed or permitted by such authority.
"ARTICLES OF MERGER" has the meaning set forth in SECTION 2.2.
"ASSETS AND PROPERTIES" shall mean all assets or properties of every
kind, nature, character, and description (whether real, personal, or mixed
whether tangible or intangible, whether absolute, accrued, contingent,
fixed, or otherwise, and wherever situated) as now operated, owned, or
leased by a specified Person, including without limitation cash, cash
equivalents, securities, accounts and notes receivable, real estate,
equipment, furniture, fixtures, insurance or annuities in force, goodwill,
and going-concern value.
"AVERAGE TRADING PRICE" shall have the meaning set forth in SECTION
2.6.
"AVR" shall mean the asset valuation reserve required to be
established and maintained by Savers at any particular date, calculated in
accordance with SAP.
"BENEFIT PLANS" shall mean all Employee Pension Benefit Plans, all
Employee Welfare Benefit Plans, all stock bonus, stock ownership, stock
option, Merger, stock appreciation rights, phantom stock, and other stock
plans (whether qualified or nonqualified), and all other pension, welfare,
severance, retirement, bonus, deferred compensation, incentive
compensation, insurance (whether life, accident and health, or other and
whether key man, group, workers compensation, or other), profit sharing,
disability, thrift, day care, legal services, leave of absence, layoff, and
supplemental or excess benefit plans, and all other benefit Contracts,
arrangements, or procedures having the effect of a plan, in each case
existing on or before the Effective Time under which Savers is or may
hereafter become obligated in any manner (including without limitation
obligations to make contributions or other payments) and which cover some
or all of the present or former officers, directors, employees, agents,
consultants, or other similar representatives providing services to or for
Savers; PROVIDED, HOWEVER, that such term shall not include (a) routine
employment policies and procedures developed and applied in the ordinary
course of business and consistent with past practice, including without
limitation sick leave, vacation, and holiday policies, and (b) directors
and officers liability insurance.
"BOOKS AND RECORDS" shall mean all accounting, financial reporting,
Tax, business, marketing, corporate, and other files, documents,
instruments, papers, books, and records of a specified Person, including
without limitation financial statements, budgets, projections, ledgers,
journals, deeds, titles, policies, manuals, minute books, stock
certificates and books, stock transfer ledgers, Contracts, franchises,
permits, agency lists, policyholder lists, supplier lists, reports,
computer files, retrieval programs, operating data or plans, and
environmental studies or plans.
"BUSINESS DAY" shall mean a day other than Saturday, Sunday, or any
day on which the principal commercial banks located in the City of
Indianapolis are authorized or obligated to close under the Laws of the
State of Indiana.
"BUSINESS OR CONDITION" shall mean the organization, existence,
authority, capitalization, business, licenses, condition (financial or
otherwise), cash flow, management, sales force, solvency, prospects, SAP
and GAAP results of operations, insurance or annuities in force, SAP
capital and surplus, Mandatory Securities Valuation Reserve, Liabilities,
or Assets and Properties of a specified Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. <section><section> 9601 ET SEQ., any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder.
"CERTIFICATE" has the meaning set forth in SECTION 2.8.
"CLOSING" has the meaning set forth in SECTION 2.18.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
(including without limitation any successor code), and the rules and
regulations promulgated thereunder.
"CONSTITUENT CORPORATIONS" has the meaning set forth in the Preamble.
"CONTAMINANT" means any waste, pollutant, hazardous or toxic substance
or waste, petroleum, petroleum-based substance or waste, special waste, or
any constituent of any such substance or waste.
"CONTRACT" shall mean any agreement, lease, sublease, license,
sublicense, promissory note, evidence of indebtedness, insurance policy,
annuity, reinsurance agreement, reinsurance treaty, or other contract or
commitment (whether written or oral).
"DAMAGES" shall mean any and all monetary damages, Liabilities, fines,
fees, penalties, interest obligations, deficiencies, losses, and expenses
(including without limitation punitive, treble, or other exemplary or extra
contractual damages, amounts paid in settlement, interest, court costs,
costs of investigation, fees and expenses of attorneys, accountants,
actuaries, and other experts, and other expenses of litigation or of any
claim, default, or assessment).
"DISCLOSURE SCHEDULE" shall mean the bound record, dated the effective
date of the Amended and Restated Merger Agreement, furnished by Savers to
SMC, and containing all lists, descriptions, exceptions, and other
information and materials as are required to be included therein pursuant
to the Amended and Restated Merger Agreement.
"DISSENTING SHARES" has the meaning set forth in SECTION 2.14.
"EFFECTIVE TIME" has the meaning set forth in SECTION 2.2.
"ELECTION" has the meaning set forth in SECTION 2.7.
"ELECTION DATE" has the meaning set forth in SECTION 2.7.
"EMPLOYEE PENSION BENEFIT PLAN" shall mean each employee pension
benefit plan (whether or not insured), as defined in Section 3(2) of ERISA,
which is or was in existence on or before the Effective Time and to which
Savers is or may hereafter become obligated in any manner as an employer.
"EMPLOYEE WELFARE BENEFIT PLAN" shall mean each employee welfare
benefit plan (whether or not insured), as defined in Section 3(1) of ERISA,
which is or was in existence on or before the Effective Time and to which
Savers is or may hereafter become obligated in any manner as an employer.
"ENVIRONMENTAL ENCUMBRANCE" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law, or
(ii) damages arising from, or costs incurred by such Governmental Body in
response to, a Release or threatened Release of a Contaminant into the
environment.
"ENVIRONMENTAL LAW" means all Requirements of Laws derived from or
relating to all federal, state and local laws or regulations relating to or
addressing the environment, health or safety, including but not limited to
CERCLA, OSHA and RCRA and any state equivalent thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended (including without limitation any successor act), and the
rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean any Person under common control (as
defined in Section 414 of the Code) with Savers.
"EXCESS SHARES" has the meaning set forth in SECTION 2.10.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder).
"EXCHANGE AGENT" has the meaning set forth in SECTION 2.8.
"EXCHANGE FUND" has the meaning set forth in SECTION 2.8.
"EXPENSES" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, consultants, accountants and other
professionals).
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 3.11.
"FORM OF ELECTION" has the meaning set forth in SECTION 2.7.
"FORMULA" shall have the meaning set forth in EXHIBIT B.
"FRACTIONAL SECURITIES FUND" shall have the meaning set forth in
SECTION 2.10.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GOVERNMENTAL ENTITY" means any foreign, federal, state, local or
other governmental authority or regulatory entity.
"GOVERNMENTAL PERMITS" means Seller owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body.
"IMPROVEMENTS ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
"IMR" shall mean the interest maintenance reserve required to be
established and maintained by Savers at any particular date, calculated in
accordance with SAP.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"LAW OR LAWS" shall mean all laws, statutes, ordinances, regulations,
and other pronouncements having the effect of law in the United States of
America, any foreign country, or any domestic or foreign state, province,
commonwealth, city, country, municipality, territory, protectorate,
possession, court, tribunal, agency, government, department, commission,
arbitrator, board, bureau, or instrumentality thereof.
"LIABILITY OR LIABILITIES" shall mean all debts, obligations, and
other liabilities of a Person (whether absolute, accrued, contingent,
fixed, or otherwise, or whether due or to become due).
"LIEN" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, or other encumbrance of
any kind, or any conditional sale Contract, title retention Contract, or
other Contract to give or to refrain from giving any of the foregoing.
"NAIC" shall mean the National Association of Insurance Commissioners.
"NCBCA" has the meaning set forth in SECTION 2.1.
"NON-ADMITTED ASSETS" shall mean any assets of the Company required to
be reported as "assets not admitted" on EXHIBIT 13 of any Annual Statement
or Quarterly Statement filed by Savers.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
<section><section> 651 ET SEQ., any amendment thereto, any successor
statute, and any regulations promulgated thereunder.
"OWNED REAL PROPERTY" has the meaning set forth in SECTION 3.20.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA.
"PERSON" means any natural person, corporation, general partnership,
limited partnership, proprietorship, trust, union, association, court,
tribunal, agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality, or other entity,
enterprise, authority, or business organization.
"PROXY STATEMENT" has the meaning set forth in SECTION 3.9.
"QUARTERLY STATEMENT" shall mean any quarterly statement of Savers
filed with or submitted to the insurance regulatory authority in the State
of North Carolina on forms prescribed or permitted by such authority.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
<section><section> 6901 ET SEQ., and any successor statute, and any
regulations promulgated thereunder.
"REGISTRATION STATEMENT" has the meaning set forth in SECTION 3.9.
"RELEASE" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any
Property of Savers, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Property of Savers.
"REQUIREMENTS OF LAW" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without
limitation, those pertaining to electrical, building, zoning, environmental
and occupational safety and health requirements) or common law.
"SAC" has the meaning set forth in the Preamble.
"SAP" shall mean the accounting practices required or permitted by the
National Association of Insurance Commissioners and the insurance
regulatory authority in the State of North Carolina, consistently applied
throughout the specified period and in the immediately prior comparable
period.
"SAP STATEMENTS" shall mean the Annual Statements, Quarterly
Statements, and other financial statements and presentations of Savers
prepared in accordance with SAP and delivered to SMC pursuant to of
SECTIONS 3.7, 3.11 and 6.2.
"SAVERS" has the meaning set forth in the Preamble.
"SAVERS AGREEMENT" has the meaning set forth in SECTION 3.22.
"SAVERS COMMON STOCK" shall have the meaning ascribed to it in this
Amended and Restated Merger Agreement.
"SAVERS STOCKHOLDERS MEETING" has the meaning as set forth in SECTION
8.1.
"SAVERS STOCK OPTION" has the meaning set forth in SECTION 8.4.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder).
"SMC" shall mean Standard Management Corporation.
"SMC COMMON STOCK" shall have the meaning ascribed to it in the
Preamble of this Amended and Restated Merger Agreement.
"SMC SECURITIES" has the meaning set forth in SECTION 4.6.
"SMC STOCKHOLDERS MEETING" has the meaning set forth in SECTION 8.1.
"STANDARD VALUATION OFFICE" shall mean the financial instruments
rating entity for the NAIC.
"STOCKHOLDER MEETINGS" has the meaning set forth in SECTION 8.1.
"SURVIVING CORPORATION" has the meaning set forth in SECTION 2.1.
"TAXES" shall mean all taxes, charges, fees, levies, or other similar
assessments or Liabilities, including without limitation income, gross
receipts, ad valorem, premium, excise, real property, personal property,
windfall profit, sales, use, transfer, licensing, withholding, employment,
payroll, Phase III, and franchise taxes imposed by the United States of
America or any state, local, or foreign government, or any subdivision
agency, or other similar Person of the United States or any such
government; and such term shall include any interest, fines, penalties,
assessments, or additions to tax resulting from, attributable to, or
incurred in connection with any such tax or any contest or dispute thereof.
"TAX RETURNS" shall mean any report, return, or other information
required to be supplied to a taxing authority in connection with Taxes.
"THIRD PARTY ACQUISITION EVENT" has the meaning set forth in SECTION
13.3.
"WORK PAPERS" shall mean all summaries, calculations, compilations and
similar written documentation derived from the accounts of Savers and used
or prepared by accountants in the process of computing Adjusted Capital and
Surplus.
<PAGE>
EXHIBIT B
FORMULA FOR DETERMINING
ADJUSTED CAPITAL AND SURPLUS OF COMPANY
AS OF THE EFFECTIVE TIME
The Adjusted Capital and Surplus of Savers on the Effective Time shall
be determined as follows (the "Formula"):
1. SAP Capital and Surplus as of the month end prior to the Effective
Time, PLUS:
2. The AVR held by Savers as of the month end prior to the Effective
Time.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF OFFICER OF SAVERS
At the Effective Time, Savers shall deliver to SMC a certificate,
dated the Effective Time, executed by the Chief Executive Officer or Chief
Financial Officer of Savers, to the following effect:
Pursuant to the provisions of SECTION 10.3 of that certain Amended and
Restated Merger Agreement dated December ___, 1997 (the "Agreement") by and
among Savers Life Insurance Company ( "Savers"), Standard Acquisition
Corporation ("SAC") and Standard Management Corporation ("SMC"), I, the
undersigned [Chief Executive Officer/Chief Financial Officer] of Savers do
hereby certify to SMC as follows:
1. That I am the duly elected [Chief Executive Officer/Chief
Financial Officer] of Savers, and in that capacity have the requisite power
and authority to execute and deliver this certificate on behalf of Savers;
2. That the representations and warranties of Savers made in
connection with the Agreement and contained in Article III thereof and in
the Disclosure Schedule attached to the Agreement and the certifications
given pursuant to SECTION 6.2(C) of the Agreement are true and correct as
of the date of this certificate as though made by Savers on and as of this
date, whether or not they were untrue or incorrect prior to such date;
3. That Savers has performed and complied with all agreements,
covenants, obligations and conditions required by the Agreement to be so
performed or complied with by Savers at or before the Effective Time; and
4. That all of the conditions to the obligations of SMC under the
Agreement have been fulfilled.
<PAGE>
EXHIBIT D
FORM OF SAVERS' COUNSEL'S OPINION
At the Closing, Savers shall deliver to SMC the opinion of its
counsel, Womble Carlyle Sandridge & Rice, to the following effect:
1. Savers is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina and has full
corporate power and authority to enter into the Amended and Restated Merger
Agreement and perform its obligations thereunder.
2. Savers is an insurance company duly organized, validly existing
and in good standing under the laws of the State of North Carolina, and is
duly licensed, qualified or admitted to do business and is in good standing
in all jurisdictions listed on SECTION 3.1 of the Disclosure Schedule.
3. Savers has full corporate power and authority to enter into the
Amended and Restated Merger Agreement and to consummate the transactions
contemplated hereby and thereby and to comply with the terms, conditions
and provisions thereof. The execution, delivery and performance by Savers
of the Amended and Restated Merger Agreement and the actions to be taken by
Savers contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of Savers. Pursuant to the Savers'
Articles of Incorporation and Bylaws of Savers, the affirmative vote of a
majority of the votes that holders of the outstanding shares of Savers
Common Stock are entitled to cast is the only vote of the holders of any
class or series of Savers' capital stock necessary to approve the Amended
and Restated Merger Agreement and the transactions contemplated thereby.
The Amended and Restated Merger Agreement has been duly executed and
delivered by Savers and constitutes the valid and binding obligation of
Savers, and is enforceable against Savers in accordance with its terms,
except to the extent that (a) enforcement may be limited by or subject to
any bankruptcy, insolvency, reorganization, moratorium or other similar
Laws now or hereafter in effect relating to or limiting creditors' rights
generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief are subject to certain equitable defenses
and to the discretion of the court or other Person before which any such
proceeding therefor may be brought. Upon the filing of the Articles of
Merger with the Secretary of State of North Carolina, the merger will
become effective under North Carolina law in accordance with the Amended
and Restated Merger Agreement.
4. (i) the authorized capital stock of Savers consists of 20,000,000
shares of Common Stock, __________ of which are outstanding, ___________ of
which were reacquired by Savers and not subsequently reissued and the
remainder of which have never been issued by Savers;
(ii) all of the outstanding shares of Savers Common Stock are duly
and validly issued and outstanding fully paid and nonassessable;
(iii) none of the issued and outstanding shares of Savers Common
Stock has been issued in violation of the preemptive rights of any person;
(iv) except for the Amended and Restated Merger Agreement and as
disclosed in the Schedules and Exhibits thereto, there are no agreements,
arrangements, warrants, options, puts, calls, rights or other commitments,
plans or understandings of any character relating to the issuance, sale,
purchase, redemption, conversion, exchange, registration, voting, or
transfer of any shares of Savers Common Stock or any other securities of
Savers; and
(v) except pursuant to applicable laws, there are no restrictions,
including but not limited to self-imposed restrictions, on the retained
earnings of Savers or on the ability of Savers to declare and pay
dividends.
5. The execution and delivery of the Amended and Restated Merger
Agreement by Savers does not, and the performance by Savers of its
obligations under the Amended and Restated Merger Agreement will not,
subject to obtaining the approvals contemplated by ARTICLES VIII, IX and X
of the Amended and Restated Merger Agreement, (a) violate any term or
provisions of any Law or any writ, judgment, decree, injunction or similar
order applicable to Savers; (b) conflict with or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both)
a default under, any of the terms, conditions, or provisions of the
articles or certificate of incorporation or Bylaws of Savers; (c) result in
the creation or imposition of any Lien upon Savers, or any of its Assets
and Properties that individually or in the aggregate with any other Liens
has or may reasonably be expected to have a material adverse effect on the
validity or enforceability of the Amended and Restated Merger Agreement, on
the ability of Savers to perform its obligations under the Amended and
Restated Merger Agreement, or on the Business or Condition of Savers; of
(d) conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under, or give
to any Person any right of termination, cancellation, acceleration, or
modification in or with respect to, any Contract to which Savers is a party
or by which any of its Assets or Properties may be bound and as to which
any such conflicts, violations, breaches, defaults or rights individually
or in the aggregate have or may reasonably be expected to have a material
adverse effect on the validity or enforceability of the Amended and
Restated Merger Agreement, on the ability of Savers to perform its
obligations under the Amended and Restated Merger Agreement, or on the
Business or Condition of Savers.
6. Any consent, approval, order or authorization of, or any waiting
period imposed by any regulatory authority under federal or state law,
including the laws of the State of North Carolina and the State of Indiana,
which require Savers to obtain any consent, approval, or action of, or make
any filing with or give any notice to, any person except those which the
failure to obtain, make, or give individually or in the aggregate with any
other such failures has or may reasonably be expected to have no material
adverse effect on the validity or enforceability of the Amended and
Restated Merger Agreement, or in the Business or Condition of Savers, in
connection with the execution and delivery of the Amended and Restated
Merger Agreement and the performance by Savers of its obligations under the
Amended and Restated Merger Agreement has been obtained or, in the case of
any such waiting period, has expired.
7. The Proxy Statement prepared by Savers in accordance with SECTION
8.2 of the Amended and Restated Merger Agreement and used in connection
with the Savers Stockholders Meeting, and the delivery of such Proxy
Statement, complied in all respects with the provisions of NCBCA. In the
course of our participation in the preparation of the Proxy Statement, we
discussed the disclosure and other requirements applicable to the Proxy
Statement with responsible officers of Savers, and have advised them as to
the materiality of certain statements of fact. We do not, however, make
any representation or express any opinion as to the accuracy of
completeness of any factual matters described in the Proxy Statement.
However, in the course of our preparation and review of the Proxy
Statement, nothing came to our attention to indicate that the description
of factual matters therein was inaccurate or incomplete in any material
respect.
8. To such counsel's actual knowledge, except as disclosed in SECTION
3.13 of the Disclosure Schedule: (a) there are no actions, suits
investigations or proceedings pending or threatened against Savers or any
of Assets and properties, at law or in equity, in, before, or by any Person
that individually or in the aggregate have or may reasonably be expected to
have a material adverse effect on the validity or enforceability of the
Amended and Restated Merger Agreement, on the ability of Savers to perform
its obligations under the Amended and Restated Merger Agreement, or on the
Business or Condition of Savers; and (b) there are no writs, judgments,
decrees or similar orders of any Person restraining, enjoining or otherwise
preventing consummation of the transactions contemplated by the Amended and
Restated Merger Agreement.
9. Savers does not have any security (i) required to be registered
pursuant to the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act") or (ii)
registered on a national securities exchange as contemplated by Section 12
(b) of the Exchange Act. In particular, the securities of Savers are
exempt from the requirements of Section 12(q) of the Exchange Act by virtue
of Section 12(g) (2) (G) of the Exchange Act.
10. Each holder of 5% or more of Savers Common Stock and each officer
of Savers (the "Principal Stockholders") has, to our knowledge, the
capacity to enter into the Lockup Agreements, to consummate the
transactions contemplated thereby and to comply with the terms, conditions
and provisions thereof. Each Lockup Agreement has been duly executed and
delivered by each Principal Stockholder and, upon execution and delivery by
the other parties thereto, the Lockup Agreements will constitute the valid
and binding obligation of such Principal Stockholders, enforceable in
accordance with its terms, subject to (a) general principles of equity,
regardless of whether enforcement is sought in a proceeding in equity or at
law, and (b) bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium, receivership or other similar laws now or hereafter in effect
relating to or affecting creditors' rights or remedies generally; and, to
our knowledge, the execution, delivery and performance of the Lockup
Agreements by such Principal Stockholders will not result in a breach of or
loss of rights under or constitute a default under or a violation of any
trust (constructive or other), agreement, judgment, decree, order or other
instrument to which he is a party or by which he or his properties or
assets may be bound.
11. Except for those stockholders listed on Schedule ____ attached
hereto, each of the Savers stockholders has effectively waived such
stockholder's rights of appraisal under the NCBCA, with respect to the
Merger, subject to judicial power of reinstatement.
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE OF OFFICER OF SMC
At the Effective Time, SMC shall deliver to Savers a certificate,
dated the Effective Time, executed by the Chief Executive Officer or Chief
Financial Officer of SMC, to the following effect:
Pursuant to the provisions of SECTION 11.3 of that certain Amended and
Restated Merger Agreement dated December ___, 1997 (the "Agreement") by and
among Savers Life Insurance Company ("Savers"), Standard Acquisition
Corporation ("SAC") and Standard Management Corporation ("SMC"), I, the
undersigned [Chief Executive Officer/Chief Financial Officer] of SMC do
hereby certify to Savers as follows:
1. That I am the duly elected [Chief Executive Officer/Chief
Financial Officer] of SMC, and in that capacity have the requisite power
and authority to execute and deliver this certificate on behalf of SMC;
2. That the representations and warranties of SMC in connection
with the Agreement and contained in Article IV thereof are true and correct
as of the date of this certificate as though made by SMC on and as of this
date, whether or not they were untrue or incorrect prior to such date;
3. That SMC has performed and complied with all agreements,
covenants, obligations and conditions required by the Agreement to be so
performed or complied with by SMC at or before the Effective Time; and
4. That all of the conditions to the obligations of Savers under
the Agreement have been fulfilled.
<PAGE>
EXHIBIT F
FORM OF SMC'S COUNSEL'S OPINION
At the Closing, SMC shall deliver to Savers the opinion of its
counsel, Stephen M. Coons, to the following effect:
1. SMC is a life insurance holding company duly organized, validly
existing and in good standing under the laws of the State of Indiana and
has full corporate power and authority to enter into the Amended and
Restated Merger Agreement and perform its obligations thereunder.
2. The execution and delivery of the Amended and Restated Merger
Agreement by SMC and the performance of its obligations thereunder have
been duly and validly authorized by all necessary corporate action on the
part of SMC, and the Amended and Restated Merger Agreement constitutes the
legal, valid, and binding obligation of SMC and is enforceable against SMC
in accordance with the terms, except to the extent that (a) enforcement may
be limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar Laws now or hereafter in effect relating to or
limiting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject
to certain equitable defenses and to the discretion of the court or other
similar Person before which any such proceeding therefor may be brought.
3. The execution and delivery of the Amended and Restated Merger
Agreement by SMC does not, and the performance by SMC of its obligations
under the Amended and Restated Merger Agreement will not, subject to
obtaining the approvals contemplated by Articles VIII, IX and X of the
Amended and Restated Merger Agreement, (a) violate any term or provisions
of any Law or any writ, judgment, decree, injunction or similar order
applicable to SMC; (b) conflict with or result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default
under, any of the terms, conditions, or provisions of the articles or
certificate of incorporation or Bylaws of SMC; (c) result in the creation
or imposition of any Lien upon SMC or any of its Assets and Properties that
individually or in the aggregate with any other Liens has or may reasonably
be expected to have a material adverse effect on the validity or
enforceability of the Amended and Restated Merger Agreement or on the
ability of SMC to perform its obligations thereunder; or (d) conflict with
or result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or give any Person any
right of termination, cancellation, acceleration, or modification in or
with respect to, any Contract to which SMC is a party or by which any of
its Assets or Properties may be bound and as to which any such conflicts,
violations, breaches, defaults or rights individually or in the aggregate
have or may reasonably be expected to have a material adverse effect on the
validity or enforceability of the Amended and Restated Merger Agreement or
on the ability of SMC to perform its obligations under the Amended and
Restated Merger Agreement.
4. Any consent, approval, order or authorization of, or any waiting
period imposed by any regulatory authority under federal or state law,
including the laws of the State of North Carolina and the State of Indiana,
which require SMC to obtain any consent, approval or action of, or make any
filing with or give any notice to, any Person except those which the
failure to obtain, make, or give individually or in the aggregate with any
other such failures has or may be expected to have no material adverse
effect on the validity or enforceability of the Amended and Restated Merger
Agreement or on the ability of SMC to perform its obligations thereunder in
connection with the execution and delivery of the Amended and Restated
Merger Agreement and the performance by SMC of its obligations thereunder
has been obtained or, in the case of any such waiting period, has expired.
<PAGE>
EXHIBIT G
CONSULTING AGREEMENT AND AGREEMENT NOT TO COMPETE
THIS CONSULTING AGREEMENT AND AGREEMENT NOT TO COMPETE (THE
"AGREEMENT"), entered into this ____ day of ________________, ____ by and
between Savers Life Insurance Company, whose address is 8064 North Point
Boulevard, Ste. #201, Winston-Salem, North Carolina, 27106 (hereinafter
referred to as the "Company") and Jerry D. Stoltz, Sr., whose address is
4355 Mashie Drive, Pfafftown, North Carolina, 27040 (hereinafter referred
to as the "Consultant").
1. CONSULTATION SERVICES. The Company hereby engages the Consultant
to perform consulting services regarding specifically assigned projects
including but not restricted to the following:
a. Advising, consulting, structuring and reviewing marketing and
sales programs and related matters regarding the Company and other
affiliated companies.
b. Such other projects as may be assigned to the Consultant by the
Company.
2. TERM OF AGREEMENT. This Agreement will begin on ____________,
1998 and terminate on ____________, 2001. Upon thirty (30) days written
notice, at the option of either the Company or the Consultant, after the
expiration of one (1) year from the effective date of this Agreement,
either party may terminate the provision of consulting services, and this
Agreement will continue for the remaining term as an agreement not to
compete, payable in equal monthly installments for the remaining term of
the Agreement.
3. TIME DEVOTED BY CONSULTANT. It is anticipated that the Consultant
will devote substantially all of his time in fulfilling its obligations
under this Agreement. The particular amount of time may vary from day to
day or week to week.
4. PLACE WHERE SERVICES MAY BE RENDERED. The Consultant may perform
services in accordance with this Agreement at his home or at the principal
office of Savers Life Insurance Company, where Consultant shall be provided
with an office and telephone, as well as appropriate supporting staff
services, for so long as he continues to provide consulting services under
this Agreement.
5. PAYMENTS TO CONSULTANT. The Company will pay the Consultant an
annual fee of One Hundred Fifty Thousand Dollars ($150,000.00) payable in
monthly installments of Twelve Thousand Five Hundred Dollars ($12,500.00)
commencing ______________, _____, 1998. In the event of Consultant's
death, any remaining payments due under this Agreement shall be made to the
estate of the Consultant. In addition, the company shall reimburse
Consultant for all travel, entertainment and other business expenses that
are reasonably incurred by Consultant in the conduct of his services under
this Agreement upon receipt of itemized expense reports approved in
accordance with the Company's customary procedure.
6. INDEPENDENT CONTRACTOR. Both the Company and the Consultant agree
that the Consultant will act as an independent contractor in the
performance of his duties under this Agreement. Accordingly, the
Consultant shall be responsible for payment of all taxes including federal,
state and local taxes arising out of the Consultant's activities in
accordance with this Agreement, including by way of illustration but not
limitation, federal and state income tax, social security tax, unemployment
insurance tax, and any other taxes or business license fees as required.
7. CONFIDENTIAL INFORMATION. The Consultant agrees that any
information received by the Consultant during any furtherance of the
Consultant's obligations in accordance with this Agreement, which concerns
the business, financial or other affairs of the Company will be treated by
the Consultant in full confidence and will not be revealed to any other
persons, firms or organizations without the prior written consent of the
Company, for a period of three (3) years from the earlier of the date of
termination of this Agreement or the providing of consultation services in
paragraph 1 hereof. Upon the termination of this Agreement for any reason,
Consultant hereby agrees to fully and finally account for all records,
property, equipment and things of value, and to immediately surrender any
and all such records, property, equipment and things of value to the
Company.
8. AGREEMENT NOT TO COMPETE. Consultant agrees that for a period of
three (3) years from the earlier of the date of termination of this
Agreement or the providing of consultation services in paragraph 1 hereof,
he shall not (x) directly or indirectly sell or attempt to sell, within
North Carolina, on behalf of himself or any other person, corporation or
entity, any type of product marketed by the Company at the time this
Agreement terminated, (y) directly or indirectly sell or attempt to sell
any type of product marketed by the Company at the time this Agreement
terminated to any person, corporation or other entity that is a customer of
the Company at the time this Agreement terminated, and (z) except for
engaging in construction lending activities, within North Carolina,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership,
management, operation, or control of any business similar to the type of
business conducted by the Company at the time of termination of
Consultant's Agreement hereunder; provided, however, that Consultant may be
a shareholder of less than five percent (5%) of the outstanding shares of
voting stock of any company listed on a recognized stock exchange or traded
on the NASDAQ National Market System.
9. MAJOR MEDICAL INSURANCE. The Company shall continue to provide
the Consultant with major medical insurance coverage which is currently in
effect through his spouse's employer and shall reimburse the Consultant for
the cost of the premium of such major medical insurance coverage or make
direct payment of the premium for such coverage during the term of this
Agreement.
10. SURVIVAL. The confidentiality and agreement not to compete
obligations described in this Agreement are intended to be binding and
survive any termination of this Agreement.
11. NOTICES. Any notices or communications contemplated hereunder
shall be delivered to the parties by certified mail, return receipt
requested, unless provided otherwise herein, at the following addresses:
To the Consultant: Jerry D. Stoltz, Sr.
4355 Mashie Drive
Pfafftown, North Carolina 27040
To the Company: Savers Life Insurance Company
8064 North Point Boulevard, Ste. #201
Winston-Salem, North Carolina 27106
Attention:
12. ARBITRATION. Any unresolved difference of opinion between the
parties arising out of or relating to this Agreement or breach thereof
shall first be discussed between the parties for the purpose of negotiating
a compromise solution to the dispute. Such discussion shall take place
within a two-week period following declaration by one party that an
unresolved difference of opinion exists. Only after exhausting efforts to
resolve such a dispute in this manner will an issue be deemed subject to
dispute resolution by a third party. In that event, all unresolved
disputes arising out of or related to this agreement shall be settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association and the expedited procedures thereof, and
judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. The arbitration shall take place in
Charlotte, North Carolina.
13. WAIVER. A waiver of a breach of the Agreement or a failure to
exercise any right under this Agreement by any party shall not constitute a
waiver as to any further breach, similar or dissimilar, or prevent the
exercise of any future right under this Agreement.
14. INVALIDITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not be in any
way affected or impaired thereby.
15. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties concerning the subject matter of this
Agreement, shall be construed in accordance with applicable North Carolina
law, supersedes all prior agreements concerning the subject matter hereof
between the parties and their employees and agents. This Agreement may not
be modified or terminated orally. This Agreement may not be assigned by
the parties without the prior written consent of the other party. This
Agreement is binding upon the parties hereto, their heirs, assigns,
transferees, executors and personal representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement and Agreement Not To Compete on the day and year first above
written.
"CONSULTANT"
Jerry D. Stoltz, Sr.
____________________________________
Jerry D. Stoltz, Sr.
"COMPANY"
Savers Life Insurance Company
By: _____________________________________
<PAGE>
EXHIBIT H
__________________, 1997
Standard Management Corporation
9100 Keystone Crossing
Suite #600
Indianapolis, Indiana 46240
Dear Sirs:
This letter agreement (the "Letter Agreement") is being delivered to you in
connection with the proposed Amended and Restated Agreement and Plan of Merger
(the "Amended and Restated Merger Agreement") among Standard Management
Corporation, an Indiana corporation ("SMC"), Standard Acquisition Corporation
("SAC") and Savers Life Insurance Company ("Savers") in connection with the
issuance of SMC Common Stock, no par value (the "SMC Common Stock"), to
shareholders of Savers.
In order to induce SMC and SAC to close the Amended and Restated Merger
Agreement, the undersigned agrees not to offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce an offering of, any
shares of SMC Common Stock beneficially owned by the undersigned or any
securities convertible into, or exchangeable or exercisable for, shares of SMC
Common Stock for a period of one (1) year following the day which is the
Effective Time of the Merger without your prior written consent, other than
shares of SMC Common Stock disposed of as bona fide gifts, so long as any
recipient of such bona fide gifts agrees in writing (delivered to SMC) to be
bound by the restrictions set forth herein.
The undersigned further agrees that, at any meeting of the stockholders of
Savers, the undersigned shall vote (or cause to be voted) all shares of Common
Stock, no par value, of Savers (the "Savers Shares") held of record (or
beneficially) by the undersigned:
(a) in favor of the Merger and the adoption of the Amended and
Restated Merger Agreement;
(b) against any action or agreement that would result in a breach of
any covenant, representation or warranty, or any other obligation or agreement,
of Savers under the Amended and Restated Merger Agreement; or
(c) against any action that is intended, or that could reasonably be
expected, to impede, interfere with, delay, postpone or discourage, or
adversely affect the contemplated economic benefits to SMC of, the Merger and
the actions or transactions contemplated by the Amended and Restated Merger
Agreement or this Letter Agreement.
If for any reason the Amended and Restated Merger Agreement shall be terminated
prior to the Effective Time (as defined in such Amended and Restated Merger
Agreement), this Letter Agreement set forth above shall likewise be terminated.
Sincerely,
SMC SCHEDULE 5.6
Certain of the outstanding options or warrants to purchase
capital stock of SMC contain cashless exercise provision.
