SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 25, 1995
LAURENTIAN CAPITAL CORPORATION
Commission File No.: 0-8403
Incorporated in the I.R.S. Employer
State of Delaware Identification No.
59-1611314
640 Lee Road, Suite 303
Wayne, Pennsylvania 19087
Registrant's Telephone Number
Including Area Code: 610/889-7400
Exhibit Index at Page 5
Page 1 of 99
<PAGE>
Item 1. Changes in Control of Registrant.
On May 26, 1995 Laurentian Capital Corporation ("LCC") issued a press
release, a copy of which is attached hereto as Exhibit 99.1, announcing that it
had on May 25, 1995 entered into a definitive agreement (the "Merger Agreement")
with American Annuity Group, Inc. ("AAG") pursuant to which, subject to the
terms and conditions thereof, AAG would acquire all of the outstanding capital
stock of LCC. The Merger Agreement, a copy of which is attached hereto as
Exhibit 10.12 and is incorporated by reference herein, provides among other
things for the merger ("Merger") of L.Q. Acquisition Corp., a wholly-owned
subsidiary of AAG formed for the purpose of the transaction, with and into LCC,
subject to the terms and conditions set forth therein. Upon consummation of the
Merger, stockholders of LCC other than The Imperial Life Assurance Company of
Canada ("Imperial") and Desjardins-Laurentian Life Group Inc. ("DLLG"; formerly
known as Laurentian Fund Inc.) would have the right to receive $14.125 per share
of common stock of LCC ("Common Stock"), and Imperial and DLLG, indirect
subsidiaries of Desjardins Laurentian Financial Corporation ("DLFC") which own
in the aggregate approximately 81.4% of the outstanding Common Stock, would have
the right to receive $13.875 for each of the 6,177,093 shares of Common Stock
owned by them. Pursuant to the Merger Agreement, prior to the effective time of
the Merger: AAG will pay or cause to be paid the outstanding indebtedness of LCC
under LCC's $45 million Credit Agreement with the Lenders named therein; holders
of executive stock options and stock appreciation rights ("SARs") granted under
the LCC Amended and Restated Executive Stock Option Plan will be paid the
difference between $14.125 and the respective exercise or base prices of their
options or SARs; and all outstanding shares of LCC's Series A Cumulative
Convertible Preferred Stock will be redeemed. Additional terms and conditions of
the Merger Agreement are set forth therein, and the foregoing is qualified in
its entirety by reference to the attached Merger Agreement.
In connection with approval of the Merger Agreement, the Board of
Directors of LCC approved an Option Agreement between AAG and Imperial and DLLG,
pursuant to which Imperial and DLLG granted to AAG an option to acquire the
Common Stock owned by them under certain circumstances for $13.875 per share,
conditioned upon acquisition of the remaining outstanding Common Stock for
a price of $14.125 per share or the price otherwise specified therein. In
addition, in response to AAG's requiring such as a condition to its entering
into the Merger Agreement, LCC entered into amendments of existing Change of
Control Agreements between Robert T. Rakich, President and Chief Executive
Officer of LCC, and Bernhard M. Koch, Senior Vice President, Chief Financial
Officer, Treasurer and Secretary of LCC, copies of which are attached hereto as
Exhibits 10.9.1 and 10.10.1, respectively.
Page 2 of 99
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Item 7. EXHIBITS.
Exhibit 10.9.1 First Amendment to Change of Control Agreement
between Laurentian Capital Corporation and Robert T. Rakich
dated as of May 25, 1995
Exhibit 10.10.1 First Amendment to Change of Control Agreement
between Laurentian Capital Corporation and Bernhard M. Koch
dated as of May 25, 1995
Exhibit 10.12 Agreement and Plan of Merger by and among American
Annuity Group, Inc., L.Q. Acquisition Corp. and Laurentian
Capital Corporation dated as of May 25, 1995
Exhibit 99.1 Press Release dated May 26, 1995
Page 3 of 99
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 8-K report to be signed on its behalf by
the undersigned hereunto duly authorized.
LAURENTIAN CAPITAL CORPORATION
BY: /s/ Bernhard M. Koch
--------------------
Bernhard M. Koch
Secretary
June 2, 1995
Page 4 of 99
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
Exhibit 10.9.1 First Amendment to Change of Control Agreement 6
between Laurentian Capital Corporation and Robert T. Rakich
dated as of May 25, 1995
Exhibit 10.10.1 First Amendment to Change of Control Agreement 14
between Laurentian Capital Corporation and Bernhard M. Koch
dated as of May 25, 1995
Exhibit 10.12 Agreement and Plan of Merger by and among American 22
Annuity Group, Inc., L.Q. Acquisition Corp. and Laurentian
Capital Corporation dated as of May 25, 1995
Exhibit 99.1 Press Release dated May 26, 1995 97
</TABLE>
Page 5 of 99
<PAGE>
EXHIBIT 10.9.1
Page 6 of 99
<PAGE>
FIRST AMENDMENT
TO
CHANGE OF CONTROL AGREEMENT
This First Amendment to Change of Control Agreement ("First Amendment") is
made as of May 25, 1995 by and between LAURENTIAN CAPITAL CORPORATION, a
Delaware corporation (the "Company"), and ROBERT T. RAKICH ("Executive").
R E C I T A L S:
WHEREAS, the Company and Executive are parties to a Change of Control
Agreement dated December 22, 1994 (the "Agreement"); and,
WHEREAS, to induce American Annuity Group and its subsidiary L.Q.
Acquisition Corp. (the "AAG Parties") to enter into an Agreement and Plan of
Merger with the Company (the "Merger Agreement"), the Company and Executive
desire to amend the Agreement in certain particulars; and,
WHEREAS, the AAG Parties will not enter into the Merger Agreement unless
the Company and Executive execute and deliver this First Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants contained hereinafter, the parties hereto, intending to be legally
bound, do hereby agree as follows:
Page 7 of 99
<PAGE>
1. Amendment of Agreement. The Agreement is hereby amended by adding
thereto the following Section:
18. NON-COMPETITION COVENANT.
(a) For good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by Executive, Executive covenants as
follows:
(i) Termination during Post-Change Period.
(A) In the event that Executive's employment by the Company
is terminated for any reason specified in Section 3(a) during the
Post-Change Period and the Total Severance Amount is paid to
Executive in accordance in all material respects with Section 3,
Executive shall not Compete (as defined in Section 18(d)) for a
period of two years following the date Executive's employment by
the Company is terminated.
(B) In the event that Executive's employment by the Company
is terminated during the Post-Change Period for any reason other
than as specified in Section 3(a), Executive shall not Compete
(as defined in Section 18(d)) for a period of one year following
the date Executive's employment by the Company is terminated.
2
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(ii) Termination During Subsequent Two Years.
(A) In the event that Executive's employment by the Company
is terminated during the two-year period immediately following
the Post-Change Period for any reason specified in Section 3(a),
the Company shall (x) pay Executive a severance payment
calculated in accordance with Section 3(b), except that the
amounts described in Section 3(b)(i) and 3(b)(ii) shall be
multiplied by "one (1)" instead of "two (2)," and (y) allow
Executive to opt to continue to participate in the plans
described in Section 3(c) in the manner described therein, except
that the period for such continued participation shall be "one
(1) year" instead of "two (2) years," and Executive shall not
Compete (as defined in Section 18(d)) for a period of one year
following the date Executive's employment by the Company is
terminated.
(B) In the event that Executive's employment by the Company
is terminated during the two-year period immediately following
the Post-Change Period for any reason other than as specified in
Section 3(a), Executive shall not Compete (as defined in Section
18(d)) for a period
3
Page 9 of 99
<PAGE>
of one year following the date Executive's employment by the
Company is terminated.
(b) It is expressly agreed that nothing in the foregoing Section
18(a) is intended to restrict or prohibit the ownership by Executive
of stock or other securities of a publicly-held corporation in which
Executive does not possess beneficial ownership of more than five
percent (5%) of the voting stock of such corporation or participate in
any management or advisory capacity.
(c) Executive acknowledges and agrees that monetary damages will
not be an adequate remedy for breach by Executive of any of the
provisions contained in Section 18(a), and that irreparable injury
will result to the Company, its shareholders and their respective
successors in interest in the event of any breach or threatened breach
by Executive of Section 18(a). Accordingly, Executive agrees that, in
addition to any remedy available at law, the Company shall be entitled
to obtain a temporary restraining order, a preliminary injunction and
other equitable relief without the need to post bond or other security
in the event of any breach or threatened breach by Executive of any of
the covenants set forth in Section 18(a).
4
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(d) For purposes of this Section 18, "Compete" shall mean any of
the following:
(i) engage, directly or indirectly, as an employee, officer,
director, consultant, shareholder, investor, partner or
otherwise, in the United States of America and its territories
and possessions, in any of the following: (x) the business of
marketing, distributing and selling pre-need funeral insurance
products; (y) the business of marketing, distributing and selling
funeral trust products; or (z) the business of marketing,
distributing and selling insurance products to or through credit
unions or to the members of credit unions (by virtue of their
status as such); or
(ii) without the prior written consent of the Company,
directly or indirectly solicit the employment, consulting or
other services of any other employee of the Company or any of its
affiliates, or otherwise induce any of such employees to leave
the employment of the Company or such affiliates or to breach an
employment agreement therewith; or
(iii) interfere in any contractual or other business
relationship between the Company (or any of its affiliates) and
any customer, distributor, vendor or supplier of the Company (or
such affiliate).
5
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(e) Executive further covenants that, in the event that
Executive's employment by the Company is terminated for any reason,
Executive shall not disparage or otherwise adversely comment upon or
with respect to the Company, its officers, directors, shareholders,
owners or their respective affiliates.
2. Miscellaneous.
(a) If the final judgment of a court of competent jurisdiction declares
that any term or provision of this First Amendment is invalid or unenforceable,
the parties hereto agree that the court making the determination of invalidity
or unenforceability shall have the power to reduce the scope, duration or area
of such term or provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or provision that is
valid or enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this First Amendment shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
(b) Nothing in this Agreement shall limit, or shall be in derogation of,
the Company's rights or remedies under federal or state statutes or decisional
law pertaining to unfair competition.
6
Page 12 of 99
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(c) No amendment of this Agreement shall be valid unless the same shall be
in writing and signed by both parties hereto. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The parties hereto agree that American Annuity Group is
an intended beneficiary of this First Amendment. Except as expressly amended by
this First Amendment, the Agreement shall remain in full force and effect as
originally executed and delivered.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date and year first above written.
LAURENTIAN CAPITAL CORPORATION
By: /s/ Claude Castonguay
----------------------------------------
Name: Claude Castonguay
Title: Chairman
/s/ Robert T. Rakich
----------------------------------------
ROBERT T. RAKICH
7
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<PAGE>
1
EXHIBIT 10.10.1
Page 14 of 99
<PAGE>
1
FIRST AMENDMENT
TO
CHANGE OF CONTROL AGREEMENT
This First Amendment to Change of Control Agreement ("First Amendment") is
made as of May 25, 1995 by and between LAURENTIAN CAPITAL CORPORATION, a
Delaware corporation (the "Company"), and BERNHARD M. KOCH ("Executive").
R E C I T A L S:
WHEREAS, the Company and Executive are parties to a Change of Control
Agreement dated December 22, 1994 (the "Agreement"); and,
WHEREAS, to induce American Annuity Group and its subsidiary L.Q.
Acquisition Corp. (the "AAG Parties") to enter into an Agreement and Plan of
Merger with the Company (the "Merger Agreement"), the Company and Executive
desire to amend the Agreement in certain particulars; and,
WHEREAS, the AAG Parties will not enter into the Merger Agreement unless
the Company and Executive execute and deliver this First Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants contained hereinafter, the parties hereto, intending to be legally
bound, do hereby agree as follows:
Page 15 of 99
<PAGE>
1. Amendment of Agreement. The Agreement is hereby amended by adding
thereto the following Section:
18. NON-COMPETITION COVENANT.
(a) For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by Executive, Executive
covenants as follows:
(i) Termination during Post-Change Period.
(A) In the event that Executive's employment by the
Company is terminated for any reason specified in Section
3(a) during the Post-Change Period and the Total Severance
Amount is paid to Executive in accordance in all material
respects with Section 3, Executive shall not Compete (as
defined in Section 18(d)) for a period of two years
following the date Executive's employment by the Company is
terminated.
(B) In the event that Executive's employment by the
Company is terminated during the Post-Change Period for any
reason other than as specified in Section 3(a), Executive
shall not Compete (as defined in Section 18(d)) for a period
of one year following the date Executive's employment by the
Company is terminated.
2
Page 16 of 99
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(ii) Termination During Subsequent Two Years.
(A) In the event that Executive's employment by the
Company is terminated during the two-year period immediately
following the Post-Change Period for any reason specified in
Section 3(a), the Company shall (x) pay Executive a
severance payment calculated in accordance with Section
3(b), except that the amounts described in Section 3(b)(i)
and 3(b)(ii) shall be multiplied by "one (1)" instead of
"two (2)," and (y) allow Executive to opt to continue to
participate in the plans described in Section 3(c) in the
manner described therein, except that the period for such
continued participation shall be "one (1) year" instead of
"two (2) years," and Executive shall not Compete (as defined
in Section 18(d)) for a period of one year following the
date Executive's employment by the Company is terminated.
(B) In the event that Executive's employment by the
Company is terminated during the two-year period immediately
following the Post-Change Period for any reason other than
as specified in Section 3(a), Executive shall not Compete
(as defined in Section 18(d)) for a period
3
Page 17 of 99
<PAGE>
of one year following the date Executive's employment by
the Company is terminated.
(b) It is expressly agreed that nothing in the foregoing Section
18(a) is intended to restrict or prohibit the ownership by Executive
of stock or other securities of a publicly-held corporation in which
Executive does not possess beneficial ownership of more than five
percent (5%) of the voting stock of such corporation or participate in
any management or advisory capacity.
(c) Executive acknowledges and agrees that monetary damages will
not be an adequate remedy for breach by Executive of any of the
provisions contained in Section 18(a), and that irreparable injury
will result to the Company, its shareholders and their respective
successors in interest in the event of any breach or threatened breach
by Executive of Section 18(a). Accordingly, Executive agrees that, in
addition to any remedy available at law, the Company shall be entitled
to obtain a temporary restraining order, a preliminary injunction and
other equitable relief without the need to post bond or other security
in the event of any breach or threatened breach by Executive of any of
the covenants set forth in Section 18(a).
4
Page 18 of 99
<PAGE>
(d) For purposes of this Section 18, "Compete" shall mean any of
the following:
(i) engage, directly or indirectly, as an employee, officer,
director, consultant, shareholder, investor, partner or
otherwise, in the United States of America and its territories
and possessions, in any of the following: (x) the business of
marketing, distributing and selling pre-need funeral insurance
products; (y) the business of marketing, distributing and selling
funeral trust products; or (z) the business of marketing,
distributing and selling insurance products to or through credit
unions or to the members of credit unions (by virtue of their
status as such); or
(ii) without the prior written consent of the Company,
directly or indirectly solicit the employment, consulting or
other services of any other employee of the Company or any of its
affiliates, or otherwise induce any of such employees to leave
the employment of the Company or such affiliates or to breach an
employment agreement therewith; or
(iii) interfere in any contractual or other business
relationship between the Company (or any of its affiliates) and
any customer, distributor, vendor or supplier of the Company (or
such affiliate).
5
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<PAGE>
(e) Executive further covenants that, in the event that
Executive's employment by the Company is terminated for any reason,
Executive shall not disparage or otherwise adversely comment upon or
with respect to the Company, its officers, directors, shareholders,
owners or their respective affiliates.
2. Miscellaneous.
(a) If the final judgment of a court of competent jurisdiction declares
that any term or provision of this First Amendment is invalid or unenforceable,
the parties hereto agree that the court making the determination of invalidity
or unenforceability shall have the power to reduce the scope, duration or area
of such term or provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or provision that is
valid or enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this First Amendment shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
(b) Nothing in this Agreement shall limit, or shall be in derogation of,
the Company's rights or remedies under federal or state statutes or decisional
law pertaining to unfair competition.
6
Page 20 of 99
<PAGE>
(c) No amendment of this Agreement shall be valid unless the same shall be
in writing and signed by both parties hereto. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The parties hereto agree that American Annuity Group is
an intended beneficiary of this First Amendment. Except as expressly amended by
this First Amendment, the Agreement shall remain in full force and effect as
originally executed and delivered.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date and year first above written.
LAURENTIAN CAPITAL CORPORATION
By: /s/ Claude Castonguay
----------------------------------------
Name: Claude Castonguay
Title: Chairman
/s/ Bernhard M. Koch
----------------------------------------
BERNHARD M. KOCH
7
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<PAGE>
1
EXHIBIT 10.12
Page 22 of 99
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN ANNUITY GROUP, INC.,
L.Q. ACQUISITION CORP.
AND
LAURENTIAN CAPITAL CORPORATION
DATED AS OF
MAY 25, 1995
Page 23 of 99
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Merger Agreement" or this
"Agreement"), dated as of May 25, 1995, by and among American Annuity Group,
Inc., a Delaware corporation ("Acquiror"), L.Q. Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Acquiror formed for the purposes of
the transactions contemplated hereby ("Newco"), and Laurentian Capital
Corporation, a Delaware corporation ("LCC").
WHEREAS, the Board of Directors of Acquiror (the "Acquiror Board") believes
it is in the best interests of Acquiror and its stockholders and the Board of
Directors of LCC (the "LCC Board") believes it is in the best interests of LCC
and its stockholders that Acquiror, Newco and LCC effect the transactions
contemplated hereby; and
WHEREAS, the parties hereto desire to adopt a plan of merger, providing for
the merger of Newco with and into LCC (the "Merger") pursuant to which all of
the issued and outstanding shares of Common Stock, $.05 par value per share, of
LCC ("LCC Common Stock") will be converted into the right to receive the amount
in cash per share specified herein; and
WHEREAS, the LCC Board has concurrently herewith approved that certain
Option Agreement made by Acquiror, The Imperial Life Assurance Company of Canada
and Desjardins-Laurentian Life Group Inc. as of the date hereof; and
WHEREAS, Acquiror, Newco and LCC desire to effect the Merger and the other
transactions contemplated hereby; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties, covenants and agreements made herein as an inducement to the
consummation of the Merger and the other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
I. THE MERGER
In accordance with the terms and subject to the conditions of this Merger
Agreement, Acquiror, Newco and LCC shall effect the Merger as follows:
Page 24 of 99
<PAGE>
1.1 THE MERGER. At the Effective Time (as defined in Section 1.3), in
accordance with this Merger Agreement and the General Corporation Law of the
State of Delaware (the "Delaware Law"), Newco shall be merged with and into LCC,
and the separate existence of Newco shall cease. LCC shall continue as the
surviving corporation and is herein sometimes referred to in this capacity as
the "Surviving Corporation."
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
Section 259 of the Delaware Law.
1.3 CONSUMMATION OF THE MERGER. As soon as is practicable on the Closing
Date (as defined in Section 1.4) after all conditions to the consummation of the
Merger set forth herein have been satisfied or duly waived, the parties hereto
shall cause the Merger to be consummated by filing with the Secretary of State
of the State of Delaware, a Certificate of Merger in such form as is required
by, and executed, acknowledged and certified in accordance with, the relevant
provisions of the Delaware Law (the later of the time of such filing or the
effective time of the Certificate of Merger filed pursuant to the Delaware Law
is herein referred to as the "Effective Time").
1.4 CLOSING. The closing of the Merger (the "Closing") shall take place on
the last business day of the month ending no less than four business days after
the date of satisfaction of all the conditions to the Closing set forth in
ARTICLE VIII or on such other date as Acquiror and LCC shall mutually agree
(such specified day following the satisfaction of all conditions to Closing or
such other mutually agreed to date being herein referred to as the "Closing
Date") at such place as Acquiror and LCC shall mutually agree.
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time, each of the Certificate of Incorporation of LCC
(the "Certificate") and the By-Laws of LCC (the "By-Laws"), shall be
amended in their entirety to conform to Exhibit A and Exhibit B,
respectively, attached hereto and made a part hereof, and shall be
after such amendment the Certificate of Incorporation and By-Laws of
the Surviving Corporation and thereafter shall continue to be such
Certificate of Incorporation and By-Laws until amended as provided
therein and in accordance with the Delaware Law.
2
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(b) From and after the Effective Time, the directors of Newco shall be the
directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be. The officers of LCC shall
be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are
duly appointed and qualified, as the case may be.
II. CONVERSION OF SHARES; DISSENTING LCC SHARES; PAYMENT FOR LCC COMMON STOCK.
2.1 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof or of any party hereto:
(a) LCC Common Stock. Each share of LCC Common Stock issued and
outstanding immediately prior to the Effective Time, other than (i)
DLFC Shares (as hereinafter defined), (ii) LCC Common Stock held by
Acquiror, any direct or indirect subsidiary of Acquiror, LCC or any
direct or indirect Subsidiary of LCC ("Excluded Shares"), and (iii)
Dissenting LCC Shares (as hereinafter defined), shall be automatically
converted into the right to receive $14.125 in cash, payable to the
holder thereof without interest thereon upon the surrender of the
certificate formerly representing such share in the manner provided by
Section 2.2.
(b) DLFC Shares. Each of the 6,177,093 shares of LCC Common Stock issued
and outstanding immediately prior to the Effective Time held by The
Imperial Life Assurance Company of Canada and Desjardins-Laurentian
Life Group Inc. (collectively, the "DLFC Shares"), shall be
automatically converted into the right to receive in cash $13.875,
payable to the holders thereof without interest thereon upon the
surrender of the certificates formerly representing such share in the
manner provided by Section 2.2.
(c) Excluded Shares. Each of the Excluded Shares shall be automatically
cancelled and extinguished, and no payment shall be made with respect
to such shares.
(d) Newco Common Stock. Each share of common stock, no par value per
share, of Newco outstanding immediately prior to the Effective Time
shall be automatically converted into one validly issued, fully paid
and nonassessable newly issued share of common stock, par value $0.05
3
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per share, of the Surviving Corporation, and the shares converted
pursuant to this Section 2.1(d) shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.
(e) Dissenting LCC Shares. Each share of LCC Common Stock with respect to
which dissenters' rights have been properly exercised by the holders
thereof under Section 262 of the Delaware Law and perfected to the
extent necessary, as of the Effective Time ("Dissenting LCC Shares",
or, individually, a "Dissenting LCC Share"), shall thereafter
represent only such rights as are provided by Section 262 of the
Delaware Law, and shall be subject to compliance by the holder thereof
with the obligations imposed by Section 262 of the Delaware Law.
2.2 SURRENDER AND EXCHANGE OF LCC COMMON STOCK, OPTIONS AND SARs.
(a) Payment Agent. Prior to the Effective Time, Acquiror shall designate a
bank or trust company reasonably acceptable to LCC to act as Payment
Agent in the Merger (the "Payment Agent"). At the Effective Time, in
accordance with Section 8.3(e) Acquiror or Newco shall deposit in
trust with the Payment Agent and/or an unconditional commitment to
provide cash in the aggregate amount equal to the Acquiror Payment (as
hereinafter defined). Such funds shall be invested by the Payment
Agent on behalf of the Surviving Corporation in securities issued or
guaranteed by the United States government or certificates of deposit
of commercial banks that have consolidated total assets of not less
than $500,000,000.
(b) Letter of Transmittal. Promptly after the Effective Time, the Payment
Agent shall mail to each record holder, as of the Effective Time, of
an outstanding certificate or certificates which immediately prior to
the Effective Time represented LCC Common Stock (the "Certificates"),
other than Certificates evidencing Dissenting LCC Shares or Excluded
Shares, a form letter of transmittal and instructions for use in
effecting the surrender of the Certificates for payment therefor. Upon
surrender to the Payment Agent of a Certificate, together with such
letter of transmittal duly executed, and any other documents required
by the Payment Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the consideration set forth in Section
2.1, and such Certificate shall forthwith be cancelled. No interest
will be
4
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paid or accrued for the benefit of holders of the Certificates on
the cash payable upon the surrender of the Certificates. If
paymentis to be made to a person other than the person in whose
name the Certificate surrendered is registered, it shall be a
condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer as
reasonably determined by Acquiror and that the person requesting
such payment shall pay to the Payment Agent any transfer or other
taxes required by reason of the payment to a person other than
the registered holder of such LCC Common Stock or establish to
the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable.
(c) Payment for Employee Options and SARs. There shall be mailed to each
holder of an Employee Option or SAR (as defined in Section 3.2(b))
outstanding at the time for payment therefor pursuant to this Section
2.2(c) the consideration set forth in Section 5.3, and upon the
mailing of such payment each such Employee Option or SAR shall
forthwith be cancelled. Payment shall be made in the manner specified
in Section 2.2(c)(i), unless Acquiror by notice to LCC given not less
than thirty (30) days prior to the filing of the Proxy Statement
described in Section 6.1(b) requests that LCC pay such consideration
in accordance with Section 2.2(c)(ii). No interest will be paid or
accrued for the benefit of holders of Employee Options or SARs on the
cash payable with respect to Employee Options or SARs. Payment shall
be made either:
(i) promptly after the Effective Time by the Payment Agent to each
holder of an Employee Option or SAR listed on LCC's certificate
delivered pursuant to Section 5.3, or
(ii) by LCC immediately prior to the Effective Time.
(d) Undisbursed Funds. At any time following one year after the Effective
Time, Acquiror shall be entitled to require the Payment Agent to
deliver to it or to the Surviving Corporation any funds (including any
interest received with respect thereto) which have been made available
to the Payment Agent and which have not been disbursed to holders of
Certificates or Employee Options or SARs, and thereafter such holders
shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the cash payable upon due surrender
of their Certificates or Employee Options or SARs. The Surviving
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Corporation shall pay all charges and expenses, including those of the
Payment Agent, in connection with the exchange of the Acquiror Payment
for LCC Common Stock, other than transfer or other taxes to be paid
pursuant to Section 2.2(b) by a person requesting payment to be made
to a person other than the person in whose name a Certificate
surrendered is registered. Until surrendered in accordance with the
provisions of this Section, each Certificate (other than Certificates
representing Excluded Shares and Dissenting LCC Shares) shall, at all
times after the Effective Time, represent for all purposes the right
to receive in cash the amount per share specified in Section 2.1
multiplied by the number of shares of LCC Common Stock evidenced by
such Certificate, without any interest thereon. Notwithstanding the
foregoing, Acquiror shall not be liable to any holder of LCC Common
Stock for any amount paid to a public official or governmental entity
pursuant to applicable abandoned property laws.
(e) No Stock Transfers. After the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of LCC Common Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented for transfer to the
Surviving Corporation, they shall be cancelled and exchanged for the
per share cash amount specified in Section 2.1 as provided in this
Article in accordance with the procedures set forth in this Article.
2.4 ACQUIROR PAYMENT
The "Acquiror Payment" shall be the sum of
(a) the aggregate of the amounts payable to holders of LCC Common Stock
issued and outstanding as of the Effective Time pursuant to Section
2.1, plus
(b) if payment is to be made to such holders pursuant to Section
2.2(c)(i), the aggregate amount payable to holders of Employee Options
or SARs outstanding at the Effective Time in accordance with Section
5.3.
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2.5 CREDIT AGREEMENT. On the Closing Date and prior to the Effective Time:
(a) Acquiror shall pay or cause to be paid in full to the Lenders
identified in that certain $45,000,000 Credit Agreement among
Laurentian Capital Corporation and the several Lenders named therein
as Lenders and National Bank of Canada, New York Branch, as Agent (the
"Agent"), dated as of April 25, 1994 (the "Credit Agreement"), the
outstanding balance of the indebtedness under the Credit Agreement
including principal, interest, fees and expenses;
(b) LCC shall have terminated the commitments under the Credit Agreement
effective as of the Closing Date; and
(c) LCC and the Agent shall have executed and delivered to Desjardins
Laurentian Financial Corporation ("DLFC") an appropriate instrument of
discharge acknowledging the termination of the Long Term Financing
Support Agreement dated as of April 25, 1994, executed between DLFC
and LCC as well as that certain agreement dated as of April 25, 1994
executed among DLFC, LCC and the Agent, and releasing DLFC from all
liabilities and obligations under such agreements.
III. REPRESENTATIONS AND WARRANTIES OF LCC
LCC hereby represents and warrants to Acquiror that:
3.1 ORGANIZATION AND COMPLIANCE WITH LAW.
(a) Each of LCC and its direct and indirect subsidiaries (such
subsidiaries being those corporations of which LCC beneficially owns
all of the outstanding voting securities, including without limitation
Loyal American Life Insurance Company ("Loyal American"), an Alabama
stock insurance corporation and a wholly-owned subsidiary of LCC, and
Prairie States Life Insurance Company ("Prairie States"), a South
Dakota stock insurance corporation and an indirect wholly-owned
subsidiary of LCC; and all such subsidiaries, collectively referred to
herein as the "LCC Subsidiaries," being listed on Exhibit 22 to the
LCC 10-K hereinafter defined) is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate
power and corporate authority and all requisite governmental and
other authorizations to own, lease and
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operate its assets and properties and to carry on its business as
now being conducted;
(b) each of LCC and the LCC Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in each
jurisdiction in the United States, Puerto Rico and the U.S. Virgin
Islands ("Jurisdiction") in which the property owned, leased or
operated by it or the nature of the business conducted by it makes
such qualification necessary; and
(c) other than is disclosed in a disclosure letter delivered by LCC to
Acquiror prior to the date hereof (the "LCC Disclosure Letter"), each
of LCC and the LCC Subsidiaries is in compliance with all applicable
laws, judgments, orders, decrees, rules and regulations, including
without limitation all Environmental Laws (as defined in Section
3.21), without regard to any waiver or forbearance arrangement;
except with respect to the foregoing (a), (b) and (c) as to such matters (if
any) where failure of such authorizations, qualifications or compliance does not
and would not, either individually or in the aggregate, have a material adverse
effect on the financial condition, results of operations or business of LCC and
the LCC Subsidiaries taken as a whole. LCC has heretofore delivered to Acquiror
true and complete copies of its Certificate and By-laws and of the charter and
bylaws of each of the LCC Subsidiaries, in each case as in existence on the date
hereof.
3.2 CAPITALIZATION
(a) The authorized capital stock of LCC consists of 20,000,000 shares of
LCC Common Stock and 5,000,000 shares of preferred stock. As of the
date hereof:
(i) there were issued and outstanding 7,587,398 shares of LCC Common
Stock and 33,747 shares of Series A Cumulative Convertible
Preferred Stock of LCC ("Preferred Stock"), of which 808 shares
are held by Loyal American, and
(ii) 524,098 shares of LCC Common Stock were held in treasury by LCC.
As of December 31, 1994, LCC had over 9,000 record holders of LCC
Common Stock. Except as disclosed in the LCC Disclosure Letter,
since such date no shares of LCC Common Stock have been issued.
All outstanding shares of LCC Common
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Stock are validly issued, fully paid and nonassessable and no
holder thereof is entitled toany preemptive rights. Except as
disclosed in the LCC Disclosure Letter, neither LCC nor any
of the LCC Subsidiaries is a party to, nor is LCC aware of,
any voting agreement, voting trust or similar agreement,
arrangement or understanding relating to any class of capital
stock of, or any agreement, arrangement or understanding
providing for registration rights with respect to any class of
capital stock or other securities of, LCC or any of the LCC
Subsidiaries.
(b) As of the date hereof, there are outstanding (i) options (the
"Employee Options") to purchase under the Laurentian Capital
Corporation Amended and Restated Executive Stock Option Plan (the "LCC
Option Plan") an aggregate of not more than 496,680 shares of LCC
Common Stock at a weighted average exercise price per share of $5.58
(ranging from $2.125 to $8.50 per share), and (ii) 349,044 Stock
Appreciation Rights ("SARs") granted under the LCC Option Plan at a
weighted average base price per share of approximately $2.54 (ranging
from $2.125 to $5.50 per SAR). Other than as set forth in this Section
3.2 and any shares of LCC Common Stock issued pursuant to any of the
foregoing, there are not now, and at the Effective Time there will not
be, any (A) outstanding shares of capital stock or other equity
securities of LCC or (B) outstanding options, warrants, scrip, rights
to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of any class of capital stock of LCC, or contracts,
agreements, arrangements or understandings to which LCC is a party, or
by which it is or may be bound, to issue additional shares of any
class of its capital stock or options, warrants, scrip or rights to
subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, any additional shares of any class of capital stock of LCC.
(c) The shares of capital stock or other equity securities of each
of the LCC Subsidiaries are collectively referred to herein
as the "LCC Subsidiary Shares". All outstanding LCC Subsidiary Shares
are validly issued, fully paid and nonassessable and, except as
set forth in the LCC Disclosure Letter, owned beneficially
and of record directly or indirectly by LCC, and in each case owned
free and clear of all liens, pledges, security interests, claims or
other encumbrances. Except as aforesaid or as described in the
LCC Disclosure Letter, there are not now, and at the
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Effective Time there will not be, any (A) outstanding LCC Subsidiary
Shares that are owned of record or beneficially by anyperson or
entity other than LCC or one of the LCC Subsidiaries, or (B)
outstanding options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any class of
capital stock of any of the LCC Subsidiaries, or contracts,
agreements, arrangements or understandings to which LCC or any of the
LCC Subsidiaries is a party, or by which any thereof is or may be
bound, to issue additional shares of any class of capital stock or
options, warrants, scrip or rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, any additional shares of
capital stock of any of the LCC Subsidiaries.
3.3 AUTHORIZATION AND VALIDITY OF AGREEMENTS. Subject only, with respect to
the Merger, to approval of this Agreement by the stockholders of LCC as provided
for in Section 8.1(a), LCC has all requisite corporate power and corporate
authority to enter into this Agreement and to perform its obligations hereunder,
and the execution and delivery by LCC of this Agreement and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
requisite corporate action. On or prior to the date hereof, the LCC Board has
determined to recommend approval of the Merger to the stockholders of LCC, and
such determination is in effect as of the date hereof. This Agreement has been
duly executed and delivered by LCC and is the valid and binding obligation of
LCC, enforceable against LCC in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
3.4 NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None of the
execution and delivery of this Agreement by LCC, the performance by LCC of its
obligations hereunder or the consummation by LCC of the transactions
contemplated hereby will:
(a) conflict with the Certificate or By-laws of LCC or with the charter or
bylaws of any of the LCC Subsidiaries;
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(b) assuming satisfaction of the requirements set forth in Clause (c) (i),
(ii), (iii) and (iv) below, violate any provision of law applicable to
LCC or any of the LCC Subsidiaries;
(c) require any consent or approval of, or filing with or notice to, any
public body or authority, domestic or foreign, under any provision of
law applicable to LCC or any of the LCC Subsidiaries, except for
(i) requirements of Federal and state securities laws,
(ii) requirements arising out of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"),
(iii) the filing of a Certificate of Merger in accordance with the
Delaware Law, and
(iv) approvals of or notices to regulatory authorities pursuant to the
insurance laws of jurisdictions requiring same; or
(d) assuming satisfaction of the condition set forth in Section 8.3(d),
require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with
notice or lapse of time or both, would constitute a default) under, or
permit the termination of, or result in the creation or imposition of
any lien upon any assets, properties or business of LCC or any of the
LCC Subsidiaries under, any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment, order, judgment or decree
to which LCC or any of the LCC Subsidiaries is a party or by which LCC
or any of the LCC Subsidiaries or any of the assets or properties
thereof is bound or encumbered, except those disclosed in the LCC
Disclosure Letter. Except as disclosed in the LCC Disclosure Letter,
there are no contracts, agreements or arrangements by which LCC or any
LCC Subsidiary is bound under which the parties thereto or persons
covered thereby have any rights or entitlements dependent upon the
change of control to be effected by the Merger.
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3.5 LCC REPORTS AND FINANCIAL STATEMENTS; RESERVES.
(a) Since December 31, 1991, each of LCC and the LCC Subsidiaries has
timely filed all reports, registration statements and other filings,
together with any amendments required to be made with respect thereto,
that it has been required to file with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934, as
amended (the "1934 Act"), or the Securities Act of 1933. All reports,
registration statements and other filings (including all exhibits,
notes and schedules thereto and documents incorporated by reference
therein) filed by LCC and any of the LCC Subsidiaries with the SEC on
or after January 1, 1992, together with any amendments thereto,
including, when filed, the Proxy Statement described in Section
6.1(b), together with any amendments thereto, insofar as such Proxy
Statement contains data and information with respect to LCC or any of
the LCC Subsidiaries, are herein sometimes collectively referred to as
the "LCC SEC Reports". LCC has heretofore delivered to Acquiror true
and complete copies of all of the LCC SEC Reports that have been filed
with the SEC prior to the date hereof. As of the respective dates of
their filing with the SEC the LCC SEC Reports complied or will comply,
as the case may be, in all material respects with the rules and
regulations of the SEC and did not or will not, as the case may be,
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 not misleading.
(b) The consolidated financial statements (including any related notes or
schedules) included in LCC's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "LCC 10-K") and LCC's Quarterly Reports
on Form 10-Q for the quarter ended March 31, 1995 and for quarters
ended subsequent thereto (the "LCC 10-Qs"), as filed with the SEC,
were or will be, as the case may be, prepared in accordance with
generally accepted accounting principles applied on a consistent
basis (except as may be noted therein or in the notes or
schedules thereto) and fairly present or will fairly present, as
the case may be, the consolidated financial position of LCC and
its consolidated subsidiaries as of December 31, 1993 and 1994
and March 31 (or the last day of the subsequent fiscal quarter,
in the case of subsequently-filed LCC 10-Qs), 1994 and 1995
and the consolidated results of their operations and cash flows
for each of the three years in the three-year period ended
December 31, 1994 and each of the interim periods reported on
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in the LCC 10-Qs, subject, in the case of the unaudited interim
financial statements contained in the LCC 10-Qs, to normal year-end
audit adjustments on a basis comparable with prior periods. The
accountants who certified any financial statements and supporting
schedules included or incorporated by reference in the LCC SEC
Reports are independent public accountants with respect to LCC as
required by the rules and regulations of the SEC.
(c) The statutory financial statements of each of the LCC Subsidiaries
engaged in the business of insurance (the "Insurance Subsidiaries"),
including Loyal American and Prairie States, for each of the three
years in the three-year period ended December 31, 1994 and for the
quarter ended March 31, 1995 and quarters ended subsequent thereto
have been or will be, as the case may be, prepared in accordance with
accounting practices prescribed or permitted by the National
Association of Insurance Commissioners and, with respect to each such
Insurance Subsidiary, the appropriate insurance department of the
state of domicile of such Insurance Subsidiary, and such accounting
practices have been or will be, as the case may be, applied on a
consistent basis throughout the periods involved, and such statutory
financial statements fairly present or will fairly present, as the
case may be, the financial condition of each respective Insurance
Subsidiary as of such dates in accordance with such accounting
practices, except as disclosed therein. LCC has heretofore delivered
to Acquiror true and complete copies of all such statements which have
heretofore been filed.
(d) Since December 31, 1991 (or if later, the date an LCC Subsidiary
became an LCC Subsidiary), each of LCC and the LCC Subsidiaries has
filed all reports and other filings, together with any amendments
required to be made with respect thereto, that it has been required to
file with state and other insurance and securities regulatory
authorities (the "LCC Insurance Filings"), and all of the LCC
Insurance Filings filed prior to the date hereof complied, and all
such filings made hereafter prior to the Effective Time will comply,
in all material respects with applicable laws, rules and regulations,
and, except as disclosed in the LCC Disclosure Letter, there are no
material open or unresolved issues raised by any insurance or
securities regulatory authority with respect to any of such filings.
LCC has heretofore delivered to Acquiror true and complete copies of
(a) all Reports of Examination issued by any insurance regulatory
authority for any Insurance Subsidiary since January 1, 1992 and all
written responses made by Insurance
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Subsidiaries concerning such Reports of Examination, and (b)
all Reports of Examination or similar documents issued by any other
regulatory authority for any other LCC Subsidiary since
January 1, 1992 and all written responses made by LCC Subsidiaries
concerning such Reports of Examination, and a list of same is
included in the LCC Disclosure Letter.
(e) The aggregate reserves and (except with respect to clause (i) below)
other amounts of liabilities or obligations of each Insurance
Subsidiary (including, without limitation, reserves established as an
allowance for uncollectible amounts under any reinsurance, coinsurance
or similar contract) as established or reflected on the books and
records of each of the Insurance Subsidiaries (i)(A) were determined
in accordance with generally accepted actuarial standards consistently
applied, (B) are fairly stated in accordance with sound actuarial
principles, and (C) on the date hereof are, and at the Effective Time
will be, based on actuarial assumptions that are in accordance with
those specified in the related insurance contracts, (ii) meet on the
date hereof, and at the Effective Time will meet, in all material
respects, the requirements of the insurance laws of the applicable
jurisdiction as in effect on the date hereof, or on the date of the
Effective Time, as the case may be, and (iii), except as set forth in
the LCC SEC Reports, are on the date hereof, and at the Effective Time
will be, adequate to cover the total amount of all matured and
unmatured liabilities and obligations of such Insurance Subsidiary
under all outstanding insurance contracts pursuant to which such
Insurance Subsidiary has any liability (whether absolute, accrued,
contingent or otherwise) or obligation, including without limitation
any incurred but not reported claims and any liability or obligation
arising as a result of any reinsurance, coinsurance or other similar
contract. For the purposes of clause (iii) above, the fact that
reserves covered by any such representation are subsequently adjusted
at times and under circumstances consistent with LCC's ordinary
practices of reassessing the adequacy of its reserves shall not be
used to support any claim regarding the accuracy of such
representation, provided that such adjustments do not exceed
$6,000,000 in the aggregate. As of the date hereof, each Insurance
Subsidiary owns assets that qualify as reserve assets to the extent
required by applicable insurance laws.
(f) Except as set forth in the financial statements referred to in
Sections 3.5(b) and 3.5(c) (the "Financial Statements") or the LCC
Disclosure Letter, neither LCC nor any of its subsidiaries has any
liabilities or
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obligations (whether absolute, accrued, contingent or otherwise)
that in the aggregate have or may reasonably be expected to
have a material adverse effect on LCC and the LCC Subsidiaries, taken
as a whole.
3.6 CONDUCT OF BUSINESS IN THE ORDINARY COURSE AND ABSENCE OF CERTAIN
CHANGES AND EVENTS
(a) Except as contemplated by this Merger Agreement or as disclosed in the
LCC SEC Reports filed with the SEC prior to the date hereof or in the
LCC Disclosure Letter, to the extent material to LCC and the LCC
Subsidiaries taken as a whole, since December 31, 1994 LCC and the LCC
Subsidiaries have taken no action of the type referred to in Section
6.2 and there has not been any material adverse change in the
financial condition, results of operations or businesses of LCC and
the LCC Subsidiaries, taken as a whole (excluding for purposes of the
foregoing the effect of any conditions, trends, uncertainties, events
and developments adversely affecting the life insurance industry
generally).
(b) Neither LCC nor any of the LCC Subsidiaries is in violation of its
charter or bylaws or, to the extent material to LCC and the LCC
Subsidiaries taken as a whole, in default in the performance of, and
no event has occurred that, with notice or lapse of time or both,
would constitute a default in the performance of, any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment, order, judgment or decree to which LCC or any of the LCC
Subsidiaries is a party or by which LCC or any of the LCC Subsidiaries
or any of the assets or properties thereof is bound or encumbered.
3.7 CERTAIN FEES. With the exception of the engagement by LCC of
Oppenheimer & Co., Inc., none of LCC or any of the LCC Subsidiaries, or any of
their respective officers, directors or employees, has employed any financial
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage or finders' fees or commissions in connection with the transactions
contemplated hereby.
3.8 LITIGATION. Except as disclosed in the LCC SEC Reports filed with the
SEC prior to the date hereof or in the LCC Disclosure Letter, there are no
claims, actions, suits, investigations or proceedings pending or, to the
knowledge of LCC, threatened against or affecting LCC or any of the LCC
Subsidiaries or any of their respective assets or properties, at law or in
equity, before or by any Federal, state,
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municipal or other governmental agency or authority, foreign or domestic,
or before any arbitration board or panel, wherever located, other than those in
the ordinary course of the insurance business of the LCC Subsidiaries, or those
which, individually or in the aggregate, would not have a material adverse
effect on LCC and the LCC Subsidiaries, taken as a whole. LCC has heretofore
delivered to Acquiror a list of all litigation pending on the date hereof to
which LCC or any LCC Subsidiary is a party.
3.9 BENEFIT PLANS
(a) The LCC Disclosure Letter lists the name and a short description of
each Benefit Plan (as herein defined), together with an indication of
its funding status (e.g., trust, insured or general company assets).
For purposes hereof, the term "Benefit Plan" shall mean any plan,
program, arrangement or contract currently maintained or terminated
within the last five years by LCC or any of the LCC Subsidiaries for
the benefit of its employees, former employees or Directors which
constitutes (i) any retirement plan intended to be qualified under
Section 401(a) such as a pension, profit sharing, 401(k), stock bonus
plan or employee stock ownership plan or other "employee pension
benefit plan" as defined in ERISA Section 3(2), and (ii) any plan,
program or arrangement providing deferred compensation, bonus deferral
or incentive benefits, whether funded through a trust or otherwise,
and (iii) any welfare plan, program or policy providing vacation,
severance, salary continuation, supplemental unemployment, disability,
life, health coverage, retiree health, VEBA, medical expense
reimbursement or dependent care assistance benefits, in any such
foregoing case without regard to whether the Benefit Plan constitutes
an employee welfare benefit plan under Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the
number of employees covered under such Benefit Plan. The term Benefit
Plan shall include any of the foregoing, whether or not maintained
currently for the benefit of employees, former employees or Directors
of LCC or an LCC Subsidiary, with respect to which there is any
current obligation (or with respect to which there is any material
likelihood of an obligation being asserted against LCC or an LCC
Subsidiary) for LCC or an LCC Subsidiary to make contributions or
benefit payments.
(b) LCC shall deliver to Acquiror within two weeks after the date hereof
true, complete and correct copies of all plan documents comprising
each Benefit Plan, together with, when applicable (i) the most recent
summary plan description, if any, required under ERISA, (ii) the most
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recent actuarial and financial reports, if any, and the most recent
annual reports filed with any governmental agency and (iii) all
Internal Revenue Service ("IRS") or other governmental agency rulings
and determination letters or any open requests for IRS rulings or
letters with respect to Benefit Plans.
(c) With respect to each Benefit Plan which is an employee pension benefit
plan (as defined in Section 3(2) of ERISA) other than any such plan
that meets the "top-hat" exception under Section 201(1) of ERISA (a
"Qualified Benefit Plan"), except as disclosed on the LCC Disclosure
Letter: (i) the IRS has issued a determination letter which determined
that such Qualified Benefit Plan satisfied the requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
as amended by all of the laws referred to in Section 1 of Revenue
Procedure 93-39, such determination letter has not been revoked or
threatened to be revoked by the IRS and the scope of such
determination letter is complete and does not exclude consideration of
any of the requirements of matters referred to in Sections 4.02
through 4.04 of Revenue Procedure 93-39; (ii) such Qualified Benefit
Plan is in compliance with all qualification requirements of Section
401(a) of the Code, except for noncompliance which would not have a
material adverse effect on LCC and the LCC Subsidiaries taken as a
whole; (iii) no application has been made to the IRS under the
voluntary compliance resolution program or the walk-in closing
agreement program and no circumstance or condition exists which would
qualify as a subject matter of such a filing; (iv) such Qualified
Benefit Plan has been operated in material compliance with all notice,
reporting and disclosure requirements of ERISA and the Code which
apply to employee pension benefit plans; (v) any Qualified Benefit
Plan which is an ESOP as defined in Section 4975(3)(7) of the Code (an
"ESOP") is in material compliance with the applicable qualification
requirements of Section 409 of the Code; and (vi) with respect to such
Qualified Benefit Plan, if it was terminated or is currently in the
process of being terminated, such Qualified Benefit Plan has been or
is being terminated in compliance with the requirements of the Code
and ERISA and the liabilities of such Qualified Benefit Plan, if
already terminated, were fully satisfied or, if such Plan is in the
process of termination, are not greater than the assets held under
such Plan. For purposes hereof, a Qualified Benefit Plan shall not be
considered in "material compliance" if circumstances exist which, (x)
if discovered by the Internal Revenue Service, would likely cause the
Internal Revenue Service to either disqualify the Plan or
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place the Plan in its closing agreement program or (y) would cause the
Department of Labor to impose material penalties which would have a
material adverse effect upon the financial condition of LCC and the
LCC Subsidiaries taken as a whole.
(d) With respect to each Benefit Plan, other than a Qualified Benefit
Plan, except as noted on the LCC Disclosure Letter: (i) to the extent
such Benefit Plan is intended to provide benefits to plan participants
that are not subject to federal income tax so long as specific
provisions of the Code are met, such Benefit Plan currently meets such
Code provisions; (ii) such Benefit Plan has been operated in material
compliance with all applicable notice, reporting and disclosure
requirements of ERISA and the Code (including but not limited to the
filing of timely Forms 5500); (iii) such Benefit Plan, if a group
health plan subject to the requirements of Section 4980B of the Code
or Sections 601 through 608 of ERISA, has been operated in material
compliance with such requirements; and (iv) there is not now, and
never has been, any "unrelated business taxable income" as defined in
Sections 512 through 514 of the Code. For purposes hereof, a Benefit
Plan shall not be considered in "material compliance" if circumstances
exist which allow the Internal Revenue Service or the Department of
Labor to impose material penalties which would have a material adverse
effect upon the financial condition of LCC and the LCC Subsidiaries
taken as a whole.
(e) No prohibited transaction under Section 406 of ERISA has occurred with
respect to any Benefit Plan subject thereto which would result, with
respect to any person, in (i) the imposition, directly or indirectly,
of an excise tax under Section 4975 of the Code or (ii) fiduciary
liability under Section 409 of ERISA which would have a material
adverse effect upon the financial condition of LCC and the LCC
Subsidiaries taken as a whole. No ESOP is leveraged.
(f) Except as noted on the LCC Disclosure Letter, no actions, suits or
claims (other than routine claims for benefits) are pending or
threatened against any Benefit Plan or against LCC or any of the LCC
Subsidiaries with respect to any Benefit Plan.
(g) All material Unfunded Liabilities, as hereinafter defined, with
respect to each Benefit Plan have been recorded and disclosed on one
or more of the most recent Financial Statements or, if not,
in the LCC Disclosure Letter. For purposes hereof, the term
"Unfunded Liabilities" shall mean
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(i) any amounts properly accrued to date under
generally accepted accounting principles in effect as of the date of
this Merger Agreement ("GAAP"), or (ii) amounts not yet accrued for
GAAP purposes but for which an obligation (which has legally accrued
and cannot legally be eliminated) exists for payment in the future
which is attributable to any Benefit Plan, including but not limited
to (A) severance pay benefits, (B) deferred compensation or unpaid
bonuses, (C) any liabilities on account of the change in control which
will result from this Agreement, including any potential 20% excise
tax under Section 4999 of the Code relating to excess parachute
payments under Section 280G of the Code, (D) any unpaid defined
benefit or money purchase pension plan contributions for the current
plan year or any accumulated funding deficiency under Section 412 of
the Code and related penalties under Section 4971 of the Code,
including unpaid defined benefit or money purchase pension plan
contributions of funding deficiencies owed by members of a controlled
group of corporations which includes LCC or any of the LCC
Subsidiaries and for which LCC is liable under applicable law, (E)
authorized but unpaid profit sharing contributions or contributions
under Section 401(k) and Section 401(m) of the Code, (F) former
employee or Director health benefit or life insurance coverage and (G)
insurance premiums due but unpaid required under any group health plan
to maintain such plan's coverage through the Closing Date.
(h) Neither LCC nor any of the LCC Subsidiaries maintain a defined benefit
pension plan subject to the provisions of Title IV of ERISA. Neither
LCC nor any of the LCC Subsidiaries has, or within the past five years
has had, any obligation to contribute to any multiemployer plan, as
defined in Section 3(37) of ERISA.
(i) Except as listed on the LCC Disclosure Letter and identified as
"Retiree Liability," LCC and the LCC Subsidiaries have no obligation
to provide medical benefits, or life insurance benefits to or with
respect to retirees, former employees or any of their relatives, other
than under Sections 601 through 608 of ERISA or Section 4980(B) of the
Code.
(j) Except as disclosed in the LCC Disclosure Letter, LCC and the LCC
Subsidiaries have all power and authority necessary to amend or
terminate each Benefit Plan established and maintained by them.
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3.10 TAX MATTERS
(a) Definitions. For purposes of this Section 3.10, the following terms
have the following meanings:
(i) "Code" - The Internal Revenue Code of 1986, as amended.
(ii) "Tax Return" - Any report, return, form, declaration or other
document or information required to be supplied to any
authority in connection with Taxes.
(iii) "Taxes" - All taxes, charges, fees, levies or other
assessments, including without limitation, all net income,
gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation,
property, premium or other taxes, fees, assessments or charges
of any kind whatsoever, together with any interest and any
penalties (including penalties for failure to file in
accordance with applicable information reporting
requirements), and additions to tax by any authority (domestic
or foreign).
(iv) "Taxable Period" - Any taxable year or any other period that
is treated as a taxable year (including any Short Period) with
respect to which any Tax may be imposed under any applicable
statute, rule, or regulation.
(v) "Pre-Closing Period" - Any Short Period, Interim Period or
other Taxable Period that ends on or before the Closing Date.
(vi) "Post-Closing Period" - Any Taxable Period that begins after
the Closing Date and, with respect to any Taxable Period that
begins on or before and ends after the Closing Date, the
portion of such Taxable Period beginning on the day following
the Closing Date.
(vii) "Interim Period" - With respect to any Taxable Period that
begins on or before the Closing Date and ends after the
Closing Date, the portion of such period that ends on the
Closing Date.
(viii) "Short Period" - Any Taxable Period that ends on the Closing
Date.
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(ix) "LCC Subsidiaries" - For purposes of this Section 3.10, LCC
Subsidiaries shall include former subsidiaries of LCC for the
periods during which any such subsidiaries were owned directly
or indirectly by LCC.
(b) Representations and Warranties. Except as set forth in the LCC
Disclosure Letter:
(i) Filing Status. LCC is the "common parent" of an "affiliated
group" of corporations (as those terms are used in Section
1504(a) of the Code and the Treasury Regulations promulgated
under Section 1502 of the Code). LCC is and will be eligible
to file a consolidated federal income Tax Return for the Short
Period ending on the Closing Date. The LCC Disclosure Letter
discloses the LCC Subsidiaries eligible for inclusion in LCC's
consolidated federal income Tax Return and those Subsidiaries
that file separate federal income Tax Returns.
(ii) Filing Tax Returns and Payment of Taxes. All Tax Returns
required to be filed with respect to LCC and LCC Subsidiaries
for all Taxable Periods ending on or before the date hereof
have been or will be timely filed. All such Returns (A) were
prepared in the manner required by applicable law, (B) are
true, correct, and complete in all material respects, and (C)
reflect the liability for Taxes of LCC and LCC Subsidiaries.
All Taxes shown to be payable on such Returns, and all
assessments of Tax made against LCC and LCC Subsidiaries with
respect to such Returns, have been or will be paid when due.
No adjustment to the income of LCC and LCC Subsidiaries
relating to such Returns has been proposed formally or
informally by any Tax authority and, to the best knowledge of
LCC, no basis exists for any such adjustment, other than such
for which adequate reserves have been established in the
Financial Statements described in Section 3.5(b).
LCC and LCC Subsidiaries have paid, have caused to be paid, or
have provided a sufficient reserve on the Financial Statements
for the period ended on or prior to the Closing Date, for the
payment of all Taxes in the aggregate with respect to all
Taxable Periods, or portions thereof, ending on or before the
date of such statements; and such Taxes paid or provided for
include those for
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which LCC and LCC Subsidiaries may be liable
in their own right, or as the transferee of the assets of, or
as successor to, any other corporation, association,
partnership, joint venture, or other entity.
(iii) Returns Filed. LCC shall deliver to Acquiror within two weeks
after the date hereof, for each Pre-Closing Period for which
the applicable statute of limitations for the assessment of an
income, franchise or premium Tax against LCC and LCC
Subsidiaries has not lapsed, a list of (A) all jurisdictions
in which LCC and LCC Subsidiaries have filed an income,
franchise, or premium Tax Return and (B) all consolidated,
combined, group, and unitary Tax Returns in which LCC and LCC
Subsidiaries have been included.
(iv) Audit Status. There are no claims or investigations by the IRS
or any other Tax authority pending or threatened against LCC
and LCC Subsidiaries for any past due Taxes, and there has
been no waiver of any applicable statute of limitations or
extension of the time for the assessment of any Tax for which
LCC and LCC Subsidiaries could be liable under any provision
of federal, state, foreign or local law.
(v) Liens. Except for liens for real and personal property Taxes
that are not yet due and payable, there are no material liens
for any Tax upon any asset of LCC and LCC Subsidiaries.
(vi) Power of Attorney. No power of attorney has been granted to
any person with respect to LCC and LCC Subsidiaries relating
to any Tax for any Taxable Period ending after the Closing
Date.
(vii) Tax Sharing Agreement. With the exception of the tax
allocation agreement(s) disclosed in the LCC Disclosure
Letter, there is no contract, agreement, or intercompany
account under which LCC and LCC Subsidiaries have, or may at
any time in the future have, an obligation to assume, share,
or contribute to the payment of any portion of a Tax (or any
amount calculated with reference to any portion of a Tax)
determined on a consolidated, combined, group, or unitary
basis with respect to any group of corporations of which LCC
and LCC Subsidiaries are or were a member.
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(viii) Partner in Partnerships. As of the date of this Merger
Agreement, for federal income Tax purposes, LCC and LCC
Subsidiaries are not treated as a partner in any partnership,
joint venture, or any other entity treated as a partnership.
(ix) Liability Under Reg. 1.1502-6. LCC has no knowledge of any
liability for Taxes asserted against LCC and LCC Subsidiaries
under Reg. 1.1502-6 for federal income Tax, or under any
similar state, local, or foreign law for a state, local or
foreign income or franchise Tax, of any corporation other than
LCC and the LCC Subsidiaries.
(x) Accounting Method Changes. LCC and LCC Subsidiaries are not
required to include in taxable income any adjustments under
Code Section 481(a) for any Taxable Period, or portion
thereof, ending after the date of this Agreement for matters
arising prior to the Closing Date.
(xi) Deferred Income. LCC and LCC Subsidiaries have no income
reportable for a Taxable Period ending after the Closing Date,
but attributable to a transaction (e.g., an installment sale)
occurring in a Taxable Period ending on or prior to the
Closing Date, that resulted in a deferred reporting of income
from such transaction (other than a "deferred intercompany
transaction").
(xii) Taxable Year. The taxable year of LCC and LCC Subsidiaries for
federal and state income and franchise Tax purposes is the
calendar year.
(xiii) Collapsible Corporations. Neither LCC nor any of the LCC
Subsidiaries are collapsible corporations as defined in Code
Section 341.
(xiv) Depreciable and Amortizable Assets. The Tax Returns of LCC and
the LCC Subsidiaries reflect deductions for depreciation of
tangible and amortization of intangible assets. LCC and the
LCC Subsidiaries have used appropriate lives and methods in
calculating Pre-Closing Period depreciation and amortization.
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(c) Additional Covenants.
(i) Tax Sharing Agreements. All contracts, agreements, or
intercompany accounts under which LCC and LCC Subsidiaries
have, or may at any time in the future have, an obligation to
assume, share, or contribute to the payment of any portion of
a Tax (or any amount calculated with reference to any portion
of a Tax) determined on a consolidated, combined, group, or
unitary basis with respect to any group of corporations of
which LCC and LCC Subsidiaries are or were a member shall
terminate with respect to LCC and LCC Subsidiaries on or
before the Closing Date.
(ii) Access to Information. From the date hereof, LCC shall make
available to the Acquiror and its authorized representatives:
(A) all federal, state, local and foreign income, franchise,
gross premium, and similar Tax Returns for Taxable Periods or
portions thereof ended on or before the Closing Date and any
examination reports and statements of deficiencies assessed
against, proposed to be assessed against, or agreed to by LCC
and LCC Subsidiaries for such Taxable Periods; (B) any tax
sharing or allocation agreement or arrangement involving LCC
and LCC Subsidiaries and a true and complete description of
any such unwritten or informal agreement or arrangement; (C)
any pro forma federal income Tax Returns of LCC and LCC
Subsidiaries together with any schedule reconciling the items
in the pro forma Tax Returns to the items as included in the
consolidated Tax Return or any separate federal income Tax
Returns for all Taxable Periods ended on or before the Closing
Date; (D) any workpapers or schedules in LCC's possession
showing the amount of Tax earnings and profits for LCC and LCC
Subsidiaries; (E) any workpapers or schedules in LCC's
possession showing the amount of Tax basis in LCC
Subsidiaries; and (F) the amount of any net operating loss,
capital loss, charitable contribution, general business
credit, or any other carryover Tax attribute (if any) for
Taxable Periods beginning on the day following the Closing
Date.
3.11 NO SECURED DEBT. Except as set forth in the LCC Disclosure Letter,
there is not now, and there will not be immediately prior to the Effective Time,
any secured debt (including capitalized leases) of LCC or any of the LCC
Subsidiaries,
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except for (i) capitalized leases of less than $1 million in the aggregate
as to which LCC and the LCC Subsidiaries are parties, or (ii) capitalized leases
of LCC or any of the LCC Subsidiaries that are not reflected (and should not be
reflected in accordance with generally accepted accounting principles) on the
consolidated financial statements of LCC, and, in either case, the existence of
which does not violate the terms of any material note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment to which LCC or any of the
LCC Subsidiaries is a party or by which LCC or any of the LCC Subsidiaries or
any of the assets or properties thereof is bound or encumbered.
3.12 OPINION OF FINANCIAL ADVISOR. The LCC Board has received from
Oppenheimer & Co., Inc. a written opinion, dated on or prior to the date of this
Agreement, to the effect that the consideration to be received by holders of LCC
Common Stock pursuant to Section 2.1(a) is fair to such stockholders of LCC from
a financial point of view.
3.13 REINSURANCE AGREEMENTS. The LCC Disclosure Letter sets forth a list of
all material treaties, agreements, arrangements or contracts regarding
reinsurance to which any Insurance Subsidiary is a party or a named reinsured
and currently has any rights, privileges, liabilities or obligations.
3.14 INSURANCE MATTERS. Except as required by law or as set forth in the
LCC Disclosure Letter:
(a) since December 31, 1994, except as originated or amended in the
ordinary course of business and as would not have a material adverse
effect on any such Insurance Subsidiary, no insurance product or
program of any Insurance Subsidiary has been amended in any material
respect or introduced.
(b) since December 31, 1994, all insurance contract obligations incurred
by any Insurance Subsidiary have in all material respects been paid
(or provision for payment has been made therefor) in accordance with
the terms of the contracts under which they arose, except for such
obligations for which such Insurance Subsidiary reasonably believes
there is a reasonable basis to contest payment.
(c) except as set forth in the LCC Insurance Filings or the LCC SEC
Reports, since December 31, 1991 there have been no outstanding
insurance contracts which would entitle the holder thereof or any
other person to
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receive dividends, distributions or other benefits based on the
revenues or earnings of any Insurance Subsidiary.
(d) the underwriting standards utilized and ratings applied by each
Insurance Subsidiary with respect to insurance contracts outstanding
as of the date hereof conform in all material respects to industry
accepted practices (or otherwise are reasonable where no such industry
accepted practices exist) and, with respect to any such contract
reinsured in whole or in part, conform in all material respects to the
standards and ratings required pursuant to the terms of the related
reinsurance, coinsurance or other similar contracts. To the knowledge
of LCC and the Insurance Subsidiaries: (i) as of the date hereof, all
amounts recoverable under reinsurance, coinsurance or other similar
contracts (including without limitation amounts based on paid and
unpaid losses) are fully collectible in the ordinary course, net of
established reserves as set forth in the Financial Statements or as
reflected in the LCC SEC Reports, except for amounts which would not,
in the aggregate, have a material adverse effect on LCC and the LCC
Subsidiaries, taken as a whole; (ii) since December 31, 1991, each
insurance agent or broker appointed by any Insurance Subsidiary, at
the time such agent or broker wrote, sold or produced business for any
Insurance Subsidiary, was duly appointed and, to the best of LCC's
knowledge, duly licensed, as an insurance agent or broker (for the
type of business written, sold or produced by such insurance agent or
broker) in the particular jurisdiction in which such agent or broker
wrote, sold or produced such business for any Insurance Subsidiary,
except for such failures to be so appointed or so licensed which would
not, in the aggregate, have a material adverse effect on LCC and the
LCC Subsidiaries, taken as a whole; (iii) to the best of LCC's
knowledge, since December 31,1991 no such insurance agent or broker
violated (or with or without notice or lapse of time or both would
have violated) any term or provision of any law or any writ, judgment,
decree, injunction or similar order applicable to the writing, sale or
production of business for any Insurance Subsidiary, the result of
which violations in the aggregate has or may reasonably be expected to
have a material adverse effect on LCC and the LCC Subsidiaries, taken
as a whole, and (iv) as of the date hereof, each Insurance Subsidiary
has all material licenses and permits required to conduct its
insurance business and operations as they are currently being
conducted.
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(e) No action at law or in equity, and no investigation or proceeding of
any kind, is now pending or, to the knowledge of LCC after due
inquiry, threatened to liquidate or dissolve any Insurance Subsidiary
or to declare any of the corporate rights, powers, or privileges of
any Insurance Subsidiary to be null and void or otherwise than in full
force and effect or which would jeopardize any insurance license or
permit held by any Insurance Subsidiary in any state or other
jurisdiction or result in sanctions against any Insurance Subsidiary
or require the restructuring of the ownership, organization, business
or assets of any Insurance Subsidiary, except for actions which would
not, in the aggregate, have a material adverse effect on LCC and the
LCC Subsidiaries, taken as a whole, if adversely determined.
(f) Neither LCC nor any LCC Subsidiary is a party to any agreement which
limits in any material respect its freedom to compete in the life,
annuity, health and accident lines of business or to solicit employees
from any person.
(g) Without limiting the generality of subsection 3.1(c), each Insurance
Subsidiary is authorized to write insurance for the types of insurance
in the Jurisdictions in which it presently writes. LCC shall deliver
to Acquiror at or prior to Closing true and complete copies of all
insurance licenses held by each Insurance Subsidiary.
(h) All insurance and annuity contracts which are being issued by any
Insurance Subsidiary as of the date of this Merger Agreement are in
all material respects, to the extent required under applicable laws,
on forms approved by the insurance regulatory authority of the
Jurisdiction where issued or have been filed with and not objected to
by such authority within the period provided for objection.
3.15 REAL PROPERTY LEASES. The Financial Statements and LCC SEC Reports
disclose each lease and sublease pursuant to which LCC or an LCC Subsidiary is a
lessee or sublessee of real property which is required to be disclosed therein;
each such lease and sublease is valid and in full force and effect and
enforceable in accordance with its terms, assuming due execution and
authorization by all other parties thereto; there exists no material event of
default or event, occurrence, condition or act, including without limitation,
the execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated by this Merger Agreement, which constitutes or would
constitute (with notice or lapse of time or both) a default in any material
respect under any of such leases or
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subleases; and neither LCC nor any LCC Subsidiary has received any notice
of any event of default or any event, occurrence, condition or act, including
without limitation, the execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated by this Merger Agreement, which
constitutes or would constitute (with notice or lapse of time or both) a default
in any respect under any of such leases or subleases.
3.16 INTELLECTUAL PROPERTY. Except as disclosed on the LCC Disclosure
Letter and to the extent material to LCC and the LCC Subsidiaries, taken as a
whole, LCC and each LCC Subsidiary owns or is licensed or otherwise has the full
and exclusive right to use all trade names, trademarks, logos, service marks,
patents and copyrights used in its business as presently conducted and the use
thereof does not, to the best knowledge of LCC, conflict with or infringe upon
or otherwise violate any rights of others; no claim has been asserted by any
person against LCC or any LCC Subsidiary with respect to the use of any
trademark, trade name, service mark, patent, copyright, know-how or process used
by LCC if challenging or questioning the validity or effectiveness of such use
or any such license or agreement and, to the best knowledge of LCC, there exists
no valid basis for any such claim; the consummation of the transactions
contemplated by this Merger Agreement will not alter or impair any rights
referred to in this Section 3.16; and to the best knowledge of LCC, no person is
infringing or otherwise violating the trade names, trademarks, logos, service
marks, patents and copyrights of LCC and the LCC Subsidiaries and neither LCC
nor any LCC Subsidiary has made any claim with respect thereto.
3.17 RIGHTS UNDER LICENSES; SOFTWARE. To the extent material to LCC and the
LCC Subsidiaries, taken as a whole, all license agreements under which LCC or
any LCC Subsidiary has obtained rights to use or permit its customers or agents
to use computer software programs or data owned by others are in full force and
effect (assuming due authorization and execution by the other parties thereto)
and enforceable in accordance with their terms and, to the best knowledge of
LCC, there is no claim that either LCC or any LCC Subsidiary or the other party
or parties to such agreements is in material default thereof; none of LCC or any
of the LCC Subsidiaries has materially infringed the proprietary software rights
of any third party and, to the best knowledge of LCC, no third party has
infringed the proprietary software rights of LCC or any LCC Subsidiary; and the
consummation of the transactions contemplated by this Merger Agreement will not
alter or impair any rights of LCC or any LCC Subsidiary referred to in this
Section 3.17.
3.18 INTERCOMPANY SERVICES AND TRANSACTIONS. Except as disclosed in the LCC
Disclosure Letter, LCC has provided Acquiror with true and complete copies of
the annual holding company filings made by the Insurance Subsidiaries for
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the years ended December 31, 1993 and December 31, 1994, including monthly
amendments, if any, in 1995, which identify all reportable transactions and all
agreements or arrangements relating to all intercompany services provided
currently or since January 1, 1993 by members of the holding company system of
which the Insurance Subsidiaries are a part. To the extent material to LCC and
the LCC Subsidiaries, taken as a whole, all intercompany services or
transactions so described have been carried out in accordance with applicable
law and all consents and notice filings for such services or transactions have
been obtained or made, as applicable. There are no agreements between LCC or any
LCC Subsidiary and DLFC or any affiliate of DLFC which will remain in effect
after the Effective Time, except for insurance coverages provided by DLFC
affiliates to LCC and the LCC Subsidiaries.
3.19 THREATS OF CANCELLATION. Since December 31, 1994, no policyholder,
group of affiliated policyholders, agents, group of affiliated agents, person or
group of affiliated persons holding, writing, selling or producing insurance
(that accounted in the aggregate for 5% or more of the aggregate premium or
annuity income of the Insurance Subsidiaries for the year ended December 31,
1994 or which with respect to which LCC has established reserves in an amount in
excess of 5% of its total reserves) has terminated (or to the knowledge of LCC
threatened to terminate) its relationship with LCC or any LCC Subsidiary.
3.20 DISCLOSURE. No representation, warranty or statement made by LCC (i)
in this Merger Agreement, (ii) in the LCC Disclosure Letter or (iii) any other
written materials furnished or to be furnished by LCC to Acquiror or their
respective representatives, attorneys or accountants pursuant to this Merger
Agreement, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
3.21 ENVIRONMENTAL MATTERS. Except as set forth in the LCC Disclosure
Letter, to the best of LCC's knowledge no claims by third parties ("Third Party
Claims") and/or regulatory actions have been asserted or assessed against LCC or
any LCC Subsidiary or any real property owned or leased by LCC or any LCC
Subsidiary (the "Real Property") and, to the best of LCC's knowledge, no Third
Party Claims and/or regulatory actions are pending or threatened against LCC or
the Real Property, arising out of or due to, or allegedly arising out of or due
to, (i) the Release on, under or from the Real Property of any Hazardous
Substances; (ii) any contamination of the Real Property by Hazardous Substances,
including without limitation, the presence of any Hazardous Substance which has
come to be located on or under the Real Property from another location; (iii)
any material violation or
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alleged violation of any Environmental Laws with respect to the Real
Property; (iv) any injury to human health or safety or to the environment by
reason of the past or present condition of, or past or present activities on or
under, the Real Property; or (v) the generation, manufacture, storage,
treatment, handling, transportation or other use, however defined, of any
Hazardous Substance on the Real Property. As used herein, "Environmental Laws"
means any and all laws, regulations, ordinances, policies, standards, permits,
licenses, orders and other restrictions or requirements, whether judicial or
administrative, of the United States, or any other country, of any state or
other jurisdiction, or of any political subdivision of any thereof, that relate
to the condition of the air, ground or surface water, land, or other parts of
the environment; to the Release or potential Release of any Hazardous Substances
into the air, ground or surface water, land or other parts of the environment;
or to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or other handling of Hazardous Substances; "Hazardous
Substances" means any and all hazardous, toxic or dangerous waste, substance,
pollutant, contaminant, radiation or material defined as such in (or deemed as
such for purposes of) the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, or any
Environmental law or other applicable law or other requirement of any
governmental authority, relating to, or imposing liability or standards of or
for conduct concerning, any hazardous or toxic waste, substance, pollutant,
contaminant or material, or any petroleum or petroleum-based products; and
"Release" means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or other disposal in any
amount into or onto the air, ground or surface water, land or other parts of the
environment, however caused.
3.22 INSURANCE COVERAGE. On the date hereof, to the extent material to LCC
and the LCC Subsidiaries, taken as a whole, LCC and the LCC Subsidiaries
maintain insurance covering their respective properties, assets and businesses
against such casualties, risks and contingencies, and in such types and amounts,
as are consistent with customary practice and standards of companies engaged in
similar businesses.
3.23 TANGIBLE PERSONAL PROPERTY. To the extent material to LCC and the LCC
Subsidiaries, taken as a whole, all equipment and tangible personal property
used by LCC and the LCC Subsidiaries are leased or owned by LCC or the LCC
Subsidiaries, free and clear of all liens, encumbrances or other third party
interests of any nature whatsoever which would materially impair the intended
use of such equipment and tangible personal property, and are in usable
condition for the purpose for which they are intended subject to ordinary wear
and tear and routine maintenance.
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3.24 AMERICAN FUNERAL TRUST. To the extent material to LCC and the LCC
Subsidiaries, taken as a whole, (a) each state trust established by American
Funeral Trust (each, an "AFT Trust") is listed in the LCC Disclosure Letter, (b)
each AFT Trust was established and is validly existing under the laws applicable
to it, and (c) each AFT Trust is in compliance with applicable law. At the time
of Closing, each AFT Trust will be in compliance in all material respects with
applicable law, notwithstanding any disclosure in the LCC Disclosure Letter.
IV. REPRESENTATIONS AND WARRANTIES OF ACQUIROR.
Acquiror and Newco represent and warrant to LCC as follows:
4.1 ORGANIZATION.
(a) Each of Acquiror and Newco is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and corporate
authority and all requisite governmental and other authorizations to
own, lease and operate its assets and properties and to carry on its
business as it is now being conducted;
(b) each of Acquiror and Newco is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary; and
(c) each of Acquiror and Newco is in compliance with all applicable laws,
judgments, orders, decrees, rules and regulations;
except with respect to the foregoing (a), (b) and (c) as to such matters (if
any) where failure of such authorizations, qualifications or compliance does not
and would not, either individually or in the aggregate, have a material adverse
effect on the financial condition, results of operations or business of Acquiror
and its subsidiaries taken as a whole. All of the outstanding capital stock of
Newco is owned by Acquiror.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENTS. Each of Acquiror and Newco
has the requisite corporate power and corporate authority to enter into this
Merger Agreement and to perform its obligations hereunder, and the execution and
delivery of this Merger Agreement and the consummation by them of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Merger Agreement has been duly executed and delivered by
each of
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Acquiror and Newco and constitutes a valid and binding agreement of each
of Acquiror and Newco, enforceable against each of Acquiror and Newco in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable defenses and to
the discretion of the court before which any proceedings therefor may be
brought.
4.3 NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None of the
execution and delivery of this Agreement by Acquiror and Newco, the performance
by them of their obligations hereunder or the consummation by them of the
transactions contemplated hereby will:
(a) conflict with the articles of incorporation or bylaws of Acquiror or
with the charter or bylaws of Newco;
(b) assuming satisfaction of the requirements set forth in Clause (c) (i),
(ii), (iii) and (iv) below, violate any provision of law applicable to
Acquiror or Newco;
(c) require any consent or approval of, or filing with or notice to, any
public body or authority, domestic or foreign, under any provision of
law applicable to Acquiror or Newco, except for:
(i) requirements of Federal and state securities laws,
(ii) requirements arising out of the HSR Act,
(iii) the filing of a Certificate of Merger in accordance with the
Delaware Law, and
(iv) approvals of or notices to regulatory authorities pursuant to
the insurance laws of the jurisdictions requiring same; or
(d) require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with
notice or lapse of time or both, would constitute a default) under, or
permit the termination of, or result in the creation or imposition of
any lien upon any assets, properties or business of Acquiror or Newco
under, any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument or
other agreement or
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commitment, order, judgment or decree to which either is a party or
by which either or any of the assets or properties of either is
bound or encumbered.
4.4 PROXY STATEMENT. None of the information relating to Acquiror or its
affiliates supplied in writing by Acquiror for inclusion in the Proxy Statement
described in Section 6.1(b) will at the time such Proxy Statement is mailed or
at the time of the LCC Stockholders Meeting contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.5 BROKERS AND FINDERS. Neither Acquiror nor Newco, nor any of their
respective officers, directors or employees, has employed any financial advisor,
broker or finder or incurred any liability for any financial advisor, brokerage
or finders' fees or commissions in connection with the transactions contemplated
herein.
4.6 AVAILABLE FUNDS. At the Effective Time, Acquiror and Newco will in
accordance with Section 8.3(e) have provided, or will have provided an
irrevocable commitment to provide, the funds available to satisfy the
obligations of Acquiror and Newco pursuant to the Merger.
V. ADDITIONAL PROVISIONS
5.1 EMPLOYEE MATTERS.
(a) Without limiting any obligations of the Surviving Corporation to
assume any LCC employee benefit plan, program, policy, contract,
agreement or arrangement as may arise by operation of law, at the
Effective Time the Surviving Corporation will continue the existing
LCC employee benefit plans, programs, policies, contracts, agreements
and arrangements (the "LCC Plans") and shall succeed to such rights as
LCC may have as the employer or sponsor under the LCC Plans to amend,
modify or terminate the same in accordance with their terms and
applicable law. For purposes of any of the LCC Plans that contains a
provision relating to a change in control of LCC (each of which is
disclosed in the LCC Disclosure Letter pursuant to Section 3.4(d)),
Acquiror acknowledges that the consummation of the Merger constitutes
such a change in control. Nothing contained in this Section 5.1 or
elsewhere in this Merger Agreement shall restrict the right to
terminate the LCC Plans subsequent to the Effective Time.
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(b) Acquiror agrees that, following the Effective Time, Acquiror or the
Surviving Corporation shall provide to employees who are employees of
LCC or any of the LCC Subsidiaries the employee benefit plans,
programs, policies and arrangements provided to employees of Acquiror
and its subsidiaries (the "Acquiror Plans"), subject to its rights as
the employer or sponsor under the Acquiror Plans to amend, modify or
terminate the same in accordance with their terms and applicable law.
The specific Acquiror Plans to be made available to employees of LCC
or any of the LCC Subsidiaries shall be in accordance with the
policies applicable to the employees of Acquiror and its subsidiaries
(the "Acquiror Subsidiaries").
(c) Nothing contained in this Section 5.1 or elsewhere in this Agreement
shall confer, or be deemed to confer, upon any person who is an
employee of Acquiror or any of the Acquiror Subsidiaries or of LCC or
any of the LCC Subsidiaries any rights to continued employment or to
continuation of any benefit plans, programs, policies or arrangements,
including the LCC Plans and the Acquiror Plans, for any particular
period of time following consummation of the Merger.
5.2 INDEMNIFICATION.
(a) Acquiror agrees that from and after the Effective Time it will assume
and honor with respect to each officer and director of LCC and each
LCC Subsidiary the indemnification and advancement of expense
obligations of LCC set forth in Article V of the By-laws of LCC as in
effect on the date hereof with respect to any and all persons
described in such bylaw provision (the "indemnitees") as to any matter
arising out of any action or omission of any such indemnitee prior to
the Effective Time (including without limitation indemnification for
any claim that is based upon, arises out of or in any way relates to
the Merger, the Proxy Statement, this Agreement or any of the
transactions contemplated hereby) and that such indemnitees shall be
entitled to the full benefits of, and Acquiror shall be bound by, such
bylaw provision as though such bylaw provision continued in full force
and effect after the effective time as an obligation of Acquiror with
respect to such matters.
(b) Acquiror agrees that for a period of six years from and after the
Effective Time it will provide directors' and officers' liability
insurance coverage for the benefit of the indemnitees on substantially
the same terms and conditions as from time to time is provided by
Acquiror for
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its directors and officers; provided however, that this
Section 5.2(b) shall not prohibit Acquiror from modifying or
terminating any such coverage for the indemnitees with the
modification or termination of its directors' and officers' liability
insurance coverage generally, so long as the coverage provided for the
indemnitees remains the same as that provided for directors and
officers of Acquiror.
(c) In the event Acquiror or any of its successors or assigns (i)
reorganizes or consolidates with or merges into or enters into another
business combination transaction with any other person or entity and
is not the resulting, continuing or surviving corporation or entity of
such consolidation, merger or transaction, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and
assets to any person or entity, then, and in each such case, proper
provision shall be made so that the successors and assigns of Acquiror
assume the obligations set forth in this Section 5.2.
(d) This Section 5.2 shall be construed as an agreement, as to which the
indemnitees are intended to be third-party beneficiaries, between
Acquiror and such indemnitees as unaffiliated third parties and is not
subject to any limitations, other than those imposed by the Delaware
Law, to which Acquiror may be subject in indemnifying its own
directors or officers or other persons.
5.3 STOCK OPTIONS AND SARs. Each holder of an outstanding Employee Option
or SAR immediately before the Effective Time will be entitled to receive from
the Payment Agent promptly after the Effective Time or from LCC immediately
before the Effective Time, all in accordance with Section 2.2(c), for each such
Employee Option or SAR, an amount in cash (subject to any applicable withholding
taxes) equal to the product of (A) the excess, if any, of (i) the amount per
share payable to holders of LCC Common Stock pursuant to Section 2.1(a) over
(ii) the per share exercise price or base price, as the case may be, of such
Employee Option or SAR, and (B) the number of shares of LCC Common Stock subject
to such Employee Option or the number of SARs, and such Employee Option or SAR
will be cancelled. The LCC Option Plan shall terminate as of the Effective Time,
and LCC shall ensure that, following the Effective Time, no holder of an
Employee Option or SAR or any participant in the LCC Option Plan shall have any
right thereunder to acquire equity securities of the Company, Acquiror or any
subsidiary thereof. Prior to the Effective Time, LCC shall cause each holder of
Employee Options or SARs whose Employee Options or SARs have not otherwise been
satisfied to tender to LCC for surrender against payment by the Payment Agent or
LCC in accordance with Section 2.2(c) at
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or before the Effective Time all Employee Options or SARs granted under the
LCC Option Plan which remain outstanding on the Closing Date. At the Effective
Time, unless it has previously paid holders of Employee Options or SARs in
accordance with Section 2.2(c)(ii), LCC shall deliver to the Payment Agent a
certificate specifying the name and address of each holder of Employee Options
or SARs, the number of Employee Options or SARs owned by such holder and the
exercise price of each Employee Option or SAR. LCC has heretofore delivered to
Acquiror a true and complete list providing such information with respect to
holders of Employee Options or SARs as of the date hereof.
5.4 SERIES A PREFERRED STOCK. LCC shall redeem all outstanding shares of
Preferred Stock at or prior to the later of July 7, 1995 or the Effective Time.
5.5 MANAGEMENT SERVICES AGREEMENT. LCC shall cause the Management Services
Agreement between LCC and Desjardin Laurentian Financial Corporation to be
cancelled at or prior to the Effective Time, without cost to LCC other than for
services performed to and including the date of cancellation.
5.6 USE OF LAURENTIAN NAME. Immediately after the Effective Time with
respect to such use in Canada, and as soon as practicable after the Effective
Time and in any event within two years thereafter with respect to such use other
than in Canada, Acquiror shall discontinue all use of the "Laurentian" name,
marks and logos.
VI. COVENANTS OF LCC
6.1 STOCKHOLDERS MEETING. In order to consummate the Merger, LCC acting
through its Board of Directors, shall, in accordance with applicable law and
subject to the fiduciary duties of the LCC Board under applicable law (as
determined by the LCC Board in good faith after consultation with and based upon
advice of counsel),
(a) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "LCC Stockholders Meeting") as soon
as practicable following the date of this Agreement for the purpose of
approving and adopting this Merger Agreement;
(b) include in the proxy statement with respect to the LCC Stockholders
Meeting (the "Proxy Statement") the recommendation of its Board of
Directors that holders of LCC Common Stock vote in favor of the
approval and adoption of this Merger Agreement; and
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(c) obtain and furnish the information required to be included by it in
the Proxy Statement, to file the Proxy Statement promptly with the SEC
and, after consultation with Acquiror, respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof, and cause the Proxy Statement to be
mailed to its stockholders at the earliest practicable time.
6.2 CONDUCT OF BUSINESS BY LCC AND LCC SUBSIDIARIES PENDING THE MERGER. LCC
covenants and agrees with Acquiror that, with respect to LCC and the LCC
Subsidiaries, prior to the Effective Time, unless Acquiror shall otherwise agree
in writing or as is otherwise expressly contemplated by this Agreement:
(a) The businesses of LCC and the LCC Subsidiaries will be conducted only
in, and LCC and the LCC Subsidiaries will not take any material action
except in, the ordinary course of business and consistent with prior
practices.
(b) Each of LCC and the LCC Subsidiaries will not directly or indirectly
do any of the following: (i) issue, sell, pledge, dispose of or
encumber (A) any shares of capital stock of LCC or any of the LCC
Subsidiaries (including without limitation any such shares held in
treasury), except the issuance of shares of LCC Common Stock upon
conversion of Preferred Stock or upon exercise of LCC Stock Options
outstanding as of the date hereof, (B) any investment assets of LCC or
any of the LCC Subsidiaries other than in the ordinary course of
business consistent with prior practices, (C) any other assets or
properties of LCC or any of the LCC Subsidiaries other than in the
ordinary course of business and consistent with prior practices or in
transactions not in excess of $500,000 in the aggregate, or (D) any
Insurance Subsidiary or all or substantially all of the business
thereof; (ii) amend or propose to amend its charter or bylaws; (iii)
split, combine or reclassify any outstanding capital stock, or
declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise with respect to its capital stock
whether now or hereafter outstanding, except for cash dividends from
any LCC Subsidiaries paid to LCC or another of the LCC Subsidiaries;
(iv) redeem, purchase or acquire or offer to acquire any of their
capital stock other than redemption of Preferred Stock as contemplated
by Section 5.4; or (v) agree or commit to do any of the foregoing.
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(c) Each of LCC and the LCC Subsidiaries will not directly or indirectly
do any of the following: (i) grant, issue, sell, pledge or dispose of
any options, warrants or rights of any kind to acquire any shares of
any class of capital stock of LCC or any of the LCC Subsidiaries or
any securities that are convertible or exchangeable therefor; (ii)
acquire (whether by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof; (iii) incur any indebtedness for
borrowed money or issue any debt securities, except under the existing
line of credit under the Credit Agreement; (iv) cancel any material
debts or obligations owing to it, except in connection with the
settlement of policy claims; (v) liquidate or merge into or
consolidate with any other corporation; or (vi) agree or commit to do
any of the foregoing.
(d) Each of LCC and the LCC Subsidiaries will not enter into, amend in any
material respect, terminate or waive any material right under any
material contract or agreement to which it is a party; provided
however, that this Section 6.2(d) shall not prohibit LCC or any of the
LCC Subsidiaries from taking any actions in the ordinary course of
business and consistent with prior practices, including without
limitation accepting or reinsuring insurance or annuity risks
(provided that after the date hereof LCC shall notify Acquiror at
least ten (10) days before entering into or materially modifying any
reinsurance agreement), or entering into, modifying or terminating
agency contracts.
(e) Each of LCC and the LCC Subsidiaries will not enter into or amend any
employment, consulting, separation or termination agreement,
arrangement or understanding nor take any action with respect to the
grant of any separation or termination pay or with respect to any
increase of benefits payable under its separation or termination pay
policies or agreements or arrangements in effect as of the date
hereof.
(f) Each of LCC and the LCC Subsidiaries will not (i) hire any new
executive employee, (ii) hire any new management employee with annual
compensation greater than $60,000, (iii) except for replacements in
the ordinary course of business consistent with prior practices, hire
any other new employee, (iv) except in the ordinary course of business
consistent with prior practices, increase the compensation of any
employee or pay any bonus, or (v) adopt or amend (except to comply
with applicable law) any bonus, profit sharing, compensation, stock
option, pension, retirement, separation, deferred compensation or
other
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employee benefit plan, agreement, trust fund or arrangement for
the benefit or welfare of, any employee or former employee.
(g) Each of LCC and the LCC Subsidiaries will not make any capital
expenditure or commitment for which it is not contractually bound at
the date hereof except (i) necessary replacements in the ordinary
course of business consistent with past practices, and (ii) other
capital expenditures and commitments not to exceed $2 million in the
aggregate. All capital expenditures and commitments in excess of
$500,000 for which LCC and the LCC Subsidiaries are contractually
bound at the date hereof are disclosed in the LCC Disclosure Letter.
(h) Subject to the provisions hereof, each of LCC and the LCC Subsidiaries
will use its reasonable efforts (i) to preserve intact the business
organization of LCC, Loyal American, Prairie States and each of the
other LCC Subsidiaries, to maintain in effect any licenses,
franchises, authorizations or similar rights material to the
businesses of LCC and the LCC Subsidiaries, to keep available the
services of their respective current officers and key employees and to
preserve the goodwill of those having relationships or business
dealings with LCC or any of the LCC Subsidiaries, (ii) to cooperate
with Acquiror in jointly communicating with LCC's employees and with
members of LCC's product distribution system, including independent
contractors, regarding the Merger and continuing operations after
consummation of the Merger; and (iii) to maintain its books and
records in accordance with sound business practice on a basis
consistent with prior practice.
(i) Except as may be required under generally accepted accounting
principles or statutory accounting requirements, each of LCC and the
LCC Subsidiaries will not make any material changes in its accounting,
underwriting, pricing or reserving principles, methods or practices.
(j) After the date hereof, (i) LCC shall not adopt any amendments to the
LCC 401(k) Profit Sharing Savings Plan except for such amendments as
may be required by the Internal Revenue Service, and (ii) LCC shall
not make any contributions to the LCC 401(k) Profit Sharing Savings
Plan except for 401(k) employee contributions and employer matching
contributions (not to exceed the guidelines established in the LCC
401(k) Profit Sharing Savings Plan) or as disclosed in the LCC
Disclosure Letter.
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6.3 NO SOLICITATION OF ACQUISITION TRANSACTIONS. Each of LCC and the LCC
Subsidiaries will not directly or indirectly, through any director, officer,
employee, agent, representative or otherwise, solicit, initiate or intentionally
encourage submission of any inquiries, proposals or offers from any person or
entity (other than Acquiror) relating to any merger, consolidation, share
exchange, purchase or other acquisition of all or (other than in the ordinary
course of business) any substantial portion of the assets of or any substantial
equity interest in LCC or any of the LCC Subsidiaries or any business
combination with LCC or any of the LCC Subsidiaries (collectively, an
"Acquisition Transaction"), or participate in any discussions or negotiations
regarding, or, unless otherwise required by law, furnish to any other person any
information with respect to LCC or any of the LCC Subsidiaries or afford access
to the properties, books or records of LCC or any of the LCC Subsidiaries for
the purposes of, or cooperate with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person or entity to seek or effect
an Acquisition Transaction; provided however, that in the event that
notwithstanding compliance by LCC and the LCC Subsidiaries with the foregoing
provisions of this Section 6.3, LCC receives from a third party a proposal with
respect to an Acquisition Transaction, only to the extent necessary to act in
accordance with the fiduciary duties of the LCC Board under applicable laws (as
determined by the LCC Board in good faith after consultation with and based upon
advice of counsel): (a) LCC and the LCC Subsidiaries may take actions otherwise
prohibited by the foregoing provisions of this Section 6.3; and (b) in such
event or in the event of withdrawal of (or failure to update at the time of
mailing of the Proxy Statement) the opinion referred to in Section 3.12, the LCC
Board may fail to make, withdraw or modify its recommendation of the Merger to
the stockholders of LCC, and LCC may fail to disseminate the Proxy Statement,
fail to solicit proxies or fail to take other action to secure a favorable vote
of its stockholders for the Merger or fail to hold a meeting of its stockholders
to vote on the Merger. In addition, following receipt of a proposal or offer
relating to an Acquisition Transaction, LCC may take and disclose to its
stockholders a position contemplated by Rule 14e-2 or Rule 14d-9 under the 1934
Act or otherwise make a disclosure to its stockholders.
6.4 ACCESS TO INFORMATION. From the date hereof to the Effective Time, each
of LCC and the LCC Subsidiaries will, and their respective directors, officers,
employees, agents and representatives will, afford the officers, employees,
agents and representatives of Acquiror reasonable access at all reasonable times
to the officers, employees, representatives, properties, books and records of
LCC and the LCC Subsidiaries, including without limitation present or past
employee benefit plans, and to the books and records of any predecessors thereof
in the possession of or under the control of LCC or any of the LCC Subsidiaries,
and will furnish to Acquiror all financial, operating and other data and
information as Acquiror, through
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its officers, employees or representatives, may reasonably request.
Nonpublic data and information received by Acquiror hereunder shall be deemed to
be Evaluation Information as defined in, and shall be subject to the terms and
conditions respecting same specified in, the Confidentiality Agreement made by
LCC and Acquiror on December 8, 1994.
6.5 DETERMINATION LETTER. LCC has filed a request for a determination
letter as to the qualified status of the LCC 401(k) Profit Sharing Savings Plan,
as amended and restated October 1, 1994, and shall diligently prosecute same.
VII. MUTUAL COVENANTS
7.1 EXPENSES. Except as provided in Section 9.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such costs and expenses.
7.2 ADDITIONAL AGREEMENTS. In accordance with the terms and subject to the
conditions hereof, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to fulfill the conditions and
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
7.3 NOTIFICATION OF CERTAIN MATTERS. LCC will give prompt notice to
Acquiror, and Acquiror will give prompt notice to LCC, of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Merger Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time, and (b) any material failure of LCC or Acquiror, or any
director, officer, employee, agent or representative thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder.
7.4 AGREEMENT TO DEFEND. In the event of any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use all reasonable efforts to defend against and
respond thereto.
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7.5 COMPLIANCE WITH HSR ACT; STOCKHOLDER APPROVAL; REGULATORY APPROVALS.
Each party hereto will use its best efforts and shall fully cooperate with the
others to make promptly all registrations, filings and applications and to give
all notices to obtain all governmental and third party consents, permits,
approvals, orders, authorizations, qualifications, exemptions and waivers
necessary for the consummation of the transactions contemplated by this
Agreement or that thereafter may be necessary to effectuate the transfer or
renewal of any material license, approval or authorization or that may be
necessary or appropriate to effectuate the transfer of contracts, agreements or
arrangements with change of control provisions. Without limiting the generality
of the foregoing, each of Acquiror and LCC will use all reasonable efforts to:
(a) file as promptly as possible and in any event within twenty (20) days
after the date of this Merger Agreement with the Department of Justice
and the Federal Trade Commission any premerger notification required
of it under the HSR Act, respond promptly to any inquiries from the
Department of Justice or the Federal Trade Commission in connection
with the transactions contemplated hereby, and obtain the earliest
possible termination or waiver of any applicable HSR Act waiting
period;
(b) prepare and file the Proxy Statement with the SEC as promptly as
possible and in any event within forty-five (45) days after the date
of this Merger Agreement; and
(c) prepare and file such requests for regulatory approvals as may be
required to be filed with the insurance departments of the States of
Alabama, South Dakota, Montana, Texas, if required, and Ohio as
promptly as possible in any event within forty-five (45) days after
the date of this Merger Agreement.
7.6 SECURITIES LAWS. Acquiror and LCC acknowledge that the transactions
contemplated hereby are subject to the provisions of the 1934 Act. Each of
Acquiror and LCC agrees to provide promptly to the other such data and
information concerning its financial condition, assets and properties, affairs,
operations and businesses as may be required or appropriate for inclusion in the
Proxy Statement and to cause its counsel, investment advisors, accountants and
actuaries to cooperate with the other's counsel, investment advisors,
accountants and actuaries in the preparation of the Proxy Statement.
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7.7 FURTHER DISCLOSURE. If in the course of the transactions contemplated
by this Merger Agreement, either Acquiror or LCC shall acquire knowledge of any
fact, law or circumstance which, if existing or occurring as of the date of this
Merger Agreement, would be required to be disclosed by such party to avoid a
breach of its representations and warranties contained in this Merger Agreement,
then such party shall immediately disclose such fact, law or circumstance to the
other party.
VIII. CONDITIONS
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party hereto to effect the Merger and to
consummate the other transactions contemplated hereby will be subject to the
fulfillment at or prior to the Closing of the following conditions.
(a) The Merger and this Merger Agreement shall have been approved and
adopted by the requisite vote of the stockholders of LCC and Acquiror
as the sole stockholder of Newco as required by law, the rules of the
American Stock Exchange with respect to LCC, and any applicable
provisions of the respective charters and bylaws of the parties.
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or
been terminated.
(c) No order shall have been entered and remain in effect in any action or
proceeding before any foreign, Federal or state court or governmental
agency or other foreign, Federal or state regulatory or administrative
agency or commission that would prevent or make illegal the
consummation of the Merger or impose any conditions on the
consummation of the transactions contemplated hereby which Acquiror
reasonably deems unacceptable.
(d) There shall have been obtained permits, consents and approvals of
insurance, securities or "blue sky" commissions or agencies of any
jurisdiction and of other governmental bodies or agencies that may
reasonably be deemed necessary so that the consummation of the Merger
and the other transactions contemplated hereby will be in compliance
with applicable laws, and they shall not contain any condition that,
in the judgment of Acquiror reasonably exercised, would reasonably be
expected to result in a material adverse change in the
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financial condition, results of operations or businesses of either
Acquiror or LCC and the LCC Subsidiaries, taken as a whole.
8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations of
Acquiror to effect the Merger and to consummate the other transactions
contemplated hereby are, at the option of Acquiror, also subject to the
fulfillment at or prior to the Closing of the following conditions:
(a) The representations and warranties of LCC contained in Article III
shall be accurate in all material respects as of the date of this
Merger Agreement, and there shall be no inaccuracy in any such
representations and warranties as of the Closing Date except to the
extent that any such inaccuracy individually or in the aggregate does
not constitute a material adverse change in the financial condition,
results of the operations or businesses of LCC and the LCC
Subsidiaries, taken as a whole; all of the terms, covenants and
conditions of this Merger Agreement to be complied with and performed
by LCC at or before the Closing (including without limitation those
specified in Sections 5.3 and 5.4) shall have been duly complied with
and performed in all material respects; and a certificate to the
foregoing effect dated as of the Closing Date and signed by the Chief
Executive Officer and Chief Financial Officer of LCC shall have been
delivered to Acquiror.
(b) Since the date of this Merger Agreement, no material adverse change in
the financial condition, results of operations or businesses of LCC
and the LCC Subsidiaries, taken as a whole, shall have occurred
(excluding for these purposes the effect of any conditions, events and
developments adversely affecting the life insurance industry
generally), including without limitation any of the following suffered
by LCC or any LCC Subsidiary: (i) any material adverse change in the
credit quality, yield and diversification characteristics of its
investment portfolio, except declines in yield caused by general
economic conditions; (ii) any material casualty loss with respect to
its assets; (iii) any business interruption which has not been cured
prior to the Closing; or (iv) any material labor difficulty or
customer boycott; and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer and Chief
Financial Officer of LCC shall have been delivered to Acquiror.
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(c) Acquiror and its subsidiaries shall have received all requisite
approvals required under applicable insurance laws necessary to
consummate the Merger and the transactions contemplated thereby.
(d) Acquiror shall have received an opinion of counsel to LCC reasonably
satisfactory to Acquiror, dated as of the Effective Time and in form
and substance reasonably satisfactory to Acquiror, substantially to
the effect that:
(i) Each of LCC and the LCC Subsidiaries has been duly organized,
and is subsisting and in good standing, as a corporation under
the laws of its respective jurisdiction of incorporation.
(ii) LCC has the corporate power and corporate authority to enter
into this Merger Agreement and consummate the transactions
provided for herein. The execution and delivery of this Merger
Agreement by LCC and the consummation by it of the
transactions provided for herein, have been duly authorized by
requisite corporate action on the part of LCC. This Merger
Agreement has been executed and delivered by LCC and (assuming
this Merger Agreement is a valid and binding obligation of
Acquiror) is a valid and binding obligation of LCC enforceable
against it in accordance with its terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally
and (B) that remedies of specific performance and injunctive
and other forms of relief may be subject to general principles
of equity and public policy and to the discretion of the court
before which any proceeding therefor may be brought.
(iii) The execution, delivery and performance by LCC of this Merger
Agreement will not (A) conflict with or result in a breach of
any provision of the Certificate or By-laws of LCC, (B) result
in, constitute a violation of or a default under, or cause the
creation of any security interest or lien upon any of the
properties or assets of LCC or the LCC Subsidiaries pursuant
to, or cause the acceleration of the maturity of any debt or
obligation of LCC or the LCC Subsidiaries pursuant to, any
agreement, instrument, order, judgment or decree to which LCC
or the LCC Subsidiaries is subject and of which such counsel
is specifically aware and
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which LCC has advised such counsel in connection with this
transaction is material to LCC and the LCC Subsidiaries or
(C) insofar as is actually known to such counsel, violate
any law, rule or regulation or any judgment, decree, order,
governmental permit or license to which LCC or any LCC
Subsidiary is subject which would have a material
adverse effect on LCC and the LCC Subsidiaries taken as a
whole.
(iv) Except for such changes as are required by this Merger
Agreement, the capitalization of LCC is as described in
Section 3.2(a) of this Merger Agreement.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United States or the
laws of a state in which such counsel is licensed, such counsel may rely upon
opinions of counsel admitted to practice in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall be delivered together
with the opinion of such counsel, which shall state that Acquiror's and such
counsel's reliance thereon is justified. Such opinion may include assumptions as
to the accuracy of the representations and warranties made by LCC in this Merger
Agreement, may include qualifications similar to those set forth in Article III
hereof and other qualifications customarily contained in legal opinions rendered
in connection with transactions of the nature of the Merger, and may expressly
rely as to matters of fact upon certificates furnished by appropriate officers
and directors of LCC and the LCC Subsidiaries and by public officials.
(e) None of the insurance regulatory approvals referred to in Section
8.1(d) shall be subject to any condition, satisfaction of all of which
conditions would materially restrict the business or financial
activities of LCC and the LCC Subsidiaries, taken as a whole, or
Acquiror and the Acquiror Subsidiaries, taken as a whole, or
materially increase the cost to Acquiror of consummating the
transactions herein contemplated, or have a material adverse effect on
the financial condition, results of operations, prospects or business
of LCC and the LCC Subsidiaries, taken as a whole, or Acquiror and the
Acquiror Subsidiaries, taken as a whole.
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(f) There shall not have been issued and be in effect any order of any
court or tribunal of competent jurisdiction, and there shall not have
been enacted any statute, rule, regulation or order by, or be
threatened, instituted or pending any suit, action, investigation,
inquiry or other proceeding by, any governmental or regulatory agency,
department, commission, authority, board, bureau, body or
instrumentality which in the reasonable judgment of Acquiror (i) makes
the acquisition by Acquiror of LCC illegal or otherwise prohibits the
acquisition of LCC, (ii) would require the divestiture by Acquiror or
any Acquiror subsidiary of a material portion of the business or
assets of Acquiror and the Acquiror Subsidiaries, taken as a whole, as
a result of the transactions contemplated hereby, or (iii) would
impose any material limitation on the ability of Acquiror to
effectively exercise full rights of ownership of LCC or of a material
portion of the assets or business of LCC and the LCC Subsidiaries,
taken as a whole, as a result of the transactions contemplated hereby.
(g) Acquiror shall have been provided by LCC at or before the Closing such
additional documents as are customarily provided for such a closing as
may be reasonably required by Acquiror.
8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF LCC. The obligations of LCC
to effect the Merger and to consummate the other transactions contemplated
hereby are, at the option of LCC, also subject to the fulfillment at or prior to
the Closing of the following conditions:
(a) The representations and warranties of Acquiror contained in Article IV
shall be accurate in all material respects as of the date of this
Merger Agreement, and there shall be no inaccuracy in any such
representations and warranties as of the Closing Date except to the
extent that any such inaccuracy individually or in the aggregate does
not constitute a material adverse change in the financial condition,
results of operations or businesses of Acquiror and the Acquiror
Subsidiaries, taken as a whole; all of the terms, covenants and
conditions of this Merger Agreement to be complied with and performed
by Acquiror at or before the Closing shall have been duly complied
with and performed in all material respects; and a certificate to the
foregoing effect dated as of the Closing Date and signed by the Chief
Executive Officer and Chief Financial Officer of Acquiror shall have
been delivered to LCC.
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(b) Since the date of this Merger Agreement, no material adverse change in
the financial condition, results of operations or businesses of
Acquiror and the Acquiror Subsidiaries, taken as a whole, shall have
occurred (excluding for these purposes the effect of any conditions,
events and developments adversely affecting the life insurance
industry generally), and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer and Chief
Financial Officer of Acquiror shall have been delivered to LCC.
(c) On the date of the Proxy Statement, the LCC Board shall have received
from Oppenheimer & Co., Inc. a written update, dated as of such date,
confirming the opinion referred to in Section 3.12.
(d) Acquiror shall have paid or caused to be paid the outstanding balance
under the Credit Agreement as provided in Section 2.5.
(e) At or before the Closing Date, either: (i) Acquiror (directly or
through one or more of its Subsidiaries) shall have deposited with the
Payment Agent in trust, for the benefit of the stockholders of LCC at
the Effective Time, funds sufficient to make all payments required
under Article II hereof to the holders of LCC Common Stock and
Employee Options or SARs, or (ii) Acquiror shall have provided to the
Payment Agent an unconditional and irrevocable written commitment of
Acquiror for the benefit of the holders of LCC Common Stock and
Employee Options and SARs at the Effective Time, in form reasonably
satisfactory to LCC and the Payment Agent, to make such funds
available as they are required, such commitment to include provisions
by which the Payment Agent is assured of access to cash and/or
marketable securities of Acquiror sufficient to satisfy such
commitment. This condition may be satisfied by a combination of a
deposit under subsection (i) and a commitment under subsection (ii)
which together equal the amount of funds necessary to make all
payments required under ARTICLE II hereof.
(f) LCC shall have received an opinion of counsel to Acquiror reasonably
satisfactory to LCC, dated as of the Effective Time and in form and
substance reasonably satisfactory to LCC, substantially to the effect
that:
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(i) Each of Acquiror and Newco has been duly organized, and is
subsisting and in good standing, as a corporation under the laws
of its respective jurisdiction of incorporation.
(ii) Each of Acquiror and Newco has the corporate power and corporate
authority to enter into this Merger Agreement and consummate the
transactions provided for herein. The execution and delivery of
this Merger Agreement by Acquiror and Newco and the consummation
by them of the transactions provided for herein, have been duly
authorized by requisite corporate action on the part of Acquiror
and Newco. This Merger Agreement has been executed and delivered
by Acquiror and Newco and (assuming this Merger Agreement is a
valid and binding obligation of LCC) is a valid and binding
obligation of Acquiror and Newco enforceable against each of
them in accordance with its terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and
(B) that remedies of specific performance and injunctive and
other forms of relief may be subject to general principles of
equity and public policy and to the discretion of the court
before which any proceeding therefor may be brought.
(iii) The execution, delivery and performance by Acquiror and Newco of
this Merger Agreement will not (A) conflict with or result in a
breach of any provision of the Articles of Incorporation or
By-laws of either of them, (B) result in, constitute a violation
of or a default under, or cause the creation of any security
interest or lien upon any of the properties or assets of
Acquiror pursuant to, or cause the acceleration of the maturity
of any debt or obligation of Acquiror pursuant to, any
agreement, instrument, order, judgment or decree to which
Acquiror is subject and of which such counsel is specifically
aware and which LCC has advised such counsel in connection with
this transaction is material to Acquiror and would have a
material adverse effect on Acquiror's ability to perform its
obligations hereunder or (C) insofar as is actually known to
such counsel, violate any law, rule or regulation or any
judgment, decree, order, governmental permit or license to which
Acquiror is subject which would have a material adverse effect
on Acquiror and the Acquiror Subsidiaries taken as a whole.
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As to any matter contained in such opinion which involves the laws of
any jurisdiction other than the federal laws of the United States or
the laws of a state in which such counsel is licensed, such counsel
may rely upon opinions of counsel admitted to practice in such other
jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel, which
shall state that Acquiror's and such counsel's reliance thereon is
justified. Such opinion may include assumptions as to the accuracy of
the representations and warranties made by Acquiror in this Merger
Agreement, may include qualifications similar to those set forth in
Article IV hereof and other qualifications customarily contained in
legal opinions rendered in connection with transactions of the nature
of the Merger, and may expressly rely as to matters of fact upon
certificates furnished by appropriate officers and directors of
Acquiror and the Acquiror Subsidiaries and by public officials.
IX. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may be terminated and the Merger
and the other transactions contemplated herein may be abandoned at any time
prior to the Effective Time, whether prior to or after approval by the
stockholder of Newco or the stockholders of LCC:
(a) By mutual consent of the Acquiror Board and the LCC Board.
(b) By the Acquiror Board or the LCC Board, if the Merger shall not have
been consummated on or before December 31, 1995 (unless such
circumstance is the result of a breach of the terms hereof in any
material respect by the party asserting the termination right).
(c) By the Acquiror Board or the LCC Board, if the Merger and this Merger
Agreement shall have been submitted to a vote of the stockholders of
LCC and shall not have been approved by the requisite votes.
(d) By the LCC Board, if a condition to LCC's obligations to close set
forth in Article VIII of this Merger Agreement is not met on the
Closing Date and is not waived.
(e) By the Acquiror Board, if a condition to Acquiror's obligations to
close set forth in Article VIII of this Merger Agreement cannot be met
on the Closing Date and is not waived.
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(f) By the Acquiror Board or the LCC Board, if an action is brought and
remains pending in a court of competent jurisdiction (i) seeking to
restrain, enjoin or otherwise prevent the consummation of the Merger
or the other transactions contemplated hereby, or (ii) seeking
substantial damages based on the consummation of the Merger or the
other transactions contemplated hereby, and in either case, the party
seeking to terminate believes in good faith with the advice of counsel
that such action may have substantial merit.
(g) By the Acquiror Board or the LCC Board, if the LCC Board does not make
to the stockholders of LCC a favorable recommendation with respect to
the Merger or such recommendation is modified or withdrawn in a way
detrimental to Acquiror.
(h) By the Acquiror Board, but only within thirty (30) days after the date
hereof, if A. M. Best Company ("Best") has communicated to Acquiror
that consummation of the transactions contemplated hereby has a
reasonable probability of resulting in a reduction of the Best's
rating of Great American Life Insurance Company to a rating lower than
"A", and Acquiror shall have delivered to LCC within thirty (30) days
after the date hereof the certificate of Acquiror executed by its
President or a Senior Vice President, stating the particulars of such
communication.
9.2 EFFECT OF TERMINATION. In the event of any termination of this Merger
Agreement pursuant to Section 9.1, Acquiror and LCC shall have no obligation or
liability to each other except that (a) the provisions of the last sentence of
Section 6.4 and Section 9.3 shall survive any such termination, and (b) nothing
herein and no termination pursuant hereto shall relieve any party from liability
for any breach of this Merger Agreement.
9.3 CERTAIN FEES AND EXPENSES.
(a) LCC agrees to pay to Acquiror the amount of $2,500,000 in immediately
available funds, which amount shall be for the purpose of (i)
reimbursement to Acquiror of costs, expenses and fees actually
incurred by or on behalf of Acquiror and/or Newco in connection with
the Merger and the consummation of all transactions contemplated by
this Agreement and (ii) compensation to Acquiror for its expenditure
of time and effort in connection with such transactions, such payment
to be made promptly, but in no event later than ten business days,
after the termination of this Merger Agreement as a result of the
occurrence
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of either of the events set forth below which results in Acquiror
or Newco not consummating the transactions contemplated by
this Merger Agreement:
(A) in compliance with Section 6.3, LCC shall have entered into, or
shall have publicly announced its intention to enter into, an
agreement or an agreement in principle with respect to any
Acquisition Transaction or shall have determined and such
determination shall have become public knowledge that any such
transaction is more favorable to the stockholders of LCC than the
transactions contemplated by this Merger Agreement; or
(B) in compliance with Section 6.3, the Board of Directors of LCC
shall have withdrawn or materially negatively modified its
approval or recommendation of this Merger Agreement or the
transactions contemplated hereby or shall have resolved to do any
of the foregoing (and such resolution shall have become public
knowledge)
if Acquiror and Newco have not breached any of their representations,
warranties, covenants or agreements contained in this Merger Agreement
in any material respect.
(b) Acquiror agrees to pay to LCC the amount of $2,500,000 in immediately
available funds, which amount shall be for the purposes of (i)
reimbursement to LCC of costs, expenses and fees actually incurred by
or on behalf of LCC in connection with the Merger and the consummation
of all transactions contemplated by this Merger Agreement and (ii)
compensation to LCC for its expenditure of time and effort in
connection with such transactions, such payment to be made promptly,
but in no event later than ten business days, after the termination of
this Merger Agreement as a result of the failure of Acquiror to
satisfy the condition to closing set forth in Section 8.3(e) hereof,
if LCC has not breached any of its representations, warranties,
covenants or agreements contained in this Merger Agreement in any
material respect.
(c) Any payment made pursuant to Section 9.3(a) or 9.3(b) shall be
liquidated damages paid in full satisfaction of all claims that the
recipient of the payment may have against the party making such
payment based on the circumstances giving rise to such
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payment. The parties hereto acknowledge the difficulty of
ascertaining actual damages in the circumstances under which payments
would be made pursuant to Section 9.3(a) or Section 9.3(b), and
agree that the amounts specified in said Sections are reasonable and
do not constitute a penalty.
X. MISCELLANEOUS
10.1 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived at
any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Merger Agreement may not be amended or supplemented at
any time, except by an instrument in writing signed on behalf of each party
hereto; provided however, that after this Merger Agreement has been approved and
adopted by the stockholder of Newco and the stockholders of LCC this Merger
Agreement may be amended only as may be permitted by applicable provisions of
the Delaware Law.
10.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty in this Merger Agreement shall survive the consummation of the Merger.
10.3 PUBLIC STATEMENTS. Acquiror and LCC agree to consult with each other
prior to issuing any press release or otherwise making any public statement or
disclosure with respect to the transactions contemplated hereby, and neither
will issue any such press release or make any such public statement or
disclosure prior to such consultation, except as may be required by law or
applicable stock exchange policy.
10.4 KNOWLEDGE. All references in this Merger Agreement to knowledge of a
corporation shall be deemed to mean knowledge of any one or more of its
executive officers.
10.5 ASSIGNMENT. This Merger Agreement will not be assignable by the
parties hereto.
10.6 NOTICES. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be given (and will be
deemed to have been duly received if so given) by delivery by cable, telegram,
telex, telecopy or by registered or certified mail, postage prepaid, return
receipt requested, to the respective parties as follows:
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If to Acquiror:
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attention: Mark F. Muething, Esquire
Telephone Number: (513) 333-5515
Telecopy Number: (513) 357-3397
with a copy to:
Keating, Muething & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Edward E. Steiner, Esquire
Telephone Number: (513) 579-6468
Telecopy Number: (513) 579-6957
and if to LCC:
Laurentian Capital Corporation
640 Lee Road, Suite 303
Wayne, Pennsylvania 19087
Attention: Mr. Robert T. Rakich
Telephone Number: (610) 889-7400
Telecopy Number: (610) 889-7406
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with a copy to:
Armbrecht, Jackson, DeMouy,
Crowe, Holmes & Reeves, L.L.C.
1300 AmSouth Center
Post Office Box 290
Mobile, Alabama 36601
Attention: E. B. Peebles III, Esquire
Telephone Number: (334) 405-1300
Telecopy Number: (334) 432-6843
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change
of address shall only be effective upon receipt.
10.7 GOVERNING LAW. THIS MERGER AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OF DELAWARE
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
10.8 SEVERABILITY. If any term, provision, covenant, agreement or
restriction of this Merger Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants, agreements and restrictions of this Merger Agreement will
continue in full force and effect and will in no way be affected, impaired or
invalidated.
10.9 COUNTERPARTS. This Merger Agreement may be executed in counterparts,
each of which will be an original, but all of which together will constitute one
and the same agreement.
10.10 HEADINGS. The section headings herein are for convenience only and
will not affect the construction hereof.
10.11 ENTIRE AGREEMENT. This Merger Agreement constitutes the entire
agreement between the parties hereto and supersede all other prior agreements
and understandings, both oral and written, between the parties relating to the
subject matter hereof and thereof, and except as provided in Section 5.2 do not
confer upon any person or entity not a party hereto or thereto any rights or
remedies hereunder or thereunder.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Merger
Agreement to be signed by its respective President or a Vice President and
attested by its respective Secretary or an Assistant Secretary, all as of the
date first above written.
AMERICAN ANNUITY GROUP, INC.
By: /s/ Jeffrey S. Tate
---------------------------
Senior Vice President
ATTEST:
/s/ Mark F. Muething
- --------------------------
Secretary
LQ ACQUISITION CORP.
By: /s/ Jeffrey S. Tate
---------------------------
Senior Vice President
ATTEST:
/s/ Mark F. Muething
- --------------------------
Secretary
LAURENTIAN CAPITAL CORPORATION
By: /s/ Robert T. Rakich
---------------------------
President
ATTEST:
/s/ Bernhard M. Koch
- --------------------------
Secretary
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EXHIBIT A TO AGREEMENT AND PLAN OF MERGER
CERTIFICATE OF INCORPORATION
OF
L.Q. ACQUISITION CORP.
I, the undersigned, for the purposes of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
execute this Certificate of Incorporation and do hereby certify as follows:
FIRST. The name of the corporation is L.Q. Acquisition Corp. (the
"Corporation").
SECOND. The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, Delaware 19801, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The aggregate number of shares of stock which the Corporation shall
have authority to issue is One Thousand (1,000), all of which shall be common
stock without par value.
FIFTH. The incorporator of the Corporation is Mark F. Muething, whose
mailing address is c/o American Annuity Group, Inc., 250 East Fifth Street,
Suite 1000, Chiquita Building, Cincinnati, Ohio 45202.
SIXTH. Unless and except to the extent that the by-laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
SEVENTH. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors of the Corporation is
expressly authorized to make, alter and repeal the by-laws of the Corporation,
subject to the power of the stockholders of the Corporation to alter or repeal
any by-law whether adopted by them or otherwise.
EIGHTH. To the fullest extent permitted by the Delaware General Corporation
Law, as the same exists or may hereafter be amended and supplemented, a director
of this Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Any amendment
or modification of the foregoing provisions of this Article EIGHTH shall not
adversely affect any right or protection of a director of the Corporation
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existing at the time of such amendment or modification. Without limiting the
generality of the foregoing contained in this Article EIGHTH, no director of
this Corporation shall be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability: (i) for any breach of the director's duty of loyalty to this
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which include intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
The foregoing provisions shall continue as to a person who has ceased to be
a director and shall inure to the benefit of the heirs, executors and
administrators of such a person.
NINTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
TENTH. The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same as may
be amended and supplemented, indemnify any person serving as a director or
officer of the Corporation from and against any and all of the expenses,
liabilities or other matters referred in or covered by said section. Any
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in such person's official
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capacity and as to action in other capacity while holding such position,
and shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such
person.
ELEVENTH. The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, advance expenses to those persons serving as directors
of the Corporation and the advancement of expenses provided for herein shall not
be deemed exclusive of any other rights to which those persons to whom expenses
have been or may be advanced may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's position as a director, and as to action in any other capacity while
holding such position as a director, and shall continue as to a person who has
ceased to be a director and shall inure to the benefit of the heirs, executors
and administrators of such person.
TWELFTH. The Corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
article.
THIRTEENTH. The powers of the incorporator are to terminate upon the filing
of this Certificate of Incorporation. The name and mailing address of the person
who is to serve as the initial director of the Corporation until the first
annual meeting of stockholders of the Corporation, or until his successor is
elected and qualifies, is: Jeffrey S. Tate.
The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is his act and deed on this ____ day of May, 1995.
---------------------------------------
Mark F. Muething
Incorporator
253091.1
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EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
BY-LAWS
OF
L.Q. ACQUISITION CORP.
ARTICLE I
STOCKHOLDERS
1. STOCKHOLDER MEETINGS.
- TIME. The annual meeting of stockholders shall be held on the second
Tuesday in April at 10:00 a.m. or such other date or time fixed, from time to
time, by the directors. The first stockholders meeting following adoption of
these By-Laws shall be held in 1996. A special meeting shall be held on the date
and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings of stockholders shall be held
at such place, within or without the State of Delaware, as the directors may,
from time to time, fix.
Whenever the directors shall fail to fix such place, the meeting shall be
held at the registered office of the corporation in the State of Delaware.
- CALL. Annual meetings and special meetings of stockholders may be called
by the directors or by any officer instructed by the directors to call the
meeting or at the written request of stockholders holding a majority in the
amount of the outstanding common stock of the Corporation issued and outstanding
and entitled to vote. Any such request by stockholders shall state the purpose
or purposes of the proposed meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings of
stockholders shall be given, stating the place, date, and hour of the meeting
and stating the place within the city or other municipality or community where
the meeting is to be held at which the list of stockholders of the corporation
may be examined. The notice of an annual meeting shall state that the meeting is
called for the election of directors and for the transaction of other business
which may properly come before the meeting, and shall, (if any other action
which could be taken at a special meeting is to be taken at such annual meeting)
state the purpose or purposes. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is called. Except
as otherwise provided by the Delaware General Corporation Law, a copy of the
notice of any meeting shall be given, personally or by mail, not less than ten
days nor more than sixty days before the date of the meeting, unless the lapse
of the prescribed period of time
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shall have been waived, and directed to each stockholder at his address as
shown on the stock ledger of the corporation. Notice by mail shall be deemed to
be given when deposited, with postage thereon prepaid, in the United States
Mail. If a meeting is adjourned to another time and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
adjournment is for more than 30 days or the directors, after adjournment, fix a
new record date for the adjourned meeting. Notice need not be given to any
stockholder who submits a written waiver of notice signed by him. Attendance of
a stockholder at a meeting of stockholders shall constitute a waiver of notice
of such meeting, except when the stockholder attends the meeting for the limited
purpose of objecting, expressed at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city or other
municipality or community where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote at
any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders of the corporation shall
be presided over by one of the following officers in the order of seniority and
if present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice-President, or if none of the
foregoing is in office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the corporation, or in his absence, an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the Chairman of the meeting shall appoint
a secretary of
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the meeting. At each stockholders meeting action may be taken
only with respect to those items contained in the Notice of Meeting, otherwise
proposed by the Board of Directors or proposed by a shareholder through a
submission in writing to the Secretary of the Corporation at least fifteen days
prior to the date of the meeting.
Only persons nominated by an officer, director or in writing by a
shareholder at least fifteen days prior to the meeting at which directors are to
be elected shall be eligible for election.
- INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the chairman of the meeting. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. The holders of one-third of the outstanding shares of stock shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders present may adjourn the meeting despite the absence
of a quorum.
- VOTING. In the election of directors, a plurality of the votes cast shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the General Corporation Law prescribes a different percentage of
votes and/or a different exercise of voting power, and except as may be
otherwise prescribed by the provisions of the certificate of incorporation and
these By-Laws.
2. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General
Corporation Law of the State of Delaware
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to be taken at any annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting of stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than Unanimous written consent
shall be given to those stockholders who have not consented in writing.
3. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law of the State of Delaware. Any restrictions on the
transfer or registration of transfer of any shares of stock of any class or
series shall be noted conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
4. UNCERTIFICATED SHARES. Subject to any conditions imposed by the Law of
the State of Delaware, the Board of Directors of the corporation may provide by
resolution or resolutions that some or
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all of any or all classes or series of the stock of the corporation shall
be uncertificated shares. Within a reasonable time after the issuance or
transfer of any uncertificated shares, the corporation shall send to the
registered owner thereof the written notice or statement prescribed by the Law
of the State of Delaware.
5. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
6. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
7. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the directors may fix, in
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advance, a record date, which shall not be more than sixty days nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on theday next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board of Directors is necessary, shall be
the day on which the first written consent is expressed and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at any meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
8. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law of the State of
Delaware confers such rights notwithstanding that the certificate of
incorporation may provide for more than one class or series of shares of stock,
one or more of which are limited or denied such rights thereunder; provided,
however, that no such right shall vest in the event of an increase or a decrease
in the authorized number of shares of stock of any class or series which is
otherwise denied voting rights under the provisions of the certificate of
incorporation, except as any provision of law may otherwise require.
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ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITIONS. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. NUMBER AND TERM. The Board of Directors shall initially consist of at
least one person. The exact number of Directors may be fixed or changed by the
Stockholders at any meeting or by the Directors in the interim between
stockholder meetings. The number of Directors may be increased by the
stockholders at any meeting or by the Directors in the interim between
stockholder meetings.
3. VACANCIES. In the interim between annual meetings of stockholders or
special meetings of stockholders called for the election of Directors and/or for
the removal of one or more Directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies on the Board of
Directors, including unfilled vacancies resulting from the removal of Directors
for cause or without cause, may be filled by the vote of a majority of the
remaining Directors then in office, although less than a quorum, or by the sole
remaining Director. Directors who are elected in the interim to fill vacancies
shall hold office until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal.
4. BOARD OF DIRECTORS MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix.
- PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any,
the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Notice of the time, place and
purpose of any special meeting of the Board of Directors or of any committee
thereof, shall be given by personal
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or written delivery, at least 72 hours before the meeting. Notice need not
be given to any director or to any member of a committee of directors who
submits a written waiver of notice signed before or after the time stated
therein. Attendance of any such person at a meeting shall constitute a waiver of
notice of such meeting, except when that person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors need be specified in any written
wavier of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevent such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law of the State of
Delaware, the vote of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board. The quorum and voting
provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law of the State of Delaware and these
By-Laws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
Unless waived by a majority of Directors in attendance, not less than
twenty-four (24) hours before any regular or special meeting of the Board of
Directors, any Director who desires the presence at such meeting of not more
than one person who is not a Director shall so notify all other Directors,
request the presence of such person at the meeting, and state the reason in
writing. Such person will not be permitted to attend the Directors' meeting
unless a majority of the Directors in attendance vote to admit such person to
the meeting. Such vote shall constitute the first order of business for any such
meeting of the Board of Directors. Such right to attend, whether granted by
waiver or vote, may be revoked at any time during any such meeting by the vote
of a majority of the Directors in attendance.
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- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law of the State of Delaware.
6. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with such
titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors, no officer other than the Chairman or Vice-Chairman of the Board, if
any, need be a director. Any number of offices may be held by the same person,
as the directors may determine.
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Unless otherwise provided in the resolution choosing an officer, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until a
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of the Board of Directors designating and choosing such
officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign. In the absence of the Secretary or
the Assistant Secretary the Chairman of the meeting shall appoint a Secretary to
record the proceedings of the meeting. Any officer may be removed, with or
without cause, by the Board of Directors. Any vacancy in any office may be
filled by the Board of Directors.
ARTICLE IV
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved (including, without
limitation, as a witness) in any actual or threatened action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation or that, being or having been such a
director or officer of the Corporation, he or she is or was serving at the
request of an executive officer of the Corporation as a director, partner,
officer, employee, or agent of another corporation or of a partnership, joint
venture, trust, or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as such a director,
officer, partner, employee, or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent permitted by the General Corporation Law
of Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
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thereto), or by other applicable law as then in effect, against all expense,
liability, and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties, and amounts paid in settlement) actually and reasonably
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of the
indemnitee's heirs, executors, and administrators. Except as provided in Section
IV(2) with respect to proceedings seeking to enforce rights to indemnification,
the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized or ratified by the Board of
Directors of the Corporation.
The right to indemnification conferred in this Section IV(1) shall be a
contract right.
The right to indemnification conferred in this Section IV(1) shall, solely
in the case of those who are or were serving as a director of the Corporation,
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"). An advancement of expenses incurred by a person
in his or her capacity as a director shall be made only upon delivery to the
Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of
such director, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appear that such director is not entitled to be indemnified for such expenses
under this Section IV(1) or otherwise. An advancement of expenses shall not be
made to a director if the Corporation's Board of Directors makes a good faith
determination that such payment would violate law or public policy.
The right to indemnification conferred in this Section IV(1) may, in the
case of those who are or were serving as an officer of the Corporation, include
the right to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition (hereinafter an "advancement
of expenses"). An advancement of expenses incurred by a person in his or her
capacity as an officer shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such officer, to repay all amounts so advanced
if it shall ultimately be determined by final judicial decision from which there
is no further right to appear that such officer is not entitled to be
indemnified for such expenses under this Section IV(1) or otherwise. An
advancement of expenses shall not be made to an officer if the Corporation's
Board of Directors makes a good faith determination that such payment would
violate law or public policy.
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2. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section IV(1) is not
paid in full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall also be
entitled to be paid the expense of prosecuting or defending such suit. The
indemnitee shall be presumed to be entitled to indemnification under this
Article IV upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking
has been tendered to the Corporation), and thereafter the Corporation shall have
the burden of proof to overcome the presumption that the indemnitee is not so
entitled. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee is not entitled to indemnification shall be a
defense to the suit or create a presumption that the indemnitee is not so
entitled.
3. NONEXCLUSIVITY AND SURVIVAL OF RIGHTS. The rights to indemnification and
to the advancement of expenses conferred in this Article IV shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provisions of the Certificate of Incorporation, By-Laws,
agreement, vote of stockholders or disinterested directors, or otherwise.
Notwithstanding any amendment to or repeal of this Article IV, or of any of
the procedures established by the Board of Directors pursuant to Section IV(7),
any indemnitee shall be entitled to indemnification in accordance with the
provisions hereof and thereof with respect to any acts or omissions of such
indemnitee occurring prior to such amendment or repeal.
4. INSURANCE, CONTRACTS, AND FUNDING. The Corporation may maintain
insurance, at its expense, to protect itself and any director, officer,
employee, or agent of the Corporation or another corporation, partnership, joint
venture, trust, or other enterprise against any expense, liability, or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability, or loss under the General Corporation Law of
Delaware. The Corporation may enter into contracts with any indemnitee in
furtherance of the provisions of this Article IV and
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may create a trust fund, grant a security interest, or use other means
(including, without limitation, a letter of credit) to ensure the payment of
such amounts as may be necessary to effect indemnification as provided in this
Article IV.
5. PERSONS SERVING OTHER ENTITIES. Any person who is or was a director,
officer, or employee of the Corporation who is or was serving (i) as a director
or officer of another corporation of which a majority of the shares entitled to
vote in the election of its directors is held by the Corporation or (ii) in an
executive or management capacity in a partnership, joint venture, trust, or
other enterprise of which the Corporation or a wholly-owned subsidiary of the
Corporation is a general partner or has a majority ownership shall be deemed to
be so serving at the request of an executive officer of the Corporation and
entitled to indemnification and advancement of expenses under Section IV(1).
6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. The
Corporation may, by action of its Board of Directors, authorize one or more
executive officers to grant rights to advancement of expenses to employees or
agents of the Corporation on such terms and conditions as such officer or
officers deem appropriate under the circumstances. The Corporation may, by
action of its Board of Directors, grant rights to indemnification and
advancement of expenses to employees or agents or groups of employees or agents
of the Corporation with the same scope and effect as the provisions of this
Article IV with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation; provided, however, that an
undertaking shall be made by an employee or agent only if required by the Board
of Directors.
7. PROCEDURES FOR THE SUBMISSION OF CLAIMS. The Board of Directors may
establish reasonable procedures for the submission of claims for indemnification
pursuant to this Article IV, determination of the entitlement of any person
thereto, and review of any such determination. Such procedures shall be set
forth in an appendix to these By-Laws and shall be deemed for all purposes to be
a part hereof.
ARTICLE V
CORPORATE SEAL
The Corporation may have a seal which shall be in such form as the Board of
Directors shall prescribe but the presence or absence of a corporate seal shall
have no effect.
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ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
Subject to the provisions of the Certificate of Incorporation and the
provisions of the General Corporation Law of the State of Delaware the By-Laws
may be amended by the Board of Directors or by the affirmative vote of the
holders of outstanding voting securities of the Corporation entitling them to
exercise two-thirds of the voting power of the Corporation on such proposal.
WITNESS my hand and the seal of the Corporation.
Dated:
----------------------------------------
Secretary
(SEAL)
253304.1
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EXHIBIT 99.1
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AMERICAN ANNUITY GROUP AGREES TO
ACQUIRE LAURENTIAN CAPITAL CORPORATION
CINCINNATI, OH, May 26, 1995 - American Annuity Group, Inc. (NYSE:AAG)
headquartered in Cincinnati and Laurentian Capital Corporation (AMEX: LQ)
headquartered in Philadelphia, jointly announced today that they have executed a
definitive agreement by which American Annuity Group will acquire all of the
common stock of Laurentian Capital Corporation for an aggregate price of
approximately $105.6 million in cash, and will repay approximately $45 million
of Laurentian Capital's long-term debt. The companies said that Desjardins
Laurentian Financial Corporation (DLFC), which beneficially owns over 80% of the
outstanding stock of Laurentian Capital, has granted to AAG an option to
purchase the Laurentian Capital stock owned by DLFC at a price of $13.875 per
share, and that under the merger agreement, AAG would pay $13.875 per share for
the shares beneficially owned by DLFC and $14.125 for all other Laurentian
Capital shares. The outstanding Series A Preferred Stock of Laurentian Capital
is to be redeemed prior to closing of the transaction.
The acquisition is to be accomplished by means of a merger of a newly
formed American Annuity Group subsidiary with Laurentian Capital. Completion of
the acquisition is subject to certain conditions, including approval by the
stockholders of Laurentian Capital and receipt of all necessary regulatory
approvals. It is anticipated that the transaction will be completed in the
fourth quarter 1995.
Laurentian Capital had announced in November 1994 its retention of
Oppenheimer & Co., Inc. to evaluate various strategies for maximizing
shareholder value, including possible business combinations or other
transactions. Today's agreement reflects the culmination of that process.
The acquisition will be an important strategic benefit to both companies.
American Annuity will provide financial strength and other important resources
to Laurentian Capital and will gain immediate access to additional markets and
distribution channels. Laurentian Capital's position will be enhanced by
becoming part of a financially larger group which will provide the resources to
fully realize its growth opportunities.
At March 31, 1995, American Annuity Group and its subsidiaries had
approximately $5.3 billion in assets and $4.7 billion of reserves for annuities.
American Annuity Group markets individual and group annuities nationwide to the
savings and retirement markets through its wholly-owned subsidiaries, Great
American Life Insurance Company, Lifestyle Financial Investments, Inc. and
Retirement Resources Group, Inc. Great American Life Insurance Company is
licensed in 49 states, the District of Columbia and the Virgin Islands.
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Laurentian Capital Corporation with assets of approximately $1.0 billion
and total life insurance in force in excess of $2.6 billion sells life and
health insurance to the pre-need, financial institution and payroll deduction
markets through its wholly-owned subsidiaries, Loyal American Life Insurance
Company and Prairie States Life Insurance Company.
For: American Annuity Group, Inc. Contact: S. Craig Lindner
250 E. Fifth Street President, AAG
Cincinnati, OH 45202 513/579-2529
For: Laurentian Capital Corporation Contact: Robert T. Rakich
640 Lee Road, Suite 303 President, LCC
Wayne, PA 19087 610/889-7400
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