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 earliest event reported):
September 17, 1996
WESTERN NATIONAL CORPORATION
STATE OF INCORPORATION: COMMISSION FILE IRS
EMPLOYER ID.
DELAWARE NO. 1-12540 NO. 75-2502064
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES:
5555 San Felipe Road, Suite 900
Houston, Texas 77056
Telephone No.: (713) 888-7800
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ITEM 5. OTHER EVENTS
On September 17, 1996, Western National Corporation (the "Company") sold
7,254,464, shares (the "Preferred Shares") of Series A Participating
Convertible Preferred Stock, par value $.001 per share (the "Convertible
Preferred Stock"), to American General Corporation, a Texas corporation
(together with its direct and indirect majority controlled subsidiaries,
"American General"), pursuant to a Stock Purchase Agreement, dated as of
September 13, 1996 (the "Stock Purchase Agreement"). The aggregate purchase
price of the Preferred Shares was $130.0 million, with net proceeds to the
Company (after a 3% discount in lieu of underwriting commissions, but prior to
expenses of issuance) of $126.1 million.
The Preferred Shares will automatically convert into common stock of the
Company (the "Common Stock") on a share-for-share basis upon the approval of
the Company's common stockholders of the issuance of the Common Stock,
pursuant to New York Stock Exchange requirements. Upon conversion, American
General's interest in the Company's Common Stock will increase to
approximately 46.2% from 40%.
The Company will contribute the net proceeds (after deduction of issuance
expenses) to its principal operating subsidiary, Western National Life
Insurance Company ("Western"). The contribution to Western's capital will
provide a financial base for asset growth that is satisfactory in terms of
Risk Based Capital requirements and ratings considerations. Significant
growth in 1996 premiums collected and projections of future asset growth led
management to explore various financing alternatives to maintain appropriate
capital levels.
STOCK PURCHASE AGREEMENT
Under the Stock Purchase Agreement, the Company issued 7,254,464
shares of Convertible Preferred Stock to American General for an aggregate
purchase price of $130.0 million, or $17.92 per share. The issue price was
based on the average closing price of the Company's common stock on the New
York Stock Exchange over the 45-trading-day period immediately preceding
determination of the issue price. In lieu of the underwriting and other fees
incident to a public issuance of equity, the Company and American General
negotiated a discount of $3.9 million (3% of the aggregate purchase price), so
that the Company received net proceeds in the amount of $126.1 million.
The Stock Purchase Agreement requires the Company to submit a proposal
approving the issuance of shares of Common Stock upon conversion of the
Preferred Shares at its 1997 Annual Meeting of Shareholders with a favorable
recommendation by the Company's Board of Directors. The Company has also
agreed to file an application for the underlying common shares on the New York
Stock Exchange. American General has agreed to vote its shares of common
stock in favor of the proposal. Additionally, American General has agreed to
file an amendment to its Statement on Schedule 13D (i) to reflect its
acquisition of the Preferred Shares, and (ii) to represent that such
acquisition was for "investment purposes" only and not for the purpose of
acquiring or influencing control of the Company.
PREFERRED STOCK
The Convertible Preferred Stock has the powers, designations, preferences
and relative rights and the qualifications, limitations and restrictions set
forth in the certificate of designation as filed with the Secretary of State
of Delaware on September 16, 1996 (the "Certificate of Designation"). The
Certificate of Designation is attached hereto as an Exhibit.
The Certificate of Designation provides that the Convertible Preferred
Stock shares pro rata on a share-for-share basis with the Common Stock in
dividends and in liquidation, subject to a $.001 per share liquidation
preference. No dividend may be paid on shares of Common Stock unless a
corresponding dividend is paid on shares of Convertible Preferred Stock.
Except as otherwise required by Delaware law, the Convertible Preferred Stock
has no voting power. The Convertible Preferred Stock is not redeemable. The
Convertible Preferred Stock automatically converts with no further action on
the part of the Company or its holder into common stock on a share-for-share
basis, following approval of the holders of the Company's common stock of the
issuance of Common Stock. The Certificate of Designation also contains
certain anti-dilution provisions relating to conversion.
SHAREHOLDER'S AGREEMENT
The Company and American General are parties to a Shareholder's
Agreement, dated as of December 2, 1994 (the "Shareholder's Agreement"), which
was amended in connection with the issuance of the Preferred Shares, to
provide that the Preferred Shares will be generally subject to the terms of
the Shareholder's Agreement. In addition, the registration rights set forth
in the Shareholder's Agreement were (i) broadened to cover the Preferred
Shares, and (ii) extended for a one-year period expiring on January 1, 2001.
Otherwise, the Shareholder's Agreement remains unchanged in all material
respects.
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ITEM 7(C). EXHIBITS.
The following exhibits are included as part of this report.
No.
3.1 Amended and Restated Certificate of Incorporation of the Company.
4.1 Certificate of Designation, Preferences and Rights and
Limitations of the Series A Participating Convertible Preferred Stock of the
Company (incorporated by reference to Exhibit 3.1 of this Report on Form 8-K
of the Registrant dated September 17, 1996).
10.1 Stock Purchase Agreement, dated as of September 13, 1996,
between American General Corporation and the Company.
10.2 Shareholder's Agreement, dated as of December 2, 1996, between
American General Corporation and the Company.
10.3 Amendment No. 1 to Shareholder's Agreement, dated as of
September 13, 1996, between American General Corporation and the Company.
99.1 The Company's News Release dated September 13, 1996.
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SIGNATURE
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 thereunto duly authorized.
Dated: September 17, 1996 WESTERN NATIONAL CORPORATION
By: /s/ Arthur R. McGimsey
Arthur R. McGimsey
Executive Vice President and
Chief Financial Officer
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WESTERN NATIONAL CORPORATION
It is hereby certified that Western National Corporation (the
"Corporation") existing pursuant to the provisions of the Delaware General
Corporation Law, as from time to time amended (the "Act"), hereby is amending
its Certificate of Incorporation, which was originally filed on October 5,
1993 under the name Western National Corporation, which name has not been
changed, by amending and restating the original Certificate of Incorporation
in its entirety, and it is hereby further certified as follows:
The exact text of the entire Certificate of Incorporation of the
Corporation , as amended and restated (the "Amended and Restated Certificate")
is set forth in its entirety below:
FIRST: The name of the Corporation is Western National Corporation.
SECOND: The nature of the business or purposes of the Corporation to be
conducted or promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware
(the "Act").
THIRD: The address of the Corporation's registered office in the state
of Delaware is Corporation Trust Center, 1209 Orange Street, in the city of
Wilmington, county of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
FOURTH: The total number of shares of Common Stock which the Corporation
shall have the authority to issue is Five Hundred Million (500,000,000),
having a par value of one-thousandth of one dollar ($.001) per share. The
total number of shares of Preferred Stock which the Corporation shall have
authority to issue is Fifty Million (50,000,000), having a par value of
one-thousandth of one dollar ($.001) per share.
FIFTH: Preferred Stock may be issued from time to time in one or more
classes or series, each of which class or series thereof shall possess such
voting powers, full or limited, or no voting powers, and such powers,
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations, or restrictions thereof, as
may be established by resolution of the Board of Directors of the Corporation
(the "Board of Directors") providing for the issuance thereof, which is vested
to the fullest extent permitted by law with authority to fix the powers,
designations, preferences, rights, qualifications, limitations or restrictions
for the Preferred Stock or any class or any series thereof, including, without
limiting the generality of the foregoing, the following:
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(i) The distinctive designation of such class or series and the
number of shares which shall constitute each class or series of Preferred
Stock which number may be increased (except where otherwise provided by the
Board of Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of Directors;
(ii) The rate or rates and the time or times at which dividends and
other distributions on the shares of each class or each series thereof shall
be paid, the relationship or priority of such dividends to those payable on
Common Stock or to other classes or series of Preferred Stock, and whether or
not any such dividends shall be cumulative (and, if so, from which date or
dates);
(iii) Whether a class or series shall have voting powers, and if
voting powers are granted, the extent thereof;
(iv) The amount payable on the shares of each class or series in the
event of the voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation, and the relative priorities, if any, to be
accorded such payments in liquidation;
(v) The terms and condition upon which either the Corporation may
exercise a right to redeem shares of each class or series or upon which the
holder of such shares may exercise a right to require redemption of such
stockholder's Preferred Stock, including any premiums or penalties applicable
to exercise of such rights;
(vi) Whether or not a sinking fund shall be created for the
redemption of the shares of a class or series, and the terms and conditions of
any such fund;
(vii) Whether shares of any class or series will be convertible or
exchangeable into shares of Common Stock or into other classes or series of
other capital stock or other securities and the prices, premiums or penalties,
ratios, adjustment provisions and other terms applicable to any such
conversion or exchange;
(viii) Restrictions on acquisition, rights of first refusal or other
limitations on transfer as may be applicable to any class or series, including
any series intended to be offered to a special class or group;
(ix) The conditions and restrictions, if any, on the payment of
dividends or on the making of other distributions on, or the purchase,
redemption or other acquisition by the Corporation of Common Stock or of any
other class or series of stock of the Corporation;
(x) The conditions and restrictions, if any, on the creation of
indebtedness of the Corporation or any subsidiary, or on the authorization or
issue of any additional stock of the Corporation; and
(xi) Any other preferences, limitations, qualifications or
restrictions on the preferred Stock or any class or series of such shares,
including rights and remedies in the event of default in connection with
dividends, other distributions or redemptions.
SIXTH: Subject to the provisions of any applicable law or of the By-laws
of the Corporation, as from time to time in effect, with respect to the fixing
of a record date for the determination of stockholders entitled to vote, and
to the rights of the holders of Preferred Stock, and except as otherwise
provided by law or by this Certificate or any resolution or resolutions
providing for the issuance of any class or series of Preferred Stock, each
holder of shares of Common Stock shall be entitled at any and all meetings of
the stockholders of the Corporation to one vote for each share of such stock
standing in his name on the books of the Corporation.
Subject to the restrictions set forth in this Article Sixth or any
resolution or resolutions providing for the issuance of any class or series of
Preferred Stock, the holders of the Common Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of the assets of the
Corporation that are by law available therefor, dividends payable in cash, in
property or in shares of capital stock.
Except as otherwise provided by this Certificate or any resolution or
resolutions providing for the issuance of any class or series of Preferred
Stock, the number of authorized shares of any class or classes of stock may be
increased or decreased by the affirmative vote of the holders of a majority of
the stock of the Corporation entitled to vote.
SEVENTH: In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of Common Stock
shall be entitled, after payment or provision for payment of the debts and
other liabilities of the Corporation and the amounts to which the holders of
the Preferred Stock shall be entitled, to share ratably in the remaining net
assets of the Corporation.
Neither a consolidation or merger of the Corporation with or into any
other corporation, nor a merger of any other corporation into the the
Corporation, nor a reorganization of the Corporation, nor the purchase or
redemption of all or part of the outstanding shares of stock of any class or
series of the Corporation nor a sale or transfer of the property and business
of the Corporation as or substantially as an entirety, shall be considered a
liquidation, dissolution or winding up of the Corporation for purposes of the
preceding sentence.
EIGHTH: The number of directors shall be from time to time fixed
pursuant to the By-laws of the Corporation. Qualifications for the directors,
if any, shall be set out in the By-laws. Election of directors need not be by
written ballot unless the By-laws so provide.
NINTH: The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. The number of directors
shall be from time to time fixed by, or in the manner provided in, the By-laws
of the Corporation (but no decrease in such number shall shorten the term of
any incumbent director). Qualifications for the directors, if any, shall be
set out in the By-laws. Election of directors need not be by written ballot
unless the By-laws so provide.
TENTH: By-laws will be adopted by the Board of Directors from time to
time. The Board of Directors is authorized to make, alter or repeal the
By-laws of the Corporation.
ELEVENTH: A director, in determining what is in the best interests of
the Corporation when considering the taking of any action, or refraining from
taking any action, including (without limitation) any action with respect to a
tender offer or proposal of acquisition, merger, consolidation or sale of
assets, may consider, in addition to consideration of the effects of any
action on stockholders and all other factors that such director may lawfully
consider, certain other factors such as (i) the effects of the action on the
Corporation's and any of its subsidiaries' employees, suppliers, creditors,
customers (including policyholders) or other constituencies; (ii) the effects
of the action on the communities in which the Corporation or any of its
subsidiaries operate; and (iii) the long-term as well as short-term interests
of the Corporation and its stockholders, including the possibility that these
interests may be best served by the continued independence of the Corporation.
If, on the basis of any of such factors, the Board of Directors determines
that the taking of any action, or refraining from taking any action is not in
the best interests of the Corporation, it may act in accordance with such
determination.
Notwithstanding any provision of this Certificate to the contrary, the
provisions of this Article Eleventh may not be amended, altered, changed or
repealed, nor may any provision inconsistent with said provisions be added to
this Certificate or to the By-laws of the Corporation, except upon the
affirmative vote of the holders of not less than 80% of the total voting power
of all outstanding shares of the voting stock (as defined in subparagraph (c)
of Article Thirteenth) of the Corporation voting as a single class.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
THIRTEENTH: This Article Thirteenth shall govern the approval of certain
business combination transactions involving the Corporation. Each capitalized
term used in this Article Thirteenth shall have the meaning ascribed to it in
subparagraph (c) hereof.
(a) Except as provided in subsection (b) of this Article Thirteenth,
holders of Voting Stock shall not be entitled to vote on a Special Business
Combination Transaction and such Special Business Combination Transaction
shall not be effected unless the aggregate amount of the cash and the fair
value of any consideration other than cash to be received per share by holders
of the Corporation's Common Stock in such Special Business Combination
Transaction shall be at least equal to the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees and
adjusted for any intervening stock splits and stock dividends) paid in order
to acquire any shares of Common Stock beneficially owned by the Related
Person, and the aggregate amount of the cash and the fair value of any
consideration other than cash to be received per share by holders of any class
or series of the Corporation's Preferred Stock in such Special Business
Combination Transaction shall be at least equal to the highest per share price
(including any brokerage commissions, transfer taxes, and soliciting dealers'
fees and adjusted for any intervening stock splits and stock dividends) paid
in order to acquire any shares of such class or series of Preferred Stock
beneficially owned by the Related Person. In the event of a Special Business
Combination Transaction in which the Corporation survives, the phrase "any
consideration other than cash to be received" as used in this subparagraph (a)
of this Article Thirteenth shall include the shares of Common Stock or
Preferred Stock retained by the holders thereof.
(b) The provisions of subparagraph (a) of this Article Thirteenth
shall not apply to any Special Business Combination Transaction of such
Special Business Combination Transaction shall have been approved by
two-thirds of the Continuing Directors.
(c) For purposed of this Article Thirteenth, the following
definitions shall apply:
(1) The term "Special Business Combination Transaction" shall mean:
(i) any merger or consolidation of the Corporation or any
Subsidiary with (x) any related Person or (y) any other corporation or entity
(whether or not itself a Related Person) which is, or after each merger or
consolidation would be, an Affiliate of a Related Person; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or in a series of transactions) to or
with any Related Person or any Affiliate of any Related Person of all or a
Substantial Part of the assets of the Corporation (including, without
limitation, any securities of a Subsidiary) or any Subsidiary; or
(iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf of a
Related Person or any Affiliate of a Related Person; or
(iv) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or in a series of related transactions) of any
securities of the Corporation or any Subsidiary to a Related Person, or any
Affiliate of a Related Person, in exchange for cash, securities or other
property (or a combination thereof); or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization or reorganization of the
Corporation, or any merger or consolidation of the Corporation with any of its
Subsidiaries, or any self tender offer for or repurchase of securities of the
Corporation or any Subsidiary by the Corporation or any Subsidiary, or any
other transaction (whether or not with or into or otherwise involving a
Related Person) which in any such case has the effect, directly or indirectly,
of increasing the proportionate shares of the outstanding shares of any class
or series of stock or securities convertible into stock of the Corporation or
any Subsidiary which is directly or indirectly beneficially owned by any
Related Person or any Affiliate of any Related Person.
(2) The term "Substantial Part" (as distinguished from the phrase
"all or substantially all") shall mean more than 10% of the book value of the
total assets of the person or entity in question, as of the end of its most
recent fiscal year ending prior to the time of the determination.
(3) The term "person" shall mean any individual, firm, corporation,
partnership, group (within the meaning of section 13(d)(3) of the Securities
Exchange Act of 1934, as in effect on the date hereof) or other entity.
(4) The term "Related Person" shall mean any person (other than the
Corporation or Subsidiary or any employee benefit plan of the Corporation or
any Subsidiary) who or which, as of the date on which such determination is
made:
(i) is the beneficial owner, directly or indirectly, of more
than 10% of the combined voting power of the then outstanding shares of Voting
Stock; or
(ii) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior thereto was the beneficial owner,
directly or indirectly, of 10% or more of the combined voting power of the
then outstanding shares of Voting Stock; or
(iii) which is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock that were at any time
within the two-year period immediately prior thereto beneficially owned by a
Related Person, if such assignment or succession shall have occurred in the
course of a transaction or series of transactions not utilizing the facilities
of a national securities exchange, occurring in the national over-the-counter
market or involving a public distribution.
(5) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly; or
(ii) which such person or any of its Affiliates or Associates
has (a) the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(6) For the purposes of determining whether a person is a Related
Person pursuant to subparagraph (c)(4) of this Article Thirteenth, the number
of shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application of subparagraph (c)(5) of this Article Thirteenth
but shall not include any other shares of Voting Stock that may be issuable
pursuant to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(7) The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934.
(8) "Subsidiary" shall mean any corporation more than 50% of whose
outstanding stock having ordinary voting power in the election of directors is
owned, directly or indirectly, by the Corporation or by a Subsidiary or by the
Corporation and one or more Subsidiaries; provided, however, that for the
purposes of the definition of Related Person set forth in subparagraph (c)(4)
of this Article Thirteenth, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
(9) "Continuing Director" shall mean any director who (i) is a
director of the Corporation on October 5, 1993, (ii) was designated (before
such person's initial election as a director) by a majority of the Continuing
Directors as a Continuing Director, (iii) with respect to a Special Business
Combination Transaction, was a member of the Board of Directors immediately
prior to the date on which any Related Person involved, either directly or
through an Affiliate or Associate, in such Special Business Combination
Transaction first became a Related Person.
(10) The term "Voting Stock" shall mean all outstanding shares of
capital stock of all classes and series of the Corporation entitled to vote
generally in the election of directors of the Corporation, in each case voting
together as a single class (it being understood that for purposes of this
Article Thirteenth each share of the Voting Stock shall have the number of
votes granted to it pursuant to Article Sixth of this Certificate).
(d) A majority of the Continuing Directors shall have the power and
duty to determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this Article
Thirteenth, including, without limitation:
(1) whether a person is a Related Person;
(2) the number of shares of Voting Stock beneficially owned by any
person;
(3) whether a person is an Affiliate or Associate of another person;
and
(4) the fair value of any consideration other than cash to be
received by holders of shares of any class or series of Voting Stock in a
Special Business Combination Transaction.
The good faith determination of a majority of the Continuing Directors on
such matters shall be conclusive and binding for all purposes of this Article
Thirteenth.
(e) Notwithstanding any provision of this Certificate to the
contrary, the provisions set forth in this Article Thirteenth may not be
amended, altered, changed or repealed, nor may any provision inconsistent with
said provisions be added to this Certificate or to the By-laws, except upon
the affirmative vote of the holders of not less than 80% of the total voting
power of all outstanding shares of the Voting Stock of the Corporation voting
as a single class.
FOURTEENTH: (a) At any time as such may be permitted under the Act, the
By-laws of the Corporation may provide that advance notice of nominations for
the Board of Directors, other than nominations by the Board of Directors
itself or a committee thereof, shall be given to the Corporation in the manner
provided in the By-laws.
(b) Notwithstanding any provision of this Certificate to the
contrary, the provision set forth in subparagraph (a) of this Article
Fourteenth may not be amended, altered, changed or repealed, nor may any
provision inconsistent with said provisions be added to this Certificate or to
the By-laws, except upon the affirmative vote of the holders of not less than
80% of the total voting power of all outstanding shares of the Voting Stock
(as defined in subparagraph (c) of Article Thirteenth) of the Corporation
voting as a single class.
FIFTEENTH: (a) Except as otherwise may be required by this Certificate
or any resolution or resolutions providing for the issuance of any class or
series of Preferred Stock, special meetings of stockholders shall be called
only by the Board of Directors acting by the affirmative vote of a majority of
the directors then in office.
(b) Notwithstanding any provision of this Certificate to the
contrary, the provision set forth in subparagraph (a) of this Article
Fifteenth may not be amended, altered, changed or repealed, nor may any
provision inconsistent with said provisions be added to this Certificate or to
the By-laws, except upon the affirmative vote of the holders of not less than
80% of the total voting power of all outstanding shares of the Voting Stock
(as defined in subparagraph (c) of Article Thirteenth) of the Corporation
voting as a single class.
SIXTEENTH: A director of the Corporation shall not be personally liable
either to the Corporation or any stockholder for monetary damages for breach
of fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for any matter in respect of which such
director shall be liable under Section 174 of the Act, or (iv) for any
transaction from which the director derived improper personal benefit. If the
Act is amended to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Act, as so amended. Any repeal or modification of this Article Sixteenth
by the stockholders shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
SEVENTEENTH: (a) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation),
by reason of the fact that he or she is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The
determination of any action, suit or proceeding by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that such person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interest of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection with the defense or settlement of such action or suit if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subparagraphs (a) and (b) of this
Article Seventeenth, or in defense of any claim, issue or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith.
(d) Any indemnification under subparagraphs (a) and (b) of this
Article Seventeenth (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in subparagraphs (a) and (b) of this Article Seventeenth. Such
determination shall be made (i) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit
or proceeding, (ii) if such a quorum is not obtainable or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel
in a written opinion or (iii) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation pursuant to this Article Seventeenth. Such
expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Seventeenth shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any By-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.
(g) For purposes of this Article Seventeenth, any reference to the
"Corporation" shall include, in addition to the resulting or surviving
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article Seventeenth with respect to the resulting or
surviving corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.
(h) For purposes of this Article Seventeenth, any reference to "other
enterprise" shall include employee benefit plans; any reference to "fines"
shall include any excise taxes assessed on a person with respect to any
employee benefit plan; and any reference to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or
agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interest of the Corporation"
as referred to in this Article Seventeenth.
(i) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Seventeenth shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person.
(j) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have
the power to indemnify him or her against such liability under the provisions
of Section 145 of the Act.
EIGHTEENTH: The names and mailing addresses of the initial Board of
Directors who shall serve until the first annual meeting of the stockholders
or until their successors are duly elected and qualified are as follows:
Michael J. Poulos
5555 San Felipe Road
Houston, Texas 77056
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by the undersigned duly authorized
officers of the Corporation this 31st day of January, 1994.
Western National Corporation
By:
James S. Adams
Senior Vice President
Attest:
By:
Karl W. Kindig
Assistant Secretary
<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
AND LIMITATIONS OF THE SERIES A PARTICIPATING
CONVERTIBLE PREFERRED STOCK OF
WESTERN NATIONAL CORPORATION
WESTERN NATIONAL CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (hereinafter referred to as the
"Corporation"), HEREBY CERTIFIES that pursuant to the authority conferred upon
the Board of Directors by Article Fifth of the Certificate of Incorporation of
the Corporation, and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, by the
unanimous vote of its members, adopted a resolution providing for the issuance
of a series of 7,254,464 shares of Preferred Stock to be designated as Series
A Participating Convertible Preferred Stock, which resolution is as follows:
RESOLVED, that a series of Preferred Stock of the Corporation be and it
hereby is created, such series of Preferred Stock is to be designated as the
Series A Participating Convertible Preferred Stock (hereinafter referred to as
the "Preferred Stock"), to consist of 7,254,464 shares with a par value of
one-thousandth of one dollar ($.001) per share (each share shall be referred
to herein as a "Share"), the preferences, special rights, qualifications,
limitations, restrictions, redemption rights, dividend rights and rights of
dissolution of assets of each share of which shall be as follows:
1. RANKING. The Preferred Stock will rank senior to the Common
Stock, and may rank senior to, on a parity with, or junior to any series of
preferred stock hereafter designated, with respect to dividends and
liquidation rights. All equity securities of the Corporation to which the
Preferred Stock ranks prior with respect to the payment of dividends and upon
liquidation, whether now existing or hereafter created, are collectively
referred to in this Certificate of Designation as the "Junior Stock", all
equity securities of the Corporation with which the Preferred Stock ranks on a
parity with respect to the payment of dividends and upon liquidation, whether
now existing or hereafter created, are collectively referred to in this
Certificate of Designation as "Parity Stock", and all equity securities of the
Corporation to which the Preferred Stock ranks junior, with respect to
dividends or upon liquidation, whether now existing or hereafter created, are
collectively referred to in this Certificate of Designation as the "Senior
Stock".
2. DIVIDENDS. So long as any shares of Preferred Stock shall
remain outstanding, the Corporation shall not (i) declare or pay any dividend
or make any other distribution on its Common Stock (whether payable in cash,
in property or in securities of the Corporation), other than a dividend
payable solely in Common Stock or rights to purchase Common Stock, unless
concurrently therewith the Corporation shall declare or pay a dividend or make
a distribution on each share of Preferred Stock then outstanding equal to the
dividend or distribution per share declared, paid or made on the Common Stock
and, if such dividend or distribution on the Common Stock is declared, paid or
made in property (other than cash) or securities of the Corporation, of
identical property or securities, (ii) declare or pay any dividend or make any
other distribution on the Common Stock payable in shares of Common Stock or
rights to purchase Common Stock, unless concurrently therewith the Corporation
shall declare or pay a dividend or make a distribution on each share of
Preferred Stock then outstanding, in the case of a dividend or distribution
payable in Common Stock, of a number of additional shares of Preferred Stock
equal to the number of shares of Common Stock payable with respect to each
share of Common Stock, or, in the case of a dividend or distribution payable
in rights to purchase Common Stock, of rights to purchase the number of shares
of Preferred Stock equal to the number of shares of Common Stock purchasable
pursuant to the rights payable to the holder of one share of Common Stock and
at the same purchase price and on the same terms and conditions, (iii) split
or otherwise subdivide the Common Stock into a greater number of shares or
combine the Common Stock into a lesser number of shares (whether by stock
split, reverse stock split, reclassification or otherwise) or reclassify the
Common Stock, unless concurrently therewith the Corporation shall subdivide,
combine or reclassify the Preferred Stock so that the number of shares of
Preferred Stock outstanding immediately following such division, combination
or reclassification shall bear the same relationship to the number of shares
of Preferred Stock outstanding immediately prior to such division, combination
or reclassification as the number of shares of Common Stock outstanding
immediately following such division, combination or reclassification bears to
the number of shares of Common Stock outstanding immediately prior to such
division, combination or reclassification and in connection with such
division, combination or reclassification the holders of the Preferred Stock
shall be entitled to receive, in respect of each share thereof, any additional
property or securities of the Corporation receivable by the holders of the
Common Stock upon such division, combination or reclassification in respect of
each share of Common Stock, or (iv) make, or permit any of its subsidiaries or
affiliates to make, any redemption, purchase or other acquisition, directly or
indirectly, of any shares of Common Stock in connection with an offer to all
or substantially all of the holders thereof, unless concurrently therewith the
Corporation shall offer to all holders of Preferred Stock (on the same terms
and conditions as the offer to the holders of the Common Stock) to redeem,
purchase or otherwise acquire a number of shares of Preferred Stock so that,
if such offer were accepted in full, the number of shares of Preferred Stock
outstanding immediately following such redemption, purchase or acquisition
would bear the same relationship to the number of shares of Preferred Stock
outstanding immediately prior thereto as the number of shares of Common Stock
immediately following such redemption, purchase or acquisition of Common Stock
bears to the number of shares of Common Stock outstanding immediately prior
thereto.
3. VOTING.
a. Except as otherwise required by law, the Preferred Stock shall
have no voting power.
b. On all matters to be voted on by the holders of the Preferred
Stock, such holders shall be entitled to one vote for each share.
4. REDEMPTION. The Preferred Stock shall not be redeemable (except
as contemplated in section 2) and shall not be subject to any sinking fund.
The Corporation shall have the right to purchase Preferred Stock in the
public market or in private purchases at such prices as may from time to time
be available in the public market or in private purchases for such shares and
shall have the right at any time to acquire any Preferred Stock from the owner
of such shares on such terms as may be agreeable to such owner. Preferred
Stock may be acquired by the Corporation from any stockholder pursuant to this
paragraph without offering any other stockholder an equal opportunity to sell
his stock to the Corporation, and no purchase by the Corporation from any
stockholder pursuant to this paragraph shall be deemed to create any right on
the part of any other stockholder to sell any Preferred Stock (or any other
stock) to the Corporation.
5. CONVERSION.
a. Automatic Conversion. Upon satisfaction of the Conversion
Condition, each share of Preferred Stock shall automatically and without any
action on the part of the holder thereof or the Corporation be converted into
one fully paid and nonassessable share of Common Stock. The "Conversion
Condition" shall be (i) the approval of the holders of Common Stock of the
Corporation (by vote or written consent of a resolution providing for such
conversion), such approval to be based on the affirmative vote of those
present and voting (or executing a consent), in person or by proxy (which
resolution may be presented at any annual or special meeting of shareholders,
at which a quorum is present, upon such notice as may be required by law) or
(ii) receipt of a written determination by the New York Stock Exchange that
the rules and regulations of such Exchange do not require shareholder approval
of such issuance.
b. Effectiveness and Effect of Conversion. Conversion shall be
deemed to have been effected immediately prior to the close of business on the
date of satisfaction of the Conversion Condition. The person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the Common Stock represented thereby at such
time and all shares of Preferred Stock so converted shall be deemed to be no
longer outstanding as of such date.
As promptly as practicable, and in any event within five days, after the
surrender of such shares of Preferred Stock, the Corporation shall issue and
shall deliver to such holder, or on the holder's written order, a certificate
or certificates for the number of full shares of Common Stock issuable upon
the conversion of such Preferred Stock. The issuance of stock certificates
representing shares of Common Stock on conversion of shares of Preferred Stock
shall be made without charge for any tax in respect of the issuance thereof.
The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any registration of transfer involved in the issuance
and delivery of Common Stock in any name other than that of the holder of
record of any Preferred Stock converted, and the Corporation shall not be
required so to issue or deliver any stock certificate unless and until the
person or persons requesting the registration of transfer shall have paid to
the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.
c. Reservation of Shares. The Corporation shall at all times reserve
and keep available out of its authorized Common Stock the full number of
shares of Common Stock of the Corporation deliverable upon the conversion of
all outstanding shares of Preferred Stock.
6. LIQUIDATION. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation (for the purposes of
this subsection 6, a "Liquidation"), before any distribution of assets shall
be made to the holders of any stock of the Corporation ranking junior upon
liquidation, the holder of each share of Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available
for distribution to its stockholders, an amount equal to $.001 plus all
dividends (whether or not declared or due) accumulated and unpaid on such
share on the date fixed for the distribution of assets of the Corporation to
the holders of Preferred Stock before any distribution of assets is made to
holders of shares of Junior Stock (for purposes of this subsection 6, the
"liquidation preference"). After payment of the full amount of the
liquidation preference to which the holder of each share of Preferred Stock is
entitled, and after holders of shares of Common Stock have received in the
Liquidation $0.001 per share upon Liquidation, such holder will participate in
any further distributions made to the holders of Common Stock as if such
holder held the number of shares of Common Stock into which such Preferred
Stock is then subject to conversion.
If upon any Liquidation of the Corporation, the assets available for
distribution to the holders of Preferred Stock, and any classes of Parity
Stock and any other classes of stock ranking on a parity upon liquidation with
the Parity Stock issued by the Corporation which shall then be outstanding
(hereinafter in this paragraph called the "Total Amount Available") shall be
insufficient to pay the holders of all outstanding Preferred Stock and all
other such stock the full amounts (including all dividends accumulated and
unpaid) to which they shall be entitled by reason of such Liquidation of the
Corporation, then there shall be paid to the holders of the Preferred Stock
(to be allocated pro rata among the Preferred Stock) in connection with such
Liquidation of the Corporation, an aggregate amount equal to the product
derived by multiplying the Total Amount Available times a fraction, the
numerator of which shall be the full amount to which the holders of the
Preferred Stock shall be entitled under the terms of the preceding paragraph
by reason of such Liquidation of the Corporation and the denominator of which
shall be the total amount which would have been distributed by reason of such
Liquidation of the Corporation with respect to the Preferred Stock, the Parity
Stock and all other stock ranking on a parity with the Parity Stock upon
Liquidation then outstanding had the Corporation possessed sufficient assets
to pay the maximum amount which the holders of all such stock would be
entitled to receive in connection with such Liquidation of the Corporation.
The voluntary sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of the Corporation (unless in
connection therewith the Liquidation of the Corporation is specifically
approved) or the merger or consolidation of the Corporation into or with any
other corporation, or the merger of any other corporation into the
Corporation, or any purchase or redemption of some or all of the shares of any
class or series of stock of the Corporation, shall not be deemed to be a
Liquidation of the Corporation for the purpose of this subsection 6.
The holder of any Preferred Stock shall not be entitled to receive any
payment owed for such Shares under this subsection 6 until such holder shall
cause to be delivered to the Corporation: (i) the certificate(s) representing
such Preferred Stock and (ii) transfer instrument(s) satisfactory to the
Corporation and sufficient to transfer such Preferred Stock to the Corporation
free of any adverse interest. No interest shall accrue on any payment upon
Liquidation after the due date thereof.
7. STATUS OF REACQUIRED PREFERRED STOCK. Shares issued and
reacquired by the Corporation (including shares of Preferred Stock which shall
be deemed to have been reacquired upon conversion into shares of Common Stock)
shall have the status of authorized and unissued shares of preferred stock of
the Corporation undesignated as to series, subject to later issuance in
accordance with the Certificate of Incorporation.
RESOLVED, that, before the Corporation shall issue any shares of the
Preferred Stock, a certificate pursuant to Section 151 of the General
Corporation Law of the State of Delaware shall be made, executed,
acknowledged, filed and recorded in accordance with the provisions of said
Section 151; and the proper officers of the Corporation are hereby authorized
and directed to do all acts and things which may be necessary or proper in
their opinion to carry into effect the purposes and intent of this and the
foregoing resolutions.
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this Certificate of
Designation to be duly executed by the President and attested to by its
Secretary and has caused its corporate seal to be affixed hereto, this ____
day of September, 1996.
WESTERN NATIONAL CORPORATION
By: /s/ Michael J. Poulos
Michael J. Poulos
Chairman of the Board of
Directors, President
and Chief Executive Officer
(Corporate Seal)
ATTEST:
/s/ Dwight L. Cramer
Dwight L. Cramer
Secretary
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
AND LIMITATIONS OF THE SERIES A PARTICIPATING
CONVERTIBLE PREFERRED STOCK OF
WESTERN NATIONAL CORPORATION
WESTERN NATIONAL CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (hereinafter referred to as the
"Corporation"), HEREBY CERTIFIES that pursuant to the authority conferred upon
the Board of Directors by Article Fifth of the Certificate of Incorporation of
the Corporation, and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, by the
unanimous vote of its members, adopted a resolution providing for the issuance
of a series of 7,254,464 shares of Preferred Stock to be designated as Series
A Participating Convertible Preferred Stock, which resolution is as follows:
RESOLVED, that a series of Preferred Stock of the Corporation be and it
hereby is created, such series of Preferred Stock is to be designated as the
Series A Participating Convertible Preferred Stock (hereinafter referred to as
the "Preferred Stock"), to consist of 7,254,464 shares with a par value of
one-thousandth of one dollar ($.001) per share (each share shall be referred
to herein as a "Share"), the preferences, special rights, qualifications,
limitations, restrictions, redemption rights, dividend rights and rights of
dissolution of assets of each share of which shall be as follows:
1. RANKING. The Preferred Stock will rank senior to the Common
Stock, and may rank senior to, on a parity with, or junior to any series of
preferred stock hereafter designated, with respect to dividends and
liquidation rights. All equity securities of the Corporation to which the
Preferred Stock ranks prior with respect to the payment of dividends and upon
liquidation, whether now existing or hereafter created, are collectively
referred to in this Certificate of Designation as the "Junior Stock", all
equity securities of the Corporation with which the Preferred Stock ranks on a
parity with respect to the payment of dividends and upon liquidation, whether
now existing or hereafter created, are collectively referred to in this
Certificate of Designation as "Parity Stock", and all equity securities of the
Corporation to which the Preferred Stock ranks junior, with respect to
dividends or upon liquidation, whether now existing or hereafter created, are
collectively referred to in this Certificate of Designation as the "Senior
Stock".
2. DIVIDENDS. So long as any shares of Preferred Stock shall
remain outstanding, the Corporation shall not (i) declare or pay any dividend
or make any other distribution on its Common Stock (whether payable in cash,
in property or in securities of the Corporation), other than a dividend
payable solely in Common Stock or rights to purchase Common Stock, unless
concurrently therewith the Corporation shall declare or pay a dividend or make
a distribution on each share of Preferred Stock then outstanding equal to the
dividend or distribution per share declared, paid or made on the Common Stock
and, if such dividend or distribution on the Common Stock is declared, paid or
made in property (other than cash) or securities of the Corporation, of
identical property or securities, (ii) declare or pay any dividend or make any
other distribution on the Common Stock payable in shares of Common Stock or
rights to purchase Common Stock, unless concurrently therewith the Corporation
shall declare or pay a dividend or make a distribution on each share of
Preferred Stock then outstanding, in the case of a dividend or distribution
payable in Common Stock, of a number of additional shares of Preferred Stock
equal to the number of shares of Common Stock payable with respect to each
share of Common Stock, or, in the case of a dividend or distribution payable
in rights to purchase Common Stock, of rights to purchase the number of shares
of Preferred Stock equal to the number of shares of Common Stock purchasable
pursuant to the rights payable to the holder of one share of Common Stock and
at the same purchase price and on the same terms and conditions, (iii) split
or otherwise subdivide the Common Stock into a greater number of shares or
combine the Common Stock into a lesser number of shares (whether by stock
split, reverse stock split, reclassification or otherwise) or reclassify the
Common Stock, unless concurrently therewith the Corporation shall subdivide,
combine or reclassify the Preferred Stock so that the number of shares of
Preferred Stock outstanding immediately following such division, combination
or reclassification shall bear the same relationship to the number of shares
of Preferred Stock outstanding immediately prior to such division, combination
or reclassification as the number of shares of Common Stock outstanding
immediately following such division, combination or reclassification bears to
the number of shares of Common Stock outstanding immediately prior to such
division, combination or reclassification and in connection with such
division, combination or reclassification the holders of the Preferred Stock
shall be entitled to receive, in respect of each share thereof, any additional
property or securities of the Corporation receivable by the holders of the
Common Stock upon such division, combination or reclassification in respect of
each share of Common Stock, or (iv) make, or permit any of its subsidiaries or
affiliates to make, any redemption, purchase or other acquisition, directly or
indirectly, of any shares of Common Stock in connection with an offer to all
or substantially all of the holders thereof, unless concurrently therewith the
Corporation shall offer to all holders of Preferred Stock (on the same terms
and conditions as the offer to the holders of the Common Stock) to redeem,
purchase or otherwise acquire a number of shares of Preferred Stock so that,
if such offer were accepted in full, the number of shares of Preferred Stock
outstanding immediately following such redemption, purchase or acquisition
would bear the same relationship to the number of shares of Preferred Stock
outstanding immediately prior thereto as the number of shares of Common Stock
immediately following such redemption, purchase or acquisition of Common Stock
bears to the number of shares of Common Stock outstanding immediately prior
thereto.
3. VOTING.
a. Except as otherwise required by law, the Preferred Stock shall
have no voting power.
b. On all matters to be voted on by the holders of the Preferred
Stock, such holders shall be entitled to one vote for each share.
4. REDEMPTION. The Preferred Stock shall not be redeemable (except
as contemplated in section 2) and shall not be subject to any sinking fund.
The Corporation shall have the right to purchase Preferred Stock in the
public market or in private purchases at such prices as may from time to time
be available in the public market or in private purchases for such shares and
shall have the right at any time to acquire any Preferred Stock from the owner
of such shares on such terms as may be agreeable to such owner. Preferred
Stock may be acquired by the Corporation from any stockholder pursuant to this
paragraph without offering any other stockholder an equal opportunity to sell
his stock to the Corporation, and no purchase by the Corporation from any
stockholder pursuant to this paragraph shall be deemed to create any right on
the part of any other stockholder to sell any Preferred Stock (or any other
stock) to the Corporation.
5. CONVERSION.
a. Automatic Conversion. Upon satisfaction of the Conversion
Condition, each share of Preferred Stock shall automatically and without any
action on the part of the holder thereof or the Corporation be converted into
one fully paid and nonassessable share of Common Stock. The "Conversion
Condition" shall be (i) the approval of the holders of Common Stock of the
Corporation (by vote or written consent of a resolution providing for such
conversion), such approval to be based on the affirmative vote of those
present and voting (or executing a consent), in person or by proxy (which
resolution may be presented at any annual or special meeting of shareholders,
at which a quorum is present, upon such notice as may be required by law) or
(ii) receipt of a written determination by the New York Stock Exchange that
the rules and regulations of such Exchange do not require shareholder approval
of such issuance.
b. Effectiveness and Effect of Conversion. Conversion shall be
deemed to have been effected immediately prior to the close of business on the
date of satisfaction of the Conversion Condition. The person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the Common Stock represented thereby at such
time and all shares of Preferred Stock so converted shall be deemed to be no
longer outstanding as of such date.
As promptly as practicable, and in any event within five days, after the
surrender of such shares of Preferred Stock, the Corporation shall issue and
shall deliver to such holder, or on the holder's written order, a certificate
or certificates for the number of full shares of Common Stock issuable upon
the conversion of such Preferred Stock. The issuance of stock certificates
representing shares of Common Stock on conversion of shares of Preferred Stock
shall be made without charge for any tax in respect of the issuance thereof.
The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any registration of transfer involved in the issuance
and delivery of Common Stock in any name other than that of the holder of
record of any Preferred Stock converted, and the Corporation shall not be
required so to issue or deliver any stock certificate unless and until the
person or persons requesting the registration of transfer shall have paid to
the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.
c. Reservation of Shares. The Corporation shall at all times reserve
and keep available out of its authorized Common Stock the full number of
shares of Common Stock of the Corporation deliverable upon the conversion of
all outstanding shares of Preferred Stock.
6. LIQUIDATION. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation (for the purposes of
this subsection 6, a "Liquidation"), before any distribution of assets shall
be made to the holders of any stock of the Corporation ranking junior upon
liquidation, the holder of each share of Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available
for distribution to its stockholders, an amount equal to $.001 plus all
dividends (whether or not declared or due) accumulated and unpaid on such
share on the date fixed for the distribution of assets of the Corporation to
the holders of Preferred Stock before any distribution of assets is made to
holders of shares of Junior Stock (for purposes of this subsection 6, the
"liquidation preference"). After payment of the full amount of the
liquidation preference to which the holder of each share of Preferred Stock is
entitled, and after holders of shares of Common Stock have received in the
Liquidation $0.001 per share upon Liquidation, such holder will participate in
any further distributions made to the holders of Common Stock as if such
holder held the number of shares of Common Stock into which such Preferred
Stock is then subject to conversion.
If upon any Liquidation of the Corporation, the assets available for
distribution to the holders of Preferred Stock, and any classes of Parity
Stock and any other classes of stock ranking on a parity upon liquidation with
the Parity Stock issued by the Corporation which shall then be outstanding
(hereinafter in this paragraph called the "Total Amount Available") shall be
insufficient to pay the holders of all outstanding Preferred Stock and all
other such stock the full amounts (including all dividends accumulated and
unpaid) to which they shall be entitled by reason of such Liquidation of the
Corporation, then there shall be paid to the holders of the Preferred Stock
(to be allocated pro rata among the Preferred Stock) in connection with such
Liquidation of the Corporation, an aggregate amount equal to the product
derived by multiplying the Total Amount Available times a fraction, the
numerator of which shall be the full amount to which the holders of the
Preferred Stock shall be entitled under the terms of the preceding paragraph
by reason of such Liquidation of the Corporation and the denominator of which
shall be the total amount which would have been distributed by reason of such
Liquidation of the Corporation with respect to the Preferred Stock, the Parity
Stock and all other stock ranking on a parity with the Parity Stock upon
Liquidation then outstanding had the Corporation possessed sufficient assets
to pay the maximum amount which the holders of all such stock would be
entitled to receive in connection with such Liquidation of the Corporation.
The voluntary sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of the Corporation (unless in
connection therewith the Liquidation of the Corporation is specifically
approved) or the merger or consolidation of the Corporation into or with any
other corporation, or the merger of any other corporation into the
Corporation, or any purchase or redemption of some or all of the shares of any
class or series of stock of the Corporation, shall not be deemed to be a
Liquidation of the Corporation for the purpose of this subsection 6.
The holder of any Preferred Stock shall not be entitled to receive any
payment owed for such Shares under this subsection 6 until such holder shall
cause to be delivered to the Corporation: (i) the certificate(s) representing
such Preferred Stock and (ii) transfer instrument(s) satisfactory to the
Corporation and sufficient to transfer such Preferred Stock to the Corporation
free of any adverse interest. No interest shall accrue on any payment upon
Liquidation after the due date thereof.
7. STATUS OF REACQUIRED PREFERRED STOCK. Shares issued and
reacquired by the Corporation (including shares of Preferred Stock which shall
be deemed to have been reacquired upon conversion into shares of Common Stock)
shall have the status of authorized and unissued shares of preferred stock of
the Corporation undesignated as to series, subject to later issuance in
accordance with the Certificate of Incorporation.
RESOLVED, that, before the Corporation shall issue any shares of the
Preferred Stock, a certificate pursuant to Section 151 of the General
Corporation Law of the State of Delaware shall be made, executed,
acknowledged, filed and recorded in accordance with the provisions of said
Section 151; and the proper officers of the Corporation are hereby authorized
and directed to do all acts and things which may be necessary or proper in
their opinion to carry into effect the purposes and intent of this and the
foregoing resolutions.
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this Certificate of
Designation to be duly executed by the President and attested to by its
Secretary and has caused its corporate seal to be affixed hereto, this ____
day of September, 1996.
WESTERN NATIONAL CORPORATION
By: /s/ Michael J. Poulos
Michael J. Poulos
Chairman of the Board of
Directors, President
and Chief Executive Officer
(Corporate Seal)
ATTEST:
/s/ Dwight L. Cramer
Dwight L. Cramer
Secretary
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of this 13th day of September, 1996
(this "Agreement"), by and between American General Corporation, a Texas
corporation ("Buyer"), and Western National Corporation, a Delaware
corporation ("Seller").
This Agreement sets forth the terms and conditions upon which Seller will
issue and sell to Buyer, and Buyer will purchase from Seller, a total of
7,254,464 shares of Series A Participating Convertible Preferred Stock, par
value $.001 per share, of Seller ("Convertible Preferred Stock") (such
7,254,464 shares of Convertible Preferred Stock being referred to herein as
the "Shares"). The Shares shall have the powers, designations, preferences
and relative rights and the qualifications, limitations and restrictions set
forth in the certificate of designation to be filed with the Secretary of
State of Delaware (in substantially the form attached hereto as Exhibit A,
the "Certificate of Designation").
The definitions of certain initially capitalized terms used herein are
set forth in Annex A hereto.
In consideration of the mutual agreements contained herein, the parties
agree as follows:
1. Upon the terms and subject to the conditions of this Agreement,
and in reliance on the representations, warranties and covenants contained
herein, at the Closing described in Section 3 hereof, Seller shall issue and
sell to Buyer, and Buyer shall purchase from Seller, all of the Shares. In
consideration of the aforesaid sale, Buyer shall pay to Seller an aggregate
purchase price of $130,000,000 for the Shares.
2. In lieu of the underwriting and other fees that Seller would have
been required to pay for issuance of the Shares in an underwritten public
offering, Seller shall pay to Buyer a fee of $3,900,000 (equal to 3% of the
aggregate purchase price for the Shares hereunder).
3. The Closing shall be held at the offices of American General
Corporation, 2929 Allen Parkway, Houston, Texas, at 10:00 a.m. on the first
business day following the date on which all of the conditions set forth in
Sections 9 and 10 to each party's obligations hereunder have been satisfied or
waived; or at such other place or time or both as the parties mutually may
agree in writing. The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date".
4. At the Closing, (a) Seller shall deliver to Buyer one or more
stock certificates, registered in the name of Buyer, representing the Shares;
and (b) Buyer shall deliver to Seller the purchase price specified in Section
1 (net of the fee specified in Section 2) through a wire transfer to a bank
account designated by Seller prior to the Closing.
5. Seller hereby represents and warrants to Buyer that:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and has all requisite power and
authority to own its assets and to carry on its business as now being
conducted and as presently proposed to be conducted.
(b) Seller has the corporate power and authority to execute, deliver
and perform this Agreement. Such execution, delivery and performance have
been duly authorized by all necessary action on the part of Seller and will
not contravene the organizational documents of Seller or conflict with, result
in a breach of, or entitle any party (with due notice or lapse of time or
both) to terminate, accelerate or call a default with respect to, any
agreement or instrument to which Seller is a party or by which Seller or its
assets are bound. The approval of the shareholders of the Seller is not
required in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby and
thereby (other than the shareholder approval specified in Section 13). The
execution, delivery and performance by Seller of this Agreement will not
result in any violation by Seller of any law, rule or regulation applicable to
Seller. Seller is not a party to, nor subject to or bound by, any judgment,
injunction or decree of any Governmental Entity that may restrict or interfere
with the performance of this Agreement. Assuming the due authorization,
execution and delivery of this Agreement by Buyer, this Agreement is a valid
and binding obligation of Seller enforceable against Seller in accordance with
its terms.
(c) As of the date hereof, the authorized capital stock of Seller
consists of five hundred million shares of common stock, par value $.001 per
share ("Common Stock"), of which 62,441,223 shares are issued and outstanding,
and fifty million shares of preferred stock, par value $0.001 per share
("Preferred Stock"), none of which are issued and outstanding. When issued
and paid for by Buyer as contemplated by this Agreement, the Shares (i) will
be duly authorized, validly issued, fully paid and non-assessable, (ii) will
not be issued in violation of any preemptive or similar rights, and (iii) will
not be subject to any restrictions created by Seller affecting the
transferability of any portion thereof, other than those imposed by federal
and state securities laws and by that certain Shareholder's Agreement, dated
December 2, 1994, as amended on September 13, 1996 ("Shareholder's
Agreement"), entered into by and among Seller, Buyer and AGC Life Insurance
Company. When issued to Buyer in accordance with the terms of the Certificate
of Designation, the shares of Common Stock issuable upon conversion of the
Shares ("Underlying Common Shares") (i) will be duly authorized, validly
issued, fully paid and non-assessable, (ii) will not be issued in violation of
any preemptive or similar rights, and (iii) will not be subject to any
restrictions created by Seller affecting the transferability of any portion
thereof, other than those imposed by federal and state securities laws and by
the Shareholders Agreement.
(d) No approval, review, consent or waiver of any Governmental Entity
is required for the execution, delivery and performance by Seller of this
Agreement or the consummation by Seller of the transactions contemplated
hereby and thereby (other than the review of the Securities and Exchange
Commission for the proxy statement specified in Section 13(a) and the listing
approval of the New York Stock Exchange specified in Section 13(b)). No
consent or waiver of any party to any Contract to which Seller is a party or
by which it is bound is required for the execution, delivery and performance
by Seller of this Agreement or the consummation by Seller of the transactions
contemplated hereby and thereby.
(e) There is no action, suit, investigation or proceeding pending or,
to the knowledge of Seller, threatened against Seller or any of its properties
or rights by or before any Governmental Entity that questions the validity of
this Agreement or any action taken or to be taken pursuant hereto.
(f) No representation or warranty made to Buyer by Seller hereunder,
and no statement contained in the Filings, or contained in any certificate,
document or instrument delivered by Seller pursuant hereto, contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
(g) Neither Seller nor any other person acting on Seller's behalf
has, directly or indirectly, offered the Shares for sale to, or solicited any
offers to buy the Shares from, or otherwise approached or negotiated with
respect thereto with any prospective purchaser, other than Buyer, and neither
Seller nor any person acting on Seller's behalf has taken any action that
would subject the issuance or sale of the Shares to the provisions of Section
5 of the Securities Act of 1933, or to the registration or qualification
requirements of any securities or Blue Sky laws of any applicable
jurisdiction.
6. Buyer hereby represents and warrants to Seller that:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Texas and has all requisite power and
authority to own its assets and to carry on its business as now being
conducted and as presently proposed to be conducted.
(b) Buyer has the corporate power and authority to execute, deliver
and perform this Agreement. Such execution, delivery and performance have
been duly authorized by all necessary action on the part of Buyer and will not
contravene the organizational documents of Buyer or conflict with, result in a
breach of, or entitle any party (with due notice or lapse of time or both) to
terminate, accelerate or call a default with respect to, any agreement or
instrument to which Buyer is a party or by which Buyer or its assets are
bound. The execution, delivery and performance by Buyer of this Agreement
will not result in any violation by Buyer of any law, rule or regulation
applicable to Buyer. Buyer is not a party to, nor subject to or bound by, any
judgment, injunction or decree of any Governmental Entity that may restrict or
interfere with the performance of this Agreement. Assuming the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement is a valid and binding obligation of Buyer enforceable against Buyer
in accordance with its terms.
(c) No approval, consent or waiver of any Governmental Entity is
required for the execution, delivery and performance by Buyer of this
Agreement or the consummation by Buyer of the transactions contemplated hereby
and thereby. No consent or waiver of any party to any Contract to which Buyer
is a party or by which it is bound is required for the execution, delivery and
performance by Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated hereby and thereby.
(d) There is no action, suit, investigation or proceeding pending or,
to the knowledge of Buyer, threatened against Buyer or any of its properties
or rights by or before any Governmental Entity that questions the validity of
this Agreement or any action taken or to be taken pursuant hereto.
(e) No representation or warranty made to Seller by Buyer hereunder,
or contained in any certificate, document or instrument delivered by Buyer
pursuant hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances in which they were made, not
misleading.
(f) Buyer will acquire the Shares for its own account and not with a
view to or for sale in connection with any distribution thereof, and Buyer
will not sell or otherwise dispose of the Shares or the Underlying Common
Shares, except in each case in compliance with the Securities Act of 1933 and
the rules and regulations thereunder. The investment representation contained
in Buyer's Statement on Schedule 13D on file with the Securities and Exchange
Commission remains true and correct in all material respects.
7. Seller covenants and agrees with Buyer that, between the date
hereof and the Closing Date:
(a) Seller will perform all acts to be performed by it pursuant to
this Agreement and will refrain from taking or omitting to take any action
that would cause its representations and warranties to be inaccurate as of the
date hereof or the Closing Date or that in any way would delay or prevent the
consummation of the transactions contemplated hereby. Seller will use its
best efforts to satisfy or cause to be satisfied all the conditions to the
obligations of Seller and Buyer set forth in Sections 9 and 10 hereof.
(b) Seller will use its commercially reasonable efforts to make all
filings, furnish all information and obtain such consents as may be required
by any third party or Governmental Entity properly asserting jurisdiction.
8. Buyer covenants and agrees with Seller that between the date
hereof and the Closing Date:
(a) Buyer will perform all acts to be performed by it pursuant to
this Agreement and will refrain from taking or omitting to take any action
that would cause its representations and warranties to be inaccurate as of the
date hereof or the Closing Date or that in any way would delay or prevent the
consummation of the transactions contemplated hereby. Buyer will use its best
efforts to satisfy or cause to be satisfied all the conditions to the
obligations of Seller and Buyer set forth in Sections 9 and 10 hereof.
(b) Buyer will use its commercially reasonable efforts to make all
filings, furnish all information and obtain such consents as may be required
(if any) by any third party or Governmental Entity properly asserting
jurisdiction. Buyer will file an amendment to its Statement on Schedule 13D
to reflect the acquisition of the additional securities contemplated hereby.
9. The obligation of Seller to sell the Shares is subject to the
satisfaction or waiver by Seller of the following conditions, on or before the
Closing Date:
(a) All representations and warranties of Buyer made in or pursuant
to this Agreement will be true and correct in all material respects as of the
date made and at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date.
(b) Buyer will have performed, observed and complied in all material
respects with all the obligations, agreements and conditions required by this
Agreement to be performed, observed or complied with by it at or prior to the
Closing Date.
(c) There will be no suit, action or other proceeding pending or
threatened before any Governmental Entity that Seller believes, in good faith
and based upon an opinion of counsel, could result in the restraint,
prohibition, set aside or invalidation of the consummation of this Agreement
or the transactions contemplated hereby or substantial damages in connection
therewith.
10. The obligation of Buyer to purchase the Shares is subject to the
satisfaction or waiver by Buyer of the following conditions on or before the
Closing Date:
(a) All representations and warranties of Seller made in or pursuant
to this Agreement will be true and correct in all material respects as of the
date made and at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date.
(b) Seller will have filed the Certificate of Designation with the
Secretary of State of Delaware and will have performed, observed and complied
in all material respects with all the obligations, agreements and conditions
required by this Agreement to be performed, observed or complied with by it at
or prior to the Closing Date.
(c) There will be no suit, action or other proceeding pending or
threatened before any Governmental Entity that Buyer believes could result in
the restraint, prohibition, set aside or invalidation of the consummation of
this Agreement or the transactions contemplated hereby or substantial damages
in connection therewith.
11. In the event of any change in the number of shares of Common
Stock outstanding by recapitalization, declaration of a stock split or
combination, or payment of a stock dividend or the like, the number of Shares
to be issued to Buyer and the per Share payments to be made to Seller shall be
adjusted appropriately.
12. Buyer and Seller acknowledge that the Shares and the Underlying
Common Shares will be subject to the terms of the Shareholder's Agreement.
Any certificate representing the Shares or the Underlying Common Shares shall
bear the restrictive legend contemplated thereby.
13. In connection with the issuance and sale of the Shares to Buyer
pursuant to this Agreement, Buyer and Seller further agree to the following:
(a) Seller shall include in the proxy statement filed with the
Securities and Exchange Commission ("Proxy Statement") for the next annual
meeting of its stockholders ("Annual Meeting") a proposal for stockholder
approval of the issuance of the Underlying Common Shares to Buyer in
accordance with the terms of the Certificate of Designation, which proposal
will be submitted for shareholder approval at the Annual Meeting with the
favorable recommendation of Seller's board of directors. Buyer shall vote all
shares of Common Stock owned directly or indirectly by it in favor of such
proposal.
(b) Seller shall as promptly as practicable prepare and submit to the
New York Stock Exchange a listing application covering the Underlying Common
Shares, and shall use all reasonable efforts to obtain approval for listing of
the Underlying Common Shares, subject to official notice of issuance (and any
conditions thereto), immediately following receipt of the shareholder approval
specified in the preceding paragraph.
(c) At the time of conversion of the Shares, Seller shall deliver a
written representation to Buyer to the effect that the Proxy Statement for the
Annual Meeting, at the date mailed to stockholders and at the time of the
Annual Meeting, does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they are made, not misleading, except that no representation is made by Seller
with respect to statements made therein based on information supplied by Buyer
for inclusion in the Proxy Statement for the Annual Meeting. The Proxy
Statement will comply in all material respects with the provisions of the
Securities Exchange Act of 1934 and the regulations thereunder.
14. Seller and Buyer agree that each of them will consult with the
other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated hereby.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement and that the obligations of
the parties hereto shall be specifically enforceable, in addition to any other
remedy that may be available at law or in equity.
16. Seller and Buyer, in connection with the transactions
contemplated herein, severally agree to indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations with respect
to any brokerage fees, commissions or finders' fees asserted by any person on
the basis of any act or statement alleged to have been made by such party or
its affiliates.
17. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
18. All representations, warranties and agreements made by Seller and
by Buyer in this Agreement shall survive the Closing hereunder and any
investigation at any time made by or on behalf of either party hereto.
19. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. Neither party to this Agreement may assign
any of its rights or obligations under this Agreement without the prior
consent of the other party, except that the rights and obligations of Buyer
may be assigned by Buyer to any of its wholly owned subsidiaries but no such
transfer shall relieve Buyer of its obligations hereunder if such transferee
does not perform such obligations.
20. All notices, claims, requests, demands, and other communications
hereunder will be in writing and will be deemed to have been duly given upon
receipt as follows:
(a) If to Buyer, to:
Robert M. Devlin
President
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Telephone: (713) 522-1111
Fax: (713) 831-1300
with a copy to:
Jon P. Newton
Vice Chairman and General Counsel
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Telephone: (713) 522-1111
Fax: (713) 831-3002
(b) If to Seller, to
Michael J. Poulos
Chairman, President and CEO
Western National Corporation
5555 San Felipe
Houston, Texas 77056
Telephone: (713) 888-7888
Fax: (713) 888-7892
with a copy to:
Richard W. Scott
Vice Chairman, General Counsel
and Chief Investment Officer
Western National Corporation
5555 San Felipe
Houston, Texas 77056
Telephone: (713) 888-7805
Fax: (713) 888-7894
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
21. This Agreement may be executed in two or more counterparts, each
of which will be deemed to be an original but all of which together will
constitute one and the same instrument.
22. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under principles of conflicts of law.
23. This Agreement may be terminated at any time prior to the Closing
Date (a) by mutual consent of Buyer and Seller or (b) by Buyer or Seller if,
without fault of, and other than by reason of a matter within the control of,
the terminating party, the Closing shall not have occurred on or prior to
September 30, 1996. In the event of any termination permitted by the
preceding sentence, neither party hereto will have liability pursuant to this
Agreement, except for liabilities arising under Sections 16 and 17 and except
for liabilities resulting from willful breach.
24. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
25. This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, whether oral or written, between the
parties hereto with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by duly authorized officers of Buyer and Seller as of the day and year first
written above.
AMERICAN GENERAL CORPORATION
By:
Name:
Title:
WESTERN NATIONAL CORPORATION
By:
Name:
Title:
<PAGE>
ANNEX A
Definitions
"Contracts" means all agreements or understandings, whether written or
oral, including, without limitation, all mortgages, indentures, notes,
guarantees, leases, purchase agreements and sale agreements.
"Filings" means Seller's annual report on Form 10-K for the year ended
December 31, 1995 (the "Annual Report"), and all registration statements under
the Securities Act of 1933 and all reports, proxy statements and other
information under the Securities Exchange Act of 1934 filed by Seller with the
Securities Exchange Commission since the date of filing of the Annual Report.
"Governmental Entity" means any agency, administrative division or
department (or administrative subdivision), arbitrator, commission, regulatory
authority, taxing or administrative authority, court or other judicial body,
legislature, audit group or procuring office of the government of the United
States or of any state, city, municipality, county or town thereof, or of any
foreign jurisdiction, including the employees or agents of any thereof.
C:\EDGAR\8-K\STK-P-AG.WP6
SHAREHOLDER'S AGREEMENT
This Agreement (the "Shareholder's Agreement"), entered into on this 2nd
day of December, 1994, by and among Western National Corporation (the
"Company"), a Delaware corporation, and American General Corporation
("Stockholder"), a Texas corporation,
W I T N E S S E T H:
WHEREAS, Stockholder will on the date hereof enter into an agreement with
Conseco Investment Holding Company ("Conseco") to acquire 24,947,500 shares of
Common Stock, par value $.001 per share (the "Common Stock") of the Company,
representing approximately 40% of the outstanding Common Stock (such
24,947,500 shares, together with any other shares of voting stock of the
Company that may be acquired by Stockholder during the term of this
Shareholder's Agreement, hereinafter referred to as the "Shares"); and
WHEREAS, Company and Stockholder wish to establish certain rights and
obligations of each to the other with respect to the Shares and their
ownership by Stockholder;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
AGREEMENTS RESPECTING THE SHARES
SECTION 1.1 SALE OF SHARES.
(a) Stockholder hereby agrees that, until the earlier of (i) January
1, 1999 or (ii) the date on which Michael J. Poulos ceases, as a result of
death, disability, or resignation, to serve as Chief Executive Officer of the
Company (such date being herein referred to in either event as the
"Termination Date"), it will not, dispose of, or enter into an agreement
providing for the disposal of, all or any portion of the Shares without the
prior approval of the Company's Board of Directors (which approval will not be
unreasonably withheld).
(b) Notwithstanding the limitation in Section 1.1(a) hereof, nothing
herein shall prevent Stockholder from selling all or any portion of the Shares
(i) in a public offering intended to result in widespread distribution; (ii)
in a transaction under Rule 144 under the Securities Act of 1933 (the
"Securities Act") in accordance with the volume limitations set forth therein;
(iii) in privately negotiated block trades; provided that the purchaser,
together with its "affiliates" (as such term is used in Rule 12b-2 under the
Securities Exchange Act of 1934 (the "Exchange Act")) and any members of any
"group" (within the meaning of Section 13(d)(3) of the Exchange Act), does
not, after giving effect to such transaction, own "beneficially" (within the
meaning of the Exchange Act) more than 4.9% of the outstanding Common Stock;
(iv) by Stockholder to an entity that is a direct or indirect majority
controlled subsidiary of Stockholder if, but only if, either (x) the Shares to
be held by such subsidiary do not constitute a substantial part of such
subsidiary's assets, and such subsidiary enters into a shareholders agreement
with the Company on terms substantially consistent with this Shareholder's
Agreement, or (y) Stockholder and such entity agree, for the benefit of the
Company, that if such entity ceases to be an entity that is a direct or
indirect majority controlled subsidiary of Stockholder, then such entity shall
immediately transfer all shares of Common Stock owned by such entity to
Stockholder or another entity that is then a direct or indirect majority
controlled subsidiary of Stockholder; or (v) pursuant to a tender offer or
exchange offer by the Company, a tender offer or exchange offer by a third
party which has been approved by the Board of Directors of the Company or a
merger or other business combination involving the Company which, in each
case, is not solicited by the Stockholder and in which the Stockholder is
treated on substantially comparable terms with other holders of the Common
Stock; and (vi) subject to the Company's right of first refusal as set forth
in Section 1.10, in response to, and pursuant to the terms of, any tender
offer or exchange offer by a third party (other than an offer referred to in
clause (v) of this Section 1.1(b)).
SECTION 1.2 CERTAIN RIGHTS AND LIMITATIONS.
(a) The Stockholder agrees that, until the Termination Date, whether
or not the Stockholder shall continue to own any voting securities of the
Company, the Stockholder shall not, and shall cause each of its "affiliates"
(as such term is used in Rule 12b-2 under the Exchange Act) not to, unless and
until such shall have been specifically invited in writing by the Company,
directly or indirectly (i) except as permitted by Section 1.2(b) below,
acquire or make any proposal to acquire any voting securities of the Company
or any securities that are exercisable, exchangeable, or convertible into
voting securities of the Company or seek or propose any merger, consolidation,
business combination, tender or exchange offer, sale or purchase of assets or
securities, dissolution, liquidation, restructuring, recapitalization or
similar transaction of or involving the Company or any of its subsidiaries,
(ii) make, or in any way participate in, any "solicitation" of "proxies" (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) or consents to vote or seek to advise or influence any person with
respect to the voting of any securities of the Company, (iii) form, join or in
any way participate in a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any voting securities of the Company, (iv)
otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of the Company, (v)
initiate or propose to the Company a shareholder proposal within the meaning
of Rule 14a-8 under the Exchange Act, (vi) have any discussions or enter into
any arrangements, understandings or agreements (whether written or oral) with,
or advise, assist or encourage, any other persons in connection with any of
the foregoing, or make any equity investment in any other person that engages
in, or offers or proposes to engage in, any of the foregoing (it being
understood that, without limiting the generality of the foregoing, the
Stockholder shall not be permitted to act as a joint bidder or co-bidder with
any other person with respect to the Company or any of its subsidiaries);
(vii) make any publicly disclosed proposal regarding any of the foregoing; or
(viii) call a shareholders meeting pursuant to the bylaw provision
contemplated by Section 1.9(b) hereof. The Stockholder also agrees during
such period not to make any proposal, statement or inquiry or disclose any
intention, plan or arrangement, whether written or oral, inconsistent with the
foregoing, or request the Company, directly or indirectly, to amend, waive or
terminate any provision of this paragraph (including this sentence).
(b) Notwithstanding Section 1.2(a), Stockholder may (i) acquire
securities by way of stock dividends or other distributions payable to holders
of Common Stock of the Company generally; and (ii) acquire in any one
twelve-month period a number of shares not in excess of 20% of the total
number of shares of Common Stock outstanding as of the date such determination
is made; provided, however, that prior to the Termination Date, Stockholder
and its affiliates shall not in any event own "beneficially" (with the meaning
of the Exchange Act) in excess of 79% of the total number of shares of Common
Stock outstanding as of the date of any such determination.
SECTION 1.3 VOTING OF SHARES.
(a) The Stockholder hereby agrees that, until the Termination Date,
at any meeting of the stockholders of the Company, however called, and in any
action by consent of the stockholders of the Company, the Stockholder shall
vote the Shares and any other voting securities of the Company with respect to
the election of directors, at Stockholder's option, either (i) in the same
proportion as the votes cast by the holders of all other voting securities of
the Company, other than any votes cast by an Affiliated Holder or (ii) in
favor of the slate of directors proposed by the Board of Directors of the
Company; provided, however, that the Stockholder shall be permitted to vote
the Shares, in its discretion, for the election as directors of individuals
nominated by it in accordance with the terms of Article III hereof. For
purposes of this Section 1.3(a), the term "Affiliated Holder" means any
"person" or "group" (as such terms are defined for purposes of the provisions
of Section 13(d) of the Exchange Act) that, together with its affiliates, is
the beneficial owner, as determined pursuant to Rule 13d-3 under the Exchange
Act, of securities representing 10% or more of the total voting power of all
voting securities of the Company, exclusive of the Shares, outstanding and
entitled to vote at the record date for any vote or consent with respect to
which such determination is made.
(b) The Stockholder hereby covenants and agrees that, except as
contemplated by this Agreement, the Stockholder shall not enter into any
voting agreement or grant a proxy or power of attorney with respect to the
Shares that is inconsistent with this Agreement.
SECTION 1.4 BINDING ON AFFILIATES, ETC. Stockholder agrees that
the limitations applicable to Stockholder hereunder shall be equally
applicable to each person or entity controlled by Stockholder, to the same
extent as if each such person or entity were named as Stockholder hereunder.
SECTION 1.5 FILING OF FORM 13D. Stockholder agrees that it will
file an initial 13D representing that the acquisition of the Shares is for
"investment purposes" and not for the purpose of acquiring or influencing
control of the Company.
SECTION 1.6 RESOLUTION UNDER SECTION 203. The Company hereby
represents and warrants that its Board of Directors has duly adopted the
resolution attached hereto as Exhibit A prior to entering into this Agreement.
SECTION 1.7 SHAREHOLDER'S RIGHTS PLAN. The Company agrees that so
long as Stockholder (together with its majority owned subsidiaries) does not,
through the sale or other disposition of its Shares, reduce its beneficial
ownership of the Company's Common Stock below 40% (a "Disqualifying
Disposition"), the Company will not adopt a shareholder's rights plan that
would limit or adversely affect the rights of Stockholder. Notwithstanding
termination of this Agreement by the occurrence of the Termination Date or
otherwise, the provisions of this Section shall survive and continue in effect
unless and until a Disqualifying Disposition occurs, unless this Agreement is
terminated pursuant to an instrument in writing expressly terminating this
Section.
SECTION 1.8 LEGEND. Stockholder agrees that (i) it is acquiring
the Shares for investment purposes for its own account, and will not effect a
distribution thereof in violation of the registration provisions of the
Securities Act; and (ii) that the Shares will bear the following legend:
"The shares represented by this certificate (the "Shares") have not been
registered under the Securities Act of 1933, and no sale, transfer or other
disposition may be made of the Shares unless they have been so registered or
Western National Corporation has been furnished evidence satisfactory to it
that such registration is not required. The Shares are also subject to
certain restrictions on transfer contained in a Shareholder's Agreement to
which Western National Corporation and the registered holder are parties, a
copy of which is on file with the Secretary of Western National Corporation."
SECTION 1.9 AMENDMENT TO ARTICLES AND BYLAWS.
(a) The Company agrees to submit to its shareholders for
consideration at its 1995 Annual Meeting, and to recommend the adoption of, an
amendment (the "Amendment") eliminating the classification of its board of
directors as provided in Article Ninth of its Certificate of Incorporation.
Each current director whose term extends beyond the 1995 Annual Meeting, by
his approval of this Agreement at a meeting held for such purpose, hereby
agrees, subject to the approval of the Amendment by the shareholders of the
Company, to take such action as may be necessary to limit his current term to
the 1996 Annual Meeting and until his successor is elected and qualified.
(b) The Company agrees to amend its Bylaws to permit any holder of
35% or more of the outstanding Common Stock of the Company to call a special
meeting of shareholders of the Company for the purpose of removing and/or
electing directors, and not to delete or limit such bylaw at any time prior to
the occurrence of a Disqualifying Disposition as defined in Section 1.7
hereof. Notwithstanding the termination of this Agreement by the occurrence
of the Termination Date or otherwise, the provisions of this Section shall
survive and continue in effect unless and until a Disqualifying Disposition
occurs, unless this Agreement is terminated pursuant to an instrument in
writing expressly terminating this Section.
SECTION 1.10 RIGHT OF FIRST REFUSAL
(a) Prior to making any sale or exchange of Shares pursuant to
Section 1.1(b)(vi) in response to a tender offer or exchange offer (an
"Offer"), the Stockholder shall give the Company the opportunity to purchase
such Shares in the following manner:
(i) The Stockholder shall give notice (the "Tender Notice") to the
Company in writing of its intention to sell or exchange Shares in response to
an Offer no later than four calendar days prior to the latest time (including
any extensions) by which Shares must be tendered in order to be accepted
pursuant to such Offer, specifying the number of Shares proposed to be
tendered by the Stockholder and the purchase price per Share specified in the
Offer at the time of the Tender Notice.
(ii) If the Tender Notice is given, the Company shall have the right,
exercisable by giving notice to the Stockholder at least two calendar days
prior to the latest time after delivery of the Tender Notice by which Shares
must be tendered in order to be accepted pursuant to the Offer (including any
extensions thereof), to purchase all, but not part, of the Shares specified in
the Tender Notice (an "Exercise Notice"). The purchase price to be paid by
the Company for any Shares purchased by it pursuant to this Section 1.10 shall
be the final price per Share specified in the Offer on the Last Tender Date
(as defined below). If the purchase price per Share specified in the Offer
includes any property other than cash (the "Offer Noncash Property"), the
purchase price at which the Company shall be entitled to purchase all, but not
part, of the Shares specified in the Tender Notice shall be (u) the amount of
cash per Share specified in such Offer (the "Cash Portion"), plus (v) an
amount of cash per Share equal to the value of the Offer Noncash Property per
Share (the "Cash Value of Offer Noncash Property"). If the Company exercises
its right of first refusal by giving an Exercise Notice, the closing of the
purchase of the Shares with respect to which such right has been exercised
(the "Closing") shall take place at 3:00 p.m., New York City time (or, if
earlier, two hours before the latest time by which shares must be tendered in
order to be accepted pursuant to the Offer), on the last day on which shares
must be tendered in order to be accepted pursuant to the Offer (including any
extensions thereof) (the "Last Tender Date"), and the Company shall pay the
purchase price for the Shares specified above as follows: (w) the payment of
the Cash Portion shall occur at the Closing on the Last Tender Date, and (x)
the payment of the Cash Value of Offer Noncash Property (if any) shall occur
promptly after the determination of the value of the Offer Noncash Property
(if any) but in no event later than 20 calendar days after the delivery of the
Tender Notice (or, if later, at the Closing). The value of any Offer Noncash
Property shall be determined by a nationally recognized investment banking
firm selected jointly by the Company and the Stockholder or, in the event the
Company and the Stockholder are unable to agree on the selection of such
investment banking firm, by a nationally recognized investment banking firm to
be selected jointly, as promptly as reasonably practicable, by a nationally
recognized investment banking firm selected by the Company and a nationally
recognized investment banking firm selected by the Stockholder.
(b) The Stockholder shall be entitled to rescind its Tender Notice at
any time prior to the Last Tender Date by notice in writing to the Company.
If the Stockholder rescinds its Tender Notice pursuant to the immediately
preceding sentence, the Company's Exercise Notice with respect to such offer
shall be deemed to be immediately rescinded.
(c) If the Company does not exercise its right of first refusal set
forth in this Section 1.10 within the time specified for such exercise by
giving an Exercise Notice, then the Stockholder shall be free to accept for
all its Shares the Offer with respect to which the Tender Notice was given.
ARTICLE II
SECURITIES ACT REGISTRATION
SECTION 2.1 DEMAND REGISTRATION.
(a) Stockholder may require the Company to register Shares proposed
to be sold by it and/or any Holder under the Securities Act. Such a
registration must relate to Shares with an aggregate fair market value of at
least $50 million on the date of the Demand or, if less, all of the Shares
owned by all Holders controlled by Stockholder. Each registration of shares
pursuant to this Section 2.1 (a "Demand Registration") shall be for a firm
commitment underwritten public offering through underwriter(s) managed by a
manager (the "Manager") selected by Stockholder, provided such manager is
reasonably acceptable to the Company (an "Underwriting"). The Company may
select one additional underwriter to serve as co-managing underwriter (but not
lead underwriter), provided that such underwriter is reasonably acceptable to
Stockholder.
(b) As used in this Article II: "Seller" means a Holder selling or
proposing to sell Shares pursuant to any registration statement contemplated
by this Section; "Registration Statement" means a registration statement under
the Securities Act; "Prospectus" means a prospectus included in a registration
statement or relating to an offer and sale of Shares registered under the
Securities Act; and "Holder" means Stockholder, any subsidiary of Stockholder
and any other person acquiring Shares on or after the date hereof and becoming
a party to this Shareholder's Agreement in accordance with this Shareholder's
Agreement.
(c) The right to require a Demand Registration under subsection (a)
may be exercised by giving notice (a "Demand") to the Company stating the
number of shares proposed to be sold therein. The Company shall not be
required to effect more than one Demand Registration in any six-month period
nor more than an aggregate of six Demand Registrations pursuant to this
Article II.
(d) Stockholder's right to a Demand Registration shall be deemed to
have been satisfied upon (i) payment and delivery of the Shares to be sold in
the related Underwriting, (ii) the failure of such a closing to occur due to a
default by Stockholder or (iii) the withdrawal of the Demand Registration at
the request of Stockholder after the related registration statement has been
filed with the Securities and Exchange Commission, in accordance with Section
2.3, unless such withdrawal is made because the Manager of the Underwriting
advises the Company that the Underwriting cannot be successfully completed
because of market conditions or adverse factors relating to the business,
affairs or financial condition of the Company.
SECTION 2.2 TERM. Notwithstanding the termination of this
Agreement due to the occurrence of the Termination Date or otherwise, the
registration rights provided for in this Agreement shall survive and continue
until the earliest to occur of (i) January 1, 2000; (ii) the date on which all
remaining Shares are freely saleable without registration; or (iii) the date
on which all Shares have been sold or otherwise disposed of by Stockholder,
unless this Agreement is terminated pursuant to any instrument in writing
expressly terminating this Section.
SECTION 2.3 REGISTRATION PROCEDURE.
(a) The registration statement for each Demand Registration will
include the Shares specified in the related Demand and notice given pursuant
to subsection 2.1(c) and will be reasonably satisfactory to counsel for the
Stockholder and counsel for the Manager (which term includes, where
appropriate, counsel for the underwriters in the Underwriting). The
registration statement will be filed under the Securities Act within 60 days
after receipt of the Demand therefor, but the Company may postpone such filing
for a period not exceeding an additional 45 days, by giving notice of such
delay to the Stockholder and the Manager, if the Company's Board of Directors
determines in good faith that such filing would interfere with a pending
material acquisition, disposition, or financing of the Company; provided, that
the Company may not exercise this right to delay such filing more than once in
any twelve month period.
(b) With respect to each Demand Registration, the Company will: (i)
use its reasonable best efforts to cause the registration statement to become
effective under the Securities Act at the earliest possible date; (ii) amend
the registration statement or supplement the prospectus whenever required by
the terms of the underwriting agreement contemplated by Section 2.4; (iii)
furnish such number of copies of the registration statement, prospectuses,
preliminary prospectuses and amendments or supplements thereto as the Manager
may reasonably request; (iv) make generally available to its security holders
an earnings statement satisfying the requirements of Section 10(a) of the
Securities Act as promptly as practicable after the expiration of 12 months
after the effective date of the registration statement; and (v) use its
reasonable best efforts to register or qualify the Shares being registered in
a Demand Registration under the securities or blue sky laws of such
jurisdictions as the Manager may reasonably request and maintain such
registrations or qualifications in effect for the period specified in the
underwriting agreement contemplated by Section 2.4.
(c) A Demand Registration may be withdrawn, subject to any required
Securities and Exchange Commission approval and the related Underwriting
terminated, at any time by the Stockholder, subject to the terms of Section
2.7.
SECTION 2.4 UNDERWRITING ARRANGEMENTS.
(a) In connection with each Demand Registration, the Company and the
Seller will enter into and perform their respective obligations under an
underwriting agreement with the Manager (whether acting alone or for a
syndicate of underwriters) containing representations, warranties, conditions,
covenants and indemnities customarily included in such agreements, used by
so-called "major bracket" underwriters for public offerings of common stock on
the registration form being used in such registration. The public offering
price and underwriting discounts or commissions in an Underwriting will be
determined by agreement between the Holders and the Manager.
(b) The Company will cooperate with the Holders, the Manager, counsel
for the Manager and counsel for the Holders in their investigation of the
Company, the preparation of the registration statement and the marketing of
the Shares being sold in the Underwriting, including making available the
Company's officers, accountants, counsel, premises, books and records for such
purpose. Each Holder participating in an Underwriting will furnish to the
Company and the Manager such written information, powers of attorney and other
documents as the Company, the Manager or their respective counsel may
reasonably request in order to complete the Underwriting.
SECTION 2.5 HOLDBACK AGREEMENTS. At the request of the Manager in
an Underwriting, the Company and each Holder will agree not to offer or sell
any Common Stock (including Shares) for cash during the period beginning seven
days prior to the effective date of the registration statement for such
Underwriting and ending 90 days after such effective date except: (i)
pursuant to such Underwriting, (ii) with the consent of the Manager, or (iii)
in the case of the Company, pursuant to a stock purchase, option or other
employee benefit plan for employees and agents of the Company or any
subsidiary thereof ("Benefit Plans"), outstanding warrants, options or rights
(including the conversion rights of convertible securities), or any dividend
reinvestment or similar plan.
SECTION 2.6 PIGGYBACK RIGHTS. If at any time on or before the
Termination Date, the Company proposes to file a registration statement under
the Act for a public offering of Common Stock for cash (other than in
connection with any sales referred to in clause (iii) of Section 2.5), it will
give each Holder notice thereof and will include in such registration and any
related underwritten public offering any Shares proposed to be sold by any
Holder requesting such inclusion by notice given to the Company within ten
days after the Company has given notice of such proposed registration. If
such registration is an underwritten public offering and the managing
underwriter thereof advises the Company that the offering would include more
Common Stock than can be sold within a price range acceptable to the Company
or other person on whose behalf the offering is being made, the amount to be
sold therein by the Holders shall be reduced to the amount which in the
opinion of such managing underwriter can be sold within such price range.
SECTION 2.7 EXPENSES. The Company will bear all of its expenses of
any piggyback registration contemplated by Section 2.6, except that each
selling Holder shall pay its share of any underwriting discount or commission.
With respect to the first three Demand Registrations, the Company shall pay,
and, with respect to any Demand Registration thereafter, the Holders shall
pay, all of the expenses of each Demand Registration including: (i) the costs
of printing and shipping the prospectuses, supplements, underwriting
agreements, blue sky surveys and stock certificates; (ii) the fees and
expenses of the Company's counsel, accountants and transfer agents; (iii) the
reasonable fees and expenses of the Manager's counsel for the blue sky
qualification and survey; and (iv) all filing fees payable with respect to the
Shares to be sold under the Securities Act, any blue sky laws, and to the
National Association of Securities Dealers, Inc.; provided, however, that (x)
each Holder shall in any event pay its share of any underwriting discount or
commission, and (y) each Holder shall reimburse the Company for its pro rata
share of the Company's costs and expenses of any Demand Registration withdrawn
as described in subsection 2.1(d)(iii), unless such withdrawal is due to
adverse factors relating to the business, affairs, or financial condition of
the Company as described in subsection 2.1(d)(iii).
SECTION 2.8 INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Seller, each
director, officer and partner of such Seller, and each other person, if any,
who controls such Seller within the meaning of the Securities Act
(collectively, including the Seller, such Seller's "Seller Indemnified
Parties"), from and against any and all losses, claims, damages or
liabilities, joint or several, and expenses (including, subject to subsection
(c) hereof, fees of counsel and any amounts paid in any settlement effected
with the consent of the Company) to which any such Seller Indemnified Party
may become subject under the Securities Act, common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) or expense arises out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement or any preliminary or
final prospectus contained therein or relating to an offer and sale of Shares
registered under the Securities Act, or any amendment or supplement thereto,
or (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company agrees to reimburse such Seller Indemnified Party
for any legal or any other expenses reasonably incurred by it in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable to any such person
to the extent that any such loss, claim, damage, liability (or action or
proceeding, whether commenced or threatened, in respect thereof) or expenses
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, or
preliminary or final prospectus, or amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
person expressly for use therein.
(b) Each Seller shall indemnify and hold harmless the Company, each
director and officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act (collectively,
including the Company, the "Company Indemnified Parties"), from and against
any and all losses, claims, damages or liabilities, joint or several, and
expenses (including, subject to Subsection (c) hereof, fees of counsel and any
amounts paid in settlement effected with the consent of such Seller) to which
any such person may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact or omission or alleged omission to state a
material fact required to be stated in any registration statement or any
preliminary or final prospectus contained therein or relating to an offer and
sale of Shares registered under the Securities Act, or any amendment or
supplement thereto, or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such statement or
alleged statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company by such
Seller expressly for use therein.
(c) Promptly after receipt by a Seller Indemnified Party or a Company
Indemnified Party (each an "Indemnified Party") of written notice of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to the indemnification provisions
contemplated by this Section 2.8, such Indemnified Party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to such indemnifying party of the commencement of such action;
provided, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the indemnifying party of any obligations it may have
under this Section 2.8 except to the extent that the indemnifying party has
been prejudiced in any material respect by such failure. In case any such
action is brought against an Indemnified Party, the indemnifying party shall
be entitled to participate therein and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that it
may wish, with counsel reasonably satisfactory to such Indemnified Party, and
after such notice from the indemnifying party to such Indemnified Party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such Indemnified Party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation unless (i) the indemnifying party has failed
to assume the defense of such claim and to employ counsel reasonably
satisfactory to such Indemnified Party or (ii) such Indemnified Party shall
have reasonably concluded that there may be defenses available to it which are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the Indemnified Party), in any of which
events the fees and expenses of counsel for the Indemnified Party shall be
borne by the indemnifying party. An indemnifying party who does not assume
the defense of a claim shall not be liable for the fees and expenses of more
than one counsel in any single jurisdiction for all Indemnified Parties who
have available to them the same defenses with respect to such claim, or with
respect to claims separate but similar or related in the same jurisdiction
arising out of the same general allegations. No indemnifying party shall
consent to entry of any judgment or enter into any settlement with respect to
a claim without the consent of the Indemnified Party, which consent shall not
be unreasonably withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim.
No Indemnified Party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
(d) If for any reason the indemnification provisions contemplated by
Subsection (a) or (b) are unavailable to or insufficient to hold harmless an
Indemnified Party in respect of any losses, claims, damages or liabilities
referred to therein, then the indemnifying party shall contribute to the
amount paid or payable by the Indemnified Party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the Indemnified
Party as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of determining relative fault, the intent, knowledge, access to
information and opportunity to correct or prevent a statement or omission (x)
of the Company shall also be attributable to the Company Indemnified Parties
and (y) of a Seller shall be attributable to its Seller Indemnified Parties.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in subsection (c) hereof, any
legal or other fees or expenses reasonably incurred by such party. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even
if the Sellers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresen-tation. Notwithstanding the
provisions of this subsection (d), no Seller in such capacity shall be
required to contribute any amount in excess of the total proceeds received by
it from the sale of Shares pursuant hereto.
(e) The indemnification and contribution provisions contained in this
Section 2.8 shall (i) with respect to any Seller Indemnified Party, survive
the transfer of Shares by its Seller and with respect to all Indemnified
Parties shall survive the termination of rights under this Section 2.8, (ii)
be in addition to any rights or obligations under any underwriting agreement
entered into pursuant to Section 2.4 and (iii) remain in full force and effect
regardless of any investigation made by or on behalf of any Indemnified Party.
SECTION 2.9 CERTAIN LIMITATIONS ON REGISTRATION RIGHTS.
Notwithstanding the other provisions of this Article II, the Company shall not
be obligated to register Shares of any Holder if, in the opinion of counsel to
the Company reasonably satisfactory to Stockholder and its counsel, the sale
or other disposition of such Holder's shares, in the manner proposed by such
Holder, may be effected without registering such Shares under the Securities
Act.
ARTICLE III
DESIGNATION OF DIRECTORS
SECTION 3.1 APPOINTMENT OF DIRECTORS. Effective as of the closing
of the acquisition of the Shares by Stockholder from Conseco, the Company
agrees, if so requested by Stockholder, to appoint as directors (the
"Stockholder Directors") two individuals specified by Stockholder to fill
vacancies created by the resignation as directors of the two individuals
previously designated by Conseco (the "Conseco Directors"), provided that the
Conseco Directors shall have theretofore resigned their positions as directors
of the Company; and provided further that the individuals specified by
Stockholder shall be reasonably acceptable to the Company and shall not
include any individual that is an officer, director, or employee of
Stockholder or its majority controlled subsidiaries (an "Ineligible Person").
SECTION 3.2 NOMINATION OF SUCCESSORS. So long as Stockholder shall
continue to own beneficially at least 25% of the Company's outstanding shares
of Common Stock, Stockholder shall have the right to designate nominees
selected and proposed from time to time by the Board of Directors for election
to the Board by the stockholders as successors to the Stockholder Directors;
provided that the individuals designated by Stockholder shall be reasonably
acceptable to the Company and shall not include an Ineligible Person. If the
beneficial ownership of the Company's outstanding shares of Common Stock by
Stockholder falls below 25%, but remains at least 20% or more, Stockholder
shall have the right to designate one nominee selected and proposed from time
to time by the Board for election to the Board by the stockholders as
successor to one of the Stockholder Directors but only to the extent necessary
such that Stockholder will continue to have one designee serving on the Board
of Directors; provided that the individual designated by Stockholder shall be
reasonably acceptable to the Company and shall not include an Ineligible
Person. The Company shall use its best efforts to cause any nominee
designated by Stockholder pursuant hereto to be elected by the stockholders
including, without limitation, supporting the election of Stockholder
designees in any proxy material prepared and circulated by the Company in
connection with the election of directors. Notwithstanding the foregoing, the
provisions of this Section 3.2 shall terminate on the Termination Date.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 INTERPRETATION. This Shareholder's Agreement shall be
interpreted in accordance with the law of the State of Texas applicable to
agreements made and performed therein.
SECTION 4.2 HEADINGS. Headings are solely for the convenience of
the parties and shall not affect the interpretation of any provision of this
agreement.
SECTION 4.3 SOLE AGREEMENT. This Shareholder's Agreement
constitutes the entire agreement and supersedes all prior agreements, whether
written or oral, with respect to the subject matter hereof; provided,however,
that unless and until Stockholder acquires the Shares, the Confidentiality
Agreement, dated as of November 18, 1994, between Stockholder and Company
shall remain in full force and effect.
SECTION 4.4 AMENDMENTS, ETC. This Shareholder's Agreement may not
be amended, modified, or waived in any respect except by an instrument in
writing duly executed by the party or parties bound thereby.
SECTION 4.5 NOTICES. All notices, requests or demands required or
permitted by this Shareholder's Agreement: (i) shall be in writing; (ii)
shall be deemed to have been given, forwarded, made or delivered: (x) if
delivered in person or by overnight courier service, when received, (y) if
transmitted by fax, when so transmitted if evidence of completed transmission
is received, and (z) if sent by registered or certified mail return receipt
requested, on the earlier of the date of receipt or the fifth day after it is
mailed; and (iii) shall be addressed: if to the Company, at 5555 San Felipe
Road, Suite 900, Houston, Texas 77056, telephone (713) 888-7800, fax (713)
888-7894, Attention: General Counsel (or to such other address as the Company
shall furnish by notice given to such Holder), and if to Stockholder, American
General Corporation, at 2929 Allen Parkway, Houston, Texas 77019, telephone
(713) 522-1111, fax (713) 831-1300, Attention: Robert M. Devlin, Vice
Chairman, with copies to American General Corporation, at 2929 Allen Parkway,
Houston, Texas 77019, telephone (713) 522-1111, fax (713) 831-1266,
Attention: Jon P. Newton, Senior Vice President and General Counsel, and to
Skadden, Arps, Slate, Meagher & Flom, at 919 Third Avenue, New York, New York
10022, telephone (212) 735-3000, fax (212) 735-2000, Attention: Morris J.
Kramer (or to such other address as such party shall furnish by notice given
to the Company).
SECTION 4.6 TERMINATION. Except as may otherwise be specifically
provided herein, this Agreement shall terminate on the Termination Date, and
all provisions of this agreement shall terminate as to any particular Shares,
upon the completion of a sale of such Shares in accordance with the terms of
this Agreement. This Shareholder's Agreement or any provision hereof may also
be terminated by a document executed in the manner provided for amendments to
this agreement in Section 4.4, with the same force and effect as provided
therein.
SECTION 4.7 SPECIFIC PERFORMANCE, ETC. Each person, by becoming a
party to this agreement, acknowledges and agrees that its breach or
nonperformance of any provision of this agreement, in accordance with the
specific terms hereof, would result in irreparable harm to the Company and to
each other Holder for which money damages would not provide an adequate
remedy. Accordingly, each person (i) agrees that the Company, Stockholder,
and each Holder shall be entitled to specific performance, injunctive or other
equitable relief against such person in the event of its breach or other
nonperformance of any of the provisions of this agreement; and (ii) waives any
requirement for the securing or posting of any bond in connection with such
remedy.
SECTION 4.8 COUNTERPARTS. This Shareholder's Agreement may be
executed in counterparts all of which together shall constitute a single
agreement.
SECTION 4.9 EFFECTIVENESS. This Shareholder's Agreement shall
become effective upon the closing of the acquisition by Stockholder of the
Shares; provided, however, this Shareholder's Agreement shall be of no force
and effect if such closing does not occur prior to January 31, 1995.
SECTION 4.10 AMENDMENTS TO EMPLOYMENT AGREEMENTS. The Company
hereby agrees that it will not alter, amend or rescind the amendments to the
Employment Agreements of Messrs. Poulos, Scott, Graf and McGimsey attached
hereto as Exhibits B, C, D and E in a manner that would adversely affect the
exception from the change in control provisions for Stockholder contained
therein.
SECTION 4.11 ASSIGNMENT. Neither party to this Agreement may
assign any of its rights or obligations under this Agreement without the prior
consent of the other party except that the rights and obligations of
Stockholder may be assigned by Stockholder to any of its wholly owned
subsidiaries but no such assignment shall relieve Stockholder of its
obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, this Shareholder's Agreement has been executed and
delivered by the undersigned as of the date first above written.
WESTERN NATIONAL CORPORATION
By:
Name:
Title:
AMERICAN GENERAL CORPORATION
By:
Name:
Title:
c:\rws51\shr-agt.d02
AMENDMENT NO. 1 TO SHAREHOLDER'S AGREEMENT
AMENDMENT NO. 1 TO SHAREHOLDER'S AGREEMENT, dated as of this 13th day of
September, 1996 (this "Amendment"), by and among American General Corporation,
a Texas corporation ("AGC"), AGC Life Insurance Company, a Missouri
corporation ("AGC Life"), and Western National Corporation, a Delaware
Corporation (the "Company").
WITNESSETH:
WHEREAS, the Company and AGC entered into that certain Shareholder's
Agreement dated December 2, 1994 (the "Shareholder's Agreement"); and
WHEREAS, AGC Life is the assignee of the rights and obligations of AGC
under the Shareholder's Agreement pursuant to that certain Assignment dated as
of December 7, 1994; and
WHEREAS, the Company and AGC will on the date hereof enter into an
agreement pursuant to which AGC will acquire 7,254,464 shares of Series A
Participating Convertible Preferred Stock, par value $.001 per share, of the
Company ("Convertible Preferred Stock") (such 7,254,464 shares of Convertible
Preferred Stock being referred to herein as the "Preferred Shares"); and
WHEREAS, the parties hereto desire to have the Preferred Shares and the
shares of common stock, par value $.001 per share, of the Company that are
issuable upon conversion of the Preferred Shares ("Underlying Common Shares")
subject to the certain terms of the Shareholder's Agreement and to make
certain other amendments to the Shareholder's Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
(a) Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Shareholder's Agreement.
(b) AGC shall be subject to the terms of the Shareholder's Agreement,
as amended hereby, to the same extent as if AGC is also named "Stockholder"
thereunder. The term "Shares" is defined to include the Preferred Shares,
Underlying Common Shares and any shares of voting stock of the Company that
may be acquired by AGC during the term of the Shareholder's Agreement.
(c) Section 2.2 of the Shareholder's Agreement is hereby amended and
restated as follows:
"SECTION 2.2 TERM. Notwithstanding the termination of this
Agreement due to the occurrence of the Termination Date or otherwise, the
registration rights provided for in this Agreement shall survive and continue
until the earliest to occur of (i) January 1, 2001; (ii) the date on which all
remaining Shares are freely saleable without registration; or (iii) the date
on which all Shares have been sold or otherwise disposed of by Stockholder,
unless this Agreement is terminated pursuant to any instrument in writing
expressly terminating this Section."
(d) The terms of the Shareholder's Agreement shall be interpreted by
the parties hereto so that: (i) the limitations of Section 1.2(b) of the
Shareholder's Agreement shall be applicable to the aggregate number of Shares
(as such term is modified by this Amendment) acquired or beneficially owned by
AGC and AGC Life; (ii) the Company shall not be required to effect more than
one Demand Registration in any six-month period nor more than an aggregate of
six Demand Registrations, in the aggregate for AGC and AGC Life, pursuant to
Article II; and (iii) only two Stockholder Directors may be appointed, by the
mutual agreement of AGC and AGC Life, pursuant to Section 3.1 of the
Shareholder's Agreement and the stock ownership percentages in Section 3.2 of
the Shareholder's Agreement shall be applicable to the aggregate number of
Shares (as such term is modified by this Amendment) beneficially owned by AGC
and AGC Life.
(e) It is the intention of the parties hereto that the inclusion of
AGC in the term "Stockholder" shall not increase the original rights granted
to "Stockholder" pursuant to the Shareholder's Agreement prior to amendment.
(f) An amendment to the initial 13D (specified in Section 1.5 of the
Shareholder's Agreement) shall be filed by AGC (if and when required by the
federal securities laws) representing that the acquisition of the Preferred
Shares is for "investment purposes" and not for the purpose of acquiring or
influencing control of the Company.
(g) This Amendment may be executed in counterparts all of which
together shall constitute a single agreement.
(h) This Amendment shall become effective upon the closing of the
acquisition by AGC of the Preferred Shares.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed and delivered by the
undersigned as of the date first above written.
AMERICAN GENERAL CORPORATION
By:
Name:
Title:
AGC LIFE INSURANCE COMPANY
By: Name:
Title:
WESTERN NATIONAL CORPORATION
By:
Name:
Title:
C:\EDGAR\8-K\AMEND-1.WP6
NEWS RELEASE (96-12)
WESTERN NATIONAL CORPORATION Contact:
5555 SAN FELIPE, SUITE 900 Patrick E. Grady Cynthia J. Shanley
HOUSTON, TEXAS 77056 Vice President Director
Investor Relations Public Relations
FAX (713) 888-7893 (713) 888-7848 (713) 888-7847
FOR IMMEDIATE RELEASE
WESTERN NATIONAL TO ISSUE $130 MILLION
OF ADDITIONAL EQUITY TO AMERICAN GENERAL
Houston, September 13, 1996 -- Western National Corporation (NYSE:WNH)
announced today that it has entered into an agreement to issue $130 million of
additional equity to American General Corporation.
Under the terms of the agreement, Western National will issue 7,254,464
shares of a newly created class of Series A Participating Convertible
Preferred Stock to American General at an issue price of $17.92 per share.
The issue price is based on the average closing price of Western National's
common stock on the New York Stock Exchange over a 45-trading-day period
preceding the agreement. The net proceeds from the offering of approximately
$126 million, which reflect a discount in lieu of an underwriting commission
of 3%, will be used by Western National to enhance the capital base of its
principal operating subsidiary, Western National Life Insurance Company. The
transaction is expected to be completed next week.
This transaction will increase American General's equity interest in
Western National to approximately 46.2% from 40% and increase the total number
of Western National common and common-equivalent shares outstanding from 62.4
million to approximately 69.7 million.
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<PAGE>
Western National - Page 2
The newly created preferred stock is intended to be substantially
equivalent on an economic basis to Western National's common stock. It will
share pro rata on a share-for-share basis with Western National's existing
common stock in dividends and in liquidation, subject to a $.001 per share
liquidation preference. The new preferred stock will have no voting rights,
except to the extent required by Delaware law. The new preferred stock will be
automatically converted into common stock on a share-for-share basis upon
approval of a resolution to that effect by the shareholders of Western
National. The agreement requires Western National to submit such a resolution
to its shareholders at its 1997 Annual Meeting.
In commenting on the offering, Michael J. Poulos, chairman and chief
executive officer of Western National, said, "We truly appreciate American
General's vote of confidence and support of our growth strategy. This
transaction will increase our statutory capital by nearly 30%, and provide a
firm financial base for the strong sales we are experiencing in 1996 and
anticipate going forward."
* * * * *
Western National Corporation, headquartered in Houston, is the parent of
Western National Life Insurance Company. With statutory assets of $8.8
billion, Western National Life is one of the largest life insurance companies
in the United States. Founded in 1944, Western National Life is a leading
provider of retirement annuity products.
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