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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
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 11, 1997
WESTERN NATIONAL CORPORATION
(Exact name of registrant as specified in charter)
Delaware 1-12540 75-2502064
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
5555 San Felipe Road, Suite 900 Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 888-7800
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<PAGE>
Item 5. Other Events
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American General Corporation ("AGC") and Western National Corporation
("Western National") today jointly announced a definitive agreement under
which AGC will acquire the remaining 54.8% of the common equivalent shares of
Western National not currently owned by AGC for a total consideration
consisting of cash and AGC common stock valued at approximately $1.2 billion,
or $29.75 per share, subject to adjustment under certain circumstances. The
transaction, which is subject to approval by Western National's shareholders
and requisite regulatory authorities, will be taxable to Western National
shareholders and is expected to close in early 1998.
Item 7. Financial Statements,Pro FormaFinancial Information and Exhibits.
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(c) Exhibits
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Exhibit Number
10.1 Agreement and Plan of Merger, dated as of September 11,
1997, among Western National, AGC, and Astro Acquisition Corp.
99.1 News Release issued September 12, 1997.
<PAGE>
SIGNATURE
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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.
WESTERN NATIONAL CORPORATION
Dated: September 12, 1997 By: /s/ Richard W. Scott
-----------------------------
Name: Richard W. Scott
Title: Vice Chairman
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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10.1 Agreement and Plan of Merger, dated as of September 11, 1997,
among Western National Corporation, American General Corporation, and Astro
Acquisition Corp.
99.1 News Release issued September 12, 1997.
AGREEMENT AND PLAN OF MERGER
Among
WESTERN NATIONAL CORPORATION,
AMERICAN GENERAL CORPORATION
and
ASTRO ACQUISITION CORP.
Dated as of September 11, 1997<PAGE>
Table of Contents
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE IThe Merger; Closing; Effective Time . . . . . . .1
1.1. The Merger. . . . . . . . . . . . . . . . . . . . .1
1.2. Closing . . . . . . . . . . . . . . . . . . . . . .2
1.3. Effective Time. . . . . . . . . . . . . . . . . . .2
ARTICLE IICertificate of Incorporation and By-Lawsof the
Surviving Corporation2
2.1. The Certificate of Incorporation. . . . . . . . . .2
2.2. The By-Laws . . . . . . . . . . . . . . . . . . . .2
ARTICLE IIIOfficers and Directorsof the Surviving
Corporation3
3.1. Directors . . . . . . . . . . . . . . . . . . . . .3
3.2. Officers. . . . . . . . . . . . . . . . . . . . . .3
ARTICLE IVEffect of the Merger on Capital Stock;Exchange
of Certificates3
4.1. Effect on Capital Stock . . . . . . . . . . . . . .3
(a) Merger Consideration . . . . . . . . . . . . .3
(b) Cancellation of Shares . . . . . . . . . . . .4
(c) Merger Sub; Parent Shares. . . . . . . . . . .5
4.2. Allocation of Merger Consideration; Election
Procedures. . . . . . . . . . . . . . . . . . . . .5
(a) Allocation . . . . . . . . . . . . . . . . . .5
(b) Election Procedures; Proration . . . . . . . .5
(c) Distributions with Respect to
Unexchanged Shares; Voting . . . . . . . . . .9
(d) Transfers. . . . . . . . . . . . . . . . . . 10
(e) Fractional Shares. . . . . . . . . . . . . . 10
(f) Termination of Exchange Fund . . . . . . . . 10
(g) Lost, Stolen or Destroyed Certificates . . . 11
(h) Affiliates . . . . . . . . . . . . . . . . . 11
4.3. Adjustments to Prevent Dilution . . . . . . . . . 11
4.4 Dissenting Shares . . . . . . . . . . . . . . . . 12
4.5 Termination Right; Adjustment Right . . . . . . . 13
ARTICLE VRepresentations and Warranties. . . . . . . . . 14
5.1. Representations and Warranties of the Company . . 14
(a) Organization, Good Standing and
Qualification. . . . . . . . . . . . . . . . 14
(b) Capital Structure. . . . . . . . . . . . . . 16
(c) Corporate Authority; Approval and
Fairness . . . . . . . . . . . . . . . . . . 16
(d) Governmental Filings; No Violations. . . . . 17
(e) Company Reports; Financial Statements. . . . 18
(f) Absence of Certain Changes . . . . . . . . . 20
(g) Litigation and Liabilities . . . . . . . . . 21
(i) Employees. . . . . . . . . . . . . . . . . . 22
(j) Compliance with Laws; Permits. . . . . . . . 26
(k) Takeover Statutes. . . . . . . . . . . . . . 26
(l) Taxes. . . . . . . . . . . . . . . . . . . . 26
(m) Brokers and Finders. . . . . . . . . . . . . 27
5.2. Representations and Warranties of Parent and
Merger Sub. . . . . . . . . . . . . . . . . . . . 27
(a) Capitalization of Merger Sub . . . . . . . . 28
(b) Organization, Good Standing and
Qualification. . . . . . . . . . . . . . . . 28
(c) Capital Structure. . . . . . . . . . . . . . 29
(d) Corporate Authority. . . . . . . . . . . . . 30
(e) Governmental Filings; No Violations. . . . . 31
(f) Parent Reports; Financial Statements . . . . 32
(g) Absence of Certain Changes . . . . . . . . . 33
(h) Litigation and Liabilities . . . . . . . . . 34
(j) Compliance with Laws; Permits. . . . . . . . 35
(k) Ownership of Shares. . . . . . . . . . . . . 35
(l) Brokers and Finders. . . . . . . . . . . . . 36
(m) Available Funds. . . . . . . . . . . . . . . 36
ARTICLE VICovenants. . . . . . . . . . . . . . . . . . . 36
6.1. Interim Operations. . . . . . . . . . . . . . . . 36
6.2. Information Supplied. . . . . . . . . . . . . . . 39
6.3. Stockholders Meeting. . . . . . . . . . . . . . . 39
6.4. Filings; Other Actions; Notification. . . . . . . 40
6.5. Access. . . . . . . . . . . . . . . . . . . . . . 41
6.6. Affiliates. . . . . . . . . . . . . . . . . . . . 42
6.7. Stock Exchange Listing. . . . . . . . . . . . . . 42
6.8. Publicity. . . . . . . . . . . . . . . . . . . . 43
6.9. Benefits. . . . . . . . . . . . . . . . . . . . . 43
(a) Stock Options. . . . . . . . . . . . . . . . 43
6.10. Expenses. . . . . . . . . . . . . . . . . . . . 45
6.11. Indemnification; Directors' and Officers'
Insurance . . . . . . . . . . . . . . . . . . . . 45
6.12. . . . . . . . . . . . . . . . . . . . . . . . . 47
Takeover Statute. . . . . . . . . . . . . . . . . 47
6.13. Parent Vote . . . . . . . . . . . . . . . . . . 47
6.14. Election to Parent's Board of Directors . . . . 48
6.15. Amendment to Shareholder's Agreement. .. . . 48
6.16. Acquisition Proposals. . . . . . . . . . . . 48
ARTICLE VIIConditions. . . . . . . . . . . . . . . . . . 51
7.1. Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . 51
(a) Stockholder Approval . . . . . . . . . . . . 51
(b) NYSE Listing . . . . . . . . . . . . . . . . 51
(c) Regulatory Consents. . . . . . . . . . . . . 51
(d) Litigation . . . . . . . . . . . . . . . . . 51
(e) S-4. . . . . . . . . . . . . . . . . . . . . 52
7.2. Conditions to Obligations of Parent and Merger
Sub . . . . . . . . . . . . . . . . . . . . . . . 52
(a) Representations and Warranties . . . . . . . 52
(b) Performance of Obligations of the
Company52. . . . . . . . . . . . . . . . . . .
(c) Consents Under Agreements. . . . . . . . . . 53
7.3. Conditions to Obligation of the Company . . . . . 53
(a) Representations and Warranties . . . . . . . 53
(b) Performance of Obligations of Parent and
Merger Sub . . . . . . . . . . . . . . . . . 54
(c) Consents Under Agreements. . . . . . . . . . 54
ARTICLE VIIITermination. . . . . . . . . . . . . . . . . 55
8.1. Termination by Mutual Consent . . . . . . . . . . 55
8.2. Termination by Either Parent or the Company . . . 55
8.3. Termination by the Company. . . . . . . . . . . . 55
8.4. Termination by Parent . . . . . . . . . . . . . . 56
8.5. Effect of Termination and Abandonment . . . . . . 56
ARTICLE IXMiscellaneous and General. . . . . . . . . . . 57
9.1. Survival. . . . . . . . . . . . . . . . . . . . . 57
9.2. Modification or Amendment . . . . . . . . . . . . 57
9.3. Waiver of Conditions. . . . . . . . . . . . . . . 57
9.4. Counterparts. . . . . . . . . . . . . . . . . . . 57
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL . . 58
9.6. Notices . . . . . . . . . . . . . . . . . . . . . 59
9.7. Entire Agreement; No Other Representations. . . . 59
9.8. No Third Party Beneficiaries. . . . . . . . . . . 60
9.9. Obligations of Parent and of the Company. . . . . 60
9.10. Severability.. . . . . . . . . . . . . . . . 60
9.11. Interpretation . . . . . . . . . . . . . . . 61
9.12. Assignment . . . . . . . . . . . . . . . . . 61
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called
this "Agreement"), dated as of September 11, 1997, among
Western National Corporation, a Delaware corporation (the
"Company"), American General Corporation, a Texas
corporation ("Parent"), and Astro Acquisition Corp., a
Delaware corporation and an indirect wholly-owned
subsidiary of Parent ("Merger Sub," the Company and Merger
Sub sometimes being hereinafter collectively referred to as
the "Constituent Corporations.")
RECITALS
WHEREAS, the respective boards of directors of
each of Parent, Merger Sub and the Company have approved
the merger of Merger Sub with and into the Company (the
"Merger") and approved the Merger upon the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, the Company, Parent and Merger Sub
desire to make certain representations, warranties, cove-
nants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises,
and of the representations, warranties, covenants and
agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to
the conditions set forth in this Agreement, at the
Effective Time (as defined in Section 1.3) Merger Sub shall
be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease.
The Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of the
Company with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger.
The Merger shall have the effects specified in the Delaware
General Corporation Law, as amended (the "DGCL").
1.2. Closing. The closing of the Merger (the
"Closing") shall take place (i) at the offices of Skadden,
Arps, Slate, Meagher & Flom, LLP, New York, New York, at
9:00 A.M. on the first business day after the last to be
fulfilled or waived of the conditions set forth in Article
VII (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date
as the Company and Parent may agree in writing, but in no
event prior to January 1, 1998 (the "Closing Date").
1.3. Effective Time. As soon as practicable
following the Closing, Parent and the Surviving Corporation
will cause a Certificate of Merger (the "Delaware
Certificate of Merger") to be executed, acknowledged and
filed with the Secretary of State of Delaware as provided
in Section 251 of the DGCL. The Merger shall become
effective at the time when the Delaware Certificate of
Merger has been duly filed with the Secretary of State of
Delaware (the "Effective Time").
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Certificate of Incorporation. The
certificate of incorporation of the Company as in effect
immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation
(the "Charter"), until duly amended as provided therein and
by applicable law.
2.2. The By-Laws. The by-laws of Merger Sub in
effect at the Effective Time shall be the by-laws of the
Surviving Corporation (the "By-Laws"), until thereafter
amended as provided therein and by applicable law.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors. The directors of Merger Sub at
the Effective Time shall, from and after the Effective
Time, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or
removal in accordance with the Charter and the By-Laws.
3.2. Officers. The officers of Merger Sub at the
Effective Time shall, from and after the Effective Time, be
the officers of the Surviving Corporation until their
successors have been duly elected or appointed and
qualified or until their earlier death, resignation or
removal in accordance with the Charter and the By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective
Time, as a result of the Merger and without any action on
the part of the holder of any capital stock of the Company:
(a) Merger Consideration. Subject to Sections
4.2, 4.5 and 4.6 each share of the Common Stock, par value
one-thousandth of a dollar ($.001) per share, of the
Company (the "Shares") issued and outstanding at the
Effective Time (other than Shares owned by Parent or any
direct or indirect subsidiary of Parent (collectively, the
"Parent Companies") or Shares that are owned by the Company
or any direct or indirect subsidiary of the Company shall
be converted into, and become exchangeable for, at the
election of the holder of Shares in accordance with Section
4.2(b): (i) $29.75 in cash (the "Cash Consideration"), or
(ii) the number of shares of Common Stock, par value $.50
per share, of Parent ("Parent Common Stock") equal to the
ratio (the "Conversion Ratio") determined by dividing
$29.75 by the average of the per share high and low sales
prices, regular way (the "Average Parent Price") of Parent
Common Stock as reported on the New York Stock Exchange,
Inc. (the "NYSE") composite transactions reporting system
(as reported in the New York City edition of The Wall
Street Journal or, if not reported thereby, another
authoritative source) for the ten (10) trading days (the
"Averaging Period") ending on the fifth trading day (the
"Determination Date") prior to the Closing (the "Stock
Consideration") (the Cash Consideration or the Stock
Consideration, as applicable, being hereinafter referred to
as the "Merger Consideration"), provided, that (x) subject
to Section 4.5 and 4.6, if the Average Parent Price is less
than $47.00, (A) the Cash Consideration shall be adjusted
to an amount equal to the sum of (aa) the product of .3165
multiplied by such Average Parent Price, plus (bb) $14.875,
and (B) the Conversion Ratio shall be adjusted to equal the
sum of (aa) .3165 plus (bb) the ratio of $14.875 to such
Average Parent Price; and (y) if the Average Parent Price
is between $53.00 and $60.00, (A) the Cash Consideration
shall be adjusted to an amount equal to the sum of (aa) the
product of .2807 multiplied by such Average Parent Price,
plus (bb) $14.875, and (B) the Conversion Ratio shall be
adjusted to equal the sum of (aa) .2807 plus (bb) the ratio
of $14.875 to such Average Parent Price.
All references in this agreement to Parent Common Stock to
be issued pursuant to the Merger shall be deemed to include
the corresponding rights ("Parent Rights") to purchase
Parent Preferred Shares (as defined in Section 5.2(c))
pursuant to the Parent Rights Agreement (as defined in
Section 5.2(c)), except where the context otherwise
requires. At the Effective Time, all Shares (other than
Shares owned by Parent and its Subsidiaries, except for
shares owned on behalf of third parties ("Parent Shares"),
and Dissenting Shares, as hereinafter defined
(collectively, "Excluded Shares")) shall no longer be
outstanding and shall be canceled and retired and shall
cease to exist, and each certificate (a "Certificate")
representing any of such Shares (other than Excluded
Shares) shall thereafter represent only the right to
receive the Merger Consideration and the right, if any, to
receive pursuant to Section 4.2(e) cash in lieu of
fractional shares and any dividends or other distributions
pursuant to Section 4.2(c).
(b) Cancellation of Shares. Each Share issued
and outstanding immediately prior to the Effective Time and
owned by the Company (other than Shares that are owned on
behalf of third parties), shall, by virtue of the Merger
and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall
cease to exist.
(c) Merger Sub; Parent Shares. At the Effective
Time, (i) each share of Common Stock, par value $1.00 per
share, of Merger Sub issued and outstanding immediately
prior to the Effective Time, and (ii) each Parent Share
shall remain outstanding and shall, after the Effective
Time, represent one share of Common Stock of the Surviving
Corporation.
4.2. Allocation of Merger Consideration; Election
Procedures.
(a) Allocation. Notwithstanding anything in
this Agreement to the contrary, the number of Shares (the
"Cash Election Number") to be converted into the right to
receive Cash Consideration in the Merger, and the number of
Shares (the "Stock Election Number") to be converted into
the right to receive Stock Consideration in the Merger
shall in each case be equal to fifty percent (50%) of (i)
the number of Shares issued and outstanding immediately
prior to the Effective Time of the Merger less (ii) the
number of Excluded Shares.
(b) Election Procedures; Proration.
(i) As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with an exchange
agent selected by Parent, with the Company's prior
approval, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of
Shares, Certificates representing the shares of Parent
Common Stock and any cash to be issued or paid pursuant to
Section 4.1 and any cash, dividends or other distributions
with respect to the Parent Common Stock to be issued or
paid pursuant to Section 4.2(c)(such cash and certificates
for shares of Parent Common Stock, together with the amount
of any dividends or other distributions payable with
respect thereto, being hereinafter referred to as the
"Exchange Fund").
(ii) Subject to allocation, conversion and
proration in accordance with the provisions of this
Section 4.2, each record holder of Shares (other than
Excluded Shares) issued and outstanding immediately prior
to the Election Deadline (as defined below) shall be
entitled (A) to elect to receive in respect of each such
Share (x) Cash Consideration (a "Cash Election") or
(y) Stock Consideration (a "Stock Election") or (B) to
indicate that such record holder has no preference as to
the receipt of Cash Consideration or Stock Consideration
for such Shares (a "Non-Election"). Shares in respect of
which a Non-Election is made (including shares in respect
of which such an election is deemed to have been made
pursuant to this Agreement (collectively, "Non-Election
Shares") shall, as nearly as possible, be deemed (A) Shares
in respect of which Stock Elections have been made in an
amount equal to fifty percent (50%) of the total number of
such Shares (Shares in respect of which a Stock Election
has been made, together with Shares in respect of which a
Stock Election is deemed to be made pursuant to this
Article IV being hereinafter referred to as "Stock Election
Shares"), and (B) Shares in respect of which Cash Elections
have been made in an amount equal to fifty percent (50%) of
the total number of such Shares (Shares in respect of which
a Cash Election has been made, together with Shares in
respect of which a Cash Election is deemed to be made
pursuant to this Article IV being hereinafter referred to
as "Cash Election Shares").
(iii) Elections pursuant to
Section 4.2(b)(ii) shall be made on a form and with such
other provisions to be reasonably agreed upon by the
Company and Parent (a "Form of Election") to be provided by
the Exchange Agent for that purpose to holders of record of
Shares (other than holders of Excluded Shares), together
with appropriate transmittal materials, at the time of
mailing to holders of record of Shares of the
Prospectus/Proxy Statement (as defined in Section 6.2) in
connection with the stockholders meeting referred to in
Section 6.3. Elections shall be made by mailing to the
Exchange Agent a duly completed Form of Election. To be
effective, a Form of Election must be (x) properly
completed, signed and submitted to the Exchange Agent at
its designated office, by 5:00 p.m., on the business day
that is two trading days prior to the Closing Date (which
date shall be publicly announced by Parent as soon as
practicable but in no event less than five trading days
prior to the Closing Date) (the "Election Deadline") and
(y) in the case of Shares that are not held in book entry
form, accompanied by the Certificate(s) representing the
Shares as to which the election is being made or an
affidavit of loss and indemnification in lieu thereof (or
by an appropriate guarantee of delivery of such
Certificate(s) by a commercial bank or trust company in the
United States or a member of a registered national security
exchange or of the National Association of Securities
Dealers, Inc., provided that such Certificates are in fact
delivered to the Exchange Agent within three trading days
after the date of execution of such guarantee of delivery).
For Shares that are held in book entry form, Parent shall
establish procedures for the delivery of such Shares, which
Procedures shall be reasonably acceptable to the Company.
The Company shall use its best efforts to as promptly as
practicable make a Form of Election available to all
Persons who become holders of record of Shares (other than
Excluded Shares) between the date of mailing described in
the first sentence of this Section 4.2(b)(iii) and the
Election Deadline. Neither Parent nor the Exchange Agent
will be under any obligation to notify any Person of any
defect in a Form of Election submitted to the Exchange
Agent. A holder of Shares that does not submit an
effective Form of Election prior to the Election Deadline
shall be deemed to have made a Non-Election.
(iv) An election may be revoked or amended, but
only by written notice received by the Exchange Agent prior
to the Election Deadline. Any Certificate(s) representing
Shares that have been submitted to the Exchange Agent in
connection with an election shall be returned without
charge to the holder thereof in the event such election is
revoked as aforesaid and such holder requests in writing
the return of such Certificate(s). Upon any such
revocation, unless a duly completed Form of Election is
thereafter submitted in accordance with paragraph (b)(ii),
such Shares shall be Non-Election Shares. In the event
that this Agreement is terminated pursuant to the
provisions hereof and any Shares have been transmitted to
the Exchange Agent pursuant to the provisions hereof, such
Shares shall promptly be returned without charge to the
Person submitting the same.
(v) In the event that the aggregate number of
Cash Election Shares exceeds the Cash Election Number all
Cash Election Shares shall be converted into the right to
receive Stock Consideration or Cash Consideration in the
following manner:
(A) Cash Election Shares shall be deemed
converted to Stock Election Shares, on a pro-rata
basis for each record holder of Shares with respect to
those Shares, if any, of such record holder that are
Cash Election Shares, to the minimum extent necessary
so that the aggregate number of Cash Election Shares
following such conversion shall equal as closely as
practicable the Cash Election Number; all such Cash
Election Shares so converted shall be converted into
the right to receive Stock Consideration; and
(B) any remaining Cash Election Shares shall be
converted into the right to receive Cash
Consideration.
(vi) In the event that the aggregate number of
Stock Election Shares exceeds the Stock Election Number all
Stock Election Shares shall be converted into the right to
receive Stock Consideration or Cash Consideration in the
following manner:
(A) Stock Election Shares shall be deemed
converted to Cash Election Shares, on a pro-rata basis
for each record holder of Shares with respect to those
Shares, if any, of such record holder that are Stock
Election Shares, to the minimum extent necessary so
that the aggregate number of Stock Election Shares
following such conversion shall equal as closely as
practicable the Stock Election Number; all such Stock
Election Shares so converted shall be converted into
the right to receive Cash Consideration; and
(B) any remaining Stock Election Shares shall be
converted into the right to receive Stock
Consideration.
(vii) In the event that clause (v) of this
Section 4.2(b) is not applicable, all Cash Election Shares
shall be converted into the right to receive Cash
Consideration, and in the event that clause (vi) of this
Section 4.2(b) is not applicable, all Stock Election Shares
shall be converted into the right to receive Stock.
(viii) The Exchange Agent, in consultation
with Parent and the Company, shall make all computations to
give effect to this Section 4.2.
(ix) In the event of a transfer of ownership of
Shares that is not registered in the transfer records of
the Company, the Merger Consideration together with any
other cash, dividends or distributions in respect thereof,
may be issued and/or paid to such a transferee if the
Certificate formerly representing such Shares is presented
to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes have been
paid. If any certificate for shares of Parent Common Stock
is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the Person
(as defined below) requesting such exchange shall pay any
transfer or other taxes required by reason of the issuance
of certificates for shares of Parent Common Stock in a name
other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of
Parent or the Exchange Agent that such tax has been paid or
is not applicable.
For the purposes of this Agreement, the term
"Person" shall mean any individual, corporation (including
not-for-profit), general or limited partnership, limited
liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined
in Section 5.1(d)) or other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged
Shares; Voting. (i) All shares of Parent Common Stock to
be issued pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time and whenever a
dividend or other distribution is declared by Parent in
respect of the Parent Common Stock, the record date for
which is at or after the Effective Time, that declaration
shall include dividends or other distributions in respect
of all shares issuable pursuant to this Agreement, provided
that no dividends or other distributions declared or made
in respect of the Parent Common Stock after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common
Stock represented thereby until the holder of such
Certificate shall surrender such Certificate in accordance
with this Article IV. Thereafter, subject to the effect of
applicable laws, following surrender of any such
Certificate, there shall be issued and/or paid to the
holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without
interest, (A) at the time of such surrender, the dividends
or other distributions with a record date after the
Effective Time theretofore payable with respect to such
whole shares of Parent Common Stock and not paid and (B) at
the appropriate payment date, the dividends or other
distributions payable with respect to such whole shares of
Parent Common Stock with a record date after the Effective
Time but with a payment date subsequent to surrender.
(ii) Holders of unsurrendered Certificates
representing Stock Election Shares shall be entitled to
vote after the Effective Time at any meeting of Parent
stockholders the number of whole shares of Parent Common
Stock represented by such Certificates, regardless of
whether such holders have exchanged their Certificates.
(d) Transfers. After the Effective Time, there
shall be no transfers on the stock transfer books of the
Company of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates formerly representing Shares are presented to
the Surviving Corporation or the Exchange Agent, they shall
be canceled and (subject to applicable abandoned property,
escheat and similar laws and, in the case of Dissenting
Shares, subject to applicable law) exchanged for Merger
Consideration (and cash in lieu of fractional interests in
accordance with Section 4.2(e)) without any interest
thereon, as provided in this Article IV.
(e) Fractional Shares. Notwithstanding any
other provision of this Agreement, no fractional shares of
Parent Common Stock will be issued and any holder of Shares
entitled to receive a fractional share of Parent Common
Stock but for this Section 4.2(e) shall be entitled to
receive a cash payment in lieu thereof, which payment shall
equal the product of (i) such holder's proportionate
interest in a share of Parent Common Stock, and (ii) the
Average Parent Price.
(f) Termination of Exchange Fund. Any portion
of the Exchange Fund (including the proceeds of any invest-
ments thereof and any Parent Common Stock) that remains
unclaimed by the stockholders of the Company for 180 days
after the Effective Time shall be paid to Parent. Any
stockholders of the Company who have not theretofore com-
plied with this Article IV shall thereafter look only to
the Surviving Corporation for payment of the Merger
Consideration and any cash, dividends and other
distributions in respect thereof payable and/or issuable
pursuant to Section 4.1 and Section 4.2 upon due surrender
of their Certificates (or affidavits of loss and
indemnification in lieu thereof), in each case, without any
interest thereon. Notwithstanding the foregoing, none of
Parent, the Surviving Corporation, the Exchange Agent or
any other Person shall be liable to any former holder of
Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat
or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In
the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount as indemnity against
any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger
Consideration and any cash payable and any unpaid dividends
or other distributions in respect thereof pursuant to
Section 4.2 upon due surrender of and deliverable in
respect of the Shares represented by such Certificate
pursuant to this Agreement.
(h) Affiliates. Notwithstanding anything herein
to the contrary, Certificates surrendered for exchange into
Stock Consideration by any "affiliate" (as determined
pursuant to Section 6.6) of the Company shall not be
exchanged until Parent has received a written agreement
from such Person as provided in Section 6.6 hereof.
(i) Withholding. The Exchange Agent or Parent
shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement
to any holder of Shares such amounts as the Exchange Agent,
Parent or the Surviving Corporation, as the case may be, is
required to deduct and withhold with respect to such
payment under the Code or any provisions of state, local or
foreign tax law. Any amounts so withheld shall be treated
for all purposes of this Agreement as having been paid to
the holder of the Shares in respect of which such deduction
and withholding was made.
4.3. Adjustments to Prevent Dilution. In the
event that the Company changes the number of Shares or
securities convertible or exchangeable into or exercisable
for Shares, or Parent changes the number of shares of
Parent Common Stock or securities convertible or exchange-
able into or exercisable for shares of Parent Common Stock,
issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a
reverse split), stock dividend or distribution, recapitali-
zation, merger, subdivision, issuer tender or exchange
offer, or other similar transaction, the Merger
Consideration shall be equitably adjusted.
4.4 Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, no Share, the holder of
which shall be entitled to assert, and shall have complied
with the provisions of Section 262 of the DGCL as to,
dissenter's rights (a "Dissenting Share"), shall be deemed
converted into and to represent the right to receive Merger
Consideration hereunder, and the holders of Dissenting
Shares, if any, shall be entitled to payment, solely from
the Surviving Corporation, of the appraised value of such
Dissenting Shares to the extent permitted by and in
accordance with the provisions of Section 262 of the DGCL;
provided, however, that (i) if any holder of Dissenting
Shares shall, under the circumstances permitted by the
DGCL, subsequently deliver a written withdrawal of his or
her demand for appraisal of such Dissenting Shares, or (ii)
if any holder fails to establish his or her entitlement to
rights to payment as provided in such Section 262, or (iii)
if neither any holder of Dissenting Shares nor the
Surviving Corporation has filed a petition demanding a
determination of the value of all Dissenting Shares within
the time provided in such Section 262, such holder or
holders (as the case may be) shall forfeit such right to
payment for such Dissenting Shares pursuant to such Section
262, and each such Share shall not be considered a
Dissenting Share but shall thereupon be converted into, and
treated as, a Non-Election Share in accordance with, and
subject to the provisions of, this Article IV. The Company
shall give Parent (X) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such
demands, and any other instruments received by the Company
relating to shareholders' rights of appraisal and (Y) the
opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the DGCL. The
Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any
demands for appraisals of Shares, offer to settle or settle
any such demands or approve any withdrawal of any such
demands.
4.5 Termination Right; Adjustment Right.
(a) The Board of Directors of the Company shall have the
right to elect to abandon the Merger and terminate this
Agreement following the Determination Date but prior to the
Effective Time if the Average Parent Price shall be less
than $40.00(the "Floor Price"), subject to the following
subparagraph (b).
(b) If the Company makes an election to abandon the
Merger and terminate this Agreement under subparagraph (a),
above, it shall give prompt written notice thereof to
Parent, provided, that such notice may be withdrawn by the
Company at any time prior to the close of business on the
second trading day prior to the Closing Date. If the
Company shall have the right to terminate this Agreement
pursuant to subparagraph (a), above, but shall not have
done so, or at any time within four business days of the
Company's having done so, Parent shall have the right, but
not the obligation, to increase the aggregate Merger
Consideration which would be delivered to the stockholders
of the Company such that the per-share value of the Merger
Consideration (valued, in the case of the Stock
Consideration component of the Merger Consideration, at the
Average Parent Price) is equal to the per share value of
the Merger Consideration that would have been received if
the Average Parent Price had been equal to the Floor Price.
Any adjustment made by Parent pursuant to this subparagraph
(b) shall be made in accordance with Section 4.6(a). If
Parent elects to make the adjustment provided for herein,
within the period provided for, it shall give prompt
written notice thereof to the Company (and the Effective
Time shall in such case be the third business day following
such election by Parent) and of the increase in the Stock
Consideration and the Cash Consideration which will be
delivered to holders of Shares and the per-share value
thereof, whereupon no abandonment or termination shall be
deemed to have occurred and this Agreement shall remain in
full force and effect in accordance with its terms (except
as the Merger Consideration shall have been so increased).
4.6 Further Adjustment. Notwithstanding any
provisions of this Article IV:
(a) if the Company elects to abandon the Merger and
terminate this Agreement pursuant to Section 4.5(a), and
Parent exercises its rights to increase the Merger
Consideration pursuant to Section 4.5(b), then the Cash
Consideration shall be $27.53 per Share, and the Conversion
Ratio shall equal the ratio of $27.53 to the Average Parent
Price; and
(b) if the Average Parent Price is greater than
$60.00, then the Cash Consideration shall be $31.71 per
Share, and the Conversion Ratio shall equal the ratio of
$31.71 to such Average Parent Price.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the
Company. Except as set forth in the corresponding sections
or subsections of the disclosure letter delivered to Parent
by the Company on or prior to entering into this Agreement
(the "Company Disclosure Letter"), the Company hereby
represents and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualifica-
tion. (i) Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar
power and authority to own and operate its properties and
assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its
business requires such qualification, except where the
failure to be so qualified or in good standing, when taken
together with all other such failures, is not reasonably
likely to have a Company Material Adverse Effect (as
defined below). The Company has made available to Parent a
complete and correct copy of the Company's and its
Significant Subsidiaries' certificates of incorporation and
by-laws, each as amended to date. The Company's and its
Significant Subsidiaries' certificates of incorporation and
by-laws so delivered are in full force and effect.
As used in this Agreement, the term (i)
"Subsidiary" means, with respect to the Company, Parent or
Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a
majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of
the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by
such party or by one or more of its respective Subsidiaries
or by such party and any one or more of its respective
Subsidiaries; (ii) "Significant Subsidiary" shall have the
meaning given such term in Rule 1.02(w) of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); and (iii) "Company Material
Adverse Effect" means a material adverse effect on the
financial condition, business or results of operations of
the Company and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any
change (i) in law, rule, or regulation or generally
accepted accounting principles or interpretations thereof
that applies to the Company or (ii) in economic or business
conditions generally or in the life insurance or annuity
industries specifically shall not be considered when
determining if a Company Material Adverse Effect has
occurred, except to the extent that any such change has
had, or may reasonably be expected to have, a
disproportionate effect on the Company and its
Subsidiaries.
(ii) The Company conducts its insurance
operations through Western National Life Insurance Company,
a Texas corporation ("LIFECO"). LIFECO is (i) duly
licensed or authorized as an insurance company in its
jurisdiction of incorporation, (ii) duly licensed or
authorized as an insurance company and, where applicable, a
reinsurer in each other jurisdiction where it is required
to be so licensed or authorized, and (iii) duly authorized
in its jurisdiction of incorporation and each other
applicable jurisdiction to write each line of business
reported as being written in the Company SAP Statements (as
hereinafter defined).
(iii) Except for the Company's Subsidiaries,
the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or
other business association or entity that directly or
indirectly conducts any activity which is material to the
Company.
(b) Capital Structure. The authorized capital
stock of the Company consists of 500,000,000 Shares, of
which 69,773,183 Shares were outstanding as of the close of
business on September 11, 1997, and 50,000,000 shares of
Preferred Stock, par value one-thousandth of one dollar
($.001) per share (the "Preferred Shares"), of which
no shares were outstanding as of the close of business on
September 11, 1997. All of the outstanding Shares have
been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no Shares or Preferred
Shares reserved for issuance, except that, as of
September 11, 1997, there were 4,827,730 Shares reserved
for issuance pursuant to the Company's 1993 Stock and
Incentive Plan (the "Stock Plan") and 500,000 Shares
reserved for issuance pursuant to the Western Save Plan.
Each of the outstanding shares of capital stock or other
securities of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable
and owned by a direct or indirect wholly-owned subsidiary
of the Company, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as
set forth above or in the Company Disclosure Letter, there
are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of
capital stock or other securities of the Company or any of
its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or
giving any Person a right to subscribe for or acquire, any
securities of the Company or any of its Subsidiaries, and
no securities or obligations evidencing such rights are
authorized, issued or outstanding. Neither the Company nor
any of its Subsidiaries has outstanding any bonds,
debentures, notes or other obligations the holders of which
have the right to vote (or convertible into or exercisable
for securities having the right to vote) with the
stockholders of the Company on any matter ("Voting Debt").
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under
this Agreement and to consummate, subject only to approval
of this Agreement by the holders of a majority of the
outstanding Shares (the "Company Requisite Vote"), the
Merger. This Agreement is a valid and binding agreement of
the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
(ii) Based upon the recommendation of the Special
Committee of the board of directors of the Company (the
"Special Committee") appointed by the board of directors of
the Company in connection with the Merger, the board of
directors of the Company has approved this Agreement and
the Merger and the other transactions contemplated hereby.
The Special Committee and the Board of Directors of the
Company have received the opinion of the Special
Committee's financial advisors, Donaldson, Lufkin &
Jenrette Securities Corporation, to the effect that the
consideration to be received by the holders of the Shares
in the Merger is fair to such holders (other than Parent
and its Affiliates (as defined in Rule 12b-2 under the
Exchange Act)) from a financial point of view. It is
agreed and understood that such opinion is for the benefit
of the Special Committee and the Company's Board of
Directors and may not be relied on by Parent or Merger Sub.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the
Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"), (C) to comply with state securities
or "blue-sky" laws, (D) required to be made with the NYSE
and (E) the filing of appropriate documents with, and
approval of, the Commissioner of Insurance of Texas, and
such consents as may be required under the Investment
Company Act of 1940, as amended, and the Investment
Advisors Act of 1940, as amended, and under the insurance
laws of any state in which the Company, Parent or any of
their respective subsidiaries is domiciled or does
business, to the knowledge of the Executive Officers of the
Company, following consultation with counsel, no notices,
reports or other filings are required to be made by the
Company with, nor are any consents, registrations,
approvals, permits or authorizations required to be
obtained by the Company from, any governmental or regula-
tory authority, agency, commission, body or other
governmental entity ("Governmental Entity"), in connection
with the execution and delivery of this Agreement by the
Company and the consummation by the Company of the Merger
and the other transactions contemplated hereby. The term
"knowledge" when used in this Agreement with respect to the
executive officers of the Company shall mean the actual
knowledge of Michael J. Poulos, Richard W. Scott, John A.
Graf, Arthur R. McGimsey, Michael J. Akers, Dwight L.
Cramer and Kent W. Lamb without obligation of any further
review or inquiry, except where otherwise noted, and does
not include information of which they may be deemed to have
constructive knowledge only.
(ii) The execution, delivery and performance of
this Agreement by the Company do not, and the consummation
by the Company of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the certificate
or by-laws of the Company or the comparable governing
instruments of any of its Significant Subsidiaries, (B) a
breach or violation of, or a default under, the accele-
ration of any obligations or the creation of a lien,
pledge, security interest or other encumbrance on the
assets of the Company or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any
agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation ("Contracts") binding upon
the Company or any of its Subsidiaries or any Law (as
defined in Section 5.1(i)) or governmental or non-govern-
mental permit or license to which the Company or any of its
Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any of the Contracts,
except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect
or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions
contemplated by this Agreement. Subject to the exception
set forth with respect to clauses (B) and (C) above,
Section 5.1(d) of the Company Disclosure Letter sets forth,
to the knowledge of the executive officers of the Company,
a correct and complete list of Contracts of the Company and
its Subsidiaries pursuant to which consents or waivers are
required prior to consummation of the transactions
contemplated by this Agreement.
(e) Company Reports; Financial Statements. (i)
The Company has delivered or made available to Parent each
registration statement, report, proxy statement or informa-
tion statement prepared by it since December 31, 1994 (the
"Audit Date"), including (i) the Company's Annual Report on
Form 10-K for the years ended December 31, 1994, 1995 and
1996 and (ii) the Company's Quarterly Reports on Form 10-Q
for the periods ended March 31, 1997 and June 30, 1997,
each in the form (including exhibits, annexes and any
amendments thereto) filed with the Securities and Exchange
Commission (the "SEC") (collectively, including any such
reports filed subsequent to the date hereof, the "Company
Reports"). As of their respective dates, the Company
Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related
notes and schedules) fairly presents, or will fairly
present, the consolidated financial position of the Company
and its Subsidiaries as of its date and each of the
consolidated statements of income and of changes in finan-
cial position included in or incorporated by reference into
the Company Reports (including any related notes and sched-
ules) fairly presents, or will fairly present, the results
of operations, retained earnings and changes in financial
position, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to notes and normal year-end
audit adjustments that will not be material in amount
or effect), in each case in accordance with generally
accepted accounting principles ("GAAP") consistently
applied during the periods involved, except as may be noted
therein.
(ii) Since the Audit Date, LIFECO has filed all
annual or quarterly statements, together with all exhibits
and schedules thereto, required to be filed with or
submitted to the appropriate regulatory authorities of the
jurisdiction in which it is domiciled on forms prescribed
or permitted by such authority (collectively, the "Company
SAP Statements") except for such filings or submissions the
failure to so file or submit is not, individually or in the
aggregate, reasonably likely to have a Company Material
Adverse Effect. Financial statements included in the
Company SAP Statements and prepared on a statutory basis,
including the notes thereto, have been prepared in all
material respects in accordance with accounting practices
prescribed or permitted by applicable state regulatory
authorities in effect as of the date of the respective
statements, and such accounting practices have been applied
on a substantially consistent basis throughout the periods
involved, except as expressly set forth in the notes or
schedules thereto. Such financial statements present
fairly the respective statutory financial positions and
results of operation of LIFECO as of their respective dates
and for the respective periods presented therein.
(f) Absence of Certain Changes. Except as dis-
closed in the Company Reports filed prior to the date
hereof, since the Audit Date the Company and its Subsidi-
aries have conducted their respective businesses only in,
and have not engaged in any material transaction other than
according to, the ordinary and usual course of such
businesses and there has not been (i) any change in the
financial condition, business or results of operations of
the Company and its Subsidiaries or, to the knowledge of
the executive officers of the Company, any development or
combination of developments that, individually or in the
aggregate, has had or is reasonably likely to have a
Company Material Adverse Effect; (ii) except as otherwise
permitted by this Agreement, any declaration, setting aside
or payment of any dividend or other distribution in respect
of the capital stock of the Company, except for dividends
or other distributions on its capital stock publicly
announced prior to the date hereof; (iii) except as
required by GAAP or applicable statutory accounting
principles, any material change by the Company in
accounting principles, practices or methods; (iv) any
material addition, or any development involving a
prospective material addition, to the Company's
consolidated reserves for future policy benefits or other
policy claims and benefits other than as a result of
ordinary sales activities; or (v) except as required by
GAAP or applicable statutory accounting principles, any
material change in the accounting, actuarial, investment,
reserving, underwriting or claims administration policies,
practices, procedures, methods, assumptions or principles
of LIFECO. Since the Audit Date, except as provided for
herein or as disclosed in the Company Reports filed prior
to the date hereof, there has not been any increase in the
compensation payable or that could become payable by the
Company or any of its Subsidiaries to officers or key
employees or any amendment of any of the Compensation and
Benefit Plans other than increases or amendments in the
ordinary course.
(g) Litigation and Liabilities. Except as dis-
closed in the Company Reports filed prior to the date
hereof, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the executive
officers of the Company, threatened against the Company or
any of its Affiliates or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise, including
those relating to environmental and occupational safety and
health matters, that, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect
or prevent or materially burden or materially impair the
ability of the Company to consummate the transactions
contemplated by this Agreement.
(h) Contracts. The Company has made available to
Parent or the representatives of Parent a true, accurate
and complete copy of each Contract to which the Company or
any of the Company Subsidiaries is a party or by which it
is bound which:
(i) is material to the Company and which is not
disclosed as an exhibit to the Company Reports;
or
(ii) is a reinsurance or retrocession contract
which requires the payment of premiums by the
Company or the Company Subsidiaries of amounts in
excess of $500,000 per year; or
(iii) is a distribution or other Contract
which accounts (or is reasonably likely to
account) for 5% or more of the Company's or the
Company Subsidiaries' premiums and deposits
annually; or
(iv) contains covenants limiting the freedom of
the Company or any of the Company Subsidiaries to
engage in any line of business in any geographic
area or to compete with any person or entity or
restricting the ability of the Company
Subsidiaries to acquire equity securities of any
person or entity; or
(v) is an employment or severance contract
applicable to any employee of the Company or the
Company Subsidiaries, including without
limitation contracts to employ executive officers
and other contracts with officers or directors of
the Company or any of the Company Subsidiaries,
other than any such Contract which by its terms
is terminable by the Company or any of the
Company Subsidiaries on not more than 60 days'
notice without material liability.
(i) Employees
(A) None of the employees of the Company or
any of the Company Subsidiaries are represented
by any labor organization, and no union claims to
represent these employees have been made. To the
knowledge of the executive officers of the
Company, there have been no union organizing
activities with respect to employees of the
Company Subsidiaries within the past five years.
The Company Subsidiaries are not, and have not
been, engaged in any unfair labor practices as
defined in the National Labor Relations Act or
other applicable law, ordinance or regulation,
nor is there pending any unfair labor practice
charge.
(B) The Company and the Company
Subsidiaries have not during the past two years
ending on the date hereof effectuated a "plant
closing" or "mass layoff" (as defined in the WARN
Act) affecting any of their sites of employment
or one or more facilities or operating units
within any site of employment or facility, nor is
any scheduled from the date hereof until the end
of the 90-day period beginning on the Effective
Time.
(C) Except as would not be reasonably
likely to result in a Company Material Adverse
Effect, the Company and the Company Subsidiaries
are not parties to any lawsuit, administrative
charge, or investigation brought or to the
knowledge of the executive officers of the
Company threatened by or on behalf of any present
or former employee of the Company or any of the
Company Subsidiaries or applicant for employment
by the Company or any of the Company
Subsidiaries, in any federal, state or local
court or administrative agency sounding in any of
the following claims or causes of action; illegal
discrimination (race, color, sex, age,
disability, national origin) sexual harassment,
illegal retaliation, wrongful discharge, breach
of employment contract, or any other tort or
contract-based cause of action arising out of the
employer-employee relationship and have not in
the three year period ending on the date hereof
been a party to any class action alleging any of
the claims or causes of action stated in this
Paragraph.
(D) Except as disclosed pursuant to Section
5.1(h)(v), there are not in effect any contracts
of employment with any present or former
employees and, in the opinion of the Company and
its Subsidiaries, no written personnel policies,
rules, or procedures or verbal statements
applicable to employees of the Company or any of
the Company Subsidiaries serves to modify in any
way the employment-at-will relationship that
exists between the Company or any of the Company
Subsidiaries and their respective employees.
(ii) Employee Benefits
(A) A copy of each material bonus, deferred
compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock
ownership, stock bonus, stock purchase,
restricted stock, stock option, employment,
termination, severance, compensation, medical,
health or other plan, agreement, policy or
arrangement that covers employees, directors,
former employees or former directors of the
Company and its Subsidiaries (the "Compensation
and Benefit Plans") and any trust agreement or
insurance contract funding such Compensation and
Benefit Plans has been made available to Parent
prior to the date hereof. The Compensation and
Benefit Plans are listed in Section 5.1(i) of the
Company Disclosure Letter. With respect to each
Compensation and Benefit Plan, the Company has
heretofore also delivered or made available to
Buyer true and complete copies of each of the
following documents: (aa) if the Compensation and
Benefit Plan is not a written plan, a description
thereof; (bb) a copy of the two most recent
annual reports and actuarial reports, if required
under ERISA, and the most recent report prepared
with respect thereto in accordance with Statement
of Financial Accounting Standards No. 87; (cc) a
copy of the most recent Summary Plan Description
required under ERISA with respect thereto; and
(dd) the most recent determination letter
received from the Internal Revenue Service with
respect to each Compensation and Benefit Plan
intended to qualify under section 401 of the
Internal Revenue Code of 1986, as amended (the
"Code").
(B) All Compensation and Benefit Plans are
in substantial compliance with all applicable Law
(as hereinafter defined), including the Code and
the Employee Retirement Income Security Act of
1974, as amended ("ERISA") in all material
respects. Each Compensation and Benefit Plan
that is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "Pension
Plan") and that is intended to be qualified under
Section 401(a) of the Code has received a
favorable determination letter from the Internal
Revenue Service (the "IRS"), or will file for
such determination letter prior to the expiration
of the remedial amendment period for such Pension
Plan, and the Company is not aware of any
circumstances likely to result in revocation or
denial of any such favorable determination
letter. The trusts maintained under any such
Compensation and Benefit Plan are exempt from
taxation under section 501(a) of the Code. As of
the date hereof, there are no pending or, to the
knowledge of the executive officers of the
Company, threatened or anticipated claims
relating to the Compensation and Benefit Plans
other than routine claims for benefits. To the
knowledge of the executive officers of the
Company, there is no matter pending (other than
routine determination filings) before the IRS,
the Department of Labor or the PBGC. Neither the
Company, any Subsidiary, any Compensation and
Benefit Plan, any trust created thereunder, nor
any trustee, administrator, or other fiduciary
thereof has engaged in a transaction in
connection with which the Company or any
Subsidiary, any Compensation and Benefit Plan,
any such trust, or any trustee, administrator or
other fiduciary thereof, or any party dealing
with any Compensation and Benefit Plan or any
such trust could be subject to either a civil
penalty assessed pursuant to section 409 or 502
of ERISA or a tax imposed pursuant to section
4975 or 4976 of the Code.
(C) All contributions required to be made
under the terms of any Compensation and Benefit
Plan have been timely made or have been reflected
on the most recent consolidated balance sheet as
of the date hereof filed or incorporated by
reference in the Company Reports prior to the
date hereof.
(D) No Compensation and Benefit Plan
provides medical, surgical, hospitalization,
death or similar benefits (whether or not
insured) for employees or former employees of the
Company or any Subsidiary for periods extending
beyond their retirement or other termination of
service, other than (aa) coverage mandated by
applicable law, (bb) death or survivor benefits
under any pension plan, or (cc) benefits the full
cost of which is borne by the current or former
employee (or his beneficiary).
(E) The consummation of the Merger and the
other transactions contemplated by this Agreement
will not, either alone or in combination with
another event, (aa) entitle any employees of the
Company or its Subsidiaries to severance pay,
(bb) accelerate the time of payment or vesting or
trigger any payment of compensation or benefits
under, increase the amount payable or trigger any
other material obligation pursuant to, any of the
Compensation and Benefit Plans or (cc) result in
any breach or violation of, or a default under,
any of the Compensation and Benefit Plans.
(F) Within the six-year period ending on
the Effective Time, neither the Company nor any
Subsidiary has sponsored, maintained, or
contributed to any plan to which Title IV of
ERISA applies. No Compensation and Benefit Plan
is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Compensation
and Benefit Plan a plan described in section
4063(a) of ERISA.
(j) Compliance with Laws; Permits. (i) The
business and operations of LIFECO have been conducted in
compliance with all applicable statutes and regulations
regulating the business of insurance and all applicable
orders and directives of insurance regulatory authorities
(including federal authorities with respect to variable
insurance and annuity products) and market conduct
recommendations resulting from market conduct examinations
of insurance regulatory authorities (including federal
authorities with respect to variable insurance and annuity
products) (collectively, "Insurance Laws"), except where
the failure to so conduct such business and operations
would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect.
(ii) In addition to Insurance Laws, except as set
forth in the Company Reports filed prior to the date
hereof, the businesses of each of the Company and its
Subsidiaries have not been, and are not being, conducted in
violation of any federal, state, local or foreign law,
statute, ordinance, rule, regulation, judgment, order,
injunction, decree, arbitration award, agency requirement,
license or permit of any Governmental Entity (collectively,
"Laws"), except for violations that, individually or in the
aggregate, are not reasonably likely to have a Company
Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement.
(k) Takeover Statutes. No restrictive provision
of any "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or
regulation (each a "Takeover Statute") or restrictive
provision of any applicable anti-takeover provision in the
Company's certificate of incorporation and by-laws is
applicable to the Company, the Shares, the Merger or the
other transactions contemplated by this Agreement
(including, without limitation, Section 203 of the DGCL).
(l) Taxes. The Company and each of its
Subsidiaries (i) have prepared in good faith and duly and
timely filed (taking into account any extension of time
within which to file) all Tax Returns (as defined below)
required to be filed by any of them, except to the extent
that the failure to so file would not have a Company
Material Adverse Effect and all such filed Tax Returns are
complete and accurate in all material respects; (ii) have
paid all Taxes (as defined below) that are shown as due on
such tax return, except with respect to matters contested
in good faith; and (iii) have not waived any statute of
limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency. As of the date hereof, there are not pending
or, to the knowledge of the executive officers of the
Company threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes or
Tax matters. There are not, to the knowledge of the
executive officers of the Company, any unresolved questions
or claims concerning the Company's or any of its
Subsidiaries' Tax liability that are reasonably likely to
have a Company Material Adverse Effect.
As used in this Agreement, (i) the term "Tax"
(including, with correlative meaning, the terms "Taxes",
and "Taxable") includes all federal, state, local and
foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances,
stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production,
value added, occupancy and other taxes, duties or
assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to
such amounts and any interest in respect of such penalties
and additions, and (ii) the term "Tax Return" includes all
returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns)
supplied or required to be supplied to a Tax authority
relating to Taxes.
(m) Brokers and Finders. Neither the Company
nor any of its officers, directors or employees has
employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders, fees in connec-
tion with the Merger or the other transactions contemplated
in this Agreement except that the Special Committee of the
board of directors of the Company has employed Donaldson,
Lufkin & Jenrette Securities Corporation as its financial
advisor, the arrangements with which have been disclosed to
Parent prior to the date hereof.
5.2. Representations and Warranties of Parent and
Merger Sub. Except as set forth in the corresponding
sections or subsections of the disclosure letter delivered
to the Company by Parent on or prior to entering into this
Agreement (the "Parent Disclosure Letter"), Parent and
Merger Sub each hereby represent and warrant to the Company
that:
(a) Capitalization of Merger Sub. The autho-
rized capital stock of Merger Sub consists of 1,000 shares
of Common Stock, par value $1.00 per share, all of which
are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the
Effective Time will be, owned by Parent, and there are
(i) no other shares of capital stock or voting securities
of Merger Sub, (ii) no securities of Merger Sub convertible
into or exchangeable for shares of capital stock or voting
securities of Merger Sub and (iii) no options or other
rights to acquire from Merger Sub, and no obligations of
Merger Sub to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital
stock or voting securities of Merger Sub. Merger Sub has
not conducted any business prior to the date hereof and has
no, and prior to the Effective Time will have no, assets,
liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement
and the Merger and the other transactions contemplated by
this Agreement.
(b) Organization, Good Standing and Qualifica-
tion. (i) Each of Parent and its Subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar
power and authority to own and operate its properties and
assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its
business requires such qualification, except where the
failure to be so qualified or in such good standing, when
taken together with all other such failures, is not
reasonably likely to have a Parent Material Adverse Effect
(as defined below). Parent has made available to the
Company a complete and correct copy of Parent's and its
Significant Subsidiaries' certificates of incorporation and
by-laws, each as amended to the date hereof. Parent's and
its Significant Subsidiaries' certificates of incorporation
and by-laws so delivered are in full force and effect.
As used in this Agreement, the term "Parent
Material Adverse Effect" means a material adverse effect on
the financial condition, business or results of operations
of Parent and its Subsidiaries taken as a whole; provided,
however, that any such effect resulting from any change
(i) in law, rule or regulation or GAAP or interpretations
thereof that applies to Parent or (ii) in economic or
business conditions generally or in the life insurance or
annuity industries specifically shall not be considered
when determining if a Parent Material Adverse Effect has
occurred, except to the extent that any such change has
had, or may reasonably be expected to have, a
disproportionate effect on Parent and its Subsidiaries.
(ii) Parent conducts its insurance operations
principally through The Variable Annuity Life Insurance
Company, American General Life Insurance Company, American
General Life and Accident Insurance Company, The Franklin
Life Insurance Company and USLIFE Insurance Company
(collectively, the "Parent Insurance Subsidiaries"). Each
of the Parent Insurance Subsidiaries is (i) duly licensed
or authorized as an insurance company in its jurisdiction
of incorporation, (ii) duly licensed or authorized as an
insurance company and, where applicable, a reinsurer in
each other jurisdiction where it is required to be so
licensed or authorized, and (iii) duly authorized in its
jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business reported as
being written in the Parent SAP Statements (as hereinafter
defined).
(iii) Except for Parent's Subsidiaries,
Parent does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or
other business association or entity that directly or
indirectly conducts any activity which is material to
Parent.
(c) Capital Structure. As of June 30, 1997: (i)
the authorized capital stock of Parent consisted of
300,000,000 shares of Parent Common Stock and 60,000,000
shares of Preferred Stock, par value $1.50 per share, of
Parent ("Parent Preferred Shares"), (ii) 243,079,485 shares
of Parent Common Stock, and 2,317,701 shares of Parent
Preferred Shares (all of which are shares in the series
designated 7% Convertible Preferred Stock) were issued and
outstanding, and (iii) stock options to acquire 4,630,068
shares of Parent Common Stock (the "Parent Stock Options")
were outstanding under all stock option plans of Parent
(collectively, the "Parent Stock Plans"). All the issued
and outstanding shares of capital stock of Parent are
validly issued, fully paid and nonassessable and free of
preemptive rights. All the shares of Parent Common Stock
reserved for issuance in exchange for shares of Company
Common Stock at the Effective Time in accordance with this
Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive
rights. Since June 30, 1997 to the date hereof, no shares
of Parent's capital stock have been issued, except Parent
Common Stock issued pursuant to the exercise of Parent
Stock Options or upon conversion of shares of 7%
Convertible Preferred Stock. Except for (i) Parent Stock
Options, (ii) 2,317,701 shares of 7% Convertible Preferred
Stock of Parent, (iii) 4,500,000 shares of 6% Convertible
Monthly Income Preferred Securities, Series A, of American
General Delaware, L.L.C. and (iv) the Series A Junior
Participating Preferred Stock Purchase Rights attached to
the Parent Common Stock as of the date of this Agreement,
there are no options, warrants, subscriptions, calls,
rights, convertible securities or other agreements or
commitments obligating Parent to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its
capital stock. Parent has delivered to the Company a
complete and correct copy of the Rights Agreement, dated as
of July 29, 1989, as amended and supplemented as of the
date hereof (the "Parent Rights Agreement") relating to the
Series A Junior Preferred Stock Purchase Rights issued
thereunder. Neither Parent nor any of its Subsidiaries has
outstanding any Voting Debt.
(d) Corporate Authority.
(i) No vote of holders of capital stock of
Parent is necessary to approve this Agreement and the
Merger and the other transactions contemplated hereby.
Each of the Parent and Merger Sub has all requisite
corporate power and authority and has taken all corporate
action necessary in order to execute, deliver and perform
its obligations under this Agreement and to consummate, the
Merger. This Agreement is a valid and binding agreement of
Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(ii) The board of directors of Parent and Merger
Sub have each approved this Agreement and the Merger and
the other transactions contemplated hereby.
(iii) Prior to the Effective Time, Parent
will have taken all necessary action to permit it to issue
the number of shares of Parent Common Stock required to be
issued pursuant to Article IV. The Parent Common Stock,
when issued, will be validly issued, fully paid and
nonassessable, and no stockholder of Parent will have any
preemptive right of subscription or purchase in respect
thereof. The Parent Common Stock, when issued, will be
registered under the Securities Act and Exchange Act and
registered or exempt from registration under any applicable
state securities or "blue sky" laws.
(e) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the HSR Act, the Securities Act, the
Exchange Act, (C) to comply with state securities or "blue
sky" laws, (D) required to be made with the NYSE and
(E) the filing of appropriate documents with, and approval
of, the Commissioner of Insurance of Texas, and such
consents as may be required under the insurance laws of any
state in which the Company, Parent or any of their
respective subsidiaries is domiciled or does business, to
the knowledge of the executive officers of Parent,
following consultation with counsel, no notices, reports or
other filings are required to be made by Parent or Merger
Sub with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by Parent
or Merger Sub from, any Governmental Entity, in connection
with the execution and delivery of this Agreement by Parent
and Merger Sub and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated
hereby. The term "knowledge" when used in this Agreement
with respect to the executive officers of Parent shall mean
the actual knowledge of its officers holding a title of
"Senior Vice President" or above, without obligation of any
further review or inquiry, and does not include information
of which they may be deemed to have constructive knowledge
only.
(ii) The execution, delivery and performance of
this Agreement by Parent and Merger Sub do not, and the
consummation by Parent and Merger Sub of the Merger and the
other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default
under, the certificate or by-laws of Parent or Merger Sub
or the comparable governing instruments of any of its
Significant Subsidiaries, (B) a breach or violation of, or
a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other
encumbrance on the assets of Parent or any of its
Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any Contracts binding upon Parent or any
of its Subsidiaries or any Law or governmental or non-
governmental permit or license to which Parent or any of
its Subsidiaries is subject or (C) any change in the rights
or obligations of any party under any of the Contracts,
except, in the case of clause (B) or (C) above, for breach,
violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely
to have a Parent Material Adverse Effect or prevent,
materially delay or materially impair the ability of Parent
or Merger Sub to consummate the transactions contemplated
by this Agreement.
(f) Parent Reports; Financial Statements.
(i) Parent has delivered to the Company each
registration statement, report, proxy statement or informa-
tion statement prepared by it since December 31, 1994 (the
"Parent Audit Date"), including (i) Parent's Annual Report
on Form 10-K for the years ended December 31, 1994, 1995
and 1996 and (ii) Parent's Quarterly Report on Form 10-Q
for the periods ended March 31, 1997 and June 30, 1997,
each in the form (including exhibits, annexes and any
amendments thereto) filed with the SEC (collectively,
including any such reports filed subsequent to the date
hereof, the "Parent Reports"). As of their respective
dates, the Parent Reports did not, and any Parent Reports
filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading.
Each of the consolidated balance sheets included in or
incorporated by reference into the Parent Reports
(including the related notes and schedules) fairly
presents, or will fairly present, the consolidated
financial position of Parent and its Subsidiaries as of its
date and each of the consolidated statements of income and
of changes in financial position included in or
incorporated by reference into the Parent Reports
(including any related notes and schedules) fairly
presents, or will fairly present, the results of opera-
tions, retained earnings and changes in financial position,
as the case may be, of Parent and its Subsidiaries for the
periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect),
in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted
therein.
(ii) Since the Parent Audit Date, each of the
Parent Insurance Subsidiaries has filed all annual or
quarterly statements, together with all exhibits and
schedules thereto, required to be filed with or submitted
to the appropriate regulatory authorities of the
jurisdiction in which it is domiciled on forms prescribed
or permitted by such authority (collectively, the "Parent
SAP Statements"). Financial Statements included in the
Parent SAP Statements and prepared on a statutory basis,
including the notes thereto, have been prepared in all
material respects in accordance with accounting practices
prescribed or permitted by applicable state regulatory
authorities in effect as of the date of the respective
statements, and such accounting practices have been applied
on a substantially consistent basis throughout the periods
involved, except as expressly set forth in the notes or
schedules thereto. Such financial statements present
fairly the respective statutory financial positions and
results of operation of each of the Parent Insurance
Subsidiaries as of their respective dates and for the
respective periods presented therein.
(g) Absence of Certain Changes. Except as
disclosed in the Parent Reports filed prior to the date
hereof, since the Parent Audit Date, Parent and its
Subsidiaries have conducted their respective businesses
only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of
such businesses and there has not been (i) any change in
the financial condition, business or results of operations
of Parent and its Subsidiaries or, to the knowledge of the
executive officers of Parent, any development or
combination of developments that, individually or in the
aggregate, has had or is reasonably likely to have a Parent
Material Adverse Effect; (ii) except as required by GAAP or
applicable statutory accounting principles, any material
change by Parent in accounting principles, practices or
methods; (iii) except as otherwise permitted by this
Agreement, any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital
stock of Parent, except for dividends or other
distributions on its capital stock publicly announced prior
to the date hereof; (iv) any material addition, or any
development involving a prospective material addition, to
Parent's consolidated reserves for future policy benefits
or other policy claims and benefits other than as a result
of ordinary sales activities; or (v) except as required by
GAAP or applicable statutory accounting principles, any
material change in the accounting, actuarial, investment,
reserving, underwriting or claims administration policies,
practices, procedures, methods, assumptions or principles
of any Parent Insurance Subsidiary.
(h) Litigation and Liabilities. Except as dis-
closed in the Parent Reports filed prior to the date
hereof, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the executive
officers of Parent, threatened against Parent or any of its
Affiliates or (ii) obligations or liabilities, whether or
not accrued, contingent or otherwise, including those
relating to environmental and occupational safety and
health matters, that, individually or in the aggregate, are
reasonably likely to have a Parent Material Adverse Effect
or prevent or materially burden or materially impair the
ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(i) Contracts. Parent has made available to the
Company or the representatives of the Company a true,
accurate and complete copy of each Contract to which Parent
or any of the Parent Subsidiaries is a party or by which it
is bound which:
(i) is material to Parent and which is not
disclosed as an exhibit to Parent Reports; or
(ii) is a reinsurance or retrocession contract
which requires the payment of premiums by Parent
or the Parent Subsidiaries of amounts in excess
of $5,000,000 per year; or
(iii) is a distribution or other Contract
which accounts (or is reasonably likely to
account) for 5% or more of Parent's or the Parent
Subsidiaries' premiums and deposits annually; or
(iv) contains covenants limiting the freedom of
Parent or any of the Parent Subsidiaries to
engage in any line of business in any geographic
area or to compete with any person or entity or
restricting the ability of the Parent
Subsidiaries to acquire equity securities of any
person or entity; or
(v) is an employment or severance contract
applicable to any employee of Parent or the
Parent Subsidiaries, including without limitation
contracts to employ executive officers and other
contracts with officers or directors of Parent or
any of the Parent Subsidiaries, other than any
such Contract which by its terms is terminable by
Parent or any of the Parent Subsidiaries on not
more than 60 days' notice without material
liability (collectively, together with such
contracts as are filed as exhibits to the Parent
Reports, the "Parent Contracts").
(j) Compliance with Laws; Permits. (i) The
business and operations of the Parent Insurance
Subsidiaries have been conducted in compliance with all
applicable Insurance Laws, except where the failure to so
conduct such business and operations would not,
individually or in the aggregate, be reasonably likely to
have a Parent Material Adverse Effect.
(ii) In addition to Insurance Laws, except as set
forth in the Parent Reports filed prior to the date hereof,
the businesses of each of the Parent and its Subsidiaries
have not been, and are not being conducted in violation of
any Laws, except for violations that, individually or in
the aggregate, are not reasonably likely to have a Parent
Material Adverse Effect or prevent or materially burden or
materially impair the ability of Parent and Merger Sub to
consummate the transactions contemplated by this Agreement.
(k) Ownership of Shares. Parent "beneficially
owns" or is the "beneficial owner" of 32,201,964 Shares (as
such terms are defined in Section 13D of the Exchange Act
and the rules and regulations promulgated thereunder) and
all of the information contained in Parent's filings with
the SEC on Schedule 13D, as amended as of the date of this
Agreement, is true and correct in all material respects, it
being understood that Parent will amend such Schedule 13D
promptly following the execution of this Agreement.
(l) Brokers and Finders. Neither Parent nor any
of its officers, directors or employees has employed any
broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by
this Agreement, except that Parent has employed Goldman,
Sachs & Co. as its financial advisor, the arrangements with
which have been disclosed in writing to the Company prior
to the date hereof.
(m) Available Funds. Parent has or will have
available to it all funds necessary to satisfy all of its
obligations hereunder and in connection with the Merger and
the other transactions contemplated by this Agreement.
ARTICLE VI
Covenants
6.1. Interim Operations. (a) The Company
covenants and agrees that, after the date hereof and prior
to the Effective Time (unless Parent shall otherwise
approve, which approval shall not be unreasonably withheld
or delayed, and except as otherwise expressly contemplated
by this Agreement):
(i) the business of it and its Subsidiaries
shall be conducted in the ordinary and usual course and, to
the extent consistent therewith, it and its Subsidiaries
shall use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors,
creditors, lessors, employees and business associates;
(ii) it shall not (A) issue, sell, pledge,
dispose of or encumber any capital stock owned by it in any
of its Subsidiaries other than sales, dispositions or
transfers of such capital stock between the Company and/or
its Subsidiaries; (B) amend its certificate of
incorporation or by-laws; (C) split, combine or reclassify
its outstanding shares of capital stock; (D) declare, set
aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than
dividends from its direct or indirect wholly-owned
Subsidiaries and other than regular quarterly cash
dividends not in excess of $.04 per Share; or
(E) repurchase, redeem or otherwise acquire, except in
connection with the Stock Plan (including any Tax
withholding in connection with awards under the Stock
Plan), or permit any of its Subsidiaries to purchase or
otherwise acquire, any shares of its capital stock or any
securities convertible into or exchangeable or exercisable
for any shares of its capital stock;
(iii) neither it nor any of its Subsidiaries
shall (A) issue, sell, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable
or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of
its capital stock of any class (other than Shares issuable
pursuant to options outstanding on the date hereof under
the Stock Plan or Shares issuable under the Compensation
and Benefit Plans) or, other than in the ordinary and usual
course of business, any other property or assets and;
(B) other than in the ordinary and usual course of busi-
ness, transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any other property or assets
(including capital stock of any of its Subsidiaries) or
incur or modify any material indebtedness or other
liability; (C) other than in the ordinary and usual course
of business, make or authorize or commit for any capital
expenditures in excess of $10,000,000 or make any signifi-
cant acquisition of, or investment in, assets or stock of
any other Person or entity; or (D) incur any funded
indebtedness except as set forth in Section 6.1(a)(iii) of
the Company Disclosure Letter;
(iv) neither it nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new
grants or awards under, amend or otherwise modify, any
Compensation and Benefit Plans or increase the salary,
wage, bonus or other compensation of any employees except
increases occurring in the ordinary and usual course of
business (which shall include normal periodic performance
reviews and related compensation and benefit increases) or
enter into any transaction, agreement or arrangement with
or for the benefit of any of their respective officers,
directors or employees, other than any such transactions,
agreements or arrangements that have been previously
disclosed to Parent and are entered into in the ordinary
and usual course of business; provided, however, that, the
Company shall be permitted to take all actions necessary or
appropriate to provide for the cashless exercise of options
outstanding under the Stock Plan and, following
consultation with Parent, to pay bonuses in respect of 1997
prior to the Closing Date that are consistent with past
practices, and, subject to the consent of Parent,
additional bonuses;
(v) neither it nor any of its Subsidiaries shall
settle or compromise any material claims or litigation or,
except in the ordinary and usual course of business modify,
amend or terminate any of its material Contracts or waive,
release or assign any material rights or claims;
(vi) neither it nor any of its Subsidiaries shall
make or change any Tax election, settle any material audit,
file any amended Tax Returns or permit any insurance policy
naming it as a beneficiary or loss-payable payee to be
canceled or terminated except in the ordinary and usual
course of business; and
(vii) neither it nor any of its Subsidiaries
will authorize or enter into an agreement to do any of the
foregoing.
(b) Parent covenants and agrees that, after the
date hereof and prior to the Effective Time (unless the
Company shall otherwise approve, which approval shall not
be unreasonably withheld or delayed, and except as
otherwise expressly contemplated by this Agreement):
(i) the business of it and its Significant
Subsidiaries shall be conducted in the ordinary and usual
course and, to the extent consistent therewith, it and its
Significant Subsidiaries shall use all reasonable efforts
to preserve its business organization intact and maintain
its existing relations and goodwill with customers,
suppliers, distributors, creditors, lessors, employees and
business associates;
(ii) it shall not declare, set aside or pay any
dividend payable in cash, stock or property in respect of
any capital stock other than dividends from its direct or
indirect wholly-owned Subsidiaries and other than regular
quarterly cash dividends; and
(iii) neither it nor any of its Subsidiaries
will authorize or enter into an agreement to do any of the
foregoing.
6.2. Information Supplied. The Company and
Parent each agrees, as to itself and its Subsidiaries, that
none of the information supplied or to be supplied by it or
its Subsidiaries for inclusion or incorporation by
reference in (i) the Registration Statement on Form S-4 to
be filed with the SEC by Parent in connection with the
issuance of shares of Parent Common Stock in the Merger
(including the proxy statement and prospectus (the
"Prospectus/ Proxy Statement") constituting a part thereof)
(the "S-4 Registration Statement") will, at the time the
S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made,
not misleading, (ii) the Prospectus/Proxy Statement and any
amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the meeting of
stockholders of the Company to be held in connection with
the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading and (iii) any Transaction
Statement on Schedule 13E-3 to be filed with the SEC by the
Company concurrently with the filing of the preliminary
proxy materials relating to the Merger (the "Transaction
Statement") will, at the time the Transaction Statement is
filed with the SEC, at the time the S-4 Registration
Statement becomes effective, at the time the Prospectus/
Proxy Statement is mailed to the stockholders of the
Company and at the date of the meeting of the stockholders
of the Company, contain any untrue statement of a material
fact or omit to state any material law required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading.
6.3. Stockholders Meeting. The Company will
take, in accordance with applicable law and its certificate
of incorporation and by-laws, all action necessary to
convene a meeting of holders of Shares (the "Stockholders
Meeting") as promptly as practicable after the S-4
Registration Statement is declared effective to consider
and vote upon the approval of this Agreement. Subject to
Section 6.18 of this Agreement, the Company's board of
directors shall recommend such approval and shall take all
lawful action to solicit such approval.
6.4. Filings; Other Actions; Notification.
(a) Parent and the Company shall promptly prepare, and the
Company shall file with the SEC, the Prospectus/Proxy
Statement and the Transaction Statement, and Parent shall
prepare and file with the SEC the S-4 Registration
Statement as promptly as practicable. Parent and the
Company each shall use its best efforts to have the S-4
Registration Statement declared effective under the
Securities Act as promptly as practicable after such
filing, and promptly thereafter mail the Prospectus/Proxy
Statement to the stockholders of the Company.
(b) The Company and Parent each shall use its
best efforts to cause to be delivered to the other party
and its directors a letter of its independent auditors,
dated the date on which the S-4 Registration Statement
shall become effective, and addressed to the other party
and its directors, in form and substance customary for
"comfort" letters delivered by independent public
accountants in connection with registration statements
similar to the S-4 Registration Statement.
(c) The Company and Parent shall cooperate with
each other and use (and shall cause their respective
Subsidiaries to use) their respective reasonable best
efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable
on its part under this Agreement and applicable Laws to
consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary
notices, reports and other filings and to obtain as
promptly as practicable all consents, registrations,
approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the Merger or
any of the other transactions contemplated by this
Agreement. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have
the right to review in advance, and to the extent
practicable each will consult the other on, all the
information relating to Parent or the Company, as the case
may be, and any of their respective Subsidiaries, that
appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental
Entity in connection with the Merger and the other
transactions contemplated by this Agreement. In exercising
the foregoing right, each of the Company and Parent shall
act reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon
request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the
Prospectus/Proxy Statement, the S-4 Registration Statement
or any other statement, filing, notice or application made
by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the
transactions contemplated by this Agreement.
(e) The Company and Parent each shall keep the
other apprised of the status of matters relating to comple-
tion of the transactions contemplated hereby, including
promptly furnishing the other with copies of notice or
other communications received by Parent or the Company, as
the case may be, or any of its Subsidiaries, from any third
party and/or any Governmental Entity with respect to the
Merger and the other transactions contemplated by this
Agreement.
6.5. Access. Upon reasonable notice, and except
as may otherwise be required by applicable law, the Company
and Parent each shall (and shall cause its Subsidiaries to)
afford the other's officers, employees, counsel,
accountants and other authorized representatives
("Representatives") access, during normal business hours
throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during such
period, each shall (and shall cause its Subsidiaries to)
furnish promptly to the other all information concerning
its business, properties and personnel as may reasonably be
requested, provided that none of the Company, Parent nor
their respective Representatives shall be required to give
access to documents or disclose information if access to
the documents or disclosure of the information would result
in the loss of an attorney-client privilege and, provided,
further, no investigation pursuant to this Section shall
affect or be deemed to modify any representation or
warranty made by the Company, Parent or Merger Sub. All
requests for information made pursuant to this
Section shall be directed to an executive officer of the
Company or Parent, as the case may be, or such Person as
may be designated by either of its officers, as the case
may be.
6.6. Affiliates. Prior to the Effective Time,
the Company shall deliver to Parent a list of names and
addresses of those Persons who are, in the opinion of the
Company, as of the time of the Stockholders Meeting,
"affiliates" of the Company within the meaning of Rule 145
under the Securities Act. The Company shall provide to
Parent such information and documents as Parent shall
reasonably request for purposes of reviewing such list.
There shall be added to such list the names and addresses
of any other Person subsequently identified by either
Parent or the Company as a Person who may be deemed to be
such an affiliate of the Company; provided, however, that
no such Person identified by Parent shall be added to the
list of affiliates of the Company if Parent shall receive
from the Company, on or before the date of the Stockholders
Meeting, an opinion of counsel reasonably satisfactory to
Parent to the effect that such Person is not such an
affiliate. The Company shall seek to deliver or cause to
be delivered to Parent, prior to the date of the
Stockholders Meeting, from each affiliate of the Company
identified in the foregoing list (as the same may be
supplemented as aforesaid), a letter dated as of the
Closing Date substantially in the form attached as
Exhibit A (the "Affiliates Letter"). Parent shall not be
required to maintain the effectiveness of the S-4
Registration Statement or any other registration statement
under the Securities Act for the purposes of resale of
Parent Common Stock by such affiliates received in the
Merger and the certificates representing Parent Common
Stock received by such affiliates shall bear a customary
legend regarding applicable Securities Act restrictions and
the provisions of this Section.
6.7. Stock Exchange Listing. Parent shall use
its best efforts to cause the shares of Parent Common
Stock to be issued in the Merger to be approved for listing
on the NYSE subject to official notice of issuance, prior
to the Closing Date.
6.8. Publicity. The initial press release shall
be a joint press release and thereafter the Company and
Parent each shall consult with each other prior to issuing
any press releases or otherwise making public announcements
with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity
(including any national securities exchange) with respect
thereto, except as may be required by law or by obligations
pursuant to any listing agreement with or rules of any
national securities exchange.
6.9. Benefits.
(a) Stock Options.
(i) At the Effective Time, each outstanding
option to purchase Shares (a "Company Option") under the
Stock Plan, whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and
conditions as were applicable under such Company Option,
the same number of shares of Parent Common Stock as the
holder of such Company Option would have been entitled to
receive pursuant to the Merger had such holder exercised
such option in full immediately prior to the Effective Time
and the Shares received in such exercise been deemed to be
Stock Election Shares (without regard to any proration
thereof) (rounded down to the nearest whole number), at a
price per share (rounded up to the nearest whole cent)
equal to (y) the aggregate exercise price for the Shares
otherwise purchasable pursuant to such Company Option
divided by (z) the number of full shares of Parent Common
Stock deemed purchasable pursuant to such Company Option in
accordance with the foregoing; provided, however, that in
the case of any Company Option which is intended to be an
"incentive stock option" (as defined in Section 422 of the
Code), the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of
exercise of such option shall be determined in accordance
with the foregoing, subject to such adjustments as are
necessary in order to satisfy the requirements of
Section 424(a) of the Code. At or prior to the Effective
Time, the Company shall make all necessary arrangements to
permit the assumption of the unexercised Company Options by
Parent pursuant to this Section.
(ii) Effective at the Effective Time, Parent
shall assume each Company Option in accordance with the
terms of the Stock Plan under which it was issued and the
stock option agreement by which it is evidenced. At or
prior to the Effective Time, Parent shall take all corpo-
rate action necessary to reserve for issuance a sufficient
number of shares of Parent Common Stock for delivery upon
exercise of Company Options assumed by it in accordance
with this Section. As soon as practicable after the Effec-
tive Time, Parent shall file a registration statement on
Form S-3 or Form S-8, as the case may be (or any successor
or other appropriate forms), with respect to the Parent
Common Stock subject to such Company Options, and shall use
its best efforts to maintain the effectiveness of such
registration statements (and maintain the current status of
the prospectus or prospectuses contained therein) for so
long as such Company Options remain outstanding.
(b) Employee Benefits.
(i) From and after the Effective Time, Parent
shall, or shall cause the Company or any Subsidiary to,
honor and be bound by the terms and conditions of each
Compensation and Benefit Plan and each employee or
executive benefit plan, program or agreement, including,
without limitation, severance agreements, sponsored or
maintained by the Company or any Subsidiary or to which the
Company or any Subsidiary is party or which has been
adopted by the board of directors of the Company prior to
the date hereof (a "Company Benefit Arrangement"). Nothing
in the immediately preceding sentence shall be construed to
limit the right of Parent or any Parent Subsidiary, as the
case may be, following the Effective Time to amend, modify
or terminate any such Company Benefit Arrangement pursuant
to the terms and conditions thereof as in effect
immediately prior to the Effective Time.
(ii) Without limiting the generality of the
foregoing, from and after the Effective Time, Parent shall,
or shall cause the Company and its Subsidiaries to, make
available to each person who is an employee of the Company
and its subsidiaries at the Effective Time (the "Company
Employees") employee benefit plans and programs which are
either (a) the same as are made available to the employees
of Parent, on terms and conditions generally applicable to
the employees of Parent (except that no accrued service
credit will be given to Company Employees for service prior
to the Effective Time under Parent's defined benefit
retirement plan) or (b) no less favorable to the Company
Employees than the terms and conditions of the Company
Benefit Arrangements in which they were participating
immediately prior to the Effective Time. Notwithstanding
the foregoing, in no event shall any employee receive
duplicate benefits with respect to any period of service.
To the extent any employee benefit plan or program in which
any Company Employee participates after the Effective Time
(x) imposes any pre-existing condition limitation, such
condition shall be waived, (y) has a deductible or requires
a co-payment by the Company Employee that is subject to a
maximum out-of-pocket limitation, there shall be credited
against any such deductible or limitation any costs
incurred by such Company Employee during the comparable
period under the terms of the corresponding Company Benefit
Arrangement prior to the Effective Time or (z) imposes a
waiting period, for purposes of eligibility or vesting, the
Company Employees will receive credit for service with the
Company or its Subsidiaries prior to the Effective Time.
6.10. Expenses. Parent will pay, or will cause
the Surviving Corporation to pay, all charges and expenses,
including those of the Exchange Agent, in connection with
the transactions contemplated in Article IV. Whether or
not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Merger
and the other transactions contemplated by this Agreement
shall be paid by the party incurring such expense, except
that, in the event that the Merger is not consummated,
expenses incurred in connection with the filing fee for the
S-4 Registration Statement and printing and mailing the
Prospectus/Proxy Statement and the S-4 Registration
Statement shall be shared equally by Parent and the
Company.
6.11. Indemnification; Directors' and Officers'
Insurance. (a) Parent shall indemnify and hold harmless,
to the fullest extent permitted under applicable law (and
Parent shall also advance expenses as incurred to the
fullest extent permitted under applicable law provided the
Person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemni-
fication), each present and former director, officer and
employee of the Company and its Subsidiaries (collectively,
the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to
the Effective Time, including the transactions contemplated
by this Agreement; provided, however, that Parent shall not
have any obligation hereunder to any Indemnified Party if
and when a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 6.12,
upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Parent thereof, but
the failure to so notify shall not relieve Parent of any
liability it may have to such Indemnified Party if such
failure does not materially prejudice the indemnifying
party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or
after the Effective Time), (i) Parent or the Surviving Cor-
poration shall have the right to assume the defense thereof
and Parent shall not be liable to such Indemnified Parties
for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if
Parent or the Surviving Corporation elects not to assume
such defense or counsel for the Indemnified Parties advises
that there are issues which raise conflicts of interest
between Parent or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent or the Surviving
Corporation shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as state-
ments therefor are received; provided, however, that Parent
shall be obligated pursuant to this paragraph (b) to pay
for only one firm of counsel for all Indemnified Parties in
any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a
conflict of interest, (ii) the Indemnified Parties will
cooperate in the defense of any such matter and
(iii) Parent shall not be liable for any settlement
effected without its prior written consent. If such
indemnity is not available with respect to any Indemnified
Party, then the Surviving Corporation and the Indemnified
Party shall contribute to the amount payable in such
proportion as is appropriate to reflect relative faults and
benefits.
(c) For not less than six years after the
Effective Time, Parent shall and shall cause the Surviving
Corporation to, maintain in effect directors' and officers'
liability insurance covering the Indemnified Parties who
are currently covered by the Company's existing directors'
and officers' liability insurance, on terms and conditions
no less favorable to such directors and officers than those
in effect on the date hereof; provided that in no event
shall Parent or the Surviving Corporation be required to
expend in any one year an amount in excess of 200% of the
annual premiums currently paid by the Company for such
insurance; and, provided, further, that if the annual
premiums of such insurance coverage exceed such amount,
Parent shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such
amount.
(d) If the Surviving Corporation or any of its
successors or assigns (i) shall consolidate with or merge
into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each
such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall
assume all of the obligations set forth in this Section.
(e) The provisions of this Section are intended
to be for the benefit of, and shall be enforceable by, each
of the Indemnified Parties, their heirs and their
representatives.
6.12. Takeover Statute. If any Takeover Statute
is or may become applicable to the Merger or the other
transactions contemplated by this Agreement, each of Parent
and the Company and its board of directors shall grant such
approvals and take such actions as are necessary so that
such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or
by the Merger and otherwise act to eliminate or minimize
the effects of such statute or regulation on such
transactions.
6.13. Parent Vote. Parent shall vote (or
consent with respect to) or cause to be voted (or a consent
to be given with respect to) any Shares and any shares of
common stock of Merger Sub beneficially owned by it or any
of its Affiliates or with respect to which it or any of its
Affiliates has the power (by agreement, proxy or otherwise)
to cause to be voted (or to provide a consent), in favor of
the adoption and approval of this Agreement at any meeting
of stockholders of the Company or Merger Sub, respectively,
at which this Agreement shall be submitted for adoption and
approval and at all adjournments or postponements thereof
(or, if applicable, by any action of stockholders of either
the Company or Merger Sub by consent in lieu of a meeting).
6.14. Election to Parent's Board of Directors.
At the Effective Time of the Merger, Parent shall promptly
increase the size of its Board of Directors in order to
cause Mr. Michael J. Poulos to be appointed to Parent's
board of directors and, subject to fiduciary obligations
under applicable law, shall use its best efforts to cause
Mr. Michael J. Poulos to be elected as a director of Parent
at the first annual meeting of stockholders of Parent with
a proxy mailing date after the Effective Time.
6.15. Amendment to Shareholder's Agreement.
Simultaneously with the execution of this Agreement, Parent
and the Company shall enter into an amendment to the
Shareholder's Agreement, dated as of December 2, 1994 (the
"Shareholder's Agreement"), between Parent and the Company,
in the form attached as Exhibit B hereto.
6.16. Acquisition Proposals. The Company
shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any officer, director or
employee of or any investment banker, attorney, accountant
or other advisor or representative of, the Company or any
of its Subsidiaries to, directly or indirectly, (i)
solicit, initiate or encourage the submission of any
Acquisition Proposal (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to,
or agree to or endorse, or take any other action to
facilitate, any Acquisition Proposal or any inquiries or
the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition
Proposal; provided, however, that nothing contained in this
Section 6.16 shall prohibit the Board of Directors of the
Company from furnishing information to, or entering into
discussions or negotiations with, any person or entity that
makes an unsolicited bona fide Acquisition Proposal if, and
only to the extent that (A) the Board of Directors of the
Company, after consultation with and based upon the advice
of independent legal counsel, determines in good faith that
such action is necessary for the Board of Directors of the
Company to comply with its fiduciary duties to the Company
stockholders under applicable law and (B) prior to taking
such action, the Company (x) provides reasonable notice to
Parent to the effect that it is taking such action and (y)
receives from such person or entity an executed
confidentiality agreement in customary form. The Company
shall notify Parent of any Acquisition Proposal (including,
without limitation, the material terms and conditions
thereof and the identity of the person making it) as
promptly as practicable after its receipt thereof, and
shall provide Parent with a copy of any written Acquisition
Proposal or amendments or supplements thereto, and shall
thereafter inform Parent on a prompt basis of the status of
any discussions or negotiations with such a third party,
and any material changes to the terms and conditions of
such Acquisition Proposal, and shall promptly give Parent a
copy of any information delivered to such person which has
not previously been reviewed by Parent. The term
"Acquisition Proposal" as used herein means any tender or
exchange offer involving the capital stock of the Company
or any of the Company Subsidiaries, any proposal for a
merger, consolidation or other business combination
involving the Company or any of the Company's Subsidiaries,
any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of
the business or assets of, the Company or any of the
Company's Subsidiaries, any proposal or offer with respect
to any recapitalization or restructuring of the Company or
any of the Company's Subsidiaries, or any proposal or offer
with respect to any other transactions similar to any of
the foregoing with respect to the Company of any of the
Company Subsidiaries, other than the Merger contemplated by
this Agreement. Immediately after the execution and
delivery of this Agreement, the Company will, and will
cause its Subsidiaries and affiliates, and their respective
officers, directors, employees, investment bankers,
attorneys, accountants and other agents to, cease and
terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with
respect to any possible Acquisition Proposal and shall
notify each party that it, or any officer, director,
investment advisor, financial advisor, attorney or other
representative retained by it, has had discussions with
during the 30 days prior to the date of this Agreement that
the Board of Directors of the Company no longer seeks the
making of any Acquisition Proposal.
6.17 Fiduciary Duties. The Board of Directors of
the Company shall not (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Merger
Sub, the approval or recommendation by such Board of
Directors of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any
Acquisition Proposal, (iii) enter into any agreement (other
than a confidentiality agreement entered into in accordance
with Section 6.16(B)(y)) with respect to any Acquisition
Proposal, or (iv) terminate this Agreement in response to
an Acquisition Proposal unless, in each case, the Company
receives an unsolicited Acquisition Proposal and the Board
of Directors of the Company determines in good faith,
following consultation with independent legal counsel and
financial advisors, that such action is necessary in order
to comply with its fiduciary duties to stockholders under
applicable law. Nothing contained in this Section 6.17
shall prohibit the Company from taking and disclosing to
its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders which, in the good
faith reasonable judgment of the Board of Directors of the
Company based on the advice of independent legal counsel,
is required under applicable law; provided that, except as
otherwise permitted in this Section 6.17, the Company does
not withdraw or modify, or propose to withdraw or modify,
its position with respect the Merger or approve or
recommend, or propose to approve or recommend, an
Acquisition Proposal. The parties agree that nothing in
this Agreement shall require any director of the Company to
violate any applicable Law.
6.18. Intercompany Dividend. If Parent so
requests, on or before the business day immediately
preceding the Closing Date, the Company will cause LIFECO
to declare and pay a dividend to the Company in such amount
as Parent may request, subject to legally available funds,
such dividend to be paid in the form of a demand promissory
note or such other form as the parties may mutually agree.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party
to effect the Merger is subject to the satisfaction or
waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall
have been duly approved by holders of Shares constituting
the Company Requisite Vote and shall have been duly
approved by the sole stockholder of Merger Sub in
accordance with applicable law and the certificate and
by-laws of each such corporation.
(b) NYSE Listing. The shares of Parent Common
Stock issuable to the Company stockholders pursuant to this
Agreement shall have been authorized for listing on the
NYSE upon official notice of issuance.
(c) Regulatory Consents. The waiting period
applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated and, other than
the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the
Effective Time by the Company or Parent or any of their
respective Subsidiaries with, and all consents,
registrations, approvals, permits and authorizations
required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries
from (i) the Texas Department of Insurance and the Missouri
Department of Insurance and (ii) any other Governmental
Entity the failure to make or obtain which would be
reasonably likely to result in a Company Material Adverse
Effect or a Parent Material Adverse Effect or in the
imposition of criminal sanctions, in connection with the
execution and delivery of this Agreement and the
consummation of the Merger and the other transactions
contemplated hereby by the Company, Parent and Merger Sub
shall have been made or obtained (as the case may be).
(d) Litigation. No court or Governmental Entity
of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, statute,
ordinance, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or
permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Merger
(collectively, an "Order").
(e) S-4. The S-4 Registration Statement shall
have become effective under the Securities Act. No stop
order suspending the effectiveness of the S-4 Registration
Statement shall have been issued, and no proceedings for
that purpose shall have been initiated or be threatened, by
the SEC.
7.2. Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to
effect the Merger are also subject to the satisfaction or
waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. Each of (i)
the representations and warranties of the Company set forth
in this Agreement that is qualified by a "Company Material
Adverse Effect" standard shall be true and correct as of
the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the
extent any such representation or warranty expressly speaks
as of an earlier date), and (ii) such representations and
warranties that is not so qualified (the "Non-Qualified
Representations") shall be true and correct in all material
respects as of the date of the Agreement and as of the
Closing Date (except to the extent any such representation
or warranty expressly speaks as of an earlier date), and
Parent shall have received a certificate signed on behalf
of the Company by the Chairman or any Vice Chairman of the
Company to such effect; provided, however, that
notwithstanding anything herein to the contrary, this
Section 7.2(a) shall be deemed to have been satisfied even
if such Non-Qualified Representations are not so true and
correct unless the failure of such Non-Qualified
Representations to be so true and correct, individually or
in the aggregate, has had, or is reasonably likely to have,
a Company Material Adverse Effect or is reasonably likely
to prevent or to materially burden or materially impair the
ability of the Company to consummate the transactions
contemplated by this Agreement.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material respects
all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on behalf of the Company
by the Chairman or any Vice Chairman of the Company to such
effect.
(c) Consents Under Agreements. The Company
shall have obtained the consent or approval of each Person
whose consent or approval shall be required under any
Contract to which the Company or any of its Subsidiaries is
a party, except those for which the failure to obtain such
consent of approval, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse
Effect or is not reasonably likely to prevent or to
materially burden or materially impair the ability of the
Company to consummate the transactions contemplated by this
Agreement.
(d) Terminations. No policyholder,
contractholder or group of policyholder or contractholder
affiliates, or Persons writing, selling, distributing or
producing business, that individually accounted for 10% or
more of the annual premium or annuity income (as determined
in accordance with SAP) of the Company and the Company
Subsidiaries, taken as a whole, for the twelve-month period
then ended, shall have (x) terminated or given written
notice of its intention to terminate any agreements in
effect on the date hereof or (y) adversely modified the
terms of such agreements in a manner reasonably likely to
result in a Company Material Adverse Effect.
(e) The employment and severance agreements
between Parent and certain employees of the Company entered
into on the date hereof shall not have been repudiated by
such employees.
7.3. Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is also
subject to the satisfaction or waiver by the Company at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. Each of (i)
the representations and warranties of Parent and Merger Sub
set forth in this Agreement that is qualified by a "Parent
Material Adverse Effect" standard shall be true and correct
in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the
Closing Date (except to the extent any such representation
and warranty expressly speaks as of an earlier date), and
(ii) such representations and warranties that is not so
qualified (the Non-Qualified Parent Representations) shall
be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date (except to the
extent any such representation or warranty expressly speaks
as of an earlier date), and the Company shall have received
a certificate signed on behalf of Parent by the Vice
Chairman or the President of Parent and the President of
Merger Sub to such effect; provided, however, that
notwithstanding anything herein to the contrary, this
Section 7.3(a) shall be deemed to have been satisfied even
if such Non-Qualified Parent Representations are not so
true and correct unless the failure of such Non-Qualified
Parent Representations to be so true and correct,
individually or in the aggregate, has had, or is reasonably
likely to have, a Parent Material Adverse Effect or is
reasonably likely to prevent or to materially burden or
materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(b) Performance of Obligations of Parent and
Merger Sub. Each of Parent and Merger Sub shall have
performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to
the Closing Date and the Company shall have received a
certificate signed on behalf of Parent by the Vice Chairman
or President of Parent and the President of Merger Sub to
such effect.
(c) Consents Under Agreements. Parent shall
have obtained the consent or approval of each Person whose
consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement
under any Contract to which Parent or any of its
Subsidiaries is a party, except those for which failure to
obtain such consents and approvals, individually or in the
aggregate, is not reasonably likely to have a Parent
Material Adverse Effect or is not reasonably likely to
prevent or to materially burden or materially impair the
ability of Parent to consummate the transactions
contemplated by this Agreement.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This
Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or
after the approval by stockholders of the Company referred
to in Section 7.1(a), by mutual written consent of the
Company and Parent by action of their respective Boards of
Directors.
8.2. Termination by Either Parent or the Company.
This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time by action
of the Board of Directors of either Parent or the Company
if (i) the Merger shall not have been consummated by June
30, 1998, whether such date is before or after the date of
approval by the stockholders of the Company (the
"Termination Date"), (ii) the approval of the Company's
stockholders required by Section 7.1(a) shall not have been
obtained at a meeting duly convened therefor or at any
adjournment or postponement thereof or (iii) any Order
permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-
appealable (whether before or after the approval by the
stockholders of the Company); provided, that the right to
terminate this Agreement pursuant to clause (i) above shall
not be available to any party that has breached in any
material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the
failure of the Merger to be consummated.
8.3. Termination by the Company. This Agreement
may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, whether before or after
the approval by stockholders of the Company referred to in
Section 7.1(a), by action of the Board of Directors of the
Company if (a) the Board of Directors of the Company shall
have taken or resolved to take any of the actions set forth
in, and in accordance with the terms of, clauses (i) - (iv)
of Section 6.17, (b) there has been a material breach by
Parent or Merger Sub of any representation, warranty,
covenant or agreement contained in this Agreement that is
not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by the Company
to the party committing such breach, and which would be
reasonably likely to result in the failure of a condition
to Closing contained in Section 7.1 or 7.3 of this
Agreement to be satisfied, or (c) subject to Section
4.4(b), the Board of Directors of the Company shall have
exercised its rights under Section 4.4(a).
8.4. Termination by Parent. This Agreement may
be terminated and the Merger may be abandoned at any time
prior to the Effective Time, by action of the Board of
Directors of Parent if (a) the Board of Directors of the
Company shall have taken or resolved to take any of the
actions set forth in clauses (i) - (iv) of Section 6.17, or
(b) there has been a material breach by the Company of any
representation, warranty, covenant or agreement contained
in this Agreement that is not curable or, if curable, is
not cured within 30 days after written notice of such
breach is given by Parent to the party committing such
breach, and which would be reasonably likely to result in
the failure of a condition to Closing contained in Section
7.1 or 7.2 of this Agreement to be satisfied.
8.5. Effect of Termination and Abandonment. (a)
In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII,
this Agreement (other than as set forth in Section 8.5(b)
and in Section 9.1) shall become void and of no effect with
no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal and
financial advisors or other representatives); provided,
however, except as otherwise provided herein, no such
termination shall relieve any party hereto of any liability
or damages resulting from any willful breach of this
Agreement.
(b) In the event that (i) this Agreement is terminated
by Parent pursuant to Section 8.4(a), (ii) this Agreement
is terminated by the Company pursuant to Section 8.3(a), or
(iii) prior to the termination of this Agreement any Person
shall have commenced a tender or exchange offer which
would, if successful, result in the acquisition by such
Person of fifty-one percent (51%)or more of the outstanding
Shares and such tender or exchange offer is completed not
later than six (6) months following the termination of this
Agreement, the Company shall promptly, but not later than
two business days after the date of any such termination
(or the date of completion of such tender or exchange
offer, as the case may be), pay to Parent in same day funds
an amount, not to exceed $7.5 million, equal to the
reasonably documented out-of-pocket expenses incurred by
Parent in connection with this Agreement and the
transactions contemplated hereby, including, without
limitation, any fees and expenses of financial advisors and
legal counsel. The Company acknowledges that the
agreements contained in this Section 8.5(b) are an integral
part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter
into this Agreement.
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX and the agree-
ments of the Company, Parent and Merger Sub contained in
Sections 6.7 (Stock Exchange Listing), 6.9 (Benefits), 6.10
(Expenses) and 6.11 (Indemnification; Directors' and
Officers' Insurance) shall survive the consummation of the
Merger. This Article IX, the agreements of the Company,
Parent and Merger Sub contained in Section 4.4 (Termination
Right; Adjustment Right) Section 6.8 (Publicity),
Section 6.10 (Expenses), and Section 8.5 (Effect of
Termination and Abandonment) shall survive the termination
of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement shall not
survive the consummation of the Merger or the termination
of this Agreement.
9.2. Modification or Amendment. Subject to the
provisions of applicable law, at any time prior to the
Effective Time, the parties hereto may modify or amend this
Agreement by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to
each of the parties' obligations to consummate the Merger
are for the sole benefit of such party and may be waived by
such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be
executed in any number of counterparts, each such counter-
part being deemed to be an original instrument, and all
such counterparts shall together constitute the same
agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN
AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the
Federal courts of the United States of America located in
the State of Delaware solely in respect of the interpreta-
tion and enforcement of the provisions of this Agreement
and of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement
hereof or of any such document, that it is not subject
thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement
or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be
heard and determined in such a Delaware State or Federal
court. The parties hereby consent to and grant any such
court jurisdiction over the person of such parties and over
the subject matter of such dispute and agree that mailing
of process or other papers in connection with any such
action or proceeding in the manner provided in Section 9.6
or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction
or other document to be given hereunder by any party to the
others shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent or Merger Sub
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attention: President
fax: (713) 831-1266
(with a copy to:
Morris J. Kramer, Esq
Skadden, Arps, Slate, Meagher & Flom, LLP
919 Third Avenue
New York, NY 10022
fax: (212) 735-2000)
if to the Company
Western National Corporation
5555 San Felipe, Suite 900
Houston, Texas 77056
Attention: President
fax: (713) 888-7894
(with a copy to:
James C. Morphy, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
fax: (212) 558-3588)
or to such other persons or addresses as may be designated
in writing by the party to receive such notice as provided
above.
9.7. Entire Agreement; No Other Representations.
This Agreement (including any exhibits hereto), the Company
Disclosure Letter and the Parent Disclosure Letter
constitute the entire agreement, and supersede all other
prior agreements, understandings, representations and
warranties both written and oral, among the parties, with
respect to the subject matter hereof. EACH PARTY HERETO
AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND MERGER SUB
NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR
WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL
ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION
WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as
provided in Section 6.11 (Indemnification; Directors' and
Officers' Insurance), this Agreement is not intended to
confer upon any Person other than the parties hereto any
rights or remedies hereunder.
9.9. Obligations of Parent and of the Company.
Whenever this Agreement requires a Subsidiary of Parent to
take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement
requires a Subsidiary of the Company to take any action,
such requirement shall be deemed to include an undertaking
on the part of the Company to cause such Subsidiary to take
such action and, after the Effective Time, on the part of
the Surviving Corporation to cause such Subsidiary to take
such action.
9.10. Severability. The provisions of this
Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability or the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as
may be valid and enforceable, the intent and purpose of
such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the validity or
enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents
and headings herein are for convenience of reference only,
do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions
hereof. Where a reference in this Agreement is made to a
Section or Exhibit, such reference shall be to a Section of
or Exhibit to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed
by the words "without limitation."
9.12. Assignment. This Agreement shall not
be assignable by operation of law or otherwise; provided,
however, that Parent may designate, by written notice to
the Company, another wholly-owned direct or indirect
Subsidiary to be a Constituent Corporation in lieu of
Merger Sub, in which event all references herein to Merger
Sub shall be deemed references to such other Subsidiary,
except that all representations and warranties made herein
with respect to Merger Sub as of the date of this Agreement
shall be deemed representations and warranties made with
respect to such other Subsidiary as of the date of such
designation.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of
the parties hereto as of the date first written above.
WESTERN NATIONAL CORPORATION
By:/S/ MICHAEL J. POULOS
Name: Michael J. Poulos
Title: Chairman, President
and Chief Executive Officer
AMERICAN GENERAL CORPORATION
By:/S/ ROBERT M. DEVLIN
Name: Robert M. Devlin
Title: Chairman and
Chief Executive Officer
ASTRO ACQUISITION CORP.
By:/S/ ROBERT M. DEVLIN
Name: Robert M. Devlin
Title: Chairman and
President
[PAGE]
EXHIBIT A
FORM OF AFFILIATE AGREEMENT
, 1998
American General Corporation
2929 Allen Parkway
Houston, TX 77019-2155
Ladies and Gentlemen:
The undersigned has been advised that as of the date
of this letter the undersigned may be deemed to be an
"affiliate" of Western National Corporation, a Delaware
corporation (the "Company"), as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145
of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended
(the "Act"). Pursuant to the terms of the Agreement and
Plan of Merger, dated as of September 11, 1997 (the
"Agreement"), by and among the Company, American General
Corporation, a Texas corporation ("Parent"), and Merger
Sub, a Delaware corporation and an indirect wholly owned
subsidiary of Parent ("Merger Sub"), Merger Sub will be
merged with and into the Company (the "Merger").
As a result of the Merger, the undersigned may receive
shares of common stock, par value $.50 per share, of Parent
(the "Parent Stock") in exchange for shares of Common
Stock, par value $.001 per share, of the Company.
1. The undersigned represents, warrants, and agrees to
and with Parent that in the event the undersigned receives
any Parent Stock as a result of the Merger:
A. The undersigned shall not make any sale,
transfer, or other disposition of such Parent Stock in
violation of the Act or the Rules and Regulations.
B. The undersigned has carefully read this letter
and the Agreement and discussed the requirements of such
documents and other applicable limitations upon the
undersigned's ability to sell, transfer, or otherwise
dispose of the Parent Stock, to the extent the undersigned
has considered necessary, with counsel for the undersigned
or counsel for the Company.
C. The undersigned has been advised that the
issuance of the Parent Stock to the undersigned pursuant to
the Merger has been registered with the Commission under
the Act on a registration Statement on Form S-4. However,
the undersigned has also been advised that, because at the
time the Merger was submitted for a vote of the
stockholders of the Company the undersigned may be deemed
to have been an "affiliate" of the Company and the
distribution by the undersigned of the Parent Stock has not
been registered under the Act, the undersigned may not
sell, transfer or otherwise dispose of the Parent Stock
issued to the undersigned in the Merger unless (i) such
sale, transfer, or other disposition has been registered
under the Act, (ii) such sale, transfer, or other
disposition is made in conformity with the provisions of
Rule 145 promulgated by the Commission under the Act, or
(iii) in the opinion of counsel reasonably acceptable to
Parent, or a "no action" letter obtained by the undersigned
from the staff of the Commission, such sale, transfer, or
other disposition is otherwise exempt from registration
under the Act.
D. The undersigned understands that Parent is under
no obligation to register the sale, transfer, or other
disposition of the Parent Stock by the undersigned or on
behalf of the undersigned under the Act or to take any
other action necessary in order to make compliance with an
exemption from such registration available.
E. The undersigned also understands that stop
transfer instructions will be given to Parent's transfer
agent with respect to the Parent Stock and that there will
be placed on the certificates for the Parent Stock issued
to the undersigned, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT, DATED AS OF
SEPTEMBER 11, 1997, BETWEEN THE REGISTERED HOLDER
HEREOF AND AMERICAN GENERAL CORPORATION, A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF AMERICAN GENERAL CORPORATION."
F. The undersigned also understands that unless the
transfer by the undersigned of its Parent Stock has been
registered under the Act or is a sale made in conformity
with the provisions of Rule 145, Parent reserves the right
to put the following legend on the certificates issued to
the transferee of the undersigned:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVES
SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OF 1933.
2. By Parent's acceptance of this letter, Parent agrees
with the undersigned as follows:
A. For as long as and to the extent necessary to
permit the undersigned to sell the Parent Shares pursuant
to Rule 145 and, to the extent applicable, Rule 144 under
the Act, Parent shall (a) use its reasonable efforts to (i)
file, on a timely basis, all reports and data required to
be filed with the Commission by it pursuant to Section 13
of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and (ii) furnish to the undersigned upon
request a written statement as to whether Parent has
complied with such reporting requirements during the 12
months preceding any proposed sale of the Parent Shares by
the undersigned under Rule 145, and (b) otherwise use its
reasonable efforts to permit such sales pursuant to Rule
145 and Rule 144. Parent hereby represents to the
undersigned that it has filed all reports required to be
filed with the Commission under Section 13 of the 1934 Act
during the preceding 12 months.
B. It is understood and agreed that certificates
with the legends set forth in paragraphs E and F above will
be substituted by delivery of certificates without such
legend if (i) one year shall have elapsed from the date the
undersigned acquired the Parent Shares received in the
Merger and the provisions of Rule 145(d)(2) are then
available to the undersigned, (ii) two years shall have
elapsed from the date the undersigned acquired the Parent
Shares received in the Merger and the provisions of Rule
145(d)(3) are then applicable to the undersigned, or (iii)
Parent has received either an opinion of counsel, which
opinion and counsel shall be reasonable satisfactory to
Parent, or a "no action" letter obtained by the undersigned
from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Execution of this letter should not be considered an
admission on the part of the undersigned that the
undersigned is an "affiliate" of the Company as described
in the first paragraph of this letter or as a waiver of any
rights the undersigned may have to object to any claim that
the undersigned is such as an affiliate on or after the
date of this letter.
Very truly yours,
Accepted this day of , 1997
By:
Name:
Title:
[PAGE]
EXHIBIT B
AMENDMENT NO. 2 TO SHAREHOLDER'S AGREEMENT
AMENDMENT NO. 2 TO SHAREHOLDER'S AGREEMENT, dated as of
this 11th day of September, 1997 (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, as amended
by Amendment No. 1 to Shareholder's Agreement dated as of
September 13, 1996 (as amended, the "Shareholder's
Agreement"); and
WHEREAS, AGC, Astro Acquisition Corp. and the Company
have entered into that certain Agreement and Plan of
Merger, dated as of the date hereof (the "Merger
Agreement);
NOW, THEREFORE, the parties hereto agree as follows:
(a) The Company and Shareholder agree that,
notwithstanding the prohibitions in Section 1.2 and Section
1.3 of the Shareholder's Agreement, the Shareholder's
Agreement shall not be deemed to (a) prohibit the execution
and delivery of the Merger Agreement by Stockholder and
Merger Sub or the consummation of the transactions
contemplated thereby; or (b) prohibit Stockholder or Merger
Sub from making a competing proposal following receipt by
the Company of an Acquisition Proposal (as defined in the
Merger Agreement) from a third party.
(b) The provisions of Section 1.4 and Article IV
(other than Sections 4.9 and 4.10) of the Shareholder's
Agreement are incorporated herein by reference in their
entirety with the exception that all references in Article
IV to "this Agreement" or the "Shareholder's Agreement"
shall be deemed to refer to this Amendment or the
Shareholder's Agreement as amended by this Amendment, as
the context requires.
(c) This Amendment may be executed in counterparts
all of which together shall constitute a single agreement.
(d) This Amendment shall become effective as of the
date first written above.
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:
NEWS RELEASE
97-26
[LOGO]
American General Corporation
P. O. Box 3247
Houston, Texas 77253
CONTACT:
American General
Robert D. Mrlik
Vice President -
Investor Relations
(713) 831-1137
John E. Pluhowski
Director - Corporate
Communications
(713) 831-1149
Western National
Patrick E. Grady
Vice President -
Investor Relations
(713) 888-7848
FOR IMMEDIATE RELEASE
AMERICAN GENERAL TO ACQUIRE REMAINING 55%
INTEREST OF
WESTERN NATIONAL CORPORATION FOR $1.2 BILLION
Houston, September 12, 1997 -- American General Corporation
(NYSE: AGC) and Western National Corporation (NYSE: WNH)
today jointly announced a definitive agreement under which
American General will acquire the remaining 55% of the common
stock of Western National for
a total consideration consisting of cash and American General
common stock valued at approximately $1.2 billion or $29.75
per share. American General currently owns 45% of the common
stock of Western National.
The transaction has been approved by the boards of
directors of both American General and Western National, and
by a special committee of Western National's board of
directors. The transaction, which is subject to approval by
Western National's shareholders and requisite regulatory
authorities, will be taxable to Western National shareholders
and is expected to close in early 1998.
In commenting on the transaction, Robert M. Devlin,
chairman and chief executive officer of American General,
said, "We are excited about the addition of Western National
and the opportunities for growth that this combination
creates. As the nation's number one provider of fixed
annuities through financial institutions, Western National
expands our presence in one of the fastest growing segments
of the financial services industry. With Western National,
American General establishes a leading position as the
nation's third largest writer of individual annuities.
"We are also pleased that Michael J. Poulos, chairman,
president, and chief executive officer of Western National,
has accepted our invitation to join American General's board
of directors upon completion of this transaction. Mike's 40
years of outstanding leadership in the financial services
industry and success in building Western National will be
invaluable to our company going forward.
"Western National, as a leading provider of
non-qualified annuities, will complement the leadership
position in tax-qualified annuities held by VALIC, our
retirement services company. This acquisition is an
important component of American General's strategy of
providing products that meet the retirement savings, wealth
accumulation, and wealth preservation needs of our broad
customer base. Additionally, the transaction will
significantly expand our capacity to distribute products and
services through financial institutions.
"This acquisition is expected to be accretive to
earnings per share during the first year, and will improve
American General's competitive position while enhancing our
opportunities for growth in revenue and profitability over
the long term."
Michael J. Poulos, chairman, president, and chief
executive officer of Western National, in commenting on the
proposed merger, said, "This transaction closes one big
chapter in our corporate history, but opens yet a bigger
one. Since Western National went public in 1994 at $12 per
share, we've grown to become the number one provider in our
primary market, with sales more than tripling to an
annualized level of more than $2 billion. Our successful
development of a proprietary annuity product targeted to
financial institutions elevated Western National to this
leading position. We're proud of the progress made in these
past four years, and look forward with enthusiasm to becoming
part of American General -- one of the nation's premier
financial services companies.
"With respect to the future, we believe that becoming
part of American General will enable Western National to
achieve its full potential through superior ratings, access
to broader markets, and a greater range of financial
flexibility."
Western National shareholders will receive a combination
of cash and American General common stock in exchange for
their shares. Western National shareholders may elect cash
or American General common stock, with cash and common stock
elections each limited to 50% of the aggregate consideration.
The exchange ratio for American General common stock will be
determined by dividing $29.75 by an average trading price of
American General common stock prior to closing, subject to a
6% collar above and below $50.00 per share for American
General common stock. Outside of the collars, the value of
the transaction would vary, subject to a maximum value of
$31.71 per Western National share at American General share
prices of $60.00 and above, and a minimum value of $27.53 per
share for Western National at American General share prices
at $40.00 and below. In addition, the agreement contains
provisions equalizing the per share cash and stock
considerations.
Upon completion of the transaction, Western National
will become part of American General's retirement services
segment. On a combined basis, American General will be the
nation's third largest writer of individual annuities with
pro forma 1996 annuity sales of $4.9 billion. The Western
National transaction will mark American General's third life
insurance company acquisition during 1997 for a total
consideration of $3.7 billion.
In December 1994, American General acquired 25 million
or 40% of Western National's common stock for $274 million or
$11 per share. American General increased its ownership
interest in Western National to 46% with the September 1996
purchase of 7.25 million shares of convertible preferred
stock for $130 million or $17.92 per common equivalent share.
The preferred stock was subsequently converted to Western
National common stock.
Founded in 1944 and headquartered in Houston, Texas,
Western National Corporation is a leading provider of
retirement annuity products. The company has assets of more
than $11 billion and annuities in force of over $9 billion.
As of June 30, 1997, Western National reported operating
earnings over the last 12 months of $112 million and
shareholders' equity of $970 million. Western National is the
parent company of Western National Life Insurance Company,
one of the largest life insurance companies in the United
States.
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American General Corporation is one of the nation's
largest diversified financial services organizations with
assets of $77 billion and shareholders' equity of $6.7
billion. Headquartered in Houston, it is a leading provider
of retirement services, life insurance, and consumer loans to
12 million customers. American General common stock is listed
on the New York, Pacific, London, and Swiss stock exchanges.
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IMPORTANT NOTICE
American General will host a conference call to discuss
the definitive agreement to acquire Western National today,
Friday, September 12, 1997, at 9:30 a.m. (EDT). The
conference call is restricted to members of the financial
community. The phone number is (800) 399-4414; participants
should plan to dial 10 minutes in advance of the call to
ensure smooth connection. A rebroadcast of the call may be
accessed by dialing (800) 642-1687, reservation number
615008.
