PRELIMINARY PROXY: MERGER
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Rule 14a-12 |
AMERUS GROUP CO.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Common Stock, no par value, of AmerUs Group Co. (Company common stock) |
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(2) |
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Aggregate number of securities to which transaction applies: |
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46,211,721 shares of Company common stock (includes an
estimated 4,886,163 shares of Company
common stock expected to be issued upon settlement of purchase contracts associated with the
Companys Income
PRIDESsm
and 3,155,576 shares of Company common stock reserved
for issuance upon exercise or payment of outstanding stock options, stock units or other
awards). |
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(3) |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
In accordance with Section 14(g) of the Securities Exchange Act of 1934, as
amended, the filing fee was calculated by multiplying .000107 by the sum of:
(a) the product of 43,056,145 shares of Company common stock and the per share
amount of $69.00 in cash per share of Company common stock, (b) the product of
2,806,370 shares of Company common stock underlying options and $33.33 (the
difference between $69.00 and $35.67, the weighted average exercise price per
share of Company common stock underlying the options), (c) the product of
486,586 stock units, performance units and similar awards and $69.00 and (d)
the product of 56,037 outstanding stock appreciation rights and $29.76 (the
difference between $69.00 and $39.24, the weighted average of the fair market
value of the outstanding stock appreciation rights on their respective dates of
grant).
(4) |
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Proposed maximum aggregate value of transaction: |
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$3,099,652,384 |
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Total fee paid: |
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$331,663 |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing. |
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Amount Previously Paid: |
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(2) |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
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AmerUs Group
Co.
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Thomas C. Godlasky
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699 Walnut Street
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Chairman, President and
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Des Moines, Iowa
50309-3948
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Chief Executive Officer
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[ ], 2006
Dear Shareholder:
You are cordially invited to attend a special meeting of
shareholders of the Company to be held on [ ],
2006, at [ ], Des Moines local time, at
[ ].
At the special meeting, you will be asked to approve an
agreement and plan of merger that the Company entered into on
July 12, 2006, providing for the merger of an indirect
wholly owned subsidiary of Aviva plc with and into the Company.
Aviva is the worlds fifth-largest insurance group and is
one of the leading providers of life and pension products in
Europe. If the merger is completed, the Companys
shareholders will receive $69.00 in cash for each share of
Company common stock they own, and the Company will become 100%
owned by Aviva. The $69.00 per share being paid in the
merger represents a premium of approximately 20% over the
average closing price of the Companys shares for the
30-day
trading period prior to the announcement of the merger.
The Company cannot complete the merger unless the conditions to
closing are satisfied, including obtaining the approval of the
Companys common shareholders and the receipt of specified
government and regulatory approvals. The Company currently
expects that these government and regulatory approvals will be
obtained and that the closing of the merger will occur before
December 31, 2006.
The Companys board of directors has determined that the
merger agreement and the merger are fair to and in the best
interests of the Company and its shareholders, and has
unanimously approved and adopted the merger agreement and the
transactions contemplated by the merger agreement. The
Companys board of directors unanimously recommends that
the Companys common shareholders vote FOR the
proposal to approve the merger agreement.
The attached notice of special meeting and proxy statement
explain the proposed merger and provide specific information
concerning the special meeting. Please read these materials
(including the annexes) carefully.
Your vote is important. Whether or not you plan to attend the
special meeting, you should read the proxy statement and follow
the instructions on your proxy card to vote by mail, telephone
or Internet to ensure that your shares will be represented at
the special meeting. If you attend the special meeting and
wish to vote in person, you may revoke your proxy and do so.
Sincerely,
Thomas C. Godlasky
Chairman, President and
Chief Executive Officer
This transaction has not been approved or disapproved by the
Securities and Exchange Commission, nor has the Securities and
Exchange Commission passed upon the fairness or merits of this
transaction or the accuracy or adequacy of the information
contained in this proxy statement. Any representation to the
contrary is unlawful.
This proxy statement is dated [ ], 2006, and is
first being mailed, along with the attached proxy card, to
shareholders of the Company on or about [ ],
2006.
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Please read this first:
Did you receive your shares of
AmerUs Group stock
as a result of
demutualization?
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If you did, please read
this special information.
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Dear AmerUs Group shareholder:
If any or all of the
shares of AmerUs Group Co. common stock you own were received as
a result of the demutualization (what demutualization means is
on reverse side) of American Mutual Holding Company or
Indianapolis Life Insurance Company, please note this special
information:
The information
contained in this mailing and the proposal described and
recommended by AmerUs Groups board of directors for your
approval do not and will not affect any insurance policy or
annuity contract you may own with AmerUs Life Insurance Company
or Indianapolis Life Insurance Company.
As always, your
policy premiums, benefits, values and guarantees will continue
to be governed by the terms of your policy.
What the enclosed
mailing is about
As you may be aware,
on July 13, 2006, AmerUs Group announced it had signed a
definitive agreement to be acquired by Aviva plc, the
worlds fifth largest insurance group. Subject to
shareholder and regulatory approvals, Aviva will buy AmerUs
Group for $69.00 in cash for each share of AmerUs Group stock
you own.
What your board
of directors recommends
As a shareholder of
AmerUs Group, you are being asked to vote on the proposed
acquisition. Please read the proxy statement accompanying this
letter for more information on the transaction. AmerUs
Groups board of directors unanimously approved and adopted
the merger agreement and the transactions contemplated by the
merger agreement. AmerUs Groups board of directors
unanimously recommends that you vote FOR the
proposal to approve the merger agreement on the enclosed proxy
card.
If you have
questions
Any policy or
annuity contract you may own with one of AmerUs Groups
companies is not affected by this proposed transaction; if you
have questions about your policy or contract, the phone numbers
for customer service are provided below for your convenience.
If you have
questions about the enclosed proxy material, please call the
AmerUs Group Proxy Call Center, Monday through Friday between
[ ] a.m. eastern time and
[ ] p.m. eastern time, toll-free, at
[ ].
Sincerely,
Thomas C.
Godlasky
Chairman, President and Chief Executive Officer
To talk with a
customer service representative about your policy or contract
please call:
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American Mutual Holding Company
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Indianapolis Life Insurance Company
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[ ]
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[ ]
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A review of
demutualization
If you received any
or all of your shares of AmerUs Group Co. stock as a result of
the demutualization of American Mutual Holding Company or
Indianapolis Life Insurance Company, key information follows.
Demutualization
simply means the company converted from a mutual company to a
stock company. When the company converted to a stock company,
you received shares of AmerUs Group stock in exchange for
membership interests (primarily the right to vote for the
companys directors).
The
demutualization the conversion to a stock
company did not affect the contract rights of your
insurance policy or annuity contract from AmerUs Life Insurance
Company (including its predecessor companies American Mutual
Life Insurance Company, Central Life Assurance Company and
Interstate Assurance Company) or Indianapolis Life Insurance
Company. Your policy or contract
status reflects only changes that the owner(s) of the policy may
have made.
The transaction
described in this proxy statement also does not affect the
contract rights of any insurance policy or annuity contract you
may own with any of AmerUs Groups companies.
If you have any
questions about your policy or annuity contract, please contact
a customer service representative. The phone numbers for
customer service are provided at the bottom on the front side of
this letter.
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Please read
this first:
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Did you receive your
shares of AmerUs Group
stock as a result of
demutualization?
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If you did,
please read
the special information
on the reverse side
of this letter.
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699 Walnut Street
Des Moines, Iowa
50309-3948
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
To Be Held on [ ], 2006
To the Shareholders:
A special meeting of shareholders of AmerUs Group Co. will be
held on [ ], 2006, at [ ], Des
Moines local time, at [ ], for the following
purposes:
1. to consider and vote on the proposal to approve the
Agreement and Plan of Merger, dated as of July 12, 2006, by
and among Aviva plc, Libra Acquisition Corporation and AmerUs
Group Co.; and
2. to transact any other business as may properly come
before the special meeting or at any adjournment or postponement
of the special meeting.
The board of directors has fixed the close of business on
[ ], 2006, as the record date for the
determination of shareholders entitled to notice of and to vote
at the special meeting. Accordingly, only shareholders of record
on that date are entitled to vote at the special meeting or any
adjournments thereof.
The Companys board of directors has determined that the
merger agreement and the merger are fair to and in the best
interests of the Company and its shareholders, and has
unanimously approved and adopted the merger agreement and the
transactions contemplated by the merger agreement. The
Companys board of directors unanimously recommends that
the Companys common shareholders vote FOR the
proposal to approve the merger agreement.
YOUR VOTE
IS IMPORTANT
All shareholders are invited to attend the special meeting in
person. Whether or not you plan to attend the special meeting,
you should read the proxy statement and follow the instructions
on your proxy card to vote by mail, telephone or Internet to
ensure that your shares will be represented at the special
meeting. If you attend the special meeting and wish to vote in
person, you may revoke your proxy and do so.
By Order of the Board of Directors,
James A. Smallenberger
Senior Vice President and Secretary
Des Moines, Iowa
[ ], 2006
TABLE OF
CONTENTS
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Q-1
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Annexes:
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Annex A Agreement
and Plan of Merger, dated as of July 12, 2006
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Annex B Opinion
of Goldman, Sachs & Co.
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ii
QUESTIONS
AND ANSWERS ABOUT THE MERGER AND
THE SPECIAL MEETING
The following are some questions that you may have regarding
the proposed merger and the other matters being considered at
the special meeting and brief answers to those questions. The
Company urges you to carefully read the remainder of this proxy
statement because the information in this section does not
provide all the information that might be important to you with
respect to the proposed merger. Additional important information
is also contained in the annexes to, and the documents
incorporated by reference in, this proxy statement. Unless
stated otherwise, all references in this proxy statement to the
Company are to AmerUs Group Co., an Iowa corporation, all
references to Aviva are to Aviva plc, a public limited company
organized under the laws of England and Wales, all references to
Merger Sub are to Libra Acquisition Corporation, an Iowa
corporation and an indirect wholly owned subsidiary of Aviva,
and all references to the merger agreement are to the Agreement
and Plan of Merger, dated as of July 12, 2006, by and among
the Company, Aviva and Merger Sub, a copy of which is attached
as Annex A to this proxy statement.
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Q: |
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What is the proposed transaction? |
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The Company, Aviva and Merger Sub have entered into a merger
agreement pursuant to which Merger Sub will merge with and into
the Company with the Company surviving the merger and continuing
its existence as an indirect wholly owned subsidiary of Aviva
(referred to in this proxy statement as the merger). For a more
complete description of the merger, see The Merger. |
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Why am I receiving these materials? |
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In order to complete the merger, the Companys common
shareholders must approve the merger agreement. Under the Iowa
Business Corporation Act, or IBCA, in order for the merger
agreement to be approved, the votes cast favoring the merger
agreement must exceed the votes cast opposing the merger
agreement at a meeting of the Companys common
shareholders, provided that a quorum is present. A quorum exists
if at least a majority of the votes entitled to be cast at the
meeting are present in person or by proxy. |
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This proxy statement contains important information about the
proposed merger, the merger agreement and the special meeting,
which you should read carefully. The enclosed voting materials
allow you to vote your shares without attending the special
meeting. |
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For a more complete description of the special meeting, see
The Special Meeting of Shareholders. |
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Your vote is very important. You are encouraged to vote as
soon as possible. |
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What will the Companys common shareholders receive in
the merger? |
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If the proposed merger is completed, at the effective time of
the merger, the Companys common shareholders will be
entitled to receive $69.00 in cash, which is referred to as the
per share amount, for each share of Company common stock they
own. |
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For a more complete description of what the Companys
common shareholders will receive in the merger, see The
Merger Agreement Merger Consideration. |
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What will happen to the Companys Series A
Preferred Stock in the merger? |
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On August 10, 2006, the Company sent a notice of redemption
to the holders of all of its issued and outstanding shares of
Series A Preferred Stock. The Company currently anticipates
that all of its Series A Preferred Stock will be redeemed
prior to completion of the merger. If such redemption does not
occur, however, each share of the Companys Series A
Preferred Stock that is outstanding immediately prior to
completion of the merger will remain outstanding after
completion of the merger as a share of the preferred stock of
the surviving corporation, until redeemed, purchased or
otherwise acquired by the surviving corporation. Regardless of
whether the redemption is completed prior to the special
meeting, holders of the Companys Series A Preferred
Stock will not be entitled to vote at the special meeting. |
Q-1
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What will happen in the proposed merger to options to
purchase Company common stock and other stock-based awards? |
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If the proposed merger is completed, at the effective time of
the merger, each outstanding option to purchase Company common
stock will be canceled and converted into the right to receive
an amount of cash per share subject to the option equal to the
excess, if any, of $69.00 over the exercise price of the option,
less any required withholding taxes. |
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Each stock unit, performance unit or similar award will be
converted into the right to receive $69.00 in cash per unit or
award held, with unvested performance units vesting at target
levels. Each stock appreciation right, or SAR, will be converted
into the right to receive an amount of cash per SAR equal to the
excess of $69.00 over the fair market value of a share of
Company common stock on the date of the grant, less any required
withholding taxes. |
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The cash into which the shares of Company common stock and the
outstanding stock options, stock units, performance awards, SARs
and similar awards is to be converted is collectively referred
to as the merger consideration, less any required withholding
taxes. |
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Will the merger be taxable to me? |
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Yes. The receipt of cash by a holder of Company common stock
pursuant to the merger will be a taxable transaction for
U.S. federal income tax purposes, and may also be a taxable
transaction under applicable state, local or foreign income or
other tax laws. Generally, for U.S. federal income tax
purposes, a shareholder will recognize gain or loss equal to the
difference between the amount of cash received by the
shareholder in the merger and the shareholders adjusted
tax basis in the shares of Company common stock converted into
cash in the merger. |
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If the shares of Company common stock are held by a shareholder
as capital assets, gain or loss recognized by such shareholder
will be capital gain or loss, which will be long-term capital
gain or loss if the shareholders holding period for the
shares of Company common stock exceeds one year. Capital gains
recognized by an individual upon a disposition of a share of
Company common stock that has been held for more than one year
generally will be subject to a maximum U.S. federal income
tax rate of 15% or, in the case of a share that has been held
for one year or less, will be subject to tax at ordinary income
tax rates. In addition, there are limits on the deductibility of
capital losses. |
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Because individual circumstances may differ, you should consult
your own tax advisor to determine the particular tax effects to
you of the completion of the merger. See The
Merger Material U.S. Federal Income Tax
Consequences. |
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After the merger is completed, how will I receive the cash
for my shares? |
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As soon as reasonably practicable after the merger is completed,
you will receive written instructions from the exchange agent to
be appointed by Aviva on how to exchange your Company common
stock certificates for the per share amount of $69.00 in cash.
You will receive cash for your shares from the exchange agent
after you comply with these instructions. |
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If you hold your shares in book-entry form that is,
without a stock certificate the exchange agent will
automatically send you the per share amount of $69.00 in cash in
exchange for the cancellation of your shares of Company common
stock after completion of the merger, provided that you comply
with applicable tax certification requirements. |
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If your shares of Company common stock are held in street
name by your broker, you will receive instructions from
your broker as to how to surrender your street name
shares and receive cash for those shares. |
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Should the Companys common shareholders send in their
Company common stock certificates now? |
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No. After the merger is completed, you will receive written
instructions from the exchange agent on how to exchange your
Company common stock certificates for the per share amount of
$69.00 in cash. Please do not send in your Company common
stock certificates with your proxy card. |
Q-2
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Q: |
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What conditions are required to be fulfilled to complete the
merger? |
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The Company and Aviva are not required to complete the merger
unless specified conditions are satisfied or waived. These
conditions include approval of the merger agreement by the
Companys common shareholders and the receipt of required
government and regulatory approvals. For a more complete summary
of the conditions that must be satisfied or waived prior to
completion of the merger, see The Merger
Agreement Conditions to Completion of the
Merger. |
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What vote is required to approve the merger agreement? |
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Under the IBCA, in order for the merger agreement to be
approved, the votes cast favoring the merger agreement must
exceed the votes cast opposing the merger agreement at a meeting
of the Companys common shareholders, provided that a
quorum is present. A quorum exists if at least a majority of the
votes entitled to be cast at the meeting are present in person
or by proxy. As of the close of business on
[ ], 2006, the record date for voting shares at
the meeting, there were [ ] shares of
Company common stock issued and outstanding. |
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What government and regulatory approvals are required? |
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State insurance laws generally require that, prior to the
acquisition of an insurance company, the acquiring party must
obtain approval from the insurance commissioner of the insurance
companys state of domicile. Accordingly, Aviva is in the
process of making the necessary applications with the insurance
commissioners of Iowa, Indiana, Kansas and New York, the states
of domicile of the Companys U.S. insurance company
subsidiaries. |
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In addition, filings will be required to be made under the
insurance laws of Arizona, Hawaii, Kentucky, Minnesota, Oklahoma
and South Dakota, which require the filing of a pre-acquisition
notification and the expiration or termination of a waiting
period prior to the completion of the merger. Aviva is in the
process of preparing these notice filings. |
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The merger is also subject to U.S. antitrust laws. Aviva
and the Company have separately filed the required notifications
under the HSR Act, with both the Antitrust Division of the
Department of Justice and the Federal Trade Commission, which
are referred to as the Antitrust Division and the FTC,
respectively. The Antitrust Division or the FTC, as well as any
state attorney general or private person, may challenge the
merger at any time before or after its completion. |
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For more information on the government and regulatory approvals
required for completion of the merger, see The
Merger Regulatory Matters. |
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Q: |
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When do the Company and Aviva expect the merger to be
completed? |
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A: |
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The Company and Aviva are working to complete the merger as
expeditiously as practicable. They currently expect the merger
to be completed before December 31, 2006. However, they
cannot predict the exact timing of the completion of the merger
because it is subject to governmental and regulatory approvals
and other conditions. See The Merger Agreement
Conditions to Completion of the Merger. |
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Q: |
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Are the Companys common shareholders entitled to
appraisal rights? |
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A: |
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No. Under the IBCA, holders of Company common stock are not
entitled to dissenters appraisal rights in connection with
the merger, and neither the Company nor Aviva will independently
provide holders of Company common stock with any such rights. |
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Q: |
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When and where will the special meeting be held? |
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A: |
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The special meeting will be held on [ ], 2006,
at [ ], Des Moines local time, at
[ ]. |
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Who is entitled to vote at the special meeting? |
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Only holders of Company common stock as of the close of business
on [ ], 2006, are entitled to vote the shares
of Company common stock that they held at that time at the
special meeting, or at any adjournment, postponement or
continuation of the special meeting. |
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On the record date, [ ] shares of Company
common stock were issued and outstanding and held by
approximately [ ] holders of record. |
Q-3
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If my shares are held in street name by my
broker, bank or other nominee, will my broker, bank or other
nominee vote my shares for me? |
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Your broker, bank or other nominee will vote your shares only if
you provide specific instructions on how to vote. You should
follow the directions provided by your broker, bank or other
nominee regarding how to instruct your broker, bank or other
nominee to vote your shares. Without instructions, your shares
will not be voted. |
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What happens if I sell my shares of Company common stock
before the special meeting? |
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The record date for the special meeting is earlier than the date
of the special meeting and the date that the merger is expected
to be completed. If you transfer your shares of Company common
stock after the record date but before the special meeting, you
will retain your right to vote at the special meeting, but will
transfer the right to receive the per share amount of $69.00 in
cash to the person to whom you transfer your shares, so long as
such person owns the shares of Company common stock when the
merger is completed. |
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How will I know the merger has occurred? |
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If the merger occurs, the Company
and/or Aviva
will promptly make a public announcement of this fact. |
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What should the Companys common shareholders do now in
order to vote on the merger agreement being considered at the
special meeting? |
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If you are a holder of Company common stock, you may submit your
vote for or against the merger agreement being considered at the
special meeting in person or by proxy. You may vote by proxy in
any of the following ways: |
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Internet. You may vote
by proxy over the Internet by going to the website listed on
your proxy card. Once at the website, follow the instructions to
vote your proxy.
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Telephone. You may
vote by proxy using the toll-free number listed on your proxy
card. Voice prompts will help you and confirm that your voting
instructions have been followed. |
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Mail. You may vote by
proxy by marking, signing, dating and returning your proxy card
in the pre-addressed postage-paid envelope provided. |
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Please refer to your proxy card or
the information forwarded by your bank, broker or other nominee
to see which options are available to you. |
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All shares entitled to vote and
represented by properly completed proxies received prior to the
special meeting, and not revoked, will be voted at the special
meeting as instructed on the proxies. If you do not indicate
how your shares should be voted on a matter, the shares
represented by your properly completed proxy will be voted as
the Companys board of directors recommends and therefore
FOR the approval of the merger agreement. |
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May I vote in person? |
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Yes. If your shares of Company common stock are not held in
street name by a broker, bank or other nominee, you
may attend the special meeting of the Companys common
shareholders, and vote your shares in person, rather than by
marking, signing, dating and returning your proxy card or
submitting your proxy by telephone or the Internet. If you wish
to vote in person and your shares are held by a broker, bank or
other nominee, you need to obtain a proxy from the broker, bank
or other nominee authorizing you to vote your shares held in the
brokers, banks or other nominees name. |
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Can I change my vote after I have delivered my proxy? |
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Yes. You may revoke your proxy at any time before it is
exercised by timely delivering a properly executed, later-dated
proxy (including over the Internet or telephone) or by voting by
ballot at the special meeting. Simply attending the special
meeting without voting will not revoke your proxy. |
Q-4
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What should I do if I receive more than one set of voting
materials for the special meeting? |
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You may receive more than one set of voting materials for the
special meeting, including multiple copies of this proxy
statement and multiple proxy cards or voting instruction cards.
For example, if you hold your shares in more than one brokerage
account, you will receive a separate voting instruction card for
each brokerage account in which you hold shares. If you are a
holder of record and your shares are registered in more than one
name, you will receive more than one proxy card. Please mark,
sign, date and return each proxy card and voting instruction
card that you receive. |
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Who can help answer my questions? |
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If you have any questions about the merger or how to submit your
proxy, or if you need additional copies of this proxy statement,
the enclosed proxy card, voting instructions or the election
form, you should contact Georgeson Inc., which is referred to as
Georgeson, at the address or telephone number below: |
17 State Street 10th Floor
New York, New York 10004
Banks and Brokers Call 212-440-9800
All others call Toll-Free 1-866-821-2570
Q-5
699 Walnut Street
Des Moines, Iowa
50309-3948
SUMMARY
TERM SHEET
This summary term sheet highlights material information
contained in this proxy statement, but does not contain all of
the information in this proxy statement that is important to
your voting decision. To understand the merger agreement fully
and for a more complete description of the terms of the merger,
you should carefully read this entire proxy statement, including
the attached annexes. In addition, the Company encourages you to
read the information incorporated by reference into this proxy
statement, which includes important business and financial
information about the Company that has been filed with the
Securities and Exchange Commission, which is referred to as the
SEC. See Where You Can Find More Information.
Page references are included in parentheses to direct you to
more complete descriptions of the topics presented in this
summary term sheet. The merger agreement is attached as
Annex A to this proxy statement. You are encouraged to read
the merger agreement, because it is the legal document that
contains the terms and conditions of the merger.
The
Companies (page 13)
AmerUs Group Co.
699 Walnut Street
Des Moines, Iowa
50309-3948
Tel: 515-362-3600
AmerUs is an Iowa corporation located in Des Moines, Iowa,
engaged through its subsidiaries in the business of marketing,
underwriting and distributing individual life insurance and
annuity products in 50 states, the District of Columbia and
the U.S. Virgin Islands. Its major operating subsidiaries
include AmerUs Life Insurance Company, American Investors Life
Insurance Company, Inc., Indianapolis Life Insurance Company and
Bankers Life Insurance Company of New York.
Aviva plc
St Helens
1 Undershaft
London EC3P 3DQ
United Kingdom
Tel: +44 0 207 283 2000
Aviva plc, a public limited company organized under the laws of
England and Wales, is the worlds fifth-largest insurance
group and the United Kingdoms largest insurance services
provider (based on gross worldwide premiums at December 31,
2005), and is one of the leading providers of life and pension
products in Europe, with substantial positions in other markets
around the world. Avivas principal business activities are
life insurance and long-term savings, investment management and
property and casualty insurance.
Libra Acquisition Corporation
c/o Aviva USA Corporation
108 Myrtle Street
North Quincy, Massachusetts
02171-1753
Tel: 617-405-6245
1
Libra Acquisition Corporation, an Iowa corporation, is an
indirect wholly owned subsidiary of Aviva formed for the sole
purpose of effecting the merger. Libra Acquisition Corporation
has not conducted any business operations other than in
connection with the transactions contemplated by the merger
agreement.
Special
Meeting of the Companys Shareholders
(page 10)
Date, Time and Place. A special meeting of
shareholders of the Company will be held on
[ ], 2006, at [ ], Des Moines
local time, at [ ], for the following purposes:
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to consider and vote on the proposal to approve the merger
agreement; and
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to transact any other business as may properly come before the
special meeting or at any adjournment or postponement of the
special meeting.
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Record Date and Shares Entitled to
Vote. Only holders of record of shares of Company
common stock at the close of business on [ ],
2006, the record date, are entitled to vote at the special
meeting. Each record holder will have one vote at the special
meeting for each share of Company common stock as of the close
of business on the record date. On the record date,
[ ] shares of Company common stock were
issued and outstanding and held by approximately
[ ] holders of record.
Required Vote. Under the IBCA, in order for
the merger agreement to be approved, the votes cast favoring the
merger agreement must exceed the votes cast opposing the merger
agreement at a meeting of the Companys common
shareholders, provided that a quorum is present. A quorum exists
if at least a majority of the votes entitled to be cast at the
meeting are present in person or by proxy. While abstentions
will be treated as present at the meeting for purposes of
determining the presence of a quorum, they will not be counted
as votes cast on the proposal to approve the merger agreement,
and a decision by a shareholder to abstain will have no effect
in determining whether the merger agreement is approved. The
failure of a shareholder to vote or abstain could have a
negative effect on the ability of the Company to obtain a quorum
at the meeting in accordance with the IBCA, but assuming that
the required quorum is present at the meeting, such failure will
have no effect in determining whether the merger agreement is
approved.
Brokers, banks or other nominees who hold shares of Company
common stock in street name for customers who are
the beneficial owners of such shares may not give a proxy to
vote those customers shares in the absence of specific
instructions from those customers. These non-voted shares, which
are referred to as broker non-votes, will be treated
as present at the meeting for purposes of determining the
presence of a quorum but will have no effect in determining
whether the merger agreement is approved. Properly executed
proxies that do not contain voting instructions will be voted
FOR the proposal to approve the merger
agreement.
Voting by the Companys Directors and Executive
Officers. At the close of business on
[ ], 2006, the record date for the special
meeting, the directors and executive officers of the Company and
their affiliates beneficially owned and were entitled to
vote [ ] outstanding shares of Company
common stock, or approximately [ ]% of the
shares of Company common stock outstanding on that date. To the
Companys knowledge, these directors and executive officers
intend to vote their shares in favor of the proposal to approve
the merger agreement.
Purposes
and Effects of the Merger (page 18)
The principal purposes of the merger are to enable Aviva to
acquire all of the outstanding shares of Company common stock
and to provide the Companys common shareholders with the
opportunity to receive a cash payment for their shares at a
premium over the market prices at which Company common stock
traded before the public announcement of the merger agreement.
If the merger is completed, each share of Company common stock
will be converted into the right to receive $69.00 in cash.
Following completion of the merger, the Company will become an
indirect wholly owned subsidiary of Aviva and Company common
stock will be delisted from the New York Stock Exchange, or
NYSE, will no longer be publicly traded and will be deregistered
under the Securities Exchange Act of 1934, as amended, or the
Exchange Act.
2
On August 10, 2006, the Company sent a notice of redemption
to the holders of all of its issued and outstanding shares of
Series A Preferred Stock. The Company currently anticipates
that all of its Series A Preferred Stock will be redeemed
prior to completion of the merger. If such redemption does not
occur, however, each share of the Companys Series A
Preferred Stock that is outstanding immediately prior to
completion of the merger will remain outstanding after
completion of the merger as a share of the preferred stock of
the surviving corporation, until redeemed, purchased or
otherwise acquired by the surviving corporation.
Effects
of the Merger Not Being Completed (page 19)
If the merger is not completed for any reason, the
Companys common shareholders and holders of stock options
and other awards will not receive the merger consideration.
Instead, the Company will remain a public company and shares of
Company common stock will continue to be listed on the NYSE. If
the merger is not completed, the Company expects to continue to
conduct its business in a manner similar to the manner in which
it is presently conducted. In such event, the value of shares of
Company common stock would continue to be subject to current
risks and opportunities, including the various factors described
in the Companys past filings with the SEC, such as the
condition of the insurance industry and prevailing economic and
market conditions.
If the merger is not completed, Company common stock may trade
at pre-announcement levels or below due to adverse market
reaction. If the merger is not completed, there can be no
assurance that any other transaction similar to the merger would
be available to the Company. Even if such a transaction were
available, there can be no assurance that such transaction would
be acceptable to the Companys board of directors and would
offer the Companys common shareholders the opportunity to
receive a cash payment for their shares of Company common stock
at a premium over the market prices at which Company common
stock traded before the public announcement of any such
transaction.
What You
Will Receive in the Merger (page 18)
If the merger is completed, each outstanding share of Company
common stock will be converted into the right to receive $69.00
in cash. You will receive the per share amount of $69.00 in cash
in respect of your shares of Company common stock after you
remit your stock certificate(s) evidencing your shares of
Company common stock in accordance with the instructions
contained in a letter of transmittal to be sent to you as soon
as reasonably practicable after completion of the merger,
together with a properly completed and signed letter of
transmittal and any other documentation required to be completed
pursuant to the written instructions.
If you hold your shares in book-entry form that is,
without a stock certificate the exchange agent will
automatically send you the per share amount of $69.00 in cash in
exchange for the cancellation of your shares of Company common
stock after completion of the merger, provided that you comply
with applicable tax certification requirements.
If your shares of Company common stock are held in street
name by your broker, you will receive instructions from
your broker as to how to surrender your street name
shares and receive cash for those shares.
Company
Stock Options and Other Awards (page 18)
Each outstanding option to purchase shares of Company common
stock, whether vested or unvested, will be converted into the
right to receive an amount in cash per share subject to the
option equal to the excess, if any, of the per share amount of
$69.00 in cash over the exercise price of such option, less any
required withholding taxes.
Each outstanding stock unit, performance unit or similar award,
whether vested or unvested, will be converted into the right to
receive an amount of cash per unit or award equal to the per
share amount of $69.00 in cash, less any required withholding
taxes.
Each outstanding SAR, whether vested or unvested, will be
converted into the right to receive an amount of cash per stock
unit to which the SAR relates equal to the product of
(1) the total number of unexercised stock units to which
the SAR relates multiplied by (2) the excess of the per
share amount of $69.00 in cash over the fair market value of a
share of Company common stock on the SARs date of grant,
less any required withholding taxes.
3
Recommendation
of the Companys Board of Directors
(page 19)
The Companys board of directors has determined that the
merger agreement and the merger are fair to and in the best
interests of the Company and its shareholders, and has
unanimously approved and adopted the merger agreement and the
transactions contemplated by the merger agreement. The
Companys board of directors unanimously recommends that
the Companys common shareholders vote FOR
the proposal to approve the merger agreement.
Opinion
of Financial Advisor (page 22)
Goldman, Sachs & Co., or Goldman Sachs, acted as the
Companys financial advisor in connection with the merger.
On July 12, 2006, Goldman Sachs delivered its oral opinion
to the board of directors, which was subsequently confirmed by
delivery of a written opinion, dated as of July 12, 2006,
that, as of that date and based upon and subject to the factors
and assumptions set forth in the written opinion, the
$69.00 per share in cash to be received by the holders of
the outstanding shares of Company common stock pursuant to the
merger agreement was fair from a financial point of view to such
holders.
The full text of the written opinion of Goldman Sachs, dated
as of July 12, 2006, which sets forth the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken by Goldman Sachs in connection with the
opinion, is attached as Annex B to this proxy statement.
Goldman Sachs provided its opinion for the information and
assistance of the board of directors in connection with its
consideration of the merger. The Goldman Sachs opinion is not a
recommendation as to how any holder of Company common stock
should vote with respect to the merger.
Merger
Agreement (page 40)
A copy of the merger agreement is attached to this proxy
statement as Annex A and a summary of the merger agreement
is provided beginning on page 40 of this proxy statement. You
are encouraged to carefully read the merger agreement as it is
the legal document that contains the terms and conditions of the
merger.
Non-Solicitation
(page 46)
The merger agreement contains restrictions on the Companys
ability to solicit or engage in discussions or negotiations with
a third party regarding a takeover proposal as described in
The Merger Agreement Covenants and
Agreements. Notwithstanding these restrictions, under
certain limited circumstances, the Company may respond to and
negotiate an unsolicited acquisition proposal or terminate the
merger agreement and enter into an acquisition agreement with
respect to a superior proposal, subject to paying Aviva a
termination fee of $90,000,000 and reimbursing up to $12,500,000
of Avivas
out-of-pocket
merger-related expenses.
Conditions
to Completion of the Merger (page 49)
The respective obligations of each of the parties to complete
the merger are subject to the satisfaction or waiver of a number
of conditions, including the following:
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approval of the merger agreement by the Companys common
shareholders;
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expiration or termination of the waiting period under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or the HSR
Act; and
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the absence of any injunction, order, statute, rule, regulation
or order that makes the completion of the merger illegal.
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The obligation of Aviva and Merger Sub to complete the merger is
also subject to the satisfaction or waiver of a number of
conditions, including the following:
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the Companys representation that there has been no
material adverse effect on the Company since December 31,
2005 shall be true and correct, and its representation as to its
due organization shall be
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true and correct in all material respects (in each case both
when made and at and as of the closing date of the merger);
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the Companys representations and warranties in the merger
agreement relating to its capital structure will be true and
correct in all material respects as of the date specified in
such representation;
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all of the Companys other representations and warranties,
disregarding all qualifications and exceptions therein relating
to materiality, shall be true and correct (both when made and at
and as of the closing date of the merger, provided that
representations and warranties that speak as of a specified date
will be determined as of that date), except where the failure to
be so true and correct does not have and would not be reasonably
expected to have, individually or in the aggregate, a material
adverse effect on the Company;
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the Company shall have performed in all material respects all of
its obligations required to be performed under the merger
agreement, at or prior to the closing date of the
merger; and
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all required governmental authorizations, consents, orders,
approvals, declarations or filings that the Company must obtain
will have been filed, occurred or been obtained and will be in
full force and effect, other than those the absence or
invalidity of which could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on
either the Company or on the benefits, taken as a whole, that
Aviva reasonably expected to derive from the transactions
contemplated by the merger agreement.
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The Companys obligation to complete the merger is also
subject to the satisfaction or waiver of a number of conditions,
including the following:
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Avivas representation that it will have sufficient cash to
pay the merger consideration shall be true and correct (both
when made and at and as of the closing date of the merger);
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all of Avivas other representations and warranties,
disregarding all qualifications and exceptions therein relating
to materiality, shall be true and correct (both when made and at
and as of the closing date of the merger, provided that
representations and warranties that speak as of a specified date
will be determined as of that date), except where the failure to
be so true and correct does not have and would not be reasonably
expected to have, individually or in the aggregate, a material
adverse effect on Aviva;
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Aviva shall have performed in all material respects all of its
obligations required to be performed under the merger agreement,
at or prior to the closing date of the merger; and
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all required governmental authorizations, consents, orders,
approvals, declarations or filings that Aviva must obtain will
have been filed, occurred or been obtained, and will be in full
force and effect, other than those the absence or invalidity of
which could not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on either the
Company or on the benefits, taken as a whole, that Aviva
reasonably expected to derive from the transactions contemplated
by the merger agreement.
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Termination
of the Merger Agreement (page 50)
The merger agreement may be terminated under certain
circumstances, including the following:
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by the mutual written consent of the Company and Aviva;
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by either the Company or Aviva, if:
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a governmental entity that must grant a required regulatory
approval has denied such approval and such denial has become
final and non-appealable, or if any governmental entity has
issued an order, decree or ruling enjoining the merger or
otherwise prohibiting the merger, and such order, decree or
ruling has become final and non-appealable;
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the merger is not completed by March 31, 2007;
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the other party breaches any of its covenants, agreements,
representations or warranties, such that the closing conditions
to the non-breaching partys obligation to effect the
merger would not be satisfied and
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the breach or failure to perform is not curable, or if curable,
has not been cured within 60 days following receipt of
written notice from the non-breaching party of such breach or
failure to perform; or
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the approval of the merger agreement by the Companys
common shareholders is not obtained at the special meeting or at
any adjournment or postponement of such meeting.
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by Aviva, if the Companys board of directors fails to
recommend approval of the merger agreement at the special
meeting or withdraws, modifies, or qualifies its recommendation
in any manner materially adverse to Aviva or to the completion
of the merger prior to receipt of shareholder approval; or
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by the Company, prior to the approval of the merger agreement by
the Companys common shareholders, in order to enter into
an agreement with respect to a third-party acquisition proposal
that the Companys board of directors determines in good
faith (after consultation with outside legal counsel and
financial advisors), in the exercise of its fiduciary duties,
constitutes a superior proposal (as described under The
Merger Agreement Covenants and Agreements),
provided that the Company must notify Aviva in writing of its
intention to terminate and the terms and conditions of the
third-party acquisition proposal no less than five business days
before such termination, and must take into account any changes
to the terms and conditions of the merger agreement proposed by
Aviva in response.
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Termination
Fee and Termination Expenses (page 51)
The Company has agreed to pay Aviva a termination fee of
$90,000,000 and to reimburse Aviva for up to $12,500,000 of its
out-of-pocket
fees and expenses incurred in connection with the merger in the
event that the merger agreement is terminated under the
following circumstances, such payment to occur on the business
day following termination in the case of the second and third
bullets below, or entry into or completion of a third-party
acquisition proposal in the case of the first and fourth bullets
below:
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if Aviva terminates the merger agreement because the merger is
not completed by March 31, 2007, and (1) at any time
after July 12, 2006 and before such termination, a
third-party acquisition proposal is publicly announced, enters
the public domain or is publicly communicated to the senior
officers or board of directors of the Company and is not
irrevocably withdrawn; (2) at the time of termination,
Aviva is not in breach of its representations, warranties or
covenants in such manner that the breach would give rise to the
failure of a closing condition; and (3) within
12 months after the date of such termination, the Company
or any of its subsidiaries enters into any agreement with a
third party with respect to, or completes, an acquisition
proposal with respect to a majority of the Companys or its
subsidiaries total voting power or a majority of the
Companys and its subsidiaries total assets;
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if Aviva terminates because the Companys board of
directors fails to recommend approval of the merger agreement at
the special meeting or withdraws, modifies or qualifies its
recommendation in any manner materially adverse to Aviva or to
the completion of the merger prior to receipt of shareholder
approval of the merger agreement;
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if the Company terminates the merger agreement, prior to the
receipt of approval of the merger agreement by its shareholders,
to enter into an agreement for an acquisition proposal that its
board of directors determines in good faith (after consultation
with its outside legal counsel and financial advisors), in the
exercise of its fiduciary duties, constitutes a superior
proposal (as described under The Merger
Agreement Covenants and Agreements); or
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if either party terminates the merger agreement because the
Companys common shareholders failed to approve the merger
agreement at the special meeting; (1) at any time after
July 12, 2006 and before the date of the special meeting an
acquisition proposal is publicly announced, otherwise enters the
public domain or is publicly communicated to the senior officers
or board of directors of the Company and is not irrevocably
withdrawn at least 10 days prior to such meeting;
(2) at the time of termination, Aviva is not in breach of
its representations, warranties or covenants in such manner that
the breach would give rise to the failure of a closing
condition; and (3) within 12 months after the date of
such termination, the Company or any of its subsidiaries enters
into any agreement with a third party with respect to, or
completes, an acquisition
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proposal with respect to a majority of the Companys or its
subsidiaries total voting power or a majority of the
Companys and its subsidiaries total assets.
Interests
of the Companys Directors and Executive Officers in the
Merger (page 30)
When considering the recommendation by the Companys board
of directors, you should be aware that a number of the
Companys directors and executive officers may have
interests in the merger that are different from, or in addition
to, the interests of the Companys other shareholders. The
Companys board of directors was aware of these interests
and considered them, among other matters, in unanimously
adopting and approving the merger agreement and the transactions
contemplated by the merger agreement.
Such interests relate to, or arise from, among other things,
(1) the fact that one of the Companys executive
officers has a supplemental benefit agreement with the Company
that provides for certain benefits upon termination of
employment following a change of control; (2) the fact that
eight of the Companys executive officers have entered into
employment agreements with the Company at the request of Aviva
that will become effective upon completion of the merger and
will replace their supplemental benefit agreements; (3) the
fact that unvested stock options, stock units, performance units
and similar awards will vest in connection with the merger;
(4) the fact that, with respect to pre-merger acts,
omissions, facts or events, the surviving corporation will
continue to (a) provide indemnification and advancement of
expenses of former or present directors and officers and
(b) for a period of six years after the effective time of
the merger, maintain directors and officers
liability insurance policies on terms no less favorable in the
aggregate than those presently provided or maintained by the
Company, subject to certain limitations; and (5) the fact
that, during the
24-month
period following the merger, Aviva has agreed to provide
employees of the Company who continue their employment with the
surviving corporation after the effective time of the merger
with compensation and benefits that are not less favorable in
the aggregate than those currently provided by the Company.
All these additional interests are described in this proxy
statement, to the extent material, and, except as described in
the proxy statement, such persons have, to the knowledge of the
Company, no material interest in the merger apart from those of
the Companys common shareholders generally. Please see
The Merger Interests of the Companys
Directors and Executive Officers in the Merger.
Merger
Financing (page 37)
Aviva has represented in the merger agreement that it has or
will have available, prior to the effective time of the merger,
sufficient cash in immediately available funds to pay or to
cause Merger Sub to pay the merger consideration to the
Companys common shareholders and to complete the merger
and the transactions contemplated by the merger agreement. The
receipt of financing by Aviva is not a condition to the
obligations of either party to complete the merger under the
terms of the merger agreement.
Market
Price and Dividend Data (page 9)
Shares of Company common stock are listed on the NYSE. For a
description of the market price and the payment of dividends,
please see Market Price Data and Dividend
Information.
7
FORWARD-LOOKING
INFORMATION
This proxy statement contains statements which constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, which include words
such as anticipate, believe,
plan, estimate, expect,
intend, and other similar and related expressions.
Forward-looking statements are made based upon managements
current expectations and beliefs concerning future developments
and their potential effects on the Company. Such forward-looking
statements are not guarantees of future events. Actual results
may differ materially from those contemplated by the
forward-looking statements due to, among others, the following
factors: (1) the shareholders of the Company may not
approve the merger agreement and the transactions contemplated
by the merger agreement at the special meeting; (2) the
parties may be unable to obtain governmental and regulatory
approvals required for the merger, or required governmental and
regulatory approvals may delay the merger or result in the
imposition of conditions that could cause the parties to abandon
the merger; (3) the parties may be unable to complete the
merger because, among other reasons, conditions to the closing
of the merger may not be satisfied or waived; or (4) other
factors that may be referred to in the Companys reports
filed with or furnished to the SEC from time to time. There can
be no assurance that other factors not currently anticipated by
the Company will not materially and adversely affect future
events. Security holders are cautioned not to place undue
reliance on any forward-looking statements made by the Company
or on its behalf. Forward-looking statements speak only as of
the date the statement was made. The Company undertakes no
obligation to update or revise any forward-looking statement.
8
MARKET
PRICE DATA AND DIVIDEND INFORMATION
Company common stock is listed and traded on the NYSE under the
symbol AMH. The following table sets forth, for the
periods indicated, the high and low per share price of Company
common stock as quoted on the NYSE and the dividends per share
declared during such period:
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Company Common Stock
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High
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Low
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Dividends(1)
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2004
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First quarter
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$
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41.00
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$
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34.73
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$
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Second quarter
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41.70
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36.73
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Third quarter
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41.51
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37.31
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Fourth quarter
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45.68
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38.60
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$
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0.40
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2005
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First quarter
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$
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49.08
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$
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43.36
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$
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Second quarter
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48.50
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45.06
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Third quarter
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57.57
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48.91
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Fourth quarter
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60.14
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54.83
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$
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0.40
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2006
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First quarter
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$
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64.03
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$
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56.40
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$
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Second quarter
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61.60
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52.41
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Third quarter (through
August 10, 2006)
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67.41
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58.79
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(1) |
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The merger agreement provides that, during the period from
July 12, 2006 until the effective time of the merger or the
termination of the merger agreement, the Company shall not
declare or pay any dividends on any of its capital stock (other
than the declaration and payment of regular quarterly cash
dividends on the Companys Series A Preferred Stock). |
The following table sets forth the closing sale price per share
of Company common stock as quoted on the NYSE on June 23,
2006, the last trading day before the Company received
Avivas $69.00 per share verbal proposal, July 6,
2006, the last trading day before the public announcement of
discussions between the Company and Aviva regarding the merger
and [ ], 2006, the latest practicable trading
day before the date of this proxy statement:
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Company
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Common Stock
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June 23, 2006
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$
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53.00
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July 6, 2006
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$
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62.51
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[ ], 2006
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$
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[ ]
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If the merger is completed, Company common stock will be
delisted from the NYSE and Company common stock will be
deregistered under the Exchange Act.
9
THE
SPECIAL MEETING OF SHAREHOLDERS
The Company is furnishing this proxy statement to holders of
Company common stock as part of the solicitation of proxies by
the Companys board of directors for use at the special
meeting of shareholders.
Date,
Time and Place
The Company will hold the special meeting on
[ ], 2006, at [ ], Des Moines
local time, at [ ].
Purpose
of Special Meeting
The special meeting will be held for the following purposes:
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to consider and vote on the proposal to approve the merger
agreement; and
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to transact any other business as may properly come before the
special meeting or at any adjournment or postponement of the
special meeting.
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After careful consideration, the Companys board of
directors has determined that the merger agreement and the
transactions contemplated by the merger agreement are fair to
and in the best interests of the Company and its shareholders.
Accordingly, the Companys board of directors has
unanimously approved and adopted the merger agreement and the
transactions contemplated by the merger agreement. The board of
directors unanimously recommends that you vote
FOR the proposal to approve the merger
agreement.
Record
Date; Shares Entitled to Vote; Quorum
Only holders of record of shares of Company common stock at the
close of business on [ ], 2006, the record date
for the special meeting, are entitled to vote at the special
meeting. Each record holder will have one vote at the special
meeting for each share of Company common stock as of the close
of business on the record date. On the record date,
[ ] shares of Company common stock were
issued and outstanding and held by approximately
[ ] holders of record. A quorum exists if at
least a majority of the votes entitled to be cast at the special
meeting are present in person or by proxy. In the event that a
quorum is not present at the special meeting, it is expected
that the special meeting will be adjourned or postponed to
solicit additional proxies.
On August 10, 2006, the Company sent a notice of redemption
to the holders of all of its issued and outstanding shares of
Series A Preferred Stock. The Company currently anticipates
that all of its Series A Preferred Stock will be redeemed
prior to completion of the merger. Regardless of whether the
redemption is completed prior to the special meeting, holders of
the Companys Series A Preferred Stock will not be
entitled to vote at the special meeting.
Required
Vote
Under the IBCA, in order for the merger agreement to be
approved, the votes cast favoring the merger agreement must
exceed the votes cast opposing the merger agreement at a meeting
of the Companys shareholders, provided that a quorum is
present. A quorum exists if at least a majority of the votes
entitled to be cast at the meeting are present in person or by
proxy. While abstentions will be treated as present at the
meeting for purposes of determining the presence of a quorum,
they will not be counted as votes cast on the proposal to
approve the merger agreement, and a decision by a shareholder to
abstain will have no effect in determining whether the merger
agreement is approved. The failure of a shareholder to vote or
abstain could have a negative effect on the ability of the
Company to obtain a quorum at the meeting in accordance with the
IBCA, but assuming that the required quorum is present at the
meeting, such failure will have no effect in determining whether
the merger agreement is approved. Brokers, banks or other
nominees who hold shares of Company common stock in street
name for customers who are the beneficial owners of such
shares may not give a proxy to vote those customers shares
in the absence of specific instructions from those customers.
These non-voted shares, which are referred to as broker
non-votes, will be treated as present at the meeting for
purposes of determining the presence of a quorum but will have
no effect in determining whether the merger agreement is
approved.
10
Voting by
the Companys Directors and Executive Officers
At the close of business on the record date, the directors and
executive officers of the Company and their affiliates
beneficially owned and were entitled to
vote [ ] outstanding shares of Company
common stock, or approximately [ ]% of the
shares of Company common stock outstanding on that date. To the
Companys knowledge, these directors and executive officers
intend to vote their shares in favor of the proposal to approve
the merger agreement.
Voting of
Proxies
Shareholders may vote their shares by attending the special
meeting and voting their shares of Company common stock in
person, or by marking, signing and dating the enclosed proxy
card and mailing it in the enclosed postage-prepaid envelope or
by submitting the proxy by telephone or the Internet by
following the instructions printed on the proxy card.
Shareholders who hold such shares through a broker, bank or
other nominee must follow the instructions on the proxy form
supplied by their broker, bank or other nominee, which may
provide for voting by telephone or via the Internet.
All shares represented by properly executed proxies received in
time for the special meeting will be voted at the special
meeting in the manner specified by the holders of such shares.
Properly executed proxies that do not contain voting
instructions will be voted FOR the proposal
to approve the merger agreement.
Shares of Company common stock represented at the special
meeting but not voted, including broker non-votes, and shares of
Company common stock for which proxies have been received but
for which shareholders have abstained, will be treated as
present at the special meeting for purposes of determining the
presence of a quorum for the transaction of all business.
Only shares affirmatively voted FOR the
approval of the merger agreement and properly executed proxies
that do not contain voting instructions will be counted as
favorable votes for the proposal.
The Company does not expect that any matter other than those
described in this proxy statement will come before the special
meeting. If any other matters are properly brought before the
special meeting for action, however, the Company intends that
the persons named as proxies on the enclosed proxy card will
vote in accordance with their best judgment. These matters may
include an adjournment or postponement of the special meeting
from time to time if the Companys board of directors so
determines, except that proxies that are voted against the
merger proposal may not be voted by the persons named on the
enclosed proxy card for an adjournment or postponement of the
special meeting. If any adjournment or postponement is made, the
Company may solicit additional proxies during the adjournment or
postponement period.
Your vote is important. Please return your marked proxy card or
submit your proxy by telephone or Internet so your shares can be
represented, even if you plan to attend the special meeting in
person.
Revocability
of Proxies
The grant of a proxy on the enclosed proxy card or by telephone
or Internet does not preclude a shareholder from voting in
person at the special meeting. A shareholder may revoke a proxy
at any time prior to its exercise by (1) filing a written
notice with the Secretary of the Company or the acting Secretary
of the special meeting stating that the shareholder would like
to revoke his proxy, (2) submitting a duly executed proxy
to the Secretary of the Company bearing a later date or
(3) appearing at the special meeting and giving oral notice
to the presiding officer during the special meeting. Attendance
at the special meeting will not in and of itself constitute a
revocation of the proxy. If you have instructed your broker,
bank or other nominee to vote your shares, you must follow the
procedures provided by your broker, bank or other nominee to
change those instructions.
Solicitation
of Proxies
The Company and its proxy solicitation firm, Georgeson, may
solicit proxies in person or by telephone, fax or other means.
The Company will pay Georgeson a fee of $16,000, plus reasonable
expenses, for its services. The Company will also pay all other
reasonable expenses for solicitation. In addition, proxies may
be solicited by
11
officers and directors and other employees of the Company,
without additional remuneration, in person or by telephone, fax
or other means.
You should send in your proxy by mail or vote by telephone or
the Internet without delay. If you hold shares of Company common
stock through a broker, bank or other nominee, please follow the
instructions on the proxy form supplied by your broker, bank or
other nominee, which may provide for voting by telephone or
through the Internet. The Company will also reimburse brokers,
banks and other nominees for their expenses in sending these
materials to you and obtaining your voting instructions.
You should not send your stock certificate(s) evidencing your
shares of Company common stock with your proxy. As soon as
reasonably practicable after completion of the merger, a letter
of transmittal with written instructions for the surrender of
stock certificates will be mailed to holders of shares of
Company common stock. If you hold your shares in book-entry
form that is, without a stock
certificate the exchange agent will automatically
send you the per share amount of $69.00 in cash in exchange for
the cancellation of your shares of Company common stock after
completion of the merger, provided that you comply with
applicable tax certification requirements. If your shares of
Company common stock are held in street name by your
broker, you will receive instructions from your broker as to how
to surrender your street name shares and receive
cash for those shares.
12
THE
COMPANIES
AmerUs
Group Co.
AmerUs is an Iowa corporation located in Des Moines, Iowa,
engaged through its subsidiaries in the business of marketing,
underwriting and distributing individual life insurance and
annuity products in 50 states, the District of Columbia and
the U.S. Virgin Islands. Its major operating subsidiaries
include AmerUs Life Insurance Company, American Investors Life
Insurance Company, Inc., Indianapolis Life Insurance Company and
Bankers Life Insurance Company of New York.
AmerUs was founded in 1896 as the mutual insurer Central Life
Assurance Company. In 1996, it became the first Mutual Insurance
Holding Company in the United States, or MIHC, a structure that
allows mutuals to access the public equity markets, which AmerUs
did in 1997 with its initial public offering. In 2000, AmerUs
reorganized its MIHC structure through a full demutualization
and became a 100% public stock company. The Companys
principal executive offices are located at 699 Walnut Street,
Des Moines, Iowa
50309-3948,
and its telephone number is 515-362-3600.
Aviva
plc
Aviva plc, a public limited company organized under the laws of
England and Wales, is the worlds fifth-largest insurance
group and the United Kingdoms largest insurance services
provider (based on gross worldwide premiums at December 31,
2005), and is one of the leading providers of life and pension
products in Europe, with substantial positions in other markets
around the world. Avivas principal business activities are
life insurance and long-term savings, investment management and
property and casualty insurance.
Aviva was created following the merger of CGU and Norwich Union
in May 2000. The group was called CGNU until rebranding as Aviva
in July 2002. Aviva can trace its history back over three
centuries. Avivas principal executive offices are located
at St Helens, 1 Undershaft, London EC3P 3DQ, United
Kingdom, and its telephone number is +44 0 207 283 2000.
Libra
Acquisition Corporation
Libra Acquisition Corporation, an Iowa corporation, is an
indirect wholly owned subsidiary of Aviva formed for the sole
purpose of effecting the merger. Libra Acquisition Corporation
has not conducted any business operations other than in
connection with the transactions contemplated by the merger
agreement.
Libra Acquisition Corporations principal executive offices
are located at 108 Myrtle Street, North Quincy, Massachusetts
02171-1753,
and its telephone number is 617-405-6245.
13
THE
MERGER
The following is a description of the material aspects of the
merger. While the Company believes that the following
description covers the material terms of the merger, the
description may not contain all of the information that is
important to you. The Company encourages you to carefully read
this entire proxy statement, including the merger agreement
attached to this proxy statement as Annex A, for a more
complete understanding of the merger.
Background
of the Merger
The board of directors regularly evaluates the Companys
strategic direction and ongoing business plans, with a view
towards strengthening the Companys core businesses and
improving shareholder value. A focus of this evaluation has, for
some time, been centered on the Companys competitive
position in the industry. Many of the Companys competitors
are better capitalized, have higher ratings and have
significantly greater resources. As part of its ongoing
evaluation of the Company, the board of directors has considered
a variety of strategic alternatives. In that regard,
representatives of the Company have from time to time discussed
potential business relationships with representatives of various
companies in the insurance industry that might expand the
Companys business, improve its competitive position and
enhance shareholder value. During its investigations of these
strategic alternatives, the policy of the Company has been
neither to actively seek nor oppose the sale of the Company, but
rather to act at all times in the best interests of the Company
and its shareholders.
In the third quarter of 2004, a large U.S. life insurance
company, referred to as Company A, approached the Company and
expressed an interest in acquiring the Company. Following the
execution of a confidentiality agreement and due diligence,
discussions with Company A were terminated in October 2004,
after the Company and Company A were unable to reach agreement
as to the price to be paid for the shares of the Company. At the
same time, discussions were held with three other North American
life insurance companies with respect to a potential acquisition
transaction, but none of these entities expressed interest in
pursuing such a transaction.
In June 2005, Roger K. Brooks, then Chairman and Chief Executive
Officer of the Company, and Thomas C. Godlasky, then President
and Chief Operating Officer of the Company, attended a meeting
of the Companys insurance sales agents in London. While in
London, Messrs. Brooks and Godlasky also arranged and
attended a meeting with David Ball, Corporate Development
Director of Aviva International Holdings Limited, an indirect
wholly owned subsidiary of Aviva that is referred to as Aviva
International, and Gavin Dixon, then M&A Director of Aviva,
at which potential business relationships between the Company
and Aviva were discussed.
In November 2005, Aviva indicated that it wished to further
pursue its interest in a strategic transaction with the Company.
Subsequently, Messrs. Brooks and Godlasky had discussions
regarding such a transaction with Philip G. Scott, Group
Executive Director of Aviva, Mark Dearsley, Finance Director of
Aviva International, and Mr. Ball, including at an
in-person meeting in Chicago. Aviva signed a confidentiality
agreement with the Company on November 14, 2005, and
thereafter Aviva was provided with selected information
regarding the Company.
On December 29, 2005, Mr. Brooks retired from his
positions as an officer and employee of the Company.
Mr. Godlasky continued as President and became Chairman and
Chief Executive Officer of the Company, concurrent with
Mr. Brooks retirement.
In early January 2006, the discussions that had begun in
November 2005 were terminated without Aviva having made a
proposal to acquire the Company.
On May 3, 2006, Mr. Scott made a telephone call to
Mr. Godlasky to inquire as to whether the Company would be
interested in reopening discussions regarding a strategic
transaction between the two companies, and suggesting that the
two meet in Chicago to discuss the matter. Mr. Godlasky
summarized his telephone conversation with Mr. Scott during
regularly scheduled meetings of the board of directors held on
May 4 and 5, 2006. After discussion, the board of directors
authorized Mr. Godlasky to meet with Mr. Scott.
Messrs. Godlasky and Scott met in Chicago on May 18,
2006 to discuss recent business developments at their respective
companies and to discuss Avivas interest in a possible
strategic transaction with the Company. Mr. Scott indicated
that Aviva expected to review its strategic planning options at
meetings of its board of directors scheduled for the end of
June, and that he was hopeful of reviving discussions between
the two companies before that time.
14
Mr. Godlasky told Mr. Scott that he would discuss with
the Companys board of directors whether it was interested
in pursuing discussions with Aviva. In addition,
Mr. Godlasky indicated to Mr. Scott his belief that
the board of directors would seek a price in the range of
$70.00 per share of Company common stock.
The board of directors met telephonically on May 22, 2006,
for the purpose of discussing the substance of
Mr. Godlaskys May 18, 2006 meeting with
Mr. Scott. Representatives from Goldman Sachs and the
Companys special outside counsel, Skadden, Arps, Slate,
Meagher & Flom LLP, which is referred to as Skadden,
also attended the meeting. Mr. Godlasky summarized his
recent discussions with Mr. Scott and indicated he would
not recommend entering into discussions with Aviva at the
present time unless Aviva was willing to proceed on a timely
basis. Following Mr. Godlaskys presentation, the
board of directors deliberated on the matter. The discussion
included, among other things, the topics of price,
confidentiality, timing, financing and the cross-border nature
of the proposed transaction. After concluding its discussion,
the board of directors authorized Mr. Godlasky to continue
discussions with Aviva.
Mr. Scott and Mr. Godlasky spoke several times over
the following week. The board of directors met telephonically on
May 31, 2006 for the purpose of monitoring the progress of
Mr. Godlaskys discussions with Aviva. Also present at
the meeting were representatives of Goldman Sachs and Skadden.
At the meeting, Mr. Godlasky updated the board of directors
on his discussions with Aviva. He relayed Avivas
willingness to proceed with negotiations on a timely basis.
Mr. Godlasky then outlined a proposed time schedule of
negotiations with Aviva. Mr. Godlasky also described plans
for opening an electronic data room on June 2, 2006, for
use by Aviva and its representatives for the purpose of
conducting due diligence, and noted that the electronic data
room would contain (1) an actuarial appraisal of the
insurance operations of the Company as of September 30,
2005 prepared by Milliman, Inc., which is referred to as the
Milliman Report, (2) a memo from Milliman, Inc. dated
June 1, 2006 which rolled forward the actuarial appraisal
value of the insurance operations of the Company from
September 30, 2005 to March 31, 2006, which is
referred to as the Milliman Memo, and (3) an internal memo
and analysis prepared by the Company and dated June 1,
2006, which estimated the actuarial appraisal valuation for the
insurance operations of the Company as of June 30, 2006 and
September 30, 2006 in the aggregate and on a per share
basis, net of holding company assets and liabilities, which is
referred to as the Company Memo. After discussion, the board of
directors authorized Mr. Godlasky to release the Milliman
Report, the Milliman Memo and the Company Memo, open the
electronic data room on June 2, 2006, and continue
discussions with Aviva and its representatives.
On June 2, 2006, the electronic data room and the Milliman
Report, the Milliman Memo and the Company Memo were made
available to Aviva. After review of the Milliman Report, the
Milliman Memo and the Company Memo, Aviva requested the
opportunity to meet and discuss the contents of the documents
with members of the senior management of the Company and
representatives of Milliman, Inc. This meeting took place among
representatives of the parties in Chicago on June 15, 2006.
The meeting was attended by Mr. Godlasky, Brian J.
Clark, Executive Vice President and Chief Product Officer of the
Company, Christopher J. Littlefield, Executive Vice President
and General Counsel of the Company, Denis Tauscheck, Vice
President Financial Forecasting of the Company,
representatives from Milliman, Inc., Mr. Ball, Jim Webber,
Director of Financial Management of Aviva International, and
representatives of Avivas consultant, Tillinghast. At the
meeting, the representatives from the Company and Milliman, Inc.
answered questions from Aviva with respect to the Companys
actuarial valuation, litigation and other regulatory matters.
On June 16, 2006, Mr. Godlasky and Mr. Scott had
a telephone conversation in which the two discussed a tentative
timeline for the negotiations. Mr. Scott proposed that the
two companies proceed with the goal of completing the
negotiations (should they continue to a definitive agreement)
and announcing a transaction by July 14, 2006.
Mr. Godlasky summarized the substance of his telephone
conversation with Mr. Scott in a telephonic meeting of the
board of directors on June 16, 2006.
Following meetings of Avivas board of directors that took
place on June 21 and 22, 2006, Mr. Scott called
Mr. Godlasky on June 23, 2006 to indicate that he
wished to meet with Mr. Godlasky in Chicago on
June 26, 2006, and that he was authorized to proceed with
respect to a possible transaction. However, Mr. Scott
shared Avivas current views on pricing in light of the
Companys share price (then approximately $53.00 per
share) and said that due to the general downward trend in the
share prices for companies in the insurance industry since the
end of April
15
2006, Aviva was prepared only to offer $66.00 per share of
Company common stock. Mr. Scott also said Aviva would seek
a 4% breakup fee and the termination of further dividends after
execution of a definitive agreement.
Mr. Godlasky relayed the substance of his conversation with
Mr. Scott to the Companys board of directors in a
meeting held on June 23, 2006. The meeting involved an
extensive discussion of price and included advice from the
Companys financial advisor, Goldman Sachs. Based on their
experience and knowledge of the Company, the board of directors
believed that a price closer to $70.00 per share of Company
common stock was more appropriate, and Goldman Sachs provided
preliminary advice as to factors to be considered by the board
of directors with respect to the per share consideration.
Following the meeting of the board of directors,
Mr. Godlasky informed Mr. Scott on June 24, 2006
that neither he nor the board of directors was prepared to
proceed on the basis of the proposed price of $66.00; rather, it
would be necessary for Aviva to improve its price.
Mr. Scott took this under advisement and it was determined
that the parties would proceed with the meeting scheduled in
Chicago on June 26, 2006.
The meeting on June 26, 2006 in Chicago involved
Messrs. Godlasky and Littlefield and Melinda S. Urion,
Executive Vice President, Chief Financial Officer and Treasurer
of the Company, together with Messrs. Scott and Ball,
Graham Jones, Group Legal Services Director of Aviva, Clifford
Abrahams, M&A Director of Aviva, and Andrew Moss, Group
Finance Director of Aviva. A number of subjects were discussed
at the meeting, including price, primary conditions for the
transaction, additional due diligence to be completed and a
request for a breakup fee in the event that a third party sought
to pay a higher price for the Company. After a lengthy
discussion, Mr. Scott agreed to increase Avivas per
share offer to $69.00 per share and to consider a 3%
breakup fee.
On June 27, 2006, the board of directors received a letter
from Aviva confirming its interest in proceeding with a
transaction, which was unanimously endorsed by Avivas
board of directors. The letter was non-binding and subject to
additional due diligence, site visits and the execution of a
definitive agreement, but served to formally express
Avivas continuing pursuit of a transaction. The key terms
of the non-binding proposal were as follows:
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a proposed purchase price of $69.00 cash per share of Company
common stock;
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a 3%
break-up fee
upon customary events of termination;
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an undertaking by the Company not to declare or pay dividends on
Company common stock between execution of an agreement and the
completion of the transaction;
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the integration of Avivas U.S. life insurance
operations, Aviva USA Corporation, which is referred to as Aviva
USA, into the operations of the Company, with the combined
company to be headquartered in Des Moines, Iowa, and with
Mr. Godlasky to act as chief executive officer of the
combined company and members of management to be drawn from both
the Company and Aviva USA; and
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a targeted announcement date of July 14, 2006.
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On June 28, 2006, the board of directors convened a special
telephonic meeting in order to receive an update with respect to
a possible transaction with Aviva. Representatives from Goldman
Sachs and Skadden were also in attendance at the meeting.
Mr. Godlasky discussed with the board of directors his
conversation with Mr. Scott on June 24, 2006 and the
results of the meeting with Mr. Scott on June 26,
2006. Mr. Godlasky then reviewed the key terms of the
non-binding proposal received from Aviva on June 27, 2006,
focusing on the proposed per share price of $69.00 and the 3%
break-up
fee. Mr. Godlasky indicated that while Mr. Scott had
discussed Avivas desire to retain Mr. Godlasky and
members of the senior management team of the Company following
the transaction, there had been no discussion of which members
of senior management Aviva wished to retain or the specific
details of any post-transaction management arrangements.
Mr. Godlasky then summarized the due diligence proposed to
be undertaken by Aviva in connection with the transaction.
Following this review, representatives from Goldman Sachs
presented their preliminary financial analysis of Avivas
proposal. A representative from Skadden then reviewed the terms
of the non-binding proposal with the board of directors from a
legal perspective, and outlined the directors fiduciary
duties with respect to the non-binding proposal. Upon hearing
each of these presentations, the board of directors deliberated
on the non-binding proposal and unanimously authorized
Mr. Godlasky and the management of the Company to go
forward and continue the process of negotiating a definitive
agreement based on proposed per share price of $69.00 in cash.
16
Aviva initially distributed a draft of the merger agreement to
the Company through its legal counsel, LeBoeuf, Lamb,
Greene & MacRae LLP, on the evening of June 29,
2006, which was thereafter negotiated between representatives of
the two companies through July 12, 2006.
After discussions with Mr. Godlasky, on July 3, 2006,
Aviva sent proposed employment terms with respect to eight
executives of the Company that Aviva desired to retain after
completion of the proposed transaction. Drafts of employment
agreements were later exchanged on July 8, 2006 and were
thereafter negotiated through July 12, 2006.
Concurrently with the negotiation of the draft merger agreement,
on July 5 and 6, 2006, members of the Companys and
Avivas senior management met in Chicago to conduct due
diligence and attend meetings to discuss certain business,
legal, regulatory, tax and other matters in connection with the
proposed merger, and to discuss the major terms of the proposed
transaction.
On the evening of July 6, 2006 (London time), the
Financial Times, an international daily newspaper,
contacted Aviva regarding its negotiations with the Company, on
which Aviva declined to comment. The Financial Times
later reported on its website that Aviva was engaged in
discussions with the Company with respect to a potential
acquisition of the Company. On July 7, 2006, Aviva issued
the following press release in response to the Financial
Times article:
Further to recent speculation, Aviva plc (Aviva)
confirms it is in discussions with AmerUs Group Co.
(AmerUs), which may or may not lead to the
acquisition of AmerUs. A transaction, if agreed, is expected to
be funded from a combination of Avivas internal resources,
external debt and a market placing of Aviva shares. If a
transaction is agreed, any equity placing will be accompanied by
an update on Avivas current trading. These discussions are
consistent with Avivas stated strategy of pursuing value
creating acquisition opportunities in key growth segments of the
major global long term savings markets.
Later on July 6, 2006, the Companys board of
directors convened a special telephonic meeting to discuss this
development. Representatives from Goldman Sachs and Skadden were
also present at the telephonic meeting. During the meeting, the
board of directors reviewed the article and also the proposed
press release to be issued by the Company in response to the
Financial Times article. Following the meeting, the
Company issued a press release, dated July 7, 2006, which
stated as follows:
AmerUs Group Co. (NYSE:AMH), a leading producer of life
insurance and annuity products, confirmed today that it is
engaged in discussions with Aviva plc regarding a potential
acquisition of the company by Aviva. The Company said that there
can be no assurance that these discussions will result in any
transaction. The Company said that it does not intend to comment
or provide updates on the discussions until they are concluded.
On July 7, 2006, the board of directors had a telephonic
meeting in order to receive an update on the status of the
merger agreement discussions. Mr. Godlasky briefly reviewed
recent developments with the board of directors, including the
Financial Times article and the press releases issued
earlier that day by the Company and Aviva, the Companys
stock price and trading volume prior to the meeting, and the
visit to the corporate offices of the Company by
Messrs. Scott and Dearsley, which had occurred earlier that
day. Following Mr. Godlaskys presentation,
representatives from Goldman Sachs presented their further
preliminary financial analysis of the transaction to the board
of directors. A representative from Skadden then reported on the
structure, terms and conditions of the draft merger agreement,
and discussed the directors fiduciary duties with respect
to the transaction. A representative from Skadden also provided
an overview of the post-merger employee benefits and discussed
the
change-of-control
benefits that certain executive officers would be entitled to
under their existing
change-of-control
agreements if they chose to terminate their own employment
immediately after the closing of the proposed merger, and
Avivas request to have eight of those
change-of-control
agreements replaced by management employment agreements. The
board of directors also scheduled another telephonic meeting for
July 11, 2006 in order to further study how the existing
change-of-control
agreements would operate in the context of the proposed
transaction and to receive an update at that time on the status
of Avivas negotiations with the eight executives with
respect to the proposed management employment agreements.
17
At the telephonic meeting on July 11, 2006, which was
attended by representatives from both Goldman Sachs and Skadden,
the directors explored the potential costs of the existing
change-of-control
agreements and the costs and terms of the management employment
agreements, which had been substantially finalized, as between
Aviva and the executives. At Avivas request, the
management employment agreements would be entered into by the
executives and the Company at the execution of the merger
agreement, but would only become effective upon the completion
of the merger. The management employment agreements are
discussed in more detail in Interests of the
Companys Directors and Executive Officers in the
Merger.
During the period between July 7 and July 12, 2006,
representatives of the Company and Aviva engaged in extensive
negotiations regarding the terms of the merger agreement.
On July 12, 2006, a meeting of the board of directors of
the Company was convened in Chicago to consider whether to
approve the merger agreement. At the meeting, Mr. Godlasky
informed the board of directors that the proposed merger
agreement had been substantially finalized. A representative
from each of Skadden and Nyemaster, Goode, West,
Hansell & OBrien P.C., Iowa counsel to the
Company, then outlined the directors fiduciary duties in
relation to the merger agreement and the transactions
contemplated by the merger agreement. Following this
presentation, management and the board of directors reviewed
certain aspects of the proposed transaction, including the
consideration to be paid in the merger, the conditions to
closing, the provisions with respect to termination events and
termination fees and expenses, the limitations that would be
placed on the Company with respect to third-party acquisition
proposals, and the proposed management employment agreements to
be executed with eight executives of the Company in connection
with the execution of the merger agreement. Following this
discussion, Goldman Sachs presented its financial analysis of
the proposed transaction and delivered its oral opinion to the
board of directors, which was subsequently confirmed by delivery
of a written opinion, dated as of July 12, 2006, that, as
of that date and based upon and subject to the factors and
assumptions set forth in the written opinion, the
$69.00 per share in cash to be received by the holders of
the outstanding shares of Company common stock pursuant to the
merger agreement was fair from a financial point of view to such
holders. A description of this opinion appears under
Opinion of Financial Advisor. Following
these presentations, the board of directors unanimously approved
and adopted the merger agreement, the transactions contemplated
by the merger agreement and the eight management employment
agreements. Remaining details with respect to the merger
agreement were finalized and it was executed later that day, as
were the management employment agreements.
The transaction was announced via separate press releases issued
by both Aviva and the Company prior to the opening of the London
markets on July 13, 2006.
Purposes
and Effects of the Merger; Consideration
The principal purposes of the merger are to enable Aviva to
acquire all of the outstanding shares of Company common stock
and to provide the Companys common shareholders with the
opportunity to receive a cash payment for their shares at a
premium over the market prices at which Company common stock
traded before the public announcement of the merger agreement.
The acquisition will be accomplished by a merger of Merger Sub
with and into the Company, with the Company surviving the merger
as an indirect wholly owned subsidiary of Aviva. If the merger
is completed, each outstanding share of Company common stock
will be converted into the right to receive $69.00 in cash. You
will receive the per share amount of $69.00 in cash after you
remit your certificate(s) evidencing your shares of Company
common stock in accordance with the instructions contained in a
letter of transmittal to be sent to you as soon as reasonably
practicable after completion of the merger, together with a
properly completed and signed letter of transmittal and any
other documentation required to be completed pursuant to the
written instructions. If you hold your shares in book-entry
form that is, without a stock
certificate the exchange agent will automatically
send you the per share amount of $69.00 in cash in exchange for
the cancellation of your shares of Company common stock after
completion of the merger, provided that you comply with
applicable tax certification requirements. If your shares of
Company common stock are held in street name by your
broker, you will receive instructions from your broker as to how
to surrender your street name shares and receive
cash for those shares.
At the effective time of the merger, each outstanding option to
purchase shares of Company common stock, whether vested or
unvested, will be converted into the right to receive an amount
in cash per share subject to the
18
option equal to the excess, if any, of the per share amount of
$69.00 in cash for holders of Company common stock over the
exercise price of such option, less any required withholding
taxes.
Each stock unit, performance unit or similar award, whether
vested or unvested, that is outstanding immediately prior to the
effective time of the merger shall be converted into the right
to receive an amount of cash per unit or award equal to the per
share amount of $69.00 in cash for holders of Company common
stock, less any required withholding taxes. Each SAR, whether
vested or unvested, that is outstanding immediately prior to the
effective time shall be converted into the right to receive an
amount of cash per stock unit to which the SAR relates equal to
the product of (1) the total number of unexercised stock
units to which the SAR relates multiplied by (2) the excess
of the per share amount of $69.00 in cash for holders of Company
common stock over the fair market value of a share of Company
common stock on the SARs date of grant, less any required
withholding taxes.
The merger will terminate all interests in Company common stock
held by the Companys common shareholders, the Company will
become an indirect wholly owned subsidiary of Aviva and Aviva
will be the sole beneficiary of any earnings and growth of the
Company following the merger. Upon completion of the merger,
Company common stock will be delisted from the NYSE, will no
longer be publicly traded and will be deregistered under the
Exchange Act.
On August 10, 2006, the Company sent a notice of redemption
to the holders of all of its issued and outstanding shares of
Series A Preferred Stock. The Company currently anticipates
that all of its Series A Preferred Stock will be redeemed
prior to completion of the merger. If such redemption does not
occur, however, each share of the Companys Series A
Preferred Stock that is outstanding immediately prior to
completion of the merger will remain outstanding after
completion of the merger as a share of the preferred stock of
the surviving corporation, until redeemed, purchased or
otherwise acquired by the surviving corporation.
Effects
of the Merger Not Being Completed
If the merger is not completed for any reason, the
Companys common shareholders and holders of stock options
and other awards will not receive the merger consideration.
Instead, the Company will remain a public company and shares of
Company common stock will continue to be listed on the NYSE. If
the merger is not completed, the Company expects to continue to
conduct its business in a manner similar to the manner in which
it is presently conducted. In such event, the value of shares of
Company common stock would continue to be subject to current
risks and opportunities, including the various factors described
in the Companys past filings with the SEC, such as the
condition of the insurance industry and prevailing economic and
market conditions. If the merger is not completed, Company
common stock may trade at pre-announcement levels or below due
to adverse market reaction. If the merger is not completed,
there can be no assurance that any other transaction similar to
the merger would be available to the Company. Even if such a
transaction were available, there can be no assurance that such
transaction would be acceptable to the Companys board of
directors and would offer the Companys common shareholders
the opportunity to receive a cash payment for their shares of
Company common stock at a premium over the market prices at
which Company common stock traded before the public announcement
of any such transaction.
Recommendation
of the Companys Board of Directors and Its Reasons for the
Merger
After careful consideration, the board of directors has
determined that the merger agreement and the transactions
contemplated by the merger agreement are fair to and in the best
interests of the Company and its shareholders. Accordingly, the
board of directors has unanimously approved and adopted the
merger agreement and the transactions contemplated by the merger
agreement. The board of directors unanimously recommends that
you vote FOR the proposal to approve the merger
agreement and the transactions contemplated by the merger
agreement. In making this determination, the board of
directors considered a number of factors which supported its
decision to approve and adopt the merger agreement and the
transactions contemplated by the merger agreement, including the
following:
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the business, financial performance, competitive position and
prospects of the Company, as well as the risks associated with
achieving those prospects, many of which are beyond the control
of the Company, the increasingly competitive nature of the
industry in which the Company operates and the relatively small
size
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of the Company in comparison with its competitors, many of which
are better capitalized, have higher ratings and have
significantly greater resources than the Company;
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the fact that the per share amount of $69.00 in cash represents
(1) a premium of 30.2% over $53.00, the closing price on
June 23, 2006, the last trading day prior to receiving
Avivas verbal proposal, (2) a premium of 10.4% over
$62.51, the closing price on July 6, 2006, the trading day
Aviva was contacted by the Financial Times, (3) a
premium of 4.6% over $65.97, the closing price on July 10,
2006, and (4) premiums of approximately 22.9%, 18.5% and
21.1% above the average trading prices over the
1-month,
3-month and
1-year
periods ending on June 23, 2006, respectively, the last
trading day prior to receiving Avivas verbal proposal;
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the fact that the merger consideration would be paid entirely in
cash, which provides certainty and immediate value to the
holders of Company common stock and holders of stock options and
other awards;
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the view of the board of directors, after consultation with
senior management and the Companys financial advisor, that
based upon information then available (including the fact that
the existence of potential merger discussions with Aviva was
discussed in a press report in early 2006 and again on a
confirmed basis on July 7, 2006 and no other potential
acquiror had contacted the Company after either report), it was
unlikely that there would be available an alternative
transaction, if one were to be pursued, that would provide
greater value to the holders of Company common stock than the
acquisition by Aviva;
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the view of the board of directors, after consultation with its
financial and legal advisors, that as a percentage of the merger
consideration to be paid in the merger, the termination fee was
within the range of termination fees provided for in recent
large acquisition transactions and the conditions to its payment
were similar to those applicable in such transactions;
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the financial analyses presented by Goldman Sachs to the board
of directors that are described in Opinion of
Financial Advisor, as well as the opinion of Goldman Sachs
dated as of July 12, 2006, that, as of that date and based
upon and subject to the factors and assumptions set forth in
Goldman Sachs written opinion, the $69.00 per share
in cash to be received by the holders of the outstanding shares
of Company common stock pursuant to the merger agreement was
fair from a financial point of view to such holders;
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the possible alternatives to the merger (including the
possibility of continuing to operate the Company as an
independent entity, and the perceived risks of that
alternative), the range of potential benefits to the
Companys common shareholders of the possible alternatives
and the timing and the likelihood of accomplishing the goals of
such alternatives, and the assessment of the board of directors
that none of such alternatives were reasonably likely to create
greater value for the Companys common shareholders than
the merger;
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the likelihood that the proposed merger would be completed, in
light of the financial capabilities of Aviva and the fact that
Avivas obligations under the merger agreement are not
subject to any financing condition; and
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the terms and conditions of the merger agreement, including,
among other things:
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the ability of the board of directors to consider and negotiate
unsolicited acquisition proposals prior to shareholder approval
of the merger agreement, in the exercise of its fiduciary
duties, and under specified circumstances, to terminate the
merger agreement to accept a superior proposal upon payment of a
termination fee;
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the fact that Aviva has agreed to use its reasonable best
efforts to take all actions necessary to obtain required
governmental consents, except to the extent that taking such
actions would reasonably be expected to have a material adverse
effect on the Company or on the benefits that Aviva reasonably
expected to derive from the merger;
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the limited conditions to Avivas obligation to complete
the merger and the low risk of non-satisfaction of those
conditions;
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the limited ability of Aviva to terminate the merger agreement;
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Avivas agreements with respect to the employees of the
Company, including Avivas agreement, during the
24-month
period following the effective time of the merger, to provide
employees of the Company and its subsidiaries who continue
employment with the surviving corporation after the merger with
compensation and benefits under employee benefit and
compensation plans that are not less favorable in the aggregate
than those currently provided by the Company to its
employees; and
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Avivas intention to maintain the principal executive
offices of the combined company in Des Moines, Iowa.
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In the course of its deliberations, the board of directors also
considered a variety of risks and other potentially negative
factors, including the following:
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the impact of the merger on the Companys employees,
holders of its annuity contracts and insurance policies,
reinsurers, agents, brokers and creditors;
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the fact that the Company will no longer exist as an independent
public company and that holders of Company common stock will
forgo any future increase in value that might result from the
Companys growth;
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the risks and contingencies related to the announcement and
pendency of the merger, including the impact on the
Companys ability to attract and retain employees, the
diversion of management and employee attention and the effect on
the Companys stock price;
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the conditions to Avivas obligation to complete the merger
and the right of Aviva to terminate the merger agreement under
certain circumstances;
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the amount of time it could take to complete the merger,
including the risk that the Company and Aviva might not receive
the necessary regulatory approvals or clearances to complete the
merger or that governmental authorities could attempt to
condition their approvals or clearances of the merger on one or
more of the parties compliance with certain burdensome
terms or conditions;
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the fact that under the terms of the merger agreement, the
Company may not solicit other acquisition proposals and must pay
to Aviva a termination fee of $90,000,000 and reimburse Aviva
for its
out-of-pocket
fees and expenses incurred in connection with the merger (up to
a maximum of $12,500,000) if the merger agreement is terminated
under certain circumstances; which, in addition to being costly,
could discourage third parties from proposing an alternative
transaction that might be more advantageous to the
Companys common shareholders than the merger;
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the fact that, pursuant to the merger agreement, the Company may
not declare or pay any dividends on Company common stock prior
to the completion of the merger or the earlier termination of
the merger agreement;
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the fact that the gain realized by holders of Company common
stock as a result of the merger will be taxable; and
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the fact that, pursuant to the merger agreement, the Company
must generally conduct its business in the ordinary course and
the fact that the Company is subject to a variety of other
restrictions on the conduct of its business prior to completion
of the merger or termination of the merger agreement, which may
delay or prevent the Company from undertaking business
opportunities that may arise or preclude actions that would be
advisable if the Company were to remain an independent company.
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In addition, the board of directors was aware of and considered
the interests that certain directors and executive officers may
have with respect to the merger that differ from, or are in
addition to, their interests as shareholders of the Company
generally, as described in Interests of the
Companys Directors and Executive Officers in the
Merger.
The foregoing discussion of the information and factors
considered by the board of directors includes material positive
and potentially negative factors considered by the board of
directors, but it is not intended to be exhaustive
21
and may not include all of the factors the board of directors
considered. In reaching its determination to approve and adopt
the merger agreement and the transactions contemplated by the
merger agreement, the board of directors did not quantify or
assign any relative or specific weights to the various factors
that it considered in reaching its determination that the merger
agreement and the transactions contemplated by the merger
agreement are fair to and in the best interests of the Company
and the holders of Company common stock. Rather, the
determination and recommendation of the board of directors were
based on an analysis of the totality of the information
presented to, and the factors considered by, the board of
directors. In addition, in considering the factors described
above, individual members of the board of directors may have
accorded greater or lesser relative importance to specific
factors considered than did other members of the board of
directors.
Opinion
of Financial Advisor
Goldman Sachs acted as the Companys financial advisor in
connection with the merger. On July 12, 2006, Goldman Sachs
delivered its oral opinion to the board of directors, which was
subsequently confirmed by delivery of a written opinion, dated
as of July 12, 2006, that, as of that date and based upon
and subject to the factors and assumptions set forth in the
written opinion, the $69.00 per share in cash to be
received by the holders of the outstanding shares of Company
common stock pursuant to the merger agreement was fair from a
financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated
as of July 12, 2006, which sets forth the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken by Goldman Sachs in connection with the
opinion, is attached as Annex B to this proxy statement.
Goldman Sachs provided its opinion for the information and
assistance of the board of directors in connection with its
consideration of the merger. The Goldman Sachs opinion is not a
recommendation as to how any holder of Company common stock
should vote with respect to the merger.
In connection with rendering the opinion described above,
Goldman Sachs reviewed, among other things:
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the merger agreement;
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the Companys annual reports to shareholders and annual
reports on
Form 10-K
for the five years ended December 31, 2005;
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certain of the Companys interim reports to shareholders
and quarterly reports on
Form 10-Q
and certain other communications from the Company to its
shareholders;
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statutory statements filed by certain insurance subsidiaries of
the Company with the insurance departments of the states under
the laws of which they are organized for the three years ended
December 31, 2005 and the quarterly period ended
March 31, 2006;
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the Milliman Report;
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the Milliman Memo;
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the Company Memo; and
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certain internal financial analyses and forecasts for the
Company prepared by its management, which are referred to as the
forecasts.
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Goldman Sachs also has held discussions with members of the
Companys senior management regarding their assessment of
the past and current business operations, financial condition
and future prospects of the Company. In addition, Goldman Sachs:
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reviewed the reported price and trading activity for the shares
of Company common stock and compared certain financial and stock
market information for the Company with similar information for
certain other companies, the securities of which are publicly
traded;
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reviewed the financial terms of certain recent acquisitions in
the life insurance industry specifically and in other industries
generally; and
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performed such other studies and analyses, and considered such
other factors, as it considered appropriate.
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22
Goldman Sachs relied upon the accuracy and completeness of all
of the financial, accounting, legal, tax and other information
discussed with or reviewed by it and assumed such accuracy and
completeness for purposes of rendering the opinion described
above. In that regard, Goldman Sachs assumed, with the consent
of the Companys board of directors, that the internal
financial forecasts prepared by the Companys management
were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the Company.
Goldman Sachs discussed the Milliman Report, the Milliman Memo
and the Company Memo with the management of the Company, and the
Company has consented to Goldman Sachs reliance on the
Milliman Report, Milliman Memo and the Company Memo in
performing its analyses. Goldman Sachs is not an actuarial firm
and its services did not include any actuarial determination or
evaluation or any attempt to evaluate actuarial assumptions, and
it has relied on the actuaries of the Company with respect to
the adequacy of reserves for the Companys insurance and
investment contract liabilities. In that regard, Goldman Sachs
made no analysis of, and expressed no opinion as to, the
adequacy of reserves for the insurance and investment contract
liabilities of the Company.
In addition, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities (including
any contingent, derivative or off-balance-sheet assets and
liabilities) of the Company or any of its subsidiaries and,
except for the Milliman Report, the Milliman Memo and the
Company Memo, Goldman Sachs was not furnished with any such
evaluation or appraisal.
The following is a summary of the material financial analyses
used by Goldman Sachs in connection with rendering the opinion
described above. The order of analyses described does not
represent relative importance or weight given to those analyses
by Goldman Sachs. Some of the summaries of the financial
analyses include information presented in tabular format. The
tables must be read together with the full text of each summary
and are alone not a complete description of Goldman Sachs
financial analyses. Except as otherwise noted, the following
quantitative information, to the extent that it is based on
market data, is based on market data as it existed on or before
July 10, 2006 and is not necessarily indicative of current
market conditions.
Historical
Stock Trading Analysis
Goldman Sachs reviewed the historical trading prices and volumes
for shares of Company common stock for the time periods from
January 29, 1997 to June 23, 2006, the last trading
day prior to receiving the $69.00 per share verbal proposal
from Aviva, and from June 23, 2006 to July 10, 2006.
Goldman Sachs calculated the weighted average price per share of
Company common stock for such periods and compared the results
of such analysis to the per share amount of $69.00 in cash to be
received by holders of outstanding shares of Company common
stock. Goldman Sachs also reviewed the number of shares of
Company common stock traded on the NYSE for the periods from
January 29, 1997 to June 23, 2006 and from
June 23, 2006 to July 10, 2006. The result of this
analysis is summarized below:
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From
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From
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From
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From
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From
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January 29,
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June 23,
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June 23,
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December 23,
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June 23,
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1997
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2003 to
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2005 to
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2005 to
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2006 to
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to June 23,
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June 23,
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June 23,
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June 23,
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July 10,
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2006
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2006
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2006
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2006
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2006
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Weighted Average Market Price
|
|
$
|
38.30
|
|
|
$
|
46.38
|
|
|
$
|
56.95
|
|
|
$
|
59.69
|
|
|
$
|
61.98
|
|
Shares Traded as a Percentage
of Shares Outstanding
|
|
|
1,020.8
|
%
|
|
|
535.9
|
%
|
|
|
199.6
|
%
|
|
|
92.9
|
%
|
|
|
22.6
|
%
|
Comparison
of Selected Life Insurance Companies
Using median estimates from the Institutional Brokerage Estimate
System, or IBES, a data service provided by First Call that
compiles estimates of securities research analysts, Goldman
Sachs reviewed and compared selected financial information and
multiples for the Company to corresponding financial information
and multiples for the following life insurance companies:
|
|
|
|
|
large capitalization companies: MetLife, Prudential, The
Hartford, Genworth, Lincoln Financial, Principal Financial, and
Ameriprise, and
|
23
|
|
|
|
|
mid/small capitalization companies: Nationwide Financial,
Torchmark, UnumProvident, Conseco, Protective Life, Stancorp,
and Phoenix.
|
Although none of the selected companies is directly comparable
to the Company, the companies included were chosen because they
are publicly traded companies with operations that, for purposes
of analysis, may be considered similar to the operations of
AmerUs.
Goldman Sachs calculated the price to earnings multiples, or P/E
multiples, and the price to book value multiples, or P/BV
multiples, for the Company at, among other dates and amounts,
(1) $69.00 per share of Company common stock,
(2) the closing price of $65.97 per share for shares
of Company common stock on the NYSE on July 10, 2006 and
(3) the closing price of $53.00 per share for shares of
Company common stock on the NYSE on June 23, 2006, the last
trading day prior to receiving the $69.00 per share verbal
proposal from Aviva. The multiples and other financial
information calculated by Goldman Sachs are based on the closing
prices on July 10, 2006 for shares of the Company and the
selected companies common stock and the most recent
publicly available information for the Company and the selected
companies as of July 10, 2006. Goldman Sachs analysis
of the selected companies compared the following to the results
for the Company:
|
|
|
|
|
the July 10, 2006 closing price as a percentage of the
52-week high
share price;
|
|
|
|
dividend yield;
|
|
|
|
estimated 2006 and 2007, or 2006E and 2007E, calendarized P/E
multiples;
|
|
|
|
5-year
earnings per share, or EPS, growth;
|
|
|
|
P/BV multiples (total and excluding accumulated other
comprehensive income, or ex-AOCI); and
|
|
|
|
2006E returns on average capital employed, or ROACE.
|
The results of these analyses with respect to the Company are
summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Price of
|
|
|
Closing Price of
|
|
|
Per Share
|
|
|
|
$53.00 on
|
|
|
$65.97 on
|
|
|
Amount of
|
|
|
|
June 23, 2006
|
|
|
July 10, 2006
|
|
|
$69.00
|
|
|
|
($ in millions, except per share data)
|
|
|
Closing price as a percentage of
the 52-week
high
|
|
|
79.2
|
%
|
|
|
98.6
|
%
|
|
|
103.1
|
%
|
Dividend yield
|
|
|
0.8
|
%
|
|
|
0.6
|
%
|
|
|
0.6
|
%
|
Calendarized P/E multiples 2006E
|
|
|
10.6
|
x
|
|
|
13.2
|
x
|
|
|
13.8
|
x
|
Calendarized P/E multiples 2007E
|
|
|
9.6
|
x
|
|
|
12.0
|
x
|
|
|
12.5
|
x
|
5-year
EPS growth
|
|
|
10.0
|
%
|
|
|
10.0
|
%
|
|
|
10.0
|
%
|
P/BV multiples (total)
|
|
|
1.5
|
x
|
|
|
1.9
|
x
|
|
|
2.0
|
x
|
P/BV multiples (ex-AOCI)
|
|
|
1.3
|
x
|
|
|
1.7
|
x
|
|
|
1.8
|
x
|
ROACE 2006E
|
|
|
12.5
|
%
|
|
|
12.5
|
%
|
|
|
12.5
|
%
|
The results of these analyses with respect to the selected life
insurance companies are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid/Small
|
|
|
Mid/Small
|
|
|
|
Large Cap
|
|
|
Large Cap
|
|
|
Cap
|
|
|
Cap
|
|
|
|
Median
|
|
|
Mean
|
|
|
Median
|
|
|
Mean
|
|
|
|
($ in millions, except per share data)
|
|
|
July 10, 2006 closing price
as a percentage of the
52-week high
|
|
|
98.0
|
%
|
|
|
95.4
|
%
|
|
|
92.4
|
%
|
|
|
89.8
|
%
|
Dividend yield
|
|
|
1.0
|
%
|
|
|
1.4
|
%
|
|
|
1.2
|
%
|
|
|
1.3
|
%
|
Calendarized P/E multiples 2006E
|
|
|
12.5
|
x
|
|
|
12.6
|
x
|
|
|
12.5
|
x
|
|
|
13.8
|
x
|
Calendarized P/E multiples 2007E
|
|
|
11.2
|
x
|
|
|
11.4
|
x
|
|
|
11.5
|
x
|
|
|
11.3
|
x
|
5-year
EPS growth
|
|
|
11.5
|
%
|
|
|
11.35
|
|
|
|
9.8
|
%
|
|
|
9.9
|
%
|
P/BV multiples (total)
|
|
|
1.5
|
x
|
|
|
1.6
|
x
|
|
|
1.3
|
x
|
|
|
1.4
|
x
|
P/BV multiples (ex-AOCI)
|
|
|
1.5
|
x
|
|
|
1.7
|
x
|
|
|
1.3
|
x
|
|
|
1.4
|
x
|
ROACE 2006E
|
|
|
13.5
|
%
|
|
|
12.8
|
%
|
|
|
11.0
|
%
|
|
|
10.3
|
%
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
All
|
|
|
All
|
|
|
All
|
|
|
|
Companies
|
|
|
Companies
|
|
|
Companies
|
|
|
Companies
|
|
|
|
High
|
|
|
Low
|
|
|
Median
|
|
|
Mean
|
|
|
|
($ in millions, except per share data)
|
|
|
July 10, 2006 closing price
as a percentage of the
52-week high
|
|
|
100.0
|
%
|
|
|
71.0
|
%
|
|
|
95.3
|
%
|
|
|
93.0
|
%
|
Dividend yield
|
|
|
2.7
|
%
|
|
|
0.0
|
%
|
|
|
1.1
|
%
|
|
|
1.3
|
%
|
Calendarized P/E multiples 2006E
|
|
|
23.8
|
x
|
|
|
9.5
|
x
|
|
|
12.5
|
x
|
|
|
13.2
|
x
|
Calendarized P/E multiples 2007E
|
|
|
15.0
|
x
|
|
|
8.9
|
x
|
|
|
11.5
|
x
|
|
|
11.4
|
x
|
5-year
EPS growth
|
|
|
13.1
|
%
|
|
|
9.0
|
%
|
|
|
10.0
|
%
|
|
|
10.6
|
%
|
P/BV multiples (total)
|
|
|
2.2
|
x
|
|
|
0.8
|
x
|
|
|
1.5
|
x
|
|
|
1.5
|
x
|
P/BV multiples (ex-AOCI)
|
|
|
2.4
|
x
|
|
|
0.7
|
x
|
|
|
1.5
|
x
|
|
|
1.5
|
x
|
ROACE 2006E
|
|
|
16.6
|
%
|
|
|
3.2
|
%
|
|
|
12.5
|
%
|
|
|
11.6
|
%
|
Comparison
of Selected North American Life Insurance Transactions Since
2001
Goldman Sachs analyzed information relating to the following 17
transactions in the life insurance industry since 2001:
|
|
|
|
|
Year Announced
|
|
Acquiror
|
|
Target
|
|
2006
|
|
Protective
|
|
Chase Insurance Group
|
2005
|
|
Lincoln National
|
|
Jefferson Pilot
|
2005
|
|
Investor Consortium
|
|
UICI
|
2005
|
|
MetLife
|
|
Travelers Life & Annuity
and Citi Insurance International
|
2004
|
|
Investor Group (White
Mountain & Berkshire)
|
|
Safeco Life & Investment
|
2003
|
|
Prudential
|
|
CIGNA Retirement benefits
|
2003
|
|
Manulife
|
|
John Hancock
|
2003
|
|
AXA
|
|
MONY Group
|
2003
|
|
AIG
|
|
GE Edison Life & US
Auto/Home
|
2003
|
|
Great-West
|
|
Canada Life
|
2002
|
|
Prudential Financial
|
|
American Skandia
|
2001
|
|
Sun Life Financial
|
|
Clarica
|
2001
|
|
Nationwide Financial
|
|
Provident Mutual
|
2001
|
|
AIG
|
|
American General
|
2001
|
|
Sun Life Financial
|
|
Keyport Life and IFMG
|
2001
|
|
AEGON
|
|
J.C. Penney Direct Marketing
Services
|
2001
|
|
Hartford Financial Services
|
|
Fortis (U.S. Life Segment)
|
Goldman Sachs compared the following information relating to the
selected transactions to the proposed merger:
|
|
|
|
|
the premium of the price paid per share to the market price of
the targets shares one month prior to announcement in the
selected transactions; and
|
|
|
|
the multiples of equity consideration to last
12 months, or LTM, net income, LTM operating income,
GAAP book value (excluding the effects of Financial Accounting
Standard 115, or ex. FAS 115) and the prior
years statutory surplus.
|
25
The results of this analysis of the selected transactions were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
|
Mean
|
|
|
Median
|
|
|
Premium to price 1 month
prior to announcement
|
|
|
18.4
|
%
|
|
|
10.3
|
%
|
|
|
13.5
|
%
|
|
|
11.8
|
%
|
LTM net income multiples
|
|
|
23.3
|
x
|
|
|
8.5
|
x
|
|
|
13.5
|
x
|
|
|
13.1
|
x
|
LTM operating income multiples
|
|
|
18.1
|
x
|
|
|
9.6
|
x
|
|
|
13.8
|
x
|
|
|
13.8
|
x
|
GAAP book value (ex.
FAS 115) multiples
|
|
|
2.8
|
x
|
|
|
0.2
|
x
|
|
|
1.6
|
x
|
|
|
1.6
|
x
|
Prior years statutory
surplus multiples
|
|
|
6.9
|
x
|
|
|
1.2
|
x
|
|
|
3.1
|
x
|
|
|
2.5
|
x
|
Implied
Premiums/Multiples at Transaction Price Analysis
Goldman Sachs calculated the implied premiums and multiples
represented by $69.00 per share in cash to be received by
the holders of Company common stock pursuant to the merger based
on the following trading prices for Company common stock:
|
|
|
|
|
the closing price of $53.00 on June 23, 2006, the last
trading day prior to receiving the $69.00 per share verbal
proposal from Aviva;
|
|
|
|
the closing price of $62.51 on July 6, 2006, the date Aviva
was contacted by the Financial Times;
|
|
|
|
the closing price of $65.97 on July 10, 2006; and
|
|
|
|
the average trading price over the
1-month,
3-month and
1-year
periods ending on June 23, 2006.
|
The results of Goldman Sachs calculations of implied
premiums at the transaction price of $69.00 per share are
as follows:
|
|
|
|
|
|
|
Implied
|
|
Day/Period
|
|
Premium
|
|
|
July 10, 2006
|
|
|
4.6
|
%
|
July 6, 2006
|
|
|
10.4
|
%
|
June 23, 2006
|
|
|
30.2
|
%
|
1-Month
average (as of June 23, 2006)
|
|
|
22.9
|
%
|
3-Month
average (as of June 23, 2006)
|
|
|
18.5
|
%
|
1-year
average (as of June 23, 2006)
|
|
|
21.1
|
%
|
The results of Goldman Sachs calculations of implied
multiples at the transaction price of $69.00 per share are
as follows:
|
|
|
|
|
|
|
Multiple of
|
|
|
|
Earnings
|
|
|
LTM operating EPS (at
March 31, 2006)
|
|
|
14.8x
|
|
LTM EPS (at March 31, 2006)
|
|
|
14.2x
|
|
2006E IBES median
reported
|
|
|
13.8x
|
|
2007E IBES median
reported
|
|
|
12.5x
|
|
|
|
|
|
|
|
|
Multiple of Book
|
|
|
|
Value
|
|
|
|
(March 31, 2006)
|
|
|
Shareholders equity
|
|
|
1.95x
|
|
Shareholders equity (ex-AOCI)
|
|
|
1.81x
|
|
Statutory surplus and capital
|
|
|
2.65x
|
|
Price
to Book Value versus Projected Return on Average Common Equity
Regression Analysis
Goldman Sachs analyzed the implied relationship between a
companys multiple of trading price to book value versus
its projected ROACE. Goldman Sachs examined this relationship by
performing a regression analysis on the
26
selected companies utilizing IBES median EPS estimates and the
latest available financial statements. This analysis indicated
an implied relationship between the P/BV (ex-AOCI) multiple and
2006E ROACE. Applying this general relationship to the
Companys 2006E ROACE produced an implied or theoretical
P/BV (ex-AOCI) multiple of approximately 1.6x, although the
actual multiple as of June 23, 2006 was 1.3x. The following
table sets forth the
P/BV
(ex-AOCI) multiples for the Company at the transaction price of
$69.00 per share and the closing price of each of July 10
and June 23, 2006.
|
|
|
|
|
|
|
P/BV
|
|
|
|
(ex-AOCI)
|
|
|
|
Multiples
|
|
|
Transaction price of
$69.00 per share
|
|
|
1.8x
|
|
Closing price of $65.97 on
July 10, 2006
|
|
|
1.7x
|
|
Closing price of $53.00 on
June 23, 2006
|
|
|
1.3x
|
|
Dividend
Discount Analysis
Goldman Sachs performed a dividend discount analysis to
determine a range of potential equity values of Company common
stock. The range was determined by adding the present value of
an estimated future dividend stream for the Company over the
five-year period from 2006 through 2010, and the present value
of an estimated terminal value of Company common stock at the
end of 2010. In performing its analysis, Goldman Sachs made the
following assumptions, among others:
|
|
|
|
|
exit at December 31, 2010 at a forward multiple of 2011E
earnings;
|
|
|
|
IBES median EPS projections for 2006E and 2007E;
|
|
|
|
10.0% IBES long-term projected growth rate applied to 2007E EPS
to estimate earnings beyond 2007E;
|
|
|
|
AmerUs 2007E P/E and P/BV (ex-AOCI) multiples are 10.6x and
1.3x, respectively, as of June 23, 2006;
|
|
|
|
annual dividend of $0.40 per share in 2006 grows at the
same rate as EPS;
|
|
|
|
constant AOCI of $(119) million;
|
|
|
|
present value calculated as of June 30, 2006;
|
|
|
|
fully diluted share count of 41.4 million shares based on
stock price of $53.00 as of June 23, 2006; and
|
|
|
|
discount rates from 10.0% to 12.0% to calculate the present
value of the dividend stream and terminal values.
|
This analysis implied a fully diluted equity value of $45.36 to
$70.18 per share of Company common stock, as illustrated by
the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminal Value Multiple
|
|
|
|
9.0x
|
|
|
10.0x
|
|
|
11.0x
|
|
|
12.0x
|
|
|
13.0x
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.0%
|
|
$
|
49.13
|
|
|
$
|
54.39
|
|
|
$
|
59.65
|
|
|
$
|
64.91
|
|
|
$
|
70.18
|
|
11.0%
|
|
|
47.20
|
|
|
|
52.25
|
|
|
|
57.30
|
|
|
|
62.35
|
|
|
|
67.41
|
|
12.0%
|
|
|
45.36
|
|
|
|
50.21
|
|
|
|
55.07
|
|
|
|
59.92
|
|
|
|
64.77
|
|
Company-Prepared
Estimate of Actuarial Appraisal and Group Net
Value
The Company engaged Milliman, Inc. to prepare the Milliman
Report and the Milliman Memo in connection with the transactions
contemplated by the merger agreement in order to obtain a
third-party opinion as to the actuarial value of the Company.
Based on the Milliman Report and the Milliman Memo, the
Companys actuaries prepared the Company Memo, in which the
Company calculated the total net actuarial value per share of
Company common stock and the actuarial value of new business per
share of Company common stock, assuming various numbers of years
of new business and various discount rates. These values were
calculated assuming risk-based capital, or RBC, ratios of 250%
and 300%. The RBC ratio is derived by dividing the total
adjusted capital of an insurance company (as determined by the
RBC formula set forth by the National Association of Insurance
27
Commissioners, or the NAIC) by the companys RBC (as
determined by the RBC formula set forth by the NAIC). For
purposes of these calculations and the review by Goldman Sachs
of the Company Memo, the Company advised Goldman Sachs that it
believed the 300% RBC ratio was the appropriate level to review,
as the Companys RBC ratio is currently in excess of 300%
and because the Company believed a 300% RBC ratio was
appropriate and consistent with the valuation RBC levels of
companies of similar size and with similar ratings. Goldman
Sachs did not participate in the preparation of this analysis or
determination of any of the assumptions or levels of variables
employed by the Company in its preparation, and it relied
without independent verification upon the Companys
calculations.
The results of the calculation of total net actuarial value per
share as of June 30, 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300% RBC
|
|
|
|
8.0%
|
|
|
10.0%
|
|
|
12.0%
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net actuarial value per
share 0 years of new business
|
|
$
|
51.27
|
|
|
$
|
44.46
|
|
|
$
|
38.93
|
|
Total net actuarial value per
share 10 years of new business
|
|
|
90.60
|
|
|
|
68.20
|
|
|
|
52.00
|
|
Total net actuarial value per
share 15 years of new business
|
|
|
118.99
|
|
|
|
83.33
|
|
|
|
59.38
|
|
Total net actuarial value per
share 20 years of new business
|
|
|
146.80
|
|
|
|
96.90
|
|
|
|
65.50
|
|
The results of the calculation of actuarial value of new
business per share as of June 30, 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300% RBC
|
|
|
|
8.0%
|
|
|
10.0%
|
|
|
12.0%
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of new business per
share 0 years of new business
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Value of new business per
share 10 years of new business
|
|
|
39.4
|
|
|
|
23.7
|
|
|
|
13.0
|
|
Value of new business per
share 15 years of new business
|
|
|
67.7
|
|
|
|
38.9
|
|
|
|
20.5
|
|
Value of new business per
share 20 years of new business
|
|
|
95.5
|
|
|
|
52.4
|
|
|
|
26.5
|
|
The results of the calculation of actuarial value of new
business per share as of June 30, 2006, expressed as a
percentage of total net actuarial value per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300% RBC
|
|
|
|
8.0%
|
|
|
10.0%
|
|
|
12.0%
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
% of value attributable to new
business 0 years of new business
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
% of value attributable to new
business 10 years of new business
|
|
|
43.5
|
%
|
|
|
34.8
|
%
|
|
|
25.1
|
%
|
% of value attributable to new
business 15 years of new business
|
|
|
56.9
|
%
|
|
|
46.7
|
%
|
|
|
34.4
|
%
|
% of value attributable to new
business 20 years of new business
|
|
|
65.1
|
%
|
|
|
54.1
|
%
|
|
|
40.5
|
%
|
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather, Goldman
Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the above analyses as a comparison is directly comparable to
the Company or the merger.
Goldman Sachs prepared these analyses for the purpose of
providing its opinion to the Companys board of directors
as to the fairness from a financial point of view to the holders
of the outstanding shares of Company common stock of the per
share amount of $69.00 in cash to be received by such holders.
These analyses do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually
may be sold. Analyses based upon forecasts of future results are
not necessarily indicative of actual future results, which may
be significantly more or less favorable than suggested by these
analyses. Because these analyses are inherently subject
28
to uncertainty, being based upon numerous factors or events
beyond the control of the parties or their respective advisors,
neither the Company nor Goldman Sachs nor any other person
assumes responsibility if future results are materially
different from those forecast.
The per share amount of $69.00 in cash to be paid in the merger
was determined through arms-length negotiations between
the Company and Aviva and was approved by the board of
directors. Goldman Sachs provided advice to the Company during
these negotiations. Goldman Sachs did not, however, recommend
any specific amount of consideration to the Company or its board
of directors or that any specific amount of consideration
constituted the only appropriate consideration for the merger.
As described above, Goldman Sachs opinion to the board of
directors was one of many factors taken into consideration by
the board of directors in making its determination to approve
and adopt the merger agreement and the transactions contemplated
by the merger agreement. The foregoing summary does not purport
to be a complete description of the analyses performed by
Goldman Sachs in connection with the fairness opinion and is
qualified in its entirety by reference to the written opinion of
Goldman Sachs attached as Annex B.
Goldman Sachs and its affiliates, as part of their investment
banking business, are continually engaged in performing
financial analyses with respect to businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private
placements and other transactions as well as for estate,
corporate and other purposes. Goldman Sachs has acted as the
Companys financial advisor in connection with, and has
participated in certain negotiations leading to, the merger.
Goldman Sachs has provided certain investment banking services
to the Company from time to time, including having acted as a
book-running underwriter for the issuance of the Companys
5.95% Senior Notes Due 2015 (aggregate principal amount
$300,000,000) in August 2005, a book-running underwriter for the
issuance of the Companys Series A Non-Cumulative
Perpetual Preferred Stock (aggregate principal amount
$150,000,000) in September 2005 and a book-running underwriter
in connection with the remarketing of the Companys
6.583% Senior Notes due May 16, 2011 (aggregate
principal amount $143,750,000) in May 2006. Goldman Sachs is
also a lender in the Companys $300 million revolving
credit facility. Goldman Sachs also has provided certain
investment banking services to Aviva from time to time,
including having acted as financial advisor to Aviva in the sale
of its general insurance businesses in Australia and New Zealand
in January 2003, financial advisor to Aviva in the sale of its
joint venture interest in Global Aerospace Underwriting Managers
Ltd. in March 2003, a book-running underwriter for the issuance
of Avivas 5.25%
Step-up
Bonds due 2023 (aggregate principal amount 650,000,000) in
September 2003, a book-running underwriter for the issuance of
Avivas 4.729% Perpetual Fixed/Straight Bonds due 2014
(aggregate principal amount 700,000,000) in November 2004,
a book-running underwriter for the issuance of Avivas
5.902% Perpetual Fixed/Straight Bonds due 2020 (aggregate
principal amount £500,000,000) in November 2004, financial
advisor to Aviva in the sale of its Asian general insurance
business in March 2005, financial advisor to Aviva in connection
with its acquisition of RAC plc in June 2005 and financial
advisor to Aviva in connection with its acquisition of Ark Life
Assurance Company Limited in December 2005. Goldman Sachs also
may provide investment banking services to the Company and Aviva
in the future.
Goldman Sachs is a full-service securities firm engaged, either
directly or through its affiliates, in securities trading,
investment management, financial planning and benefits
counseling, risk management, hedging, financing and brokerage
activities for both companies and individuals. In the ordinary
course of these activities, Goldman Sachs and its affiliates may
provide such services to the Company, Aviva and their respective
affiliates, may actively trade the debt and equity securities
(or related derivative securities) of the Company and Aviva for
their own account and for the accounts of their customers and
may at any time hold long and short positions of such securities.
The Companys board selected Goldman Sachs as a financial
advisor because it is an internationally recognized investment
banking firm that has substantial experience in transactions
similar to the merger. Pursuant to a letter agreement dated
March 1, 2006, the Company engaged Goldman Sachs to act as
its financial advisor in the event of a possible sale of the
Company. Pursuant to the terms of this engagement letter, the
Company agreed to pay Goldman Sachs a transaction fee equal to
0.625% of the aggregate consideration paid for the
Companys equity securities (including amounts paid to
holders of options, warrants and convertible securities) plus
the principal amount of all indebtedness for borrowed money as
set forth on the balance sheet of the Company as existing
immediately prior to the completion of the sale, or
approximately $23 million, all of which is contingent upon
29
completion of the merger. In addition, the Company has agreed to
reimburse Goldman Sachs for its reasonable expenses, including
attorneys fees and disbursements (which shall not exceed
$50,000 for attorneys fees and disbursements or $150,000
for other expenses without the prior consent of the Company,
which shall not be unreasonably withheld), and to indemnify
Goldman Sachs and related persons against various liabilities,
including certain liabilities under the federal securities laws.
Interests
of the Companys Directors and Executive Officers in the
Merger
When considering the recommendation by the Companys board
of directors, you should be aware that a number of the
Companys directors and executive officers may have
interests in the merger that are different from, or in addition
to, the interests of the Companys other shareholders. The
Companys board of directors was aware of these interests
and considered them, among other matters, in unanimously
adopting and approving the merger agreement and the transactions
contemplated by the merger agreement. Such interests relate to,
or arise from, among other things:
|
|
|
|
|
the fact that one of the Companys executive officers has a
supplemental benefit agreement with the Company providing for
cash severance payments, the continuation of medical benefits
and the immediate vesting of certain welfare benefits and
perquisites in the event of a termination of such executive
officers employment by either the Company or the executive
officer under certain circumstances following the merger;
|
|
|
|
the fact that, in connection with the execution of the merger
agreement and at the request of Aviva, the Company entered into
employment agreements with several executive officers of the
Company that will become effective upon completion of the merger
and will replace their supplemental benefit agreements;
|
|
|
|
the fact that unvested stock options, stock units, performance
units and similar awards, including those held by the
Companys directors and executive officers, will vest and
be converted into the right to receive an amount in cash
pursuant to the terms of the merger agreement;
|
|
|
|
the fact that unvested stock options, stock units, performance
units and similar awards, including those held by the
Companys directors and executive officers, will vest and
be converted into the right to receive an amount in cash
pursuant to the terms of the merger agreement;
|
|
|
|
the fact that the surviving corporation will continue to
(1) provide indemnification against and advancement of
expenses for claims against former or present directors and
officers of the Company for acts or omissions occurring at or
prior to the effective time of the merger and (2) for a
period of six years after the effective time of the merger,
maintain directors and officers liability insurance
policies on terms no less favorable in the aggregate than those
presently provided or maintained by the Company with respect to
claims arising from facts or events occurring at or prior to the
effective time of the merger; and
|
|
|
|
the fact that, during the
24-month
period following the effective time of the merger, Aviva has
agreed to provide employees of the Company and its subsidiaries
who continue employment with the surviving corporation after the
merger with compensation and benefits under employee benefit and
compensation plans that are not less favorable in the aggregate
than those currently provided by the Company to its employees.
|
All these additional interests are described below, to the
extent material, and, except as described below, such persons
have, to the knowledge of the Company, no material interest in
the merger apart from those of the Companys common
shareholders generally.
Supplemental
Benefit Agreements (also called
change-of-control
agreements)
The Companys executive officers have entered into
change-of-control
agreements with the Company, most of which were amended and
restated in 2003. Completion of the merger would constitute a
change of control under these agreements. In an effort to retain
the executive officers and encourage them to continue their
employment with the Company following the merger, at the request
of Aviva, the Company entered into employment agreements with
each of the executive officers, other than Ms. Urion. The
employment agreements will become effective upon
30
completion of the merger and will replace each of the executive
officers
change-of-control
agreements. Accordingly, only Ms. Urion has retained the
right to receive severance payments under the
change-of-control
agreements in connection with the merger. Ms. Urions
agreement provides that in the event of a change of control of
the Company followed by a termination by her for good
reason or a termination of her employment without
cause (as such terms are defined in the
change-of-control
agreement), she will be entitled to: (1) a cash severance
payment in an amount equal to three times her annual base
compensation and target bonus; (2) continuation of employee
medical benefits; and (3) immediate vesting of benefits
under the All«AmerUs
Supplemental Executive Retirement Plan and the
All«AmerUs Excess Benefit
Plan. Under her agreement, upon completion of the merger,
Ms. Urion would have good reason to terminate employment
and receive
change-of-control
cash severance and other benefits under the agreements, because
she will cease to be an executive officer of a public company.
The approximate value of the severance benefit that would be
payable to Ms. Urion under her
change-of-control
agreement, if she were to terminate employment immediately after
the merger would be $2,185,000. Ms. Urion will also be
entitled to receive a payment intended to make her whole with
respect to the imposition of any parachute excise tax with
respect to any payments or benefits.
Employment
Agreements
Aviva desired to have the remaining
change-of-control
agreements replaced by employment agreements, which would not
entitle the executive officers to such
change-of-control
payments. Following negotiations with Aviva as to the terms of
the proposed employment agreements, Mr. Godlasky,
Mr. Boal, Mr. Boltz, Mr. Clark, Mr. Heitz,
Mr. Littlefield, Mr. McPhail and Ms. Cushing
entered into employment agreements with the Company on
July 12, 2006, which will become effective upon completion
of the merger and replace the
change-of-control
agreements.
Each employment agreement has a term of three years, with
subsequent automatic one-year renewals unless notice is given.
Each executive will be entitled to participate in all employee
benefit plans and welfare benefits which are generally available
to the Companys senior executives and will receive an
automobile allowance of $10,000 per year. Each executive
will also participate in annual incentive and long-term
incentive plans. These plans will generally provide payments to
the executives only upon attainment of performance goals set by
Aviva in consultation with Mr. Godlasky, who will serve as
Chief Executive Officer of the surviving corporation. Pursuant
to their individual agreements, the following executives will
initially serve in these capacities as officers of the Company:
Mr. Boal, Executive Vice President and Chief Investment
Officer; Mr. Boltz, Executive Vice President and Chief
Information Officer; Mr. Clark, Executive Vice President
and Chief Product Officer; Mr. Heitz, Executive Vice
President Annuities; Mr. Littlefield, Executive
Vice President and General Counsel; Mr. McPhail, Executive
Vice President Life; and Ms. Cushing, Senior
Vice President and Controller. The base salaries provided in the
respective agreements are as follows: Mr. Godlasky,
$750,000; Mr. Boal, $475,000; Mr. Boltz, $310,000;
Mr. Clark, $450,000; Mr. Heitz, $460,000;
Mr. Littlefield, $400,000; Mr. McPhail, $460,000; and
Ms. Cushing, $250,000.
Each agreement provides two retention bonuses as consideration
for the executives continued services after the merger,
including the additional responsibilities and duties that will
result from the merger, and for the restrictive covenants to
which the executive agrees. The first retention bonus becomes
payable on the first anniversary of completion of the merger, if
the executives employment continues on that date or upon
an earlier change of control or termination by the Company
without cause or for disability or by
the executive with good reason (as those terms are
defined in the agreements) or by the executives death. The
first retention bonus for each executive was determined to
represent a fair-value payment to the executive for entering
into the employment agreements and agreeing to the restrictive
covenants contained in the agreements. The amount of each
executives first retention bonus will be as follows: Mr
Godlasky, $5,178,000; Mr. Boal, $3,195,000; Mr. Boltz,
$1,477,000; Mr. Clark, $2,695,000; Mr. Heitz,
$3,049,000; Mr. Littlefield, $1,653,000; Mr. McPhail,
$2,739,000; and Ms. Cushing, $825,000.
The second retention bonus becomes payable on the third
anniversary of completion of the merger, if the executives
employment continues on that date. The amount of each
executives second retention bonus will be as follows:
Mr. Godlasky, $3,222,000; Mr. Boal, $1,988,000;
Mr. Boltz, $919,000; Mr. Clark, $1,677,000;
Mr. Heitz, $1,780,000; Mr. Littlefield, $1,028,000;
Mr. McPhail, $1,704,000; and Ms. Cushing, $513,000.
If, prior to the third
31
anniversary of completion of the merger, there is a termination
of the executives employment by the Company without
cause or for disability or by the
executive with good reason (as those terms are
defined in the agreements) or by the executives death, the
executive will receive a pro-rata payment determined by
multiplying the executives second retention bonus by a
fraction, the numerator of which is the number of days of
employment between the completion of the merger and the date of
termination and the denominator of which is 1095.
If the executives employment is terminated by the Company
during the term of the agreement other than for
cause or disability or the executive
terminates employment for good reason (as such terms
are defined in the agreement), among other things, the executive
will receive a severance amount equal to the sum of his annual
base salary and target bonus, with the severance amount being
doubled if the termination is in connection with a change of
control after the merger. The executive will also receive a
pro-rata payment calculated with respect to the executives
target annual bonus in the year in which the termination occurs
and, at the time when any payments of long-term incentive awards
are made to other participants in the long-term incentive plan,
a pro-rata payment with respect to the actual award (based on
the extent of actual achievement of the long-term incentive
goals) which the executive would have received but for such
termination. The executives benefits, including medical
benefits and life insurance, will continue for 12 months
(or 24 months if the termination is in connection with a
change of control after the merger).
If the executive incurs legal fees or costs to enforce his
rights under the agreement, and the executive is the prevailing
party, the Company will reimburse the executive for such fees
and costs, and provide a tax
gross-up for
any resulting imputed income taxable to the executive. The
executives (other than Ms. Cushing) will also be entitled
to receive a payment intended to make them whole with respect to
the imposition of any parachute excise tax on any payments or
benefits.
Each executive agrees to protect the Companys
confidential information (as defined in the
agreement), both during and after employment. Each executive
agrees to provide testimony or assistance to the Company with
respect to litigation or proceedings relating to the
executives employment period with the Company, as
reasonably requested. The executives are not currently subject
to any non-competition or non-solicitation agreement. However,
in the employment agreement which will become effective upon
completion of the merger, each executive agrees that during
employment and the 12 months after termination the
executive will not engage in competition with the Company or any
affiliate. During the 12 months after termination the
executive will not solicit, attempt to do business with, or
otherwise interfere with, the Companys business
relationships with those who were customers or clients (or
prospective customers or clients) of the Company at any time
during the 12 months immediately prior to the
executives termination.
When Aviva delivered proposed terms for the employment
agreements with the executives, Mr. Godlasky retained
Proskauer Rose LLP, or Proskauer Rose, to negotiate with Aviva
regarding his employment agreement. Since the proposals for the
eight executives were substantially similar, the employment
agreement negotiated on behalf of Mr. Godlasky became the
model for the Companys agreements with all eight
executives. Because retention of management was a key
consideration for Aviva, the board of directors determined that
the fees of Proskauer Rose would be paid by the Company.
Management
Incentive Plan
Pursuant to the merger agreement if any participant in the
Management Incentive Plan, or MIP, including an executive
officer, is involuntarily terminated without cause within the
24-month
period immediately following completion of the merger, the
terminated participant will receive a pro-rated target bonus for
the year of termination, and, with respect to any completed year
as to which payment has not yet been made, a payment equal to
the participants target bonus for such year.
MIP
Deferral Plan
Participants in the Management Incentive Plan, including
executive officers, may elect to defer bonus amounts, which are
deemed invested in stock units, under the MIP Deferral Plan.
Limited employer matches of the deferred amounts are made and
also deemed invested in stock units, which vest after a
restricted period of at least three years, or earlier upon a
change of control. Pursuant to the merger agreement, upon
completion of the merger each stock unit will
32
be converted into the right to receive the per share amount of
$69.00 in cash to be received by holders of the Company common
stock in the merger. The following table sets forth the amounts
that the indicated executive officer will receive upon
conversion of their stock units in connection with the
completion of the merger, more than 85% of the stock units being
attributable to previously earned bonus amounts which were
deferred.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Match
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
Deferred Unit
|
|
|
Match
|
|
|
Unit
|
|
|
Total MIP
|
|
|
Total MIP
|
|
Name
|
|
Units
|
|
|
Values
|
|
|
Units
|
|
|
Values
|
|
|
Units
|
|
|
Value
|
|
|
Thomas C. Godlasky
|
|
|
1,577
|
|
|
$
|
108,823
|
|
|
|
163
|
|
|
$
|
11,266
|
|
|
|
1,740
|
|
|
$
|
120,088
|
|
Gregory D. Boal
|
|
|
12,584
|
|
|
|
868,322
|
|
|
|
644
|
|
|
|
44,434
|
|
|
|
13,228
|
|
|
|
912,756
|
|
Michael D. Boltz
|
|
|
61
|
|
|
|
4,224
|
|
|
|
31
|
|
|
|
2,112
|
|
|
|
92
|
|
|
|
6,336
|
|
Brian J. Clark
|
|
|
1,125
|
|
|
|
77,602
|
|
|
|
562
|
|
|
|
38,801
|
|
|
|
1,687
|
|
|
|
116,404
|
|
Brenda J. Cushing
|
|
|
1,376
|
|
|
|
94,970
|
|
|
|
644
|
|
|
|
44,434
|
|
|
|
2,020
|
|
|
|
139,403
|
|
Mark V. Heitz
|
|
|
1,288
|
|
|
|
88,867
|
|
|
|
644
|
|
|
|
44,434
|
|
|
|
1,932
|
|
|
|
133,301
|
|
Gary R. McPhail
|
|
|
9,695
|
|
|
|
668,921
|
|
|
|
3,838
|
|
|
|
264,833
|
|
|
|
13,533
|
|
|
|
933,754
|
|
Melinda S. Urion
|
|
|
16,070
|
|
|
|
1,108,853
|
|
|
|
644
|
|
|
|
44,434
|
|
|
|
16,714
|
|
|
|
1,153,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
43,776
|
|
|
$
|
3,020,582
|
|
|
|
7,170
|
|
|
$
|
494,748
|
|
|
|
50,946
|
|
|
$
|
3,515,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Incentive Plan
Upon a change of control each non-vested performance unit vests.
Pursuant to the merger agreement the performance unit vests at
target level and is converted upon completion of the merger into
the right to receive the per share amount of $69.00 in cash to
be received by holders of the Company common stock in the
merger. The following table sets forth the amounts that the
indicated executive officers will receive upon conversion of
their performance units in connection with the completion of the
merger. The table includes some performance units which were
determined to be earned and vested in February 2006, but were
scheduled to be paid in February 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP Unit
|
|
Name
|
|
LTIP Units
|
|
|
Values
|
|
|
Thomas C. Godlasky
|
|
|
35,500
|
|
|
$
|
2,449,500
|
|
Gregory D. Boal
|
|
|
20,200
|
|
|
|
1,393,800
|
|
Michael D. Boltz
|
|
|
5,000
|
|
|
|
345,000
|
|
Brian J. Clark
|
|
|
19,000
|
|
|
|
1,311,000
|
|
Mark V. Heitz
|
|
|
19,000
|
|
|
|
1,311,000
|
|
Christopher J. Littlefield
|
|
|
5,000
|
|
|
|
345,000
|
|
Gary R. McPhail
|
|
|
20,200
|
|
|
|
1,393,800
|
|
Melinda S. Urion
|
|
|
16,000
|
|
|
|
1,104,000
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
139,900
|
|
|
$
|
9,653,100
|
|
|
|
|
|
|
|
|
|
|
Post-Retirement
Consulting and Non-competition Agreement and Restricted Stock
Units
The Company entered into a consulting agreement as of
December 31, 2005, with Roger K. Brooks, who retired as
chief executive officer of the Company on December 29,
2005. The consulting agreement includes non-competition and
non-solicitation covenants which remain in effect through
December 31, 2008. Pursuant to his consulting agreement,
Mr. Brooks was granted 35,296 restricted stock units which
would normally vest in five installments, on December 29,
2006, July 1, 2007, December 28, 2007, July 1,
2008, and January 2, 2009, and also vest upon a change of
control. Pursuant to the merger agreement, upon completion of
the merger each stock unit will be converted into the right to
receive the per share amount of $69.00 in cash to be received by
holders of the Company common stock in the merger. Upon
completion of the merger and conversion of his stock units,
Mr. Brooks will receive $2,435,424.
Also, on February 11, 2005, prior to his retirement and in
lieu of being granted performance units under the Long-Term
Incentive Plan, Mr. Brooks was granted 22,000 restricted
stock units, vesting ratably on February 11,
33
2006, 2007 and 2008. Pursuant to the merger agreement, upon
completion of the merger each restricted stock unit will be
converted into the right to receive the per share amount of
$69.00 in cash to be received by holders of the Company common
stock in the merger. Upon completion of the merger
Mr. Brooks will receive $1,011,954 upon conversion of his
remaining 14,666 restricted stock units, 7,334 restricted stock
units having vested on February 11, 2006.
Conversion
in the Merger of Restricted Shares of Directors
The non-employee directors are each granted 2,500 restricted
shares of Company common stock upon their initial appointment or
election to the board. The shares would normally vest and the
restrictions would lapse three years after the date of grant.
Pursuant to the award agreements, the restrictions will also
lapse upon completion of the merger and pursuant to the merger
agreement each outstanding share will be converted into the
right to receive the per share amount of $69.00 in cash to be
received by holders of the Company common stock in the merger.
The initial grant to each of the following directors is still
subject to restrictions. Upon completion of the merger, each of
them will receive $172,500 upon the vesting and conversion of
the granted shares: Messrs. Holland, Klein and Strome and
Ms. Steiger.
The non-employee directors may elect to receive all or part of
their director fees in shares of Company common stock, pursuant
to an adjustment formula. Any such shares are subject to
restrictions on transfer for not less than two years from the
purchase date. Shares held by some of the directors are still
subject to such restrictions. Upon completion of the merger
those restrictions will lapse. The following table sets forth
the amounts that the indicated director will receive upon
conversion of these shares in connection with the completion of
the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of
|
|
Name
|
|
Restricted Shares
|
|
|
Restricted Shares
|
|
|
Thomas F. Gaffney
|
|
|
3,764
|
|
|
$
|
259,716
|
|
Louis A. Holland
|
|
|
1,258
|
|
|
|
86,802
|
|
Ward M. Klein
|
|
|
1,712
|
|
|
|
118,128
|
|
John W. Norris Jr.
|
|
|
3,498
|
|
|
|
241,362
|
|
Jack C. Pester
|
|
|
3,783
|
|
|
|
261,027
|
|
Heidi L. Steiger
|
|
|
1,697
|
|
|
|
117,093
|
|
Stephen Strome
|
|
|
1,042
|
|
|
|
71,898
|
|
F.A. Wittern Jr.
|
|
|
2,837
|
|
|
|
195,753
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
19,591
|
|
|
$
|
1,351,779
|
|
|
|
|
|
|
|
|
|
|
Stock
Options
Each of the Companys non-employee directors and executive
officers holds options to acquire shares of Company common
stock. See Securities Ownership of Certain Beneficial
Owners and Management. At the effective time of the
merger, each outstanding option to purchase shares of Company
common stock, whether vested or unvested, will be converted into
the right to receive an amount in cash per share subject to the
option equal to the excess, if any, of the per share amount of
$69.00 in cash for holders of Company common stock over the
exercise price of such option, less any required withholding
taxes.
34
The following table sets forth the number of stock options to
acquire shares of Company common stock held by the
Companys directors and executive officers as of the date
of this proxy statement and an estimate of the total cash amount
to be paid with respect to such options in the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
Exercisable For
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Weighted Average
|
|
|
Total Cash Value of
|
|
Name
|
|
(No. of Shares)
|
|
|
Exercise Price
|
|
|
Options
|
|
|
David A. Arledge
|
|
|
14,000
|
|
|
$
|
41.55
|
|
|
$
|
384,300
|
|
Roger K. Brooks
|
|
|
490,000
|
|
|
|
31.25
|
|
|
|
18,497,500
|
|
Thomas F. Gaffney
|
|
|
27,500
|
|
|
|
35.92
|
|
|
|
909,700
|
|
Thomas C. Godlasky
|
|
|
399,000
|
|
|
|
34.16
|
|
|
|
13,901,160
|
|
Louis A. Holland
|
|
|
3,500
|
|
|
|
56.61
|
|
|
|
43,365
|
|
Ward M. Klein
|
|
|
7,000
|
|
|
|
50.58
|
|
|
|
128,940
|
|
John W. Norris Jr.
|
|
|
27,500
|
|
|
|
35.92
|
|
|
|
909,700
|
|
Andrew J. Paine Jr.
|
|
|
17,500
|
|
|
|
40.45
|
|
|
|
499,625
|
|
Jack C. Pester
|
|
|
27,500
|
|
|
|
35.92
|
|
|
|
909,700
|
|
Heidi L. Steiger
|
|
|
5,833
|
|
|
|
51.79
|
|
|
|
100,386
|
|
Stephen Strome
|
|
|
7,000
|
|
|
|
50.58
|
|
|
|
128,940
|
|
John A. Wing
|
|
|
27,500
|
|
|
|
35.92
|
|
|
|
909,700
|
|
F. A. Wittern Jr.
|
|
|
20,000
|
|
|
|
39.30
|
|
|
|
594,000
|
|
Gregory D. Boal
|
|
|
66,800
|
|
|
|
45.08
|
|
|
|
1,597,856
|
|
Michael D. Boltz
|
|
|
20,000
|
|
|
|
58.85
|
|
|
|
203,000
|
|
Brian J. Clark
|
|
|
131,500
|
|
|
|
39.32
|
|
|
|
3,902,920
|
|
Brenda J. Cushing
|
|
|
30,500
|
|
|
|
38.10
|
|
|
|
942,450
|
|
Mark V. Heitz
|
|
|
308,500
|
|
|
|
32.39
|
|
|
|
11,294,185
|
|
Christopher J. Littlefield
|
|
|
25,000
|
|
|
|
60.72
|
|
|
|
207,000
|
|
Gary R. McPhail
|
|
|
265,000
|
|
|
|
33.30
|
|
|
|
9,460,500
|
|
Melinda S. Urion
|
|
|
119,000
|
|
|
|
39.51
|
|
|
|
3,509,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
2,040,133
|
|
|
|
|
|
|
$
|
69,034,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Officers Indemnification and Insurance
From and after the effective time of the merger, the surviving
corporation, to the fullest extent permitted by applicable law,
will indemnify, defend and hold harmless and provide advancement
of expenses to the Companys and its subsidiaries
current and former officers, directors and employees against all
losses paid in connection with any claim based on acts or
omissions by them in their capacities as such prior to the
effective time of the merger, to the extent provided under the
Companys articles of incorporation, bylaws,
indemnification agreements and resolutions, if any, in effect on
the date of the merger agreement.
For a period of six years after the effective time of the
merger, the surviving corporation will maintain coverage under
an officers and directors liability insurance policy
on terms and conditions no less advantageous to the directors
and officers than the liability insurance policy that the
Company maintained for its directors and officers prior to the
merger, with respect to claims arising from facts or events that
occurred at or before the effective time of the merger, provided
that the surviving corporation will not be obligated to pay
annual premiums with respect thereto to the extent that they
exceed 200% of the last annual premium paid by the Company prior
to the effective time of the merger, and if the premiums do
exceed such amount, then the surviving corporation will be
required to maintain insurance policies that, in the surviving
corporations reasonably determination, provide maximum
coverage available at an annual premium equal to 200% of such
last annual premium paid. Alternatively, the surviving
corporation may purchase a prepaid tail policy for
such coverage, which the Company may obtain prior to the
effective time of the merger.
35
Continuation
of Employee Benefits
Following the completion of the merger:
|
|
|
|
|
during the
24-month
period following the effective time of the merger, Aviva has
agreed to provide employees of the Company and its subsidiaries
who continue employment with the surviving corporation after the
merger (who are referred to as the affected employees) with
compensation, benefits and coverage under employee benefit or
compensation plans or arrangements that are, in the aggregate,
not less favorable than those provided to the affected employees
by the Company immediately prior to the effective time of the
merger;
|
|
|
|
Aviva has agreed to cause the surviving corporation to give the
affected employees full credit for such employees prior
service with the Company for purposes of eligibility and vesting
under the surviving corporations employee benefit plans
(including vacation and severance plans established after the
effective time of the merger) to the same extent recognized by
the Company or its subsidiaries;
|
|
|
|
Aviva has agreed to or to cause the surviving corporation to
waive all limitations as to preexisting conditions, exclusions
and waiting periods with respect to participation and coverage
requirements applicable to the affected employees under any
benefits plans established by Aviva or the surviving
corporation, except to the extent that such limitations or
waiting periods have not been satisfied under benefits plans
existing prior to the effective time of the merger; and
|
|
|
|
Aviva has agreed to cause the surviving corporation to honor
employment, severance, consulting, retention and similar
agreements and all of the Companys benefits plans as in
effect on July 12, 2006.
|
Aviva has also agreed to permit the Company to amend
(1) the Companys 401(k) plan to provide that, upon an
involuntary termination without cause within 24 months
following the effective time, the terminated participants
account shall immediately be fully vested to the extent
permitted by law, (2) the Companys severance and
termination plans to cover position eliminations made within the
24-month
period immediately following the effective time of the merger
and (3) each of the Companys annual incentive plans
to provide that, upon an involuntary termination within
24 months after the effective time of the merger, the
terminated participant will receive a pro-rated bonus payment
for the plan year in which the termination occurs.
Delisting
and Deregistration of Company Common Stock
If the merger is completed, Company common stock will be
delisted from the NYSE and will be deregistered under the
Exchange Act.
Certain
Relationships Between the Company and Aviva
On November 14, 2005, Aviva and the Company entered into a
confidentiality agreement with respect to the Companys
confidential information given to Aviva for Avivas due
diligence in connection with the merger. Under the terms of the
confidentiality agreement, Aviva is required to keep
confidential all of the confidential information it has received
from the Company (other than materials that become generally
available to the public other than as a result of disclosure by
Aviva or its representatives and other than materials available
to Aviva on a non-confidential basis), and is generally
restricted from using such confidential information for any
purposes other than in connection with the merger. The
confidentiality agreement also contains a standstill
provision which provides that, for a period of two years
following the date of the confidentiality agreement, Aviva and
its affiliates will not, unless specifically requested by the
Company, (1) acquire or offer or agree to acquire any
securities of the Company, (2) make or participate in any
solicitation of proxies of the Company or seek to influence any
person or entity with respect to the voting of the securities of
the Company, (3) submit to the Company any shareholder
proposal under
Rule 14a-8
of the Exchange Act, (4) make any public announcement with
respect to any extraordinary transaction involving the Company
and its securities or assets, (5) form, join in or
participate in any group in connection with any of the
foregoing, (6) seek to have the standstill
provisions of the confidentiality agreement amended, modified or
waived or (7) otherwise take any actions with the purpose
or effect of avoiding or circumventing the
standstill provisions of the confidentiality
agreement. Aviva has also agreed that, until the earlier of the
completion of the merger or three years following the date of
the confidentiality agreement, Aviva will not solicit
36
any person for employment who within 180 days prior to such
solicitation was an employee of the Company, or induce any
employee of the Company to leave the employ of the Company.
On December 22, 2005, Aviva and the Company entered into a
confidentiality agreement with respect to Avivas
confidential information given to the Company for the
Companys due diligence undertaking in connection with the
merger. Under the terms of the confidentiality agreement, the
Company is required to keep confidential all of the confidential
information it has received from Aviva (other than materials
that become generally available to the public other than as a
result of disclosure by the Company or its representatives and
other than materials available to the Company on a
non-confidential basis), and is generally restricted from using
such confidential information for any purposes other than in
connection with the merger. The agreement does not contain any
standstill provisions with respect to the securities
of Aviva.
Other than the two confidentiality agreements discussed above,
there are no present or proposed material agreements,
arrangements, understandings or relationships between the
Company or any of its executive officers, directors, controlling
persons or subsidiaries, on the one hand, and Aviva, Merger Sub
or any of their respective executive officers, directors,
controlling persons or subsidiaries, on the other hand, other
than the merger agreement or with respect to the merger
agreement or the transactions contemplated by the merger
agreement. Aviva and its affiliates do not own any shares of
Company common stock, except as may be held indirectly through
mutual funds.
Appraisal
Rights
Holders of Company common stock will not have any appraisal
rights under the IBCA or under the Companys articles of
incorporation in connection with the merger, and neither the
Company nor Aviva will independently provide holders of Company
common stock with any such rights.
Merger
Financing; Source of Funds
Aviva has represented in the merger agreement that it has or
will have available, prior to the effective time of the merger,
sufficient cash in immediately available funds to pay or to
cause Merger Sub to pay the merger consideration to the
Companys common shareholders and to complete the merger
and the transactions contemplated by the merger agreement. The
receipt of financing by Aviva is not a condition to the
obligations of either party to complete the merger under the
terms of the merger agreement.
Material
U.S. Federal Income Tax Consequences of the
Merger
The following is a summary of the material U.S. federal
income tax consequences of the merger to shareholders of the
Company whose shares of Company common stock are converted into
the right to receive cash in the merger. The following summary
is based on the Internal Revenue Code of 1986, as amended, the
Treasury regulations promulgated thereunder, judicial decisions
and administrative rulings, all of which are subject to change,
possibly with retroactive effect. The summary does not address
all of the U.S. federal income tax consequences that may be
relevant to particular shareholders in light of their individual
circumstances or to shareholders who are subject to special
rules, including:
non-U.S. persons,
U.S. expatriates, insurance companies, dealers or brokers
in securities or currencies, tax-exempt organizations, financial
institutions, mutual funds, cooperatives, pass-through entities
and investors in such entities, shareholders who have a
functional currency other than the U.S. Dollar,
shareholders who hold their shares of Company common stock as a
hedge or as part of a hedging, straddle, conversion, synthetic
security, integrated investment or other risk-reduction
transaction or who are subject to alternative minimum tax or
shareholders who acquired their shares of Company common stock
upon the exercise of employee stock options or otherwise as
compensation. Further, this discussion does not address any
U.S. federal estate and gift or alternative minimum tax
consequences or any state, local or foreign tax consequences
relating to the merger.
The
Merger
The receipt of cash pursuant to the merger will be a taxable
transaction for U.S. federal income tax purposes, and may
also be a taxable transaction under applicable state, local or
foreign income or other tax laws. Generally, for
U.S. federal income tax purposes, a shareholder will
recognize gain or loss equal to the difference between the
37
amount of cash received by the shareholder in the merger and the
shareholders adjusted tax basis in the shares of Company
common stock converted into cash in the merger. If shares of
Company common stock are held by a shareholder as capital
assets, gain or loss recognized by such shareholder will be
capital gain or loss, which will be long-term capital gain or
loss if the shareholders holding period for the shares of
Company common stock exceeds one year. Capital gains recognized
by an individual upon a disposition of a share of Company that
has been held for more than one year generally will be subject
to a maximum U.S. federal income tax rate of 15% or, in the
case of a share that has been held for one year or less, will be
subject to tax at ordinary income tax rates. In addition, there
are limits on the deductibility of capital losses. The amount
and character of gain or loss must be determined separately for
each block of Company common stock (i.e., shares acquired at the
same cost in a single transaction) converted into cash in the
merger.
Backup
Withholding
A shareholder (other than certain exempt shareholders,
including, among others, all corporations and certain foreign
individuals) whose shares of Company common stock are converted
into the per share amount of $69.00 in cash may be subject to
backup withholding at the then-applicable rate (under current
law, the backup withholding rate is 28%) unless the shareholder
provides the shareholders taxpayer identification number,
or TIN, and certifies under penalties of perjury that such TIN
is correct (or properly certifies that it is awaiting a TIN) and
certifies as to no loss of exemption from backup withholding and
otherwise complies with the applicable requirements of the
backup withholding rules. A shareholder that does not furnish a
required TIN or that does not otherwise establish a basis for an
exemption from backup withholding may be subject to a penalty
imposed by the Internal Revenue Service, or the IRS. Each
shareholder should complete and sign the Substitute
Form W-9
included as part of the letter of transmittal that will be sent
to shareholders promptly following closing of the merger so as
to provide the information and certification necessary to avoid
backup withholding. Backup withholding is not an additional tax.
Rather, the amount of the backup withholding can be credited
against the U.S. federal income tax liability of the person
subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results
in an overpayment of tax, a refund can be obtained by the
shareholder by filing a U.S. federal income tax return.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET
FORTH ABOVE IS FOR GENERAL INFORMATION ONLY AND IS BASED ON THE
LAW IN EFFECT ON THE DATE HEREOF. SHAREHOLDERS ARE STRONGLY
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION
AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS) OF THE MERGER.
Regulatory
Matters
Antitrust
Under the HSR Act and the rules promulgated under that act by
the FTC, the merger may not be completed until notifications
have been given and information furnished to the Antitrust
Division and the FTC, and until the specified waiting period has
expired or been terminated. The Company and Aviva each filed
notification and report forms under the HSR Act with the
Antitrust Division and the FTC on August 7, 2006 and,
absent a request from the Antitrust Division or the FTC for
additional information, the waiting period will expire at
11:59 p.m. on September 6, 2006. The Company and Aviva
have also requested early termination of the HSR Act waiting
period, which could be granted at any time before the initial
HSR Act waiting period expires.
At any time before or after completion of the merger, the
Antitrust Division or the FTC could take any action under the
antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin completion of the merger
or seeking divestiture of substantial assets of the Company or
Aviva. Private parties could also take action under the
antitrust laws, including seeking an injunction prohibiting or
delaying the merger, divestiture or damages under certain
circumstances. Under the merger agreement, Aviva is not required
to divest assets or agree to any other condition imposed by a
regulatory authority if doing so would be reasonably likely to
have a material adverse effect on the Company or a material
adverse effect on the benefits, taken as a whole, that Aviva
reasonably expects to derive from the merger. See The
Merger Agreement Covenants and Agreements.
38
Additionally, at any time before or after the completion of the
merger, any state could take action under its antitrust laws as
it deems necessary or desirable in the public interest.
Insurance
Regulations
The insurance laws and regulations of all 50 U.S. states,
the District of Columbia and the U.S. Virgin Islands
generally require that, prior to the acquisition of an insurance
company, either through the acquisition of or merger with the
insurance company or a holding company of that insurance
company, the acquiring company must obtain approval from the
insurance commissioner of the insurance companys state of
domicile. Accordingly, Aviva is in the process of making the
necessary applications with the insurance commissioners of Iowa,
Indiana, Kansas and New York, the states of domicile of the
Companys U.S. insurance company subsidiaries.
In addition, the insurance laws and regulations of Arizona,
Hawaii, Kentucky, Minnesota, Oklahoma and South Dakota require
that, prior to an acquisition of an insurance company doing
business in or licensed by that state (or the acquisition of its
holding company), a notice filing disclosing certain market
share data in the applicable jurisdiction must be made and an
applicable waiting period must expire or be terminated. Aviva is
in the process of preparing these notice filings.
Other
Regulatory Authorities
Applications or notifications are being filed with certain state
and foreign regulatory authorities, including the Ontario
Securities Commission, and with self-regulatory organizations,
including the National Association of Securities Dealers, in
connection with acquisitions or changes in control of
subsidiaries of the Company, including broker-dealers and
investment advisers, that may be deemed to result from the
merger.
Obtaining
Regulatory Approvals
Although the Company and Aviva do not expect that any of the
foregoing regulatory authorities will raise any significant
concerns in connection with their review of the merger, there
can be no assurance that the Company and Aviva will obtain all
required regulatory approvals, or that those approvals will not
include terms, conditions or restrictions that may have a
material adverse effect on the Company or the benefits, taken as
a whole, that Aviva reasonably expects to derive from the merger.
Other than the filings described above, neither the Company nor
Aviva is aware of any regulatory approvals required to be
obtained, or waiting periods that must expire, to complete the
merger. If they discover that other approvals or waiting periods
are necessary, they will seek to comply with them. If any
additional approval or action is needed, however, the Company
and Aviva may be unable to obtain it, as is the case with
respect to other necessary approvals. Even if the Company and
Aviva do obtain all necessary approvals, conditions may be
placed on any such approval that could cause Aviva to abandon
the merger.
39
THE
MERGER AGREEMENT
The following summary describes selected material provisions
of the merger agreement and is qualified by reference to the
merger agreement, which is attached to this proxy statement as
Annex A. This summary may not contain all of the
information about the merger agreement that is important to you.
You are encouraged to carefully read the merger agreement in its
entirety, as it is the legal document that contains the terms
and conditions of the merger.
The merger agreement has been included to provide you with
information regarding its terms. It is not intended to provide
any other factual information about the Company. Such
information can be found elsewhere in this document and in the
public filings that the Company makes with the SEC, which are
available without charge through the SECs website at
www.sec.gov.
The representations and warranties described below and
included in the merger agreement were made by the Company to
Aviva and Merger Sub and by Aviva and Merger Sub to the Company.
These representations and warranties were made as of specific
dates and are in some cases subject to important exceptions,
limitations and supplemental information contained in the
confidential disclosure letter the Company provided to Aviva and
Merger Sub in connection with the signing of the merger
agreement, and are additionally subject to contractual standards
of materiality that may be different from that generally
applicable under federal securities laws. In addition, the
representations and warranties may have been included in the
merger agreement for the purpose of allocating risk between
Aviva and the Company, rather than to establish matters as
facts. While the Company does not believe that its disclosure
letter contains information the securities laws require it to
disclose, other than information that has already been so
disclosed, the disclosure letter contains information that
modifies, qualifies and creates exceptions to the
representations and warranties set forth in the merger
agreement. Accordingly, you should not rely on the
representations and warranties as characterizations of the
actual state of facts, since the representations and warranties
are subject, in important part, to the Companys underlying
disclosure letter. The Companys disclosure letter contains
information that has been included in its prior public
disclosures, as well as additional non-public information.
Information concerning the subject matter of the Companys
representations and warranties may have changed since the date
of the merger agreement, and subsequent information may or may
not be fully reflected in its public disclosures.
Structure
of the Merger
If all the conditions to the merger are satisfied or waived in
accordance with the terms of the merger agreement, Merger Sub,
an indirect wholly owned subsidiary of Aviva, will merge with
and into the Company. The separate corporate existence of Merger
Sub will cease, and the Company will continue as the surviving
corporation and will become an indirect wholly owned subsidiary
of Aviva.
Completion
and Effectiveness of the Merger
The closing of the merger will occur on the second business day
after all of the conditions to completion of the merger
contained in the merger agreement are satisfied or waived,
unless another date is agreed to by the Company and Aviva. The
merger will become effective upon the filing of the articles of
merger with the Secretary of State of the State of Iowa or at
such later time as is specified in the articles of merger.
Merger
Consideration
Company Common Stock. At the effective time of
the merger, each issued and outstanding share of Company common
stock will be automatically cancelled, extinguished and
converted into the right to receive $69.00 in cash, without
interest and less any applicable withholding taxes, less any
required withholding taxes. Shares of Company common stock held
in treasury by the Company or held by any of the Companys
subsidiaries immediately prior to the effective time of the
merger will be cancelled, and no payment will be made with
respect to such shares.
Stock Options and Other Awards. At the
effective time of the merger, each outstanding option to
purchase shares of Company common stock, whether vested or
unvested, will be converted into the right to receive an amount
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in cash per share subject to the option equal to the excess, if
any, of the per share amount of $69.00 in cash for holders of
Company common stock over the exercise price of such option,
less any required withholding taxes.
Each stock unit, performance unit or similar award, whether
vested or unvested, that is outstanding immediately prior to the
effective time of the merger shall be converted into the right
to receive an amount of cash per unit or award equal to the per
share amount of $69.00 in cash for holders of Company common
stock, less any required withholding taxes. Each SAR, whether
vested or unvested, that is outstanding immediately prior to the
effective time shall be converted into the right to receive an
amount of cash per stock unit to which the SAR relates equal to
the product of (1) the total number of unexercised stock
units to which the SAR relates multiplied by (2) the excess
of the per share amount of $69.00 in cash for holders of Company
common stock over the fair market value of a share of Company
common stock on the SARs date of grant, less any required
withholding taxes.
The cash into which the shares of Company common stock and the
outstanding stock options, stock units, performance awards, SARs
and similar awards is to be converted is collectively referred
to as the merger consideration.
Exchange Procedures. At the effective time of
the merger, Aviva will deposit cash in an amount sufficient to
pay the merger consideration to holders of the Company common
stock with the exchange agent. Promptly after the effective time
of the merger, Aviva will cause the exchange agent to mail to
each record holder of Company common stock a letter of
transmittal for use in the exchange of such holders
certificates representing shares of Company common stock for the
per share amount of $69.00 in cash payable with respect to such
certificates. Those holders of Company common stock who properly
surrender their certificates representing shares of Company
common stock in accordance with the exchange agents
instructions will receive an amount in cash equal to the per
share amount of $69.00 in cash multiplied by the number of
shares of Company common stock represented by such certificate
immediately prior to the effective time of the merger, plus any
dividends or other distributions with a record date prior to
July 12, 2006 remaining unpaid with respect to such Company
common stock. After the effective time of the merger, each
certificate formerly representing shares of Company common stock
that has not been surrendered will represent only the right to
receive the per share amount of $69.00 in cash multiplied by the
number of shares of Company common stock represented by such
certificate immediately prior to the effective time of the
merger, plus any dividends or other distributions with a record
date prior to July 12, 2006 remaining unpaid with respect
to such Company common stock.
You should not send your Company common stock certificates to
the exchange agent until you have received the transmittal
materials from the exchange agent. Do not return your Company
common stock certificates with the enclosed proxy, and do not
forward your stock certificates to the exchange agent without a
letter of transmittal.
If you hold your shares in book-entry form that is,
without a stock certificate the exchange agent will
automatically send you the per share amount of $69.00 in cash in
exchange for the cancellation of your shares of Company common
stock after completion of the merger, provided that you comply
with applicable tax certification requirements. If your shares
of Company common stock are held in street name by
your broker, you will receive instructions from your broker as
to how to surrender your street name shares and
receive cash for those shares.
Transfers of Ownership and Lost Stock
Certificates. Following the effective time of the
merger, the Company will not register or transfer any shares of
Company common stock on its stock transfer books.
If a certificate representing Company common stock is lost,
stolen or destroyed, the holder of such certificate will be
required to deliver an affidavit (and may be required to enter
into an indemnity agreement) prior to receiving the per share
amount of $69.00 in cash and any dividends or other
distributions payable in respect of the shares of Company common
stock represented by such certificate.
Conclusion of Exchange Period; Unclaimed Merger
Consideration. The exchange agent will return to
Aviva any portion of the merger consideration, certificates and
other documents in the exchange agents possession that
remain unclaimed by holders of Company common stock one year
after the effective time of the merger. Thereafter, a holder of
Company common stock, stock options or other awards must look
only to the surviving corporation for payment of the merger
consideration to which the holder is entitled under the terms of
the merger agreement. Aviva, the surviving corporation and the
exchange agent will not be liable to any holder of shares of
Company common
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stock for any amount paid to a public authority under any
applicable abandoned property, escheat or similar law. Any
portion of the merger consideration remaining unclaimed by
holders of Company common stock, stock options or other awards
as of a date that is immediately prior to such time as such
amount would otherwise escheat to or become property of any
governmental entity will, to the extent permitted by law, become
the property of the surviving corporation, free and clear of any
claims or interest of any person previously entitled to such
merger consideration.
Corporate
Governance Matters
Articles
of Incorporation and Bylaws of the Surviving
Corporation
The Companys articles of incorporation as in effect
immediately prior to the effective time of the merger will be
the articles of incorporation of the surviving corporation. The
bylaws of Merger Sub as in effect immediately prior to the
effective time of the merger will be the bylaws of the surviving
corporation.
Directors
and Officers of the Surviving Corporation
The directors of Merger Sub immediately prior to the effective
time of the merger will be the directors of the surviving
corporation, except that the president and chief executive
officer of the Company will also be a director of the surviving
corporation, with each director holding office until the next
annual meeting (or the earlier of their resignation or removal)
and until their respective successors are duly elected and
qualified.
The Companys officers immediately prior to the effective
time of the merger will 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.
Representations
and Warranties
The Companys representations and warranties in the merger
agreement relate to, among other things, corporate matters,
including due organization, subsidiaries, standing, the power to
conduct the Companys business and its qualification to do
business; capital structure; the authorization, execution,
delivery, performance and enforceability of the merger
agreement; the absence of conflicts with, or violations of, the
Companys organizational documents, contracts, applicable
law or judgments, orders or decrees or other obligations;
required consents and approvals; SEC filings, financial
statements and regulatory reports; compliance with applicable
laws and reporting requirements; compliance with the
Sarbanes-Oxley Act of 2002; legal proceedings; the filing of tax
returns, the status of unpaid taxes and other tax matters;
material contracts; employee benefit plans, employees and labor
matters; the Companys subsidiaries; agreements with
regulators; the absence of material adverse effects and
specified changes; board approval of the merger agreement and
the vote required to approve the merger; owned and leased
property; intellectual property; brokers and finders; the
opinion of the Companys financial advisor; takeover laws;
the accuracy of information contained in this proxy statement;
the licensing and registration of the Companys
broker-dealers; insurance reports; insurance business matters;
risk management instruments; producer sales and marketing
matters; and reinsurance matters.
Certain of the Companys representations and warranties are
qualified as to materiality or as to material adverse
effect. When used with respect to the Company or any of
its subsidiaries, the term material adverse effect
means any event, change, circumstance, state of facts or effect,
alone or in combination, that has had or is reasonably likely to
have a material adverse effect on (1) the financial
condition, properties, assets, liabilities, businesses or
results of operations of the Company and its subsidiaries, taken
as a whole, or (2) the Companys ability to timely
perform its obligations under the merger agreement. With respect
to (1) above, a material adverse effect does not include
any effect to the extent resulting from or arising in connection
with:
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changes in the economy in general in the United States;
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changes in U.S. or global financial or securities markets
or conditions, including those caused by natural catastrophes,
acts of war, hostility or terrorism;
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changes in the life insurance and annuity industries generally
(excluding changes in applicable laws), provided that such
changes do not have a materially disproportionate effect on the
Company or any of its subsidiaries;
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changes in applicable law or releases, or the adoption,
modification or interpretation by the SEC of any laws or
releases relating to annuities and life insurance contracts
offering equity index strategies or total return accounts,
including those offered by the Companys subsidiaries that
issue insurance policies;
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changes in U.S. generally accepted accounting principles or
statutory accounting practices prescribed or permitted by the
applicable state regulatory agency after July 12, 2006;
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any adverse development after July 12, 2006 in certain
pending litigations, mediations, arbitrations and regulatory
investigations, inquiries and proceedings, other than any such
development that, considered in the aggregate with all other
adverse or positive developments in connection with such
litigations, mediations, arbitrations and regulatory
investigations, inquiries and proceedings, would materially
increase the reasonably anticipated economic impact on the
Company and its subsidiaries, taken as a whole, of the
disposition of such litigations, mediations, arbitrations and
regulatory investigations, inquiries and proceedings compared to
the reasonable expectations of the parties as of July 12,
2006; or
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changes or developments directly resulting from the execution,
delivery and performance of the merger agreement, or the
announcement of the merger.
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The Companys representations and warranties are subject to
information disclosed in the confidential disclosure letter that
it delivered to Aviva. In addition, the representations and
warranties are subject to information in the Companys SEC
filings, excluding information provided under the headings
Safe Harbor Statement, Risk Factors, or
any similar sections and any disclosures of risks included in
the Companys SEC filings that are predictive or
forward-looking in nature.
The merger agreement also contains representations and
warranties made by Aviva and Merger Sub to the Company relating
to, among other things, corporate matters, including due
organization, subsidiaries, standing, the power to conduct their
businesses and qualification to do business; the authorization,
execution, delivery, performance and enforceability of the
merger agreement; the absence of conflicts with, or violations
of, their organizational documents, certain contracts,
applicable law or judgments, orders or decrees or other
obligations; required consents and approvals; the accuracy of
information provided by Aviva and Merger Sub for inclusion in
this proxy statement; Avivas ability to pay the merger
consideration; the absence of any requirement to have
Avivas shareholders approve the merger agreement or the
transactions contemplated by the merger agreement; the absence
of any record or beneficial ownership of Company common stock;
and the formation and operations of the Merger Sub.
Certain of Avivas and Merger Subs representations
and warranties are qualified as to materiality or as to
material adverse effect. When used with respect to
Aviva or Merger Sub, the term material adverse
effect means any event or events that would, individually
or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of Aviva or Merger Sub to perform
their respective obligations under the merger agreement.
Covenants
and Agreements
Conduct of the Company. The Company has agreed
that, until the effective time of the merger or termination of
the merger agreement, it will conduct its operations in the
ordinary course consistent with past practice and use all
reasonable efforts to preserve intact its business organizations
and relationships with third parties (including employees,
customers, suppliers and those persons with whom the Company has
business dealings) and maintain their rights, franchises,
licenses and other authorizations issued by governmental
entities. The merger agreement also provides that, without the
prior written consent of Aviva, the Company will not, and will
not permit any of its subsidiaries to:
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enter into any new material line of business;
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enter into, amend or terminate any material reinsurance,
coinsurance, modified coinsurance or any similar contract
without the consent of Aviva (which consent will not be
unreasonably withheld or delayed);
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alter or amend in any material respect existing underwriting,
claim handling, loss control, actuarial, financial reporting or
accounting practices, guidelines or policies or any material
assumption underlying an actuarial practice or policy, except as
required by generally accepted accounting principles or
statutory accounting practices;
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incur or commit to any capital expenditure, or any obligation or
liability in connection with any capital expenditure, other than
in the ordinary course of business consistent with past practice;
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enter into, amend or terminate any material lease, contract or
agreement, other than in the ordinary course of business
consistent with past practice;
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declare or pay any dividend or distribution with respect to the
Companys capital stock (other than the regular quarterly
cash dividend on the Companys Series A Preferred
Stock);
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split, combine, or reclassify any outstanding shares of capital
stock, or issue or authorize any other securities;
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purchase, redeem or otherwise acquire any of its own capital
stock or any securities convertible into or exercisable for any
shares of its capital stock, unless such repurchases,
redemptions or acquisitions are required under the terms of
certain outstanding securities or its stock option or award
plans;
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issue, deliver, sell, pledge or encumber any shares of its
capital stock, voting debt, SARs, stock unit or similar equity
award, or any securities convertible into or exchangeable for,
or any rights, warrants or options to acquire, any shares of the
Companys capital stock or voting debt, other than in
connection with the Companys Income
PRIDESsm
and the exercise or settlement of stock options, stock units,
performance units, SARs or similar awards under the
Companys benefits plans;
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adopt or propose a change in the Companys articles of
incorporation or bylaws;
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acquire or dispose of any corporation, partnership, association
or other business organization or division or any material
assets, by merging or consolidating with, purchasing a
substantial portion of the assets or any stock of such entity or
by any other manner, other than in the ordinary course of
business consistent with past practice and investments made
according to its investment policy;
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sell, lease, assign, encumber or otherwise dispose of any
material assets, other than in the ordinary course of business
consistent with past practice and investments made according to
its investment policy;
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subject to limited exceptions, incur, create, assume or
guarantee indebtedness for borrowed money, other than to replace
existing indebtedness at a lower cost of capital;
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subject to limited exceptions, issue or sell any debt securities
or rights to acquire debt securities, or guarantee any debt
securities of others;
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subject to limited exceptions, enter into any agreement to
maintain the financial condition of any other entity;
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pay, discharge, settle or satisfy any material claim,
litigation, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than payment,
discharge, settlement or satisfaction (1) made in the
ordinary course of business, (2) made in accordance with
the terms of the liabilities reflected in the Companys
filings with the SEC and (3) incurred since the date of
such filing in the ordinary course of business consistent with
past practice;
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modify, amend or terminate any material contract, other than in
the ordinary course of business, or enter into new material
contracts;
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materially modify, amend or terminate (1) any insurance
coverage the Company or its subsidiaries maintained which is not
replaced by a comparable amount of insurance coverage, or
(2) any investment or any risk management or derivatives
use policy currently used, except as required by applicable law
or changes in generally accepted accounting practices or
statutory accounting policies;
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change methods of accounting, except as disclosed in documents
filed with the SEC or as required by changes in generally
accepted accounting principles or statutory accounting practices;
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(1) enter into, adopt, amend or terminate any material
benefit plan; (2) issue any new awards or grants or pay
additional compensation or benefits to any director, officer,
agent, independent contractor or employee, other than additional
compensation or benefits paid in the ordinary course of business
consistent with past practice or amounts required by law or by
any existing commitments; or (3) accelerate the vesting of
any equity-related award;
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adopt any plan or resolutions providing for or authorizing a
liquidation, dissolution, restructuring, recapitalization or
other material reorganization;
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(1) make, amend or change any material tax election;
(2) make a request for a tax ruling or enter into any
agreement with a taxing authority; (3) settle or compromise
any material tax liability or tax claim in excess of amounts
specifically reserved for such purpose; (4) file any
amendments to previously filed tax returns; (5) surrender
any right to claim a refund; (6) make any distribution or
enter into any transaction, other than in the ordinary course of
business, that could materially increase the Companys
taxes; (7) file any tax return in a manner that could be
materially inconsistent with past custom and practice; or
(8) change the Companys method of tax accounting,
except as required by law, generally accepted accounting
principles or statutory accounting practices;
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fail to cause each of the Companys applicable investment
advisors to comply with the Investment Advisers Act of 1940, as
amended, and the rules and regulations promulgated thereunder;
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fail to file or publicly furnish all required documents with or
to the SEC, and to comply in all material respects with the
Securities Act of 1933, as amended, the Exchange Act, and the
rules and regulations of the SEC; or
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agree or commit to do any of the foregoing.
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Recommendations of the Boards of Directors;
Shareholders Meetings. The Company has
agreed to file this proxy statement with the SEC as promptly as
practicable following the date of the merger agreement, but in
no case later than 45 days after the date of the merger
agreement, and to use its reasonable best efforts to respond as
promptly as practicable to any comments of the SEC and to cause
the proxy statement to be mailed to shareholders as promptly as
practicable following the date of the merger agreement.
The merger agreement requires the Company to take all action
necessary to convene a meeting of its shareholders as promptly
as practicable for the purpose of obtaining approval of the
transactions contemplated by the merger agreement, and, subject
to applicable law, to provide notice of the meeting to all
holders of the Companys Series A Preferred Stock. The
board of directors will use its reasonable best efforts to
solicit approval of the merger agreement by the Companys
common shareholders and will recommend that the Companys
common shareholders vote to approve the merger agreement. The
board of directors is not obligated to make such recommendation
to the extent that it reasonably determines in good faith, after
consultation with outside legal counsel, that failure of the
board of directors to so recommend is required in order to
comply with the directors fiduciary obligations under
applicable law. However, the board of directors is obligated to
submit the merger agreement to the Companys common
shareholders for a vote on approval to the extent consistent
with applicable law, unless the merger agreement has been
terminated in accordance with its terms before the meeting.
The Company has also agreed that after consultation with Aviva
it may adjourn or postpone the special meeting (1) to the
extent necessary to ensure that any required supplement or
amendment to the proxy statement is provided to shareholders;
(2) if as of the time of the meeting there are insufficient
shares of common stock represented to constitute a quorum
necessary to conduct the business of the meeting; or (3) to
solicit additional proxies if there are insufficient proxies at
the time of the meeting to provide the required shareholder vote.
The merger agreement provides that nothing will prohibit or
impede the Company from taking and disclosing to the
shareholders a position as required by applicable law if, in the
good faith judgment of the Companys board of directors,
after consultation with outside legal counsel, failure to so
disclose would be inconsistent with applicable law.
Access to Information. To the extent permitted
by applicable law, the Company has agreed to provide Aviva, its
officers, employees, accountants, counsel, financial advisors
and other representatives with reasonable access to
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the Companys properties, books, contracts, records,
commitments, officers and employees, and to make available to
Aviva a copy of each document filed or received by the Company
pursuant to the requirements of applicable laws and all other
information concerning the Companys business, properties
and personnel as Aviva may reasonably request. All such
information is to remain confidential in accordance with the
terms of the confidentiality agreement between Aviva and the
Company.
Reasonable Best Efforts. The Company, Aviva
and Merger Sub will cooperate and will use all reasonable best
efforts to:
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take all actions necessary, proper or advisable to comply with
all legal requirements that may be imposed on such party or its
subsidiaries with respect to the merger and to complete the
transactions contemplated by the merger agreement as promptly as
practicable;
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obtain any consent, authorization, order or approval of, or any
exemption from any third party that is required to be obtained
or made by such party or any of its subsidiaries in connection
with the merger and the transactions contemplated by the merger
agreement; and
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cooperate in connection with any financing undertaken by Aviva
to fund the merger, including facilitating due diligence and
arranging senior officers to meet with prospective lenders and
investors in presentations, including preparing and filing all
documentation in connection with all necessary filings,
applications and other documents.
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In order to comply with its agreement to use its reasonable best
efforts to complete the merger, neither Aviva nor any of its
subsidiaries will be required to (1) sell, divest, hold
separate, or otherwise dispose of any of their or the
Companys respective businesses, product lines or assets,
(2) conduct their or the Companys respective
businesses in a specified manner or (3) agree to take any
such action, or agree to take any other action or agree to any
restriction, limitation or condition that would or would
reasonably be likely to have (a) a material adverse effect
on the Company or (b) a material adverse effect on the
benefits, taken as a whole, that Aviva reasonably expected to
derive from the merger, other than those customarily imposed by
regulatory agencies in transactions similar to the merger.
In order to comply with its agreement to use its reasonable best
efforts to complete the merger, the Company will agree to
divest, hold separate or otherwise take or commit to take any
action with respect to its businesses, services or assets or any
of its subsidiaries only if requested to do so by Aviva in
writing; provided that any such action shall be conditioned upon
the completion of the merger.
The merger agreement provides that each of the Company and Aviva
are required to file a notification form under the HSR Act with
the Antitrust Division and the FTC, and to make as soon as
practicable, but in no event later than 30 days after the
date of the merger agreement, the filings for such approvals and
consents as are required under the insurance laws of the states
where the Companys insurance subsidiaries are domiciled or
commercially domiciled or any foreign state where they are
licensed to do business. See The Merger
Regulatory Matters.
Other Offers. The merger agreement provides
that neither the Company nor any of its subsidiaries nor any
officers or directors will, and that the Company will cause its
employees, investment bankers, attorneys, accountants,
representatives and other agents not to, directly or indirectly,
take any action to:
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initiate, solicit, encourage or knowingly facilitate any
inquiries or the making of any proposal or offer with respect to
an acquisition proposal;
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have any discussions with or provide any confidential
information or data to any person relating to an acquisition
proposal or engage in any negotiations concerning or knowingly
facilitate any effort or attempt to make or implement an
acquisition proposal;
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approve, adopt, recommend, execute or enter into any agreement
related to any acquisition proposal; or
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propose or agree to any of the foregoing.
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For purposes of the merger agreement, an acquisition
proposal is any offer or proposal for, or any indication
of interest in:
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a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or its subsidiaries;
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any purchase or sale of 10% or more of the consolidated assets
of the Company and its subsidiaries, taken as a whole; or
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any purchase or sale of, or tender or exchange offer for, the
Companys voting securities that if completed would result
in any person (or the shareholders of such person) beneficially
owning securities representing 10% or more of the total voting
power of the Company and its subsidiaries or the voting power of
any of the Companys subsidiaries.
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However, the Companys board of directors, prior to the
approval of the merger agreement by the Companys common
shareholders, may engage in discussions and negotiations with a
third party that has made a bona fide unsolicited written
acquisition proposal, and, subject to entry into a
confidentiality agreement with such third party on terms no less
favorable to the Company than those in the confidentiality
agreement the Company entered into with Aviva, may provide
non-public information or data to such third party, if the
Companys board of directors determines in good faith by
majority vote, after consultation with its financial advisor and
outside legal counsel, that the acquisition proposal is or is
reasonably likely to lead to a superior proposal; provided that
the Companys board of directors determines in good faith,
after consultation with outside legal counsel, that failure to
take such action would be a breach of its fiduciary duties under
applicable law.
For purposes of the merger agreement, a superior
proposal is any bona fide unsolicited written acquisition
proposal that is not attributable to actions initiated by the
Company or its subsidiaries, or any of their directors,
officers, employees or agents, for a majority of the
Companys or its subsidiaries total voting power or a
majority of the Companys and its subsidiaries total
assets, that its board of directors determines in good faith,
after consultation with its financial advisors and outside legal
advisor, taking into account, among other things, its
obligations under applicable law, the terms and conditions of
the proposal, including price, form of consideration, financing
conditions, closing conditions and other aspects of the proposal
and the person making the proposal (including any
break-up
fees and expense reimbursement provisions):
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is more favorable to the Companys common shareholders from
a financial point of view than the merger with Aviva and the
other transactions contemplated by the merger agreement; and
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is fully financed or reasonably capable of being fully financed,
reasonably likely to receive all required government approvals
and otherwise reasonably capable of being completed on the terms
proposed.
|
The merger agreement obligates the Company to promptly notify
Aviva upon receipt of any acquisition proposal, request for
non-public information by any third party that has made or is
considering making an acquisition proposal or inquiry from a
third party seeking to discuss a possible acquisition proposal.
Such notice must be given (both orally and confirmed in writing)
no later than 24 hours after the receipt of such
acquisition proposal, request or inquiry and must identify the
third party and set forth the material terms and conditions of
the acquisition proposal. The merger agreement also provides
that the Company must promptly notify Aviva, both orally and in
writing, within 24 hours, if the Company enters into
discussions or negotiations concerning any acquisition proposal
or provides non-public information to any third person, and must
keep Aviva informed of the status and material terms of any such
acquisition proposal or negotiation.
The merger agreement also provides that the Company will and
will cause its subsidiaries and its officers, directors, agents,
representatives and advisors to immediately cease and terminate
any and all existing activities, discussions or negotiations
with third parties conducted prior to the date of the merger
agreement with respect to any acquisition proposal, and will not
release any third party from, or waive any provisions of, any
confidentiality or standstill agreement with respect to any
acquisition proposal.
Fees and Expenses. Aviva and the Company will
each pay all their own costs and expenses incurred in connection
with the merger agreement and the transactions contemplated by
the merger agreement, except for the termination fees described
below.
47
Directors and Officers
Liability. The merger agreement provides that
following the effective time of the merger, the surviving
corporation will, to the fullest extent permitted by applicable
law, indemnify, defend and hold harmless and provide advancement
of expenses to the Companys and its subsidiaries
current and former officers, directors and employees against all
losses paid in connection with any claim based on acts or
omissions by them in their capacities as such at or prior to the
effective time of the merger, to the extent provided under the
Companys articles of incorporation, bylaws,
indemnification agreements and resolutions, if any, in effect on
the date of the merger agreement.
The merger agreement further requires the surviving corporation,
for a minimum of six years following the effective time of the
merger, to maintain coverage under an officers and
directors liability insurance policy on terms and
conditions no less advantageous to the directors and officers
than the liability insurance policy that the Company maintained
for its directors and officers prior to the merger, with respect
to claims arising from facts or events that occurred at or
before the effective time of the merger, provided that the
surviving corporation will not be obligated to pay such annual
premiums to the extent that they exceed 200% of the last annual
premium paid by the Company prior to the effective time of the
merger, and if the premiums do exceed 200% of the Companys
last annual premium paid, then the surviving corporation will
cause to be maintained insurance policies that, in the surviving
corporations reasonable determination, provide maximum
coverage available at an annual premium equal to 200% of such
last annual premium paid. Alternatively, the surviving
corporation may purchase a prepaid tail policy for
such coverage, which the Company may obtain prior to the
effective time of the merger.
Employee Benefit Matters. Aviva has agreed
that those individuals who are employed by the Company or any of
its subsidiaries prior to the effective time of the merger will
continue to be employees of the surviving corporation or its
subsidiaries, subject to the ability of the applicable employer
to terminate the employment of such employees. For a period of
24 months after the effective time of the merger, Aviva or
the surviving corporation will provide all individuals who are
employed by the Company as of closing and who remain employees
of the surviving corporation or its subsidiaries after the
effective time of the merger with compensation, benefits and
coverage that are, in the aggregate, no less favorable (as
reasonably determined by Aviva in good faith) than those
provided to such employees immediately prior to the effective
time of the merger. Aviva has agreed that it or the surviving
corporation will honor all of the Companys benefit plans
in accordance with their terms, including full credit for
purposes of eligibility, vesting and determination of level of
benefits. Aviva and the surviving corporation will waive all
limitations as to pre-existing conditions, exclusions, waiting
periods and certain other requirements under welfare benefit
plans, provide credit for co-payments and deductibles paid and
generally recognize prior service with the Company prior to
closing for purposes of any employee benefit plans. The
surviving corporation will honor all employment, severance,
consulting, retention and similar arrangements and all of the
Companys benefit plans as in effect as of the date of the
merger agreement, subject to any amendment or termination that
may be permitted by the terms of any plan.
Aviva has also agreed to permit the Company to amend
(1) the Companys 401(k) plan to provide that, upon an
involuntary termination without cause within 24 months
following the closing date, the terminated participants
account shall immediately be fully vested to the extent
permitted by law, (2) the Companys severance and
termination plans to cover position eliminations made within the
24-month
period immediately following the closing date and (3) each
of the Companys annual incentive plans to provide that,
upon an involuntary termination without cause within
24 months after the closing date, the terminated
participant will receive a pro-rated bonus payment for the plan
year in which the termination occurs.
Tax Treatment. The Company and its
subsidiaries will cooperate with Aviva in the preparation,
execution and filing or all tax returns or other documents
regarding any taxes or similar fees and any additional amount
imposed in connection with such fees, taxes, or charges as
levied by any taxing authority in connection with the
transactions contemplated by the merger agreement and take all
reasonable steps necessary to obtain any exemptions from such
transfer taxes.
Public Announcements. Aviva and the Company
have agreed to use their reasonable best efforts to
(1) develop a joint communications plan, (2) ensure
that all press releases and other public statements with respect
to the transactions contemplated by merger agreement are
consistent with such communications plan and (3) consult
with each other before issuing any press release or any public
statement with respect to the merger
48
agreement, unless otherwise required by applicable law or any
listing agreement with any national securities exchange.
Stock Exchange Delisting. Aviva and the
Company have agreed to cooperate with each other in taking, or
causing to be taken, all actions necessary to delist Company
common stock from the NYSE and to terminate registration under
the Exchange Act, effective as of the effective time of the
merger.
Exempt Transactions. The Companys board
of directors may adopt a resolution before the effective time of
the merger providing that the dispositions of equity securities
by the officers and directors of the Company and its
subsidiaries, who immediately prior to the closing are subject
to the reporting requirements of Section 16(a) of the
Exchange Act, are intended to be exempt pursuant to
Rule 16b-3
under the Exchange Act.
Takeover Statute. The Companys board of
directors has agreed to (1) take all actions reasonably
necessary to ensure that no takeover statute or similar statute
or regulation is or becomes applicable to the merger agreement
and the related transactions and (2) if any takeover
statute or similar regulation becomes applicable to the merger
agreement or the related transactions, take all actions
reasonably necessary to ensure that the merger and related
transactions may be completed as promptly as practicable on the
terms contemplated by the merger agreement and minimize the
effect of such statute or regulation on the merger and the
transactions contemplated by the merger agreement.
Obligations of Merger Sub. Aviva has agreed to
take all actions necessary to cause Merger Sub to perform its
obligations, when due, under the merger agreement.
Headquarters; Community Commitments. Aviva has
acknowledged its intention to maintain the surviving
corporations principal executive offices in Des Moines,
Iowa. Aviva has also agreed to cause the surviving corporation
to engage in charitable and community giving and other
charitable and community activities to at least the same degree
as currently undertaken by the Company, and to honor and fulfill
all charitable and community commitments made by the Company
prior to the date of the merger agreement.
Conditions
to Completion of the Merger
The obligations of Aviva and the Company to complete the merger
are subject to the satisfaction or waiver, where legally
permissible, of the following conditions:
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the merger agreement will have been approved by the
Companys common shareholders;
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the waiting period applicable to the completion of the merger
under the HSR Act will have expired or been terminated; and
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no governmental entity or court will have enacted, issued,
enforced or entered any temporary restraining order, injunction,
order, law, regulation, judgment, decree or other restraint
which prohibits, enjoins or makes illegal the completion of the
merger.
|
In addition, the obligations of Aviva and Merger Sub to complete
the merger are subject to the satisfaction or waiver, prior to
the effective time of the merger, of the following conditions:
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the Companys representation as to the absence of a
material adverse effect on the Company since December 31,
2005 will be true and correct as of July 12, 2006 and as of
closing;
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the Companys representations and warranties in the merger
agreement relating to its due organization will be true and
correct in all material respects as of July 12, 2006 and as
of closing;
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the Companys representations and warranties in the merger
agreement relating to its capital stock, outstanding stock
options, stock units, SARs and similar awards will be true and
correct in all material respects as of the date specified in
such representation;
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the Companys other representations and warranties in the
merger agreement, disregarding all qualifications and exceptions
therein relating to materiality, will be true in all respects as
of the date of the merger agreement and as of closing (provided
that the accuracy of representations and warranties that by
their terms
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49
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speak as of a specified date will be determined as of such
date), except for failure to be so true and correct which would
not, individually or in the aggregate, have a material adverse
effect on the Company;
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the Company will have performed or complied with all agreements
and covenants required under the merger agreement that are
qualified as to materiality at or prior to closing or complied
in all material respects with all other obligations required to
be performed by the Company under the merger agreement at or
prior to closing, and Aviva will have received a certificate
from the Company to such effect, signed by the Companys
chief executive officer or its chief financial officer; and
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all required governmental authorizations, consents, orders,
approvals, declarations or filings that the Company must obtain
will have been filed, occurred or been obtained and will be in
full force and effect, other than those the absence or
invalidity of which could not be reasonably expected to have,
individually or in the aggregate, a material adverse effect on
either the Company or on the benefits, taken as a whole, that
Aviva reasonably expected to derive from the transactions
contemplated by the merger agreement.
|
In addition, the Companys obligation to complete the
merger is subject to the satisfaction or waiver of the following
conditions:
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the representations and warranties of Aviva in the merger
agreement relating to its ability to have sufficient cash
immediately available to pay the merger consideration will be
true and correct in all material respects as of the date of the
merger agreement and as of closing;
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Avivas and Merger Subs other representations and
warranties in the merger agreement, disregarding all
qualifications and exceptions therein relating to materiality,
will be true and correct in all respects as of the date of the
merger agreement and as of closing (provided that the accuracy
of representations and warranties that by their terms speak as
of a specified date will be determined as of such date), except
for failure to be so true and correct which would not,
individually or in the aggregate, have a material adverse effect
on Aviva;
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Aviva will have performed or complied with all agreements and
covenants required under the merger agreement that are qualified
as to materiality at or prior to closing or complied in all
material respects with all other obligations required to be
performed by it under the merger agreement at or prior to
closing, and the Company will have received a certificate from
Aviva to such effect, signed by a senior officer of
Aviva; and
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all required governmental authorizations, consents, orders,
approvals, declarations or filings that Aviva must obtain will
have been filed, occurred or been obtained and will be in full
force and effect, other than those the absence or invalidity of
which could not be reasonably expected to have, individually or
in the aggregate, a material adverse effect on either the
Company or on the benefits, taken as a whole, that Aviva
reasonably expected to derive from the transactions contemplated
by the merger agreement.
|
Neither the Company nor Aviva nor Merger Sub may fail to
complete the merger or terminate the merger agreement and
abandon the merger because any condition to closing has not been
satisfied, if such failure was caused by such partys
breach of any provision of the merger agreement or failure to
use its reasonable best efforts to complete the merger and
related transactions.
Termination
The merger agreement may be terminated at any time prior to the
effective time of the merger, notwithstanding any approval of
the merger agreement by the Companys common shareholders:
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by mutual written consent of Aviva and the Company;
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by either Aviva or the Company on written notice to the other
party if:
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a governmental entity has denied a required approval or has
issued a non-appealable final order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise
prohibiting the merger; provided, however, that this right to
terminate will not be available to a party whose failure to
fulfill in any material respect any obligation under the merger
agreement has caused or resulted in the failure of a condition
to complete the merger;
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50
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the merger is not completed by March 31, 2007; provided,
however, that this right to terminate will not be available to a
party whose failure to fulfill in any material respect any
obligation under the merger agreement has caused or resulted in
the failure of a condition to complete the merger;
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the other party breaches any of its covenants, agreements,
representations or warranties, such that the closing conditions
to the non-breaching partys obligation to effect the
merger would not be satisfied and the breach or failure to
perform is not curable, or if curable, has not been cured within
60 days following receipt of written notice from the
non-breaching party of such breach or failure to perform; or
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the approval of the merger agreement by the Companys
common shareholders is not obtained at the special meeting or at
any adjournment or postponement of such meeting.
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by Aviva on written notice if the Companys board of
directors fails to recommend approval of the merger agreement at
the special meeting or withdraws, modifies or qualifies its
recommendation in a manner materially adverse to Aviva or to the
completion of the merger prior to the receipt of approval of the
merger agreement by the Company shareholders, or resolves to
take any such action; or
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by the Company, prior to the receipt of approval of the merger
agreement by its shareholders, to enter into an agreement for an
acquisition proposal that its board of directors determines in
good faith (after consultation with its outside legal counsel
and financial advisors), in the exercise of its fiduciary
duties, constitutes a superior proposal, provided that the
Company must notify Aviva in writing of its intention to
terminate and the terms and conditions of the third-party
acquisition proposal no less than five business days before such
termination, and must take into account any changes to the terms
and conditions of the merger agreement proposed by Aviva in
response.
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Effect of
Termination
If the merger agreement is terminated and the merger is
abandoned as described above, the merger agreement will be void
and there will be no liability or obligation on the part of any
party to the merger agreement, or their respective officers or
directors, other than the obligation to pay, if applicable, fees
and expenses in accordance with the merger agreement, and no
party will be relieved or released from any liabilities or
damages resulting from any willful breach of the merger
agreement. In addition, the parties obligations under the
confidentiality agreement previously entered into will survive
termination of the merger agreement.
The Company has agreed to pay Aviva a termination fee of
$90,000,000 and to reimburse Aviva for up to $12,500,000 of its
out-of-pocket
fees and expenses incurred in connection with the merger in the
event that the merger agreement is terminated under the
following circumstances, such payment to occur on the business
day following termination in the case of the second and third
bullets below, or entry into or completion of a third party
acquisition proposal in the case of the first and fourth bullets
below:
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if Aviva terminates the merger agreement because the merger is
not completed on or before March 31, 2007; (1) at any
time after July 12, 2006 and before such termination, an
acquisition proposal is publicly announced, otherwise enters the
public domain or is publicly communicated to the senior officers
or board of directors of the Company and is not irrevocably
withdrawn; (2) at the time of termination, Aviva is not in
breach of its representations, warranties or covenants in such
manner that the breach would give rise to the failure of a
closing condition; and (3) within 12 months after the
date of such termination, the Company or any of its subsidiaries
enters into any agreement with a third party with respect to, or
completes, an acquisition proposal with respect to a majority of
the Companys or its subsidiaries total voting power
or a majority of the Companys and its subsidiaries
total assets;
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if Aviva terminates because the Companys board of
directors fails to recommend approval of the merger agreement at
the special meeting or withdraws, modifies or qualifies its
recommendation in any manner materially adverse to Aviva or to
the completion of the merger prior to receipt of shareholder
approval of the merger agreement;
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if the Company terminates the merger agreement, prior to the
receipt of approval of the merger agreement by its shareholders,
to enter into an agreement for an acquisition proposal that its
board of directors determines
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51
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in good faith (after consultation with its outside legal counsel
and financial advisors), in the exercise of its fiduciary
duties, constitutes a superior proposal; or
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if either party terminates the merger agreement because the
Companys common shareholders failed to approve the merger
agreement at the special meeting; (1) at any time after
July 12, 2006 and before the date of the special meeting an
acquisition proposal is publicly announced, otherwise enters the
public domain or is publicly communicated to the senior officers
or board of directors of the Company and is not irrevocably
withdrawn at least 10 days prior to such meeting;
(2) at the time of termination, Aviva is not in breach of
its representations, warranties or covenants in such manner that
the breach would give rise to the failure of a closing
condition; and (3) within 12 months after the date of
such termination, the Company or any of its subsidiaries enters
into any agreement with a third party with respect to, or
completes, an acquisition proposal with respect to a majority of
the Companys or its subsidiaries total voting power
or a majority of the Companys and its subsidiaries
total assets.
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Amendment
and Waiver
The merger agreement may be amended by the parties at any time
before or after the approval of the merger agreement by the
Companys common shareholders, but after such approval, no
amendment that by applicable law requires further approval of
such shareholders will be made without their approval. The
merger agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
At any time prior to the effective time of the merger, a party
to the merger agreement may, to the extent permitted by law,
(1) extend the time for the performance of any of the
obligations or other acts of the other parties, (2) waive
any inaccuracies in the representations and warranties of the
other parties to the merger agreement or any other document
delivered according to the merger agreement and (3) waive
compliance by the other parties with any of the agreements or
conditions contained in the merger agreement. Any agreement on
the part of a party to any such extension or waiver will be
valid only if in writing signed on behalf of such party.
52
SECURITIES
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Directors
and Executive Officers
The following table sets forth the beneficial ownership of
Company common stock as of August 10, 2006, for each of the
directors and named executive officers of the Company, and all
directors and executive officers as a group. No person or entity
was known by the Company to own five percent or more of Company
common stock as of August 10, 2006.
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Number of
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Beneficial
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Percent of
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Shares
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Right to
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Ownership
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Outstanding
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Name
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Owned(1)
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Acquire(2)
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Total(3)
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Shares(4)
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David A. Arledge
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4,600
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7,000
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11,600
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*
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Roger K. Brooks (5)(7)
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46,462
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490,000
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536,462
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1.4
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%
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Thomas F. Gaffney (8)(11)
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23,670
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20,500
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44,170
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*
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Thomas C. Godlasky (5)(9)(12)
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58,009
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287,800
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345,809
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*
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Louis A. Holland (6)(11)
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12,258
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12,258
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*
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Ward M. Klein (6)(11)
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4,256
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1,167
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5,423
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*
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John W. Norris Jr.(11)
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15,982
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20,500
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36,482
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*
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Jack C. Pester(12)
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15,513
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20,500
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36,013
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*
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Heidi L. Steiger (6)(11)
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5,408
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5,408
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*
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Stephen Strome (6)(11)
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3,542
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1,167
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4,709
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*
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John A. Wing
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10,864
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20,500
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31,364
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*
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F. A. Wittern Jr. (10)(11)
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9,814
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13,000
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22,814
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*
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Gregory D. Boal (5)(12)
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25,140
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5,000
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30,140
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*
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Brian J. Clark (5)(12)
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24,296
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70,300
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94,596
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*
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Mark V. Heitz (5)(12)
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51,246
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247,300
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298,546
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*
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Gary R. McPhail (5)(12)
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34,518
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197,200
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231,718
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*
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Directors and executive officers
as a group (19 persons)
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379,084
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1,475,134
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1,854,218
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4.7
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%
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(1) |
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Excludes shares that may be acquired through the exercise of
stock options, the vesting of restricted stock units or other
convertible or exercisable rights. |
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(2) |
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Except as otherwise set forth in the footnotes below, represents
shares of common stock that can be acquired upon the exercise of
stock options or vesting of restricted stock units within
60 days of August 10, 2006. |
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(3) |
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Unless otherwise indicated, each person has sole voting and
dispositive power with respect to the shares shown. Some
directors and executive officers share the voting and
dispositive power over their shares with their spouses as
community property, joint tenants or tenants in common. |
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(4) |
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An * indicates that the individuals beneficial
ownership of the Companys common stock is less than one
percent. |
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(5) |
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Includes beneficial interest in shares of Company common stock
held pursuant to the Companys Savings &
Retirement Plan. The attributed shares owned by the
Companys Savings & Retirement Plan are voted by
the trustees as directed by their respective participants. |
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(6) |
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Includes 2,500 shares of restricted common stock awarded
under the Companys stock incentive plans to each of
Messrs. Holland, Klein and Strome and Ms. Steiger upon
appointment to the board of directors. The shares have vesting
and transfer restrictions for three years after the date of the
award. |
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(7) |
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Includes 9,000 shares owned by his spouse; 25,303 owned by
the Roger K. Brooks Revocable Trust; and 5,000 shares owned
by the RKB Partnership, L.P. |
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(8) |
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Includes 7,692 shares owned by his spouse through the Donna
L. Gaffney Trust and 461 shares owned directly by his
spouse. |
53
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(9) |
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Includes 12,122 shares owned by his spouse. |
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(10) |
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Includes 500 shares owned by his spouse. |
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(11) |
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Includes shares of common stock that were acquired through the
Non-Employee Director Stock Plan, the Companys 2000 Stock
Incentive Plan and the Companys 2003 Stock Incentive Plan
which have vesting and transfer restrictions for two
(2) years after the date of purchase:
Mr. Gaffney 3,764; Mr. Holland
3,758; Mr. Klein 4,256;
Mr. Norris 3,498; Mr. Pester
3,783; Ms. Steiger 4,241;
Mr. Strome 3,542; and
Mr. Wittern 2,837. |
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(12) |
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Includes performance units purchased under the terms of the MIP
Deferral Plan: Mr. Godlasky 1,577;
Mr. Boal 12,584; Mr. Heitz
1,288; Mr. McPhail 9,695;
Mr. Clark 1,125; and all executive officers as
a group 42,400. |
54
SHAREHOLDER
PROPOSALS
Other
Matters
Neither the Companys board of directors nor management
intends to bring any matter for action at the special meeting of
shareholders other than those matters described above. If any
other matter or any proposal should be presented and should
properly come before the meeting for action, the persons named
in the accompanying proxy will vote upon such matter and upon
such proposal in accordance with their best judgment.
Company
Shareholder Proposals
If the merger is completed, the 2007 annual shareholders
meeting will not be held. If the 2007 annual shareholders
meeting is held, under the rules of the SEC, proposals for
consideration at the 2007 annual shareholders meeting,
including director nominations, must be received by the Company
no later than December 1, 2006, as well as meet the other
SEC requirements, in order to be considered for inclusion in the
2007 annual meeting proxy statement.
Shareholder
Proposals
In order for a shareholder proposal to be considered for
inclusion in the Companys proxy statement for next
years annual meeting, the written proposal must be
received by the Company no later than December 1, 2006, and
should contain such information as is required under the
Companys by-laws. Such proposals will need to comply with
the SECs regulations regarding the inclusion of
shareholder proposals in the Company sponsored proxy materials.
In order for a shareholder proposal to be raised from the floor
during next years annual meeting, written notice must be
received by the Company no later than December 1, 2006, and
should contain such information as required under the
Companys by-laws. If the Company does not receive notice
of the proposal within this time frame, the Companys
management will use its discretionary authority to vote the
shares it represents as the board may recommend.
Nomination
of Director Candidates
The Companys bylaws permit shareholders to nominate
directors at a shareholders meeting. In order to make a
director nomination at an annual shareholders meeting, it
is necessary that you notify the Company not fewer than
120 days before the first anniversary of the date that the
proxy statement for the preceding years annual meeting was
first sent to shareholders. The Companys 2006 proxy
statement was first sent to shareholders on March 31, 2006.
Thus, in order for any such nomination notice to be timely for
next years annual meeting, it must be received by the
Company no later than December 1, 2006. In addition, the
notice must meet all other requirements contained in the
Companys bylaws and include any other information required
pursuant to Regulation 14A under the Exchange Act.
Copy
of Bylaw Provisions
If you would like a copy of the relevant bylaw provision
regarding the requirement for mailing shareholder proposals and
nominating director candidates, please contact James A.
Smallenberger, Secretary, AmerUs Group Co., 699 Walnut Street,
Des Moines, Iowa
50309-3948.
55
MULTIPLE
SHAREHOLDERS SHARING THE SAME ADDRESS
The rules regarding delivery of proxy statements and annual
reports promulgated by the SEC permit the Company to deliver a
single proxy statement to one address shared by two or more of
its shareholders. This practice, known as
householding, is designed to reduce the
Companys printing and postage costs. In order to take
advantage of this opportunity, the Company has delivered only
one proxy statement and annual report to multiple shareholders
who share an address, unless it has received instructions to the
contrary from any shareholder at that address. If any
shareholder residing at such an address wishes to receive a
separate proxy statement for the special meeting or in the
future, they must contact the Companys transfer agent,
Mellon Investor Services, by phone (toll-free) at
1-800-304-9709
or by mail at PO Box 3315, South Hackensack, New Jersey
07606, attention: Shareholder Correspondence. If you are
receiving multiple copies of the Companys proxy statements
and annual reports and would prefer to receive only one, you can
request householding by contacting Mellon Investor Services in
the same manner.
56
WHERE YOU
CAN FIND MORE INFORMATION
The Company files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any reports, statements or other information that the
Company files with the SEC at the SECs public reference
room at Public Reference Room, 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information regarding the public reference room.
These SEC filings are also available to the public from
commercial document retrieval services and at the Internet world
wide web site maintained by the SEC at www.sec.gov. Reports,
proxy statements and other information concerning the Company
may also be inspected at the offices of the NYSE at
20 Broad Street, New York, New York 10005.
The SEC allows the Company to incorporate by
reference information into this proxy statement. This
means that the Company can disclose important information to you
by referring you to another document filed separately with the
SEC. The information incorporated by reference is considered to
be a part of this proxy statement, except for any information
that is superseded by information that is included directly in
this proxy statement or incorporated by reference subsequent to
the date of this proxy statement. The Company does not
incorporate the contents of its website into this proxy
statement.
This proxy statement incorporates by reference the documents
listed below that the Company has previously filed with the SEC.
|
|
|
Company SEC Filings
|
|
|
(File No. 001-15166)
|
|
Period and Date Filed
|
|
Annual Report on
Form 10-K
|
|
Fiscal year ended
December 31, 2006, filed on March 14, 2006
|
Quarterly Reports on
Form 10-Q
|
|
Quarterly period ended
March 31, 2006, filed on May 4, 2006; and quarterly
period ended June 30, 2006, filed on August 2, 2006
|
Current Reports on
Form 8-K
|
|
Filed on: January 4, 2006;
February 16, 2006; May 5, 2006; May 15, 2006;
June 20, 2006; July 13, 2006; July 25, 2006;
August 2, 2006 (Item 2.03 only); and August 10,
2006
|
Proxy Statement on Schedule 14A
for the Companys 2006 Annual Meeting of Shareholders
|
|
Filed on March 29, 2006
|
In addition, the Company incorporates by reference additional
documents that it may file with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this proxy statement and the date of the
special meeting. These documents include periodic reports, such
as annual reports on
Form 10-K,
quarterly reports on
Form 10-Q
and current reports on
Form 8-K.
You may obtain the Companys documents filed with the SEC,
without charge, by requesting them in writing or by telephone
from the Company at the following address:
AmerUs Group Co.
699 Walnut Street
Des Moines, Iowa
50309-3948
Attention: Secretary
Telephone: 515-362-3600
If you would like to request documents from the Company, please
do so by [ ], 2006 to receive them before the
special meeting.
If you are a shareholder of record and have further questions
about the exchange of your shares of Company common stock for
the per share amount of $69.00 in cash, you should contact the
Companys proxy solicitor, Georgeson, at 212-440-9800
(banks and brokers) or 1-866-821-2570 (all others, toll-free).
You should not send in your Company stock certificate(s)
evidencing your shares of Company common stock until you receive
the transmittal materials from the exchange agent.
57
You should rely only on the information contained in this proxy
statement, the annexes to this proxy statement and the documents
referred to in this proxy statement to vote on the merger
agreement. The Company has not authorized anyone to provide you
with information that is different from what is contained in
this proxy statement. This proxy statement is dated as of
[ ], 2006. You should not assume that the
information contained in this proxy statement is accurate as of
any date other than that date. Neither the mailing of this proxy
statement to shareholders on [ ], 2006 nor the
payment of cash in the merger on any other date creates any
implication to the contrary. This proxy statement does not
constitute a solicitation of a proxy in any jurisdiction where,
or to or from any person to whom, it is unlawful to make a proxy
solicitation.
By Order of the Board of Directors,
James A. Smallenberger
Secretary
58
ANNEX A
AGREEMENT
AND PLAN OF MERGER
Dated as of July 12, 2006
by and among
AVIVA PLC,
LIBRA ACQUISITION CORPORATION
and
AMERUS GROUP CO.
A-1
TABLE OF
CONTENTS
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Page
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ARTICLE I THE MERGER
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A-9
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1.1.
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The Merger
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A-9
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|
1.2.
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Effective Time of the Merger
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A-9
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1.3.
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Closing
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A-9
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1.4.
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Effects of the Merger
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|
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A-9
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|
1.5.
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Articles of Incorporation and
Bylaws of Surviving Corporation
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A-9
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1.6.
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|
Directors and Officers of the
Surviving Corporation
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A-9
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1.7.
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Subsequent Actions
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|
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A-10
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ARTICLE II TREATMENT OF SHARES
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A-10
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2.1.
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Conversion of Securities
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A-10
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(a)
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Conversion of AmerUs Capital Stock
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A-10
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(b)
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Cancellation of Treasury Stock
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A-10
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(c)
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Conversion of Merger Sub Capital
Stock
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A-10
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2.2.
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|
Surrender of Capital Stock; Stock
Transfer Books.
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A-10
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(a)
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Exchange Agent
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A-10
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(b)
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Exchange Period
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A-10
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(c)
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|
Payment to Other Persons
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|
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A-11
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(d)
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Transfer Books
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A-11
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(e)
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Lost, Stolen or Destroyed
Certificates
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A-11
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(f)
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Conclusion of Exchange Period
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A-11
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(g)
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Withholdings
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A-12
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(h)
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Certain Adjustments
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A-12
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2.3.
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AmerUs Stock Awards
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A-12
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ARTICLE III REPRESENTATIONS
AND WARRANTIES
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A-12
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|
3.1.
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Representations and Warranties of
AmerUs
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A-12
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(a)
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Organization, Standing and Power.
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A-13
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(b)
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Capital Structure.
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A-14
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(c)
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Authority.
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A-15
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(d)
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SEC Documents; Regulatory Reports;
Undisclosed Liabilities.
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A-16
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(e)
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Compliance with Applicable Laws
and Reporting Requirements
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A-17
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(f)
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Sarbanes Oxley Act.
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A-17
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(g)
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Legal Proceedings
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A-18
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(h)
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Taxes.
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A-18
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(i)
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Certain Agreements
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A-20
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(j)
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Benefit Plans and Labor Matters.
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A-20
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(k)
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Subsidiaries
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A-22
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(l)
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Agreements with Regulators
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A-22
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(m)
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Absence of Certain Changes or
Events
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A-22
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(n)
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Board Approval
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A-22
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(o)
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Vote Required
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A-22
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(p)
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Properties
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A-22
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(q)
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Intellectual Property.
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A-23
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(r)
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Brokers or Finders
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A-23
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(s)
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Opinion of AmerUs Financial Advisor
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A-23
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(t)
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Takeover Laws
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A-23
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A-2
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Page
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(u)
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Information Supplied.
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A-23
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(v)
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Certain Securities Matters.
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A-24
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(w)
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Insurance Reports.
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A-24
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(x)
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Insurance Business
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A-25
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(y)
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Risk Management Instruments
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A-26
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(z)
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Producer Sales and Marketing.
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A-26
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(aa)
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Reinsurance
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A-26
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3.2.
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Representations and Warranties of
Aviva and Merger Sub
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A-27
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(a)
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Organization, Standing and Power.
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A-27
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(b)
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Authority.
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A-27
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(c)
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Information Supplied
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A-28
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(d)
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Financing
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A-28
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(e)
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No Aviva Vote Required
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A-28
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(f)
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Aviva Ownership of AmerUs
Securities
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A-28
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(g)
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Merger Sub.
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A-28
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ARTICLE IV COVENANTS RELATING
TO CONDUCT OF BUSINESS
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A-28
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4.1.
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Covenants of AmerUs
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A-28
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(a)
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Ordinary Course
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A-28
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(b)
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Dividends; Changes in Stock
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A-29
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(c)
|
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Issuance of Securities
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A-29
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(d)
|
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Governing Documents
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A-29
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(e)
|
|
No Acquisitions or Dispositions
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A-29
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(f)
|
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Indebtedness
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|
A-29
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(g)
|
|
Liabilities
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|
A-29
|
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|
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(h)
|
|
Material Contracts
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|
|
A-30
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|
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(i)
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Risk Policy
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A-30
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|
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(j)
|
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Accounting Methods
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|
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A-30
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(k)
|
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Compensation and Benefit Plans
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|
A-30
|
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|
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(l)
|
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No Liquidation
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|
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A-30
|
|
|
|
(m)
|
|
Taxes
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|
|
A-30
|
|
|
|
(n)
|
|
Advisory Contract Consents
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|
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A-31
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(o)
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AmerUs SEC Documents
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A-31
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(p)
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Other Actions
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A-31
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|
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(q)
|
|
Other Agreements
|
|
|
A-31
|
|
4.2.
|
|
Advice of Changes; Government
Filings.
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|
|
A-32
|
|
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|
|
|
|
ARTICLE V ADDITIONAL
AGREEMENTS
|
|
|
A-32
|
|
5.1.
|
|
Proxy Statement.
|
|
|
A-32
|
|
5.2.
|
|
Access to Information.
|
|
|
A-33
|
|
5.3.
|
|
Reasonable Best Efforts.
|
|
|
A-33
|
|
5.4.
|
|
Acquisition Proposals.
|
|
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A-34
|
|
5.5.
|
|
Fees and Expenses
|
|
|
A-35
|
|
5.6.
|
|
Indemnification; Directors
and Officers Insurance.
|
|
|
A-36
|
|
5.7.
|
|
Employee Benefit Matters.
|
|
|
A-36
|
|
5.8.
|
|
Tax Matters.
|
|
|
A-37
|
|
5.9.
|
|
Public Announcements
|
|
|
A-38
|
|
5.10.
|
|
Delisting
|
|
|
A-38
|
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A-3
|
|
|
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Page
|
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5.11.
|
|
Rule 16b-3
|
|
|
A-38
|
|
5.12.
|
|
Takeover Statute
|
|
|
A-38
|
|
5.13.
|
|
Principal Executive Offices of the
Surviving Corporation
|
|
|
A-38
|
|
5.14.
|
|
Community Commitments
|
|
|
A-38
|
|
5.15.
|
|
Undertakings of Aviva
|
|
|
A-38
|
|
5.16.
|
|
Additional Agreements
|
|
|
A-38
|
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|
|
|
|
|
ARTICLE VI CONDITIONS
PRECEDENT
|
|
|
A-39
|
|
6.1.
|
|
Conditions to Each Partys
Obligation To Effect the Merger
|
|
|
A-39
|
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|
|
(a)
|
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Shareholder Approval
|
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|
A-39
|
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|
|
(b)
|
|
HSR Approval
|
|
|
A-39
|
|
|
|
(c)
|
|
No Injunctions or Restraints;
Illegality
|
|
|
A-39
|
|
6.2.
|
|
Conditions to Obligations of Aviva
and Merger Sub
|
|
|
A-39
|
|
|
|
(a)
|
|
Representations and Warranties
|
|
|
A-39
|
|
|
|
(b)
|
|
Performance of Obligations of
AmerUs
|
|
|
A-39
|
|
|
|
(c)
|
|
Regulatory Matters
|
|
|
A-39
|
|
6.3.
|
|
Conditions to Obligations of AmerUs
|
|
|
A-40
|
|
|
|
(a)
|
|
Representations and Warranties
|
|
|
A-40
|
|
|
|
(b)
|
|
Performance of Obligations of Aviva
|
|
|
A-40
|
|
|
|
(c)
|
|
Regulatory Matters
|
|
|
A-40
|
|
6.4.
|
|
Frustration of Closing Conditions
|
|
|
A-40
|
|
|
|
|
|
|
ARTICLE VII TERMINATION AND
AMENDMENT
|
|
|
A-40
|
|
7.1.
|
|
Termination
|
|
|
A-40
|
|
7.2.
|
|
Effect of Termination.
|
|
|
A-41
|
|
7.3.
|
|
Expenses
|
|
|
A-42
|
|
7.4.
|
|
Amendment
|
|
|
A-42
|
|
7.5.
|
|
Extension; Waiver
|
|
|
A-42
|
|
|
|
|
|
|
ARTICLE VIII GENERAL
PROVISIONS
|
|
|
A-43
|
|
8.1.
|
|
Non-survival of Representations,
Warranties and Agreements
|
|
|
A-43
|
|
8.2.
|
|
Notices
|
|
|
A-43
|
|
8.3.
|
|
Interpretation
|
|
|
A-43
|
|
8.4.
|
|
Counterparts
|
|
|
A-44
|
|
8.5.
|
|
Entire Agreement; No Third Party
Beneficiaries
|
|
|
A-44
|
|
8.6.
|
|
Governing Law
|
|
|
A-44
|
|
8.7.
|
|
Submission to Jurisdiction; Waivers
|
|
|
A-44
|
|
8.8.
|
|
Severability
|
|
|
A-44
|
|
8.9.
|
|
Assignment
|
|
|
A-45
|
|
8.10.
|
|
Enforcement
|
|
|
A-45
|
|
8.11.
|
|
WAIVER OF JURY TRIAL
|
|
|
A-45
|
|
A-4
INDEX OF
DEFINED TERMS
|
|
|
|
|
Section
|
|
Acquisition Proposal
|
|
5.4(a)
|
Affected Employee
|
|
5.7(a)
|
Agreement
|
|
Preamble
|
AmerUs
|
|
Preamble
|
AmerUs Actuarial Analysis
|
|
3.1(x)(ii)
|
AmerUs Adviser
|
|
3.1(v)(iii)
|
AmerUs Benefit Plans
|
|
3.1(j)(i)
|
AmerUs Board Approval
|
|
3.1(n)
|
AmerUs Broker-Dealer
|
|
3.1(v)(iii)
|
AmerUs Contracts
|
|
3.1(i)
|
AmerUs Current Premium
|
|
5.6(b)
|
AmerUs Disclosure Letter
|
|
3.1
|
AmerUs Fund
|
|
3.1(v)(iii)
|
AmerUs Insurance Contracts
|
|
3.1(x)(i)
|
AmerUs Insurer
|
|
3.1(v)(iii)
|
AmerUs Intellectual Property
|
|
3.1(q)(i)
|
AmerUs Material Adverse Effect
|
|
3.1(a)(iv)
|
AmerUs Permits
|
|
3.1(e)(i)
|
AmerUs PRIDES
|
|
3.1(b)(ii)
|
AmerUs Private Fund
|
|
3.1(v)(iii)
|
AmerUs Proposal
|
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7.2(b)
|
AmerUs Reinsurance Agreements
|
|
3.1(aa)
|
AmerUs Requisite Regulatory
Approvals
|
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6.2(c)
|
AmerUs SAP Statements
|
|
3.1(w)(i)
|
AmerUs SEC Documents
|
|
3.1(d)(i)
|
AmerUs Shareholders Meeting
|
|
5.1(b)
|
AmerUs Stock Plans
|
|
3.1(b)(i)
|
Annuity Contract
|
|
3.1(h)
|
Articles of Merger
|
|
1.2
|
Aviva
|
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Preamble
|
Aviva Material Adverse Effect
|
|
3.2(a)(i)
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Aviva Requisite Regulatory
Approvals
|
|
6.3(c)
|
Award Consideration
|
|
2.3
|
Awards
|
|
2.3
|
Business Day
|
|
1.3
|
Change in AmerUs Recommendation
|
|
7.1(d)
|
Closing
|
|
1.3
|
Closing Date
|
|
1.2
|
Code
|
|
2.2(g)
|
Common Stock
|
|
2.1(a)(i)
|
Company Insiders
|
|
5.11
|
Confidentiality Agreement
|
|
5.2(b)
|
A-5
|
|
|
|
|
Section
|
|
Effective Time
|
|
1.2
|
EI Products
|
|
3.1(x)(iii)
|
ERISA
|
|
3.1(j)(i)
|
Exchange Act
|
|
3.1(c)(iii)
|
Exchange Agent
|
|
2.2(a)
|
Exchange Period
|
|
2.2(b)
|
GAAP
|
|
3.1(a)(iv)
|
Governmental Entity
|
|
3.1(c)(iii)
|
HSR Act
|
|
3.1(c)(iii)
|
IBCA
|
|
1.1
|
Indemnified Liabilities
|
|
5.6(a)
|
Indemnified Parties
|
|
5.6(a)
|
Interim AmerUs Documents
|
|
4.1(o)
|
Investment Advisers Act
|
|
3.1(v)(iii)
|
Investment Company Act
|
|
3.1(v)(ii)
|
Laws
|
|
1.3
|
Liens
|
|
3.1(p)
|
Life Insurance Contract
|
|
3.1(h)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
2.1(a)(ii)
|
Merger Sub
|
|
Preamble
|
Multiemployer Plans
|
|
3.1(j)(i)
|
NASD
|
|
3.1(c)(iii)
|
Notice of AmerUs Shareholders
Meeting
|
|
3.1(u)(i)
|
Notice of Superior Proposal
|
|
7.1(e)
|
NYSE
|
|
3.1(c)(iii)
|
Option
|
|
2.3
|
Option Consideration
|
|
2.3
|
Out-of-Pocket
Expenses
|
|
7.2(b)
|
Per Share Amount
|
|
2.1(a)(i)
|
Post Closing Plans
|
|
5.7(c)
|
Producer
|
|
3.1(z)(i)
|
Product Letter
|
|
3.1(x)(iv)
|
Proxy Statement
|
|
5.1(a)
|
Regulatory Material Adverse Effect
|
|
5.3(b)
|
Required AmerUs Vote
|
|
3.1(o)
|
SAP
|
|
3.1(a)(iv)
|
SAR
|
|
2.3
|
SAR Consideration
|
|
2.3
|
Sarbanes Oxley Act
|
|
3.1(f)(i)
|
SEC
|
|
3.1(a)(iv)
|
Securities Act
|
|
3.1(d)(i)
|
separate account shares
|
|
3.1(b)(i)
|
A-6
|
|
|
|
|
Section
|
|
Series A Preferred Stock
|
|
3.1(b)(i)
|
Subsidiary
|
|
3.1(a)(iv)
|
Superior Proposal
|
|
5.4(e)
|
Surviving Corporation
|
|
1.1
|
Tax
|
|
3.1(h)
|
Tax Asset
|
|
3.1(h)
|
Tax Return
|
|
3.1(h)
|
Tax Sharing Agreement
|
|
3.1(h)
|
Taxing Authority
|
|
3.1(h)
|
Termination Fee
|
|
7.2(b)
|
Transacted
|
|
3.1(z)(i)
|
Unit
|
|
2.3
|
Unit Consideration
|
|
2.3
|
Violation
|
|
3.1(c)(ii)
|
Voting Debt
|
|
3.1(b)(ii)
|
A-7
EXHIBITS
Exhibit A Bylaws of Merger Sub
A-8
AGREEMENT AND PLAN OF MERGER dated as of July 12, 2006
(this Agreement), by and among AVIVA PLC, a
company incorporated under the laws of England and Wales with
registration number 2468686 (Aviva), LIBRA
ACQUISITION CORPORATION, an Iowa corporation and an indirect
wholly owned subsidiary of Aviva (Merger
Sub), and AMERUS GROUP CO., an Iowa corporation
(AmerUs).
WHEREAS, the respective Boards of Directors of Aviva, AmerUs and
Merger Sub (and the Board of Directors of the appropriate Aviva
subsidiary as sole shareholder of Merger Sub) have approved and
adopted and deem it advisable and in the best interests of their
respective shareholders that the parties consummate the
transactions contemplated herein, upon the terms and subject to
the conditions set forth herein (the Merger);
WHEREAS, the Board of Directors of AmerUs has resolved to
recommend to its shareholders approval and adoption of this
Agreement and the transactions contemplated hereby (including
the Merger), upon the terms and subject to the conditions set
forth herein; and
WHEREAS, Aviva and AmerUs desire to make certain
representations, warranties and agreements in connection with
the Merger and also to prescribe various conditions to the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. At the
Effective Time and upon the terms and subject to the conditions
set forth herein and the Iowa Business Corporation Act (the
IBCA), Merger Sub shall be merged with and
into AmerUs, the separate corporate existence of Merger Sub
shall cease, and AmerUs shall continue as the surviving
corporation (sometimes hereinafter referred to as the
Surviving Corporation).
1.2. Effective Time of the
Merger. Subject to the provisions of this
Agreement and the requirements of Section 490.1106 of the
IBCA, articles of merger (the Articles of
Merger) shall be duly prepared and executed by Merger
Sub and AmerUs and thereafter delivered to the Secretary of
State of the State of Iowa as provided in the IBCA. The Merger
shall become effective upon the filing of the Articles of Merger
with the Secretary of State of the State of Iowa, or at such
time thereafter as is provided in the Articles of Merger (the
Effective Time).
1.3. Closing. The closing of
the Merger (the Closing) will take place at
Noon, New York City Time, on the date that is the second
Business Day after the satisfaction or waiver (subject to any
applicable law, statute, ordinance, code, regulation, rule,
judgment, order, decree, injunction, arbitration award, decision
or ruling of, any Governmental Entity (Laws))
of the conditions set forth in Article VI (excluding
conditions that, by their terms, are to be satisfied on the
Closing Date), unless another time or date is agreed to in
writing by the parties hereto (the actual date and time of the
Closing are herein referred to as the Closing
Date) . The Closing shall be held at the offices of
LeBoeuf, Lamb, Greene & MacRae LLP, in New York, New
York, unless another place is agreed to in writing by the
parties hereto. Business Day as used herein
shall mean any day other than a Saturday, Sunday or other day on
which banking institutions in New York or Iowa are obligated by
Law or executive order to be closed.
1.4. Effects of the
Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the
applicable provisions of the IBCA. Without limiting the
generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and
franchises of AmerUs and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of AmerUs and
Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.5. Articles of Incorporation and Bylaws of
Surviving Corporation. The Articles of
Incorporation of AmerUs as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the
Surviving Corporation. The Bylaws of Merger Sub as in effect
immediately prior to the Effective Time, as set forth in
Exhibit A hereto, shall be the Bylaws of the Surviving
Corporation.
1.6. Directors and Officers of the Surviving
Corporation. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors
of the Surviving Corporation; provided that the President and
Chief
A-9
Executive Officer of AmerUs shall be a director of the Surviving
Corporation, with each director holding office until the next
annual meeting (or the earlier of their resignation or removal)
and until their respective successors are duly elected and
qualified, as the case may be. The officers of AmerUs
immediately prior to the Effective Time 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.
1.7. Subsequent Actions. If,
at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets
of either of AmerUs or Merger Sub acquired or to be acquired by
the Surviving Corporation as result of, or in connection with,
the Merger or otherwise to carry out the terms of this
Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the
name and on behalf of either AmerUs or Merger Sub, all such
deeds, bills of sale, assignments and assurances and to take and
do, in the name and on behalf of each of such corporation, all
such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out the terms of
this Agreement, in accordance with the requirements of the IBCA.
ARTICLE II
TREATMENT OF
SHARES
2.1. Conversion of
Securities. As of the Effective Time, by
virtue of the Merger and without any action on the part of
Merger Sub, AmerUs or the holder of any of the following
securities:
(a) Conversion of AmerUs Capital
Stock. Each share of AmerUs Common Stock, no
par value (the Common Stock), issued and
outstanding immediately prior to the Effective Time (other than
any shares of Common Stock to be canceled pursuant to
Section 2.1(b)) shall be cancelled and extinguished and be
converted into the right to receive $69.00 (the Per
Share Amount) in cash payable to the holder thereof,
without interest, upon surrender of the certificate or
certificates representing such Common Stock. The cash into which
the shares of Common Stock and outstanding Awards, as set forth
in Section 2.3, are to be exchanged is referred to herein
as the Merger Consideration.
(b) Cancellation of Treasury
Stock. Each share of Common Stock held in the
treasury of AmerUs and each share of Common Stock owned by any
direct or indirect Subsidiary of AmerUs (other than, for the
avoidance of doubt, separate account shares, as such term is
defined in Section 3.1(b)) immediately prior to the
Effective Time shall be canceled and extinguished, and no
payment or other consideration shall be made with respect
thereto.
(c) Conversion of Merger Sub Capital
Stock. Each share of common stock, no par
value, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall thereafter represent one validly
issued, fully paid and nonassessable share of common stock, no
par value, of the Surviving Corporation with the same rights,
powers and privileges as the share so converted, and the shares
so converted shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
2.2. Surrender of Capital Stock; Stock Transfer
Books.
(a) Exchange Agent. Prior to the
Effective Time, Aviva shall designate at its own cost and
expense a bank or trust company (reasonably acceptable to
AmerUs) to act as agent for the holders of Common Stock (the
Exchange Agent) to receive the funds
necessary to make the payments contemplated by Sections 2.1
and 2.3. At or prior to the Effective Time, Aviva shall deposit,
or cause to be deposited, in trust with the Exchange Agent for
the benefit of holders of Common Stock, the aggregate
consideration to which such holders shall be entitled to at the
Effective Time pursuant to Sections 2.1 and 2.3.
(b) Exchange Period. Each holder
of a certificate or certificates representing any shares of
Common Stock canceled upon the Merger pursuant to
Section 2.1(a) may thereafter surrender such certificates
or certificates to the Exchange Agent as agent for such holder,
to effect the surrender of such certificate or certificates on
such holders
A-10
behalf for a period ending one year after the Effective Time
(the Exchange Period). Aviva agrees that
promptly after the Effective Time it shall cause the
distribution to holders of record of shares of Common Stock as
of the Effective Time of appropriate materials, including a
letter of transmittal, to facilitate such surrender, which
materials shall be reasonably acceptable to AmerUs. Upon the
surrender of certificates representing the Common Stock, Aviva
shall cause the Exchange Agent to pay the holder of such
certificates in exchange therefor cash in an amount equal to the
Per Share Amount multiplied by the number of shares of Common
Stock, plus the amount of dividends or other distributions with
a record date prior to the Effective Time, if any, remaining
unpaid with respect to the Common Stock, represented by such
certificate immediately prior to the Effective Time. Until so
surrendered, each such certificate (other than certificates
representing Common Stock canceled pursuant to
Section 2.1(b)) shall represent solely the right to receive
the aggregate Per Share Amount, relating thereto, subject
however to Avivas obligation (if any) to pay any dividends
or make any other distributions with a record date prior to the
Effective Time which may have been declared by AmerUs on the
shares of Common Stock, in accordance with the terms of this
Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time.
(c) Payment to Other Persons. If
payment of cash in respect of canceled shares of Common Stock is
to be made to a person other than the person in whose name a
surrendered certificate or instrument is registered, it shall be
a condition to such payment that the certificate or instrument
so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by
reason of such payment in a name other than that of the
registered holder of the certificate or instrument surrendered
or shall have established to the satisfaction of Aviva or the
Exchange Agent that such tax is not payable.
(d) Transfer Books. At the
Effective Time, the stock transfer books of AmerUs shall be
closed and there shall not be any further registration or
transfer of any shares of Common Stock thereafter on the records
of AmerUs. If, after the Effective Time, certificates for shares
of Common Stock are presented to the Surviving Corporation they
shall be cancelled and exchanged for cash as provided in
Section 2.1(a). No interest shall accrue or be paid on any
cash payable upon the surrender of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of Common Stock.
(e) Lost, Stolen or Destroyed
Certificates. In the event any certificates
representing Common Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed certificates, upon the making of an
affidavit of that fact by the holder thereof, the Per Share
Amount and any dividends or other distributions as may be
required pursuant to this Article II in respect of the
shares of Common Stock represented by such lost, stolen or
destroyed certificates; provided, however, that
Aviva may, in its reasonable discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to enter into an
indemnity agreement with respect to any claim that may be made
against Aviva or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
(f) Conclusion of Exchange
Period. Promptly following the expiration of
the Exchange Period, subject to applicable Law, the Exchange
Agent shall deliver to Aviva all cash (including any interest
received with respect thereto), certificates and other documents
in its possession relating to the transactions contemplated
hereby, and the Exchange Agents duties shall terminate.
Thereafter, each holder of (i) a certificate representing
Common Stock (other than certificates representing Common Stock
canceled pursuant to Section 2.1(b)), or (ii) an Award
shall be entitled to look to the Surviving Corporation with
respect to the aggregate Per Share Amount or the aggregate Award
Consideration, as applicable, payable upon due surrender of
their certificates by holders of certificates, and payable as
soon as practicable to holders of Awards, without any interest
thereon. Notwithstanding the foregoing, subject to applicable
Law, neither Aviva, the Surviving Corporation nor the Exchange
Agent shall be liable to any holder of a certificate
representing Common Stock or any holder of an Award for any
amount delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. Any portion of the
Merger Consideration remaining unclaimed by holders of Common
Stock or Award as of a date that is immediately prior to such
time as such amounts would otherwise escheat to or become
property of any Governmental Entity shall, to the extent
permitted by applicable Law, become the property of the
Surviving Corporation free and clear of any claims or interest
of any person previously entitled thereto.
A-11
(g) Withholdings. Notwithstanding
any provision in this Agreement to the contrary, AmerUs, its
Subsidiaries and Aviva shall cooperate with each other and take
all reasonably necessary steps between the date hereof and the
Effective Time to determine if any amounts should be withheld or
deducted from any payments made under this Agreement pursuant to
the Internal Revenue Code of 1986, as amended (including all
rules and regulations promulgated thereunder, the
Code), or under any provision of any state,
county, local or foreign tax Law, including Section 1445 of
the Code. The Per Share Amount and the Award Consideration paid
in the Merger shall be subject to reduction for any applicable
withholding Taxes or, as set forth in Section 2.2(c), stock
transfer taxes payable by such holder. To the extent that
amounts are so withheld by Aviva, AmerUs or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the relevant
shares.
(h) Certain Adjustments. If,
between the date of this Agreement and the Effective Time, the
outstanding Common Stock shall have been changed into a
different number of shares or different class by reason of any
reclassification, recapitalization, stock split, split-up,
combination or exchange of shares or a stock dividend or
dividend payable in any other securities shall be declared with
a record date within such period, or any similar event shall
have occurred, the Merger Consideration shall be equitably
adjusted to eliminate the effects of such event.
2.3. AmerUs Stock
Awards. The right to receive shares of Common
Stock pursuant to the exercise of each vested and unvested
option for Common Stock (each, an Option)
that is outstanding immediately prior to the Effective Time
shall be converted into the right to receive an amount of cash
per share subject to the Option equal to the product obtained by
multiplying (x) the total number of shares of Common Stock
issuable upon the exercise in full of such Options by
(y) the excess, if any, of the amount of the Per Share
Amount over the exercise price per share of Common Stock under
such Option (with the aggregate amount of such payment rounded
up to the nearest cent), less any required withholding taxes
(the Option Consideration). The right to
receive a share of Common Stock or cash value equal to the value
thereof pursuant to each vested and unvested stock unit,
performance unit or similar award (each, a
Unit) that is outstanding immediately prior
to the Effective Time (excluding any stock unit to which a stock
appreciation right relates and provided that any unvested
performance unit or similar award that vests shall do so at its
target level) shall be converted into the right to
receive an amount of cash per Unit equal to the amount of the
Per Share Amount (with the aggregate amount of the payment for
all Units rounded up to the nearest cent), less any required
withholding taxes (such aggregate amount, the Unit
Consideration). The right to receive shares of Common
Stock or cash pursuant to the exercise of each vested and
unvested stock appreciation right (each, a
SAR) that is outstanding immediately prior to
the Effective Time shall be converted into the right to receive
an amount of cash per stock unit to which the SAR relates equal
to the product obtained by multiplying (x) the total number
of unexercised stock units to which the SAR relates by
(y) the excess, if any, of the amount of the Per Share
Amount over the fair market value of a share of Common Stock on
the SARs date of grant (with the aggregate amount of the
payment for all such SAR stock units rounded up to the nearest
cent), less any required withholding taxes (such aggregate
amount, the SAR Consideration, and together
with the Option Consideration and Unit Consideration, the
Award Consideration). As of the Effective
Time, all such Options, Units and SARs (together,
Awards) shall no longer be outstanding and
shall automatically be canceled and retired and shall expire and
cease to exist and each holder of such Awards shall cease to
have any rights with respect thereto, except the right to
receive the Award Consideration without interest. Aviva agrees
that AmerUs may amend the AmerUs Stock Plans as necessary for
the sole purpose of implementing the foregoing provisions of
this Section 2.3; provided, however, prior to
any amendment AmerUs consults with Aviva as to, and provides
Aviva with a copy of, the terms of any such proposed amendment.
The cash amounts resulting from the conversions pursuant to this
Section 2.3 shall be paid as soon as practicable after the
Effective Time, but no later than five Business Days thereafter.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES
3.1. Representations and Warranties of
AmerUs. Except as set forth in (x) the
written disclosure letter delivered by AmerUs to Aviva in
connection with the execution and delivery of this Agreement
(the AmerUs Disclosure Letter), it being
acknowledged and agreed by Aviva that any matter set forth in
any section or subsection of the AmerUs Disclosure Letter shall
be deemed to be a disclosure for all purposes of this Agreement
A-12
and all other sections or subsections of the AmerUs Disclosure
Letter to where it is readily apparent that the matters so
disclosed are applicable, but shall expressly not be deemed to
constitute an admission by AmerUs or any of its Subsidiaries, or
otherwise imply, that any such matter rises to the level of an
AmerUs Material Adverse Effect or is otherwise material for
purposes of this Agreement or the AmerUs Disclosure Letter or
(y) any AmerUs SEC Documents filed or furnished and made
publicly available prior to the date of this Agreement
(excluding any disclosures set forth in any such SEC Documents
under the headings Safe Harbor Statement,Risk
Factors or any similar sections and any disclosures of
risks included therein that are predictive or forward looking in
nature), AmerUs represents and warrants to Aviva and Merger Sub
as follows:
(a) Organization, Standing and Power.
(i) Each of AmerUs and its Subsidiaries is a corporation
duly organized and validly existing and in good standing (except
in the case of AmerUs and each Subsidiary incorporated under the
laws of the State of Iowa, in which case each shall be
considered to be in good standing if they are validly existing)
under the Laws of its jurisdiction of incorporation, has all
requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted,
and is duly qualified to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in
such jurisdictions where the failure to so qualify would not,
either individually or in the aggregate, reasonably be expected
to have an AmerUs Material Adverse Effect.
(ii) The copies of the Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws of AmerUs
incorporated by reference in the
Form 10-K
of AmerUs for the fiscal year ended December 31, 2005 are
true, complete and correct copies of such documents, are in full
force and effect and have not been amended or otherwise
modified. AmerUs is not in material violation of any provision
of its Amended and Restated Articles of Incorporation or its
Amended and Restated Bylaws, and no Subsidiary of AmerUs is in
material violation of any provision of its articles of
incorporation, bylaws or equivalent organizational documents.
(iii) AmerUs has made available to Aviva complete and
correct copies (except as redacted to protect confidential
information related to the transactions contemplated by this
Agreement or other alternative strategic transactions considered
since July 1, 2004) of the minutes (or, in the case of
minutes that have not yet been finalized, drafts thereof) of all
meetings of the shareholders of AmerUs and the Board of
Directors of AmerUs, in each case held since January 1,
2003 and prior to the date hereof.
(iv) As used in this Agreement: (x) the word
Subsidiary when used with respect to any
party means any entity of which 50% or more of the effective
voting power or equity or other ownership interest of such
entity is directly or indirectly owned by such party;
provided that the term Subsidiary shall not
include any corporation, general or limited partnership, limited
liability company, joint venture, trust or other entity created
or organized and currently existing for the sole purpose of
acquiring, constructing, developing, improving, owning,
maintaining, operating, managing or otherwise dealing with real
estate assets included in AmerUs investment portfolio; and
(y) the term AmerUs Material Adverse
Effect means, with respect to AmerUs or any of its
Subsidiaries, an event, change, circumstance, state of facts or
effect, alone or in combination, that has had or is reasonably
likely to have a material adverse effect on (A) the
financial condition, properties, assets, liabilities, businesses
or results of operations (excluding the impact of non-recurring
events on results of operations in the period in which such
events occur) of AmerUs and its Subsidiaries, taken as a whole,
except to the extent that any such material adverse effect
results, alone or in combination, from (1) changes in the
economy in general in the United States; (2) changes in
United States or global financial or securities markets or
conditions, including those caused by natural catastrophes, acts
of war, hostility or terrorism; (3) changes in the life
insurance and annuity industries generally (excluding changes in
applicable Laws), to the extent such changes do not have a
materially disproportionate effect on AmerUs or any of its
Subsidiaries; (4) changes in applicable Law or releases, or
the adoption, modification or interpretation by the SEC of any
Laws or releases, in each case relating to annuities and life
insurance contracts offering equity index strategies or total
return accounts, including EI Products; (5) changes in
United States generally accepted accounting principles or in
A-13
statutory accounting practices after the date of this Agreement
prescribed or permitted by the applicable domiciliary state
regulation, in each case applied on a consistent basis during
the periods involved (except as may be disclosed therein)
(GAAP or SAP,
respectively), including accounting pronouncements by the
Securities and Exchange Commission (the SEC),
the National Association of Insurance Commissioners and the
Financial Accounting Standards Board; (6) any adverse
development after the date hereof in the pending litigations,
mediations, arbitrations and regulatory investigations,
inquiries and proceedings set forth on Section 3.1(g) of
the AmerUs Disclosure Letter, other than any such development
that, considered in the aggregate with all other adverse or
positive developments relating to such litigations, mediations,
arbitrations and regulatory investigations, inquiries and
proceedings, would materially increase the reasonably
anticipated economic impact to AmerUs and its Subsidiaries,
taken as a whole, of the disposition of such litigations,
mediations, arbitrations and regulatory investigations,
inquiries and proceedings compared to the reasonable
expectations of the parties of such economic impact as of the
date hereof; or (7) the execution, delivery and performance
of this Agreement or the announcement of the transactions
contemplated hereby, including the identity of Aviva, or
(B) the ability of AmerUs to perform its obligations
hereunder on a timely basis.
(b) Capital Structure.
(i) The authorized capital stock of AmerUs consists of two
hundred and thirty million (230,000,000) shares of Common Stock
and twenty million (20,000,000) shares of preferred stock, no
par value. The only authorized series of AmerUs preferred stock
is the Series A Non-Cumulative Perpetual Preferred Stock
(the Series A Preferred Stock).
(ii) As of the close of business on July 7, 2006,
(A) 38,140,526 shares of Common Stock were issued and
outstanding, (B) 3,223,441 shares of Common Stock were
reserved for issuance upon the exercise or payment of
outstanding stock options, stock units or other awards (such
stock options, units and other awards and plans and programs,
collectively, the AmerUs Stock Plans), and
(C) 8,806,966 shares of Common Stock were held in the
treasury of AmerUs or by its Subsidiaries (exclusive of shares
held in insurance company separate accounts (any such shares,
separate account shares). From July 7,
2006 to the date hereof, AmerUs has not issued or permitted to
be issued any shares of capital stock, SARs or securities
exercisable or exchangeable for or convertible into shares of
capital stock of AmerUs or any of its Subsidiaries, other than
pursuant to and as required by the terms of the AmerUs Stock
Plans and, from July 7, 2006 to the date hereof, AmerUs has
not issued any stock options or other awards under the AmerUs
Stock Plans. As of the close of business on July 7, 2006,
six million (6,000,000) shares of Series A Preferred Stock
were issued and outstanding. No shares of Series A
Preferred Stock are reserved for issuance. All outstanding
shares of Common Stock and Series A Preferred Stock have
been duly authorized and validly issued and are fully paid and
non-assessable and not subject to preemptive rights. As of the
close of business on July 7, 2006, 5,750,000 PRIDES
Securities offered by AmerUs pursuant to the prospectus
supplement dated May 21, 2003 (the AmerUs
PRIDES) were issued and outstanding.
(iii) No bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which shareholders
may vote (Voting Debt) of AmerUs or any
Subsidiary of AmerUs are issued or outstanding.
(iv) Except for (A) Awards issued or to be issued
under the AmerUs Stock Plans and (B) Common Stock purchase
rights issued in connection with the AmerUs PRIDES, there are no
options, warrants, calls, convertible or exchangeable
securities, rights, commitments or agreements of any character
to which AmerUs or any Subsidiary of AmerUs is a party or by
which it or any such Subsidiary is bound (x) obligating
AmerUs or any Subsidiary of AmerUs to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of
capital stock or any Voting Debt or stock appreciation rights of
AmerUs or of any Subsidiary of AmerUs, (y) obligating
AmerUs or any Subsidiary of AmerUs to grant, extend or enter
into any such option, warrant, call, convertible or exchangeable
security, right, commitment or agreement or (z) which
provide the economic equivalent of an equity ownership interest
in AmerUs or any Subsidiary of AmerUs. There are no outstanding
contractual obligations of AmerUs or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital
stock of AmerUs
A-14
or any of its Subsidiaries. None of AmerUs or any Subsidiary of
AmerUs is a party to any shareholders agreement, voting trust
agreement or registration rights agreement relating to any
equity securities of AmerUs or any Subsidiary of AmerUs or any
other agreement relating to disposition, voting or dividends
with respect to any equity securities of AmerUs or any
Subsidiary of AmerUs.
(v) Since June 30, 2006, AmerUs has not declared, set
aside, made or paid to the shareholders of AmerUs dividends or
other distributions on the outstanding shares of Common Stock or
Series A Preferred Stock, other than regular quarterly cash
dividends on the Series A Preferred Stock.
(c) Authority.
(i) AmerUs has all requisite corporate power and authority
to enter into this Agreement and, subject in the case of the
consummation of the Merger to the approval of this Agreement by
the requisite vote of the holders of Common Stock, to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of AmerUs and no other corporate
proceedings on the part of AmerUs are necessary to authorize
this Agreement and consummate the transactions contemplated
hereby, subject in the case of the consummation of the Merger to
the approval of this Agreement by the shareholders of AmerUs.
This Agreement has been duly executed and delivered by AmerUs
and (assuming the due authorization, execution and delivery by
Aviva and Merger Sub) constitutes a valid and binding obligation
of AmerUs, enforceable against AmerUs in accordance with its
terms, except to the extent enforcement is limited by
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to
or affecting creditors rights and to general equitable
principles.
(ii) The execution and delivery of this Agreement do not,
and the performance of its obligations and consummation of the
transactions contemplated hereby will not, (A) conflict
with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest,
charge or other encumbrance on any assets (any such conflict,
violation, default, right of termination, cancellation or
acceleration, loss or creation, a Violation)
pursuant to any provision of the Amended and Restated Articles
of Incorporation or Amended and Restated Bylaws of AmerUs or the
Articles of Incorporation or Bylaws of any Subsidiary of AmerUs,
or (B) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations
and filings referred to in subsection (iii) below,
result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, treaty, AmerUs Benefit Plan or other
agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, Law,
ordinance, rule or regulation applicable to AmerUs or any
Subsidiary of AmerUs or their respective properties or assets,
which Violation, in the case of clause (B), either
individually or in the aggregate, would reasonably be expected
to have an AmerUs Material Adverse Effect.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court,
administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, arbitral
tribunal, or industry self-regulatory organization (each, a
Governmental Entity), is required to be filed
or obtained by AmerUs or any of its Subsidiaries (as opposed to
Aviva or Merger Sub or any of their respective affiliates) in
order for AmerUs to (x) execute and deliver this Agreement
or (y) consummate the Merger, which the failure to make or
obtain, individually or in the aggregate, would reasonably be
expected to have an AmerUs Material Adverse Effect, except for
(A) the filing with the SEC of such statements,
prospectuses, reports and other materials, including,
(1) the Proxy Statement, and (2) such reports, filings
and statements under the Securities Exchange Act of 1934, as
amended (the Exchange Act) as may be required
in connection with this Agreement and the Merger, (B) the
filing of the Articles of Merger with the Secretary of State of
the State of Iowa, (C) consents, authorizations, approvals,
filings or exemptions as set forth in Section 3.1(c)(iii)
of the AmerUs Disclosure Letter, (D) notices or filings
under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act), (E) compliance with any
applicable requirements of the New York Stock Exchange (the
A-15
NYSE) and (F) consents, authorizations,
approvals, filings or exemptions in connection with compliance
with the applicable provisions of state and federal securities
laws relating to the regulation of broker-dealers, investment
companies and investment advisers and the rules and regulations
of the National Association of Securities Dealers, Inc. (the
NASD). Section 3.1(c)(iii) of the AmerUs
Disclosure Letter sets forth a complete list of the
jurisdictions in which each of the AmerUs Insurers are domiciled
or commercially domiciled.
(d) SEC Documents; Regulatory Reports; Undisclosed
Liabilities.
(i) AmerUs and its Subsidiaries, including the AmerUs
Insurers and their respective separate accounts, have filed or
furnished all required reports, schedules, registration
statements and other documents and exhibits thereto with or to
the SEC since December 31, 2003 and through the Business
Day prior to the date of this Agreement (the AmerUs SEC
Documents). As of their respective dates of filing
with or publicly furnishing to the SEC (or, if amended or
supplemented by a filing prior to the date hereof, as of the
date of such latest filing), the AmerUs SEC Documents complied
in all material respects with the requirements of the Securities
Act of 1933, as amended (the Securities Act),
or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such AmerUs SEC
Documents, and none of the AmerUs SEC Documents when filed with
or publicly furnished to the SEC (or, if amended or supplemented
by a filing prior to the date hereof, as of the date of such
latest filing) contained any untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The financial statements of AmerUs and its Subsidiaries,
including the AmerUs Insurers and their respective registered
separate accounts, included in the AmerUs SEC Documents
complied, as of their respective dates of filing with the SEC
(or, if amended or supplemented by a filing prior to the date
hereof, as of the date of such latest filing), in all material
respects with all applicable accounting requirements and with
the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP and fairly
present in all material respects the consolidated financial
position of AmerUs and its consolidated Subsidiaries (in the
case of AmerUs SEC Documents filed by AmerUs) or the entities
purported to be presented therein (in the case of AmerUs SEC
Documents filed by Subsidiaries or separate accounts) and the
consolidated results of operations, changes in
shareholders equity and cash flows of such companies or
entities as of the dates and for the periods shown (subject, in
the case of any unaudited interim financial statements, to
normal and recurring year-end adjustments that, individually or
in the aggregate, would not reasonably be expected to have an
AmerUs Material Adverse Effect).
(ii) Other than the AmerUs SEC Documents, which are
addressed in clause (i) above, AmerUs and each of its
Subsidiaries, including the AmerUs Insurers and their separate
accounts, have timely filed (after taking into account all grace
periods or extensions) all reports, registrations and
statements, together with any amendments required to be made
with respect thereto, that they were required to file since
December 31, 2003 with any Governmental Entity, and have
paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessments
would not reasonably be expected to have, either individually or
in the aggregate, an AmerUs Material Adverse Effect.
(iii) Except for (A) those liabilities that are fully
reflected or reserved for in the consolidated financial
statements of AmerUs included in its Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2006, as filed with the SEC
prior to the date of this Agreement, (B) liabilities
incurred since March 31, 2006 in the ordinary course of
business consistent with past practice, (C) liabilities
incurred pursuant to this Agreement and the transactions
contemplated hereby and (D) liabilities which would not,
individually or in the aggregate, reasonably be expected to have
an AmerUs Material Adverse Effect, AmerUs and its Subsidiaries
do not have, and since March 31, 2006, AmerUs and its
Subsidiaries have not incurred, any liabilities or obligations
of any nature whatsoever (whether accrued, absolute, contingent
or otherwise and whether or not required to be reflected in
AmerUs financial statements in accordance with generally
accepted accounting principles).
A-16
(e) Compliance with Applicable Laws and Reporting
Requirements. AmerUs and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are required for
the operation of the businesses of AmerUs and its Subsidiaries
(the AmerUs Permits), and AmerUs and its
Subsidiaries are in compliance with the terms of the AmerUs
Permits and all applicable Laws, except where the failure to so
hold or comply, individually or in the aggregate, would not
reasonably be expected to have an AmerUs Material Adverse
Effect. The businesses of AmerUs and its Subsidiaries are not
being conducted in violation of any Law, except for possible
violations which, individually or in the aggregate, do not have,
and would not reasonably be expected to have, an AmerUs Material
Adverse Effect. AmerUs has not received any written notice of a
pending investigation by any Governmental Entity with respect to
AmerUs or any of its Subsidiaries nor, to the knowledge of
AmerUs, is any such investigation threatened, other than, in
each case, those the outcome of which, individually or in the
aggregate, would not reasonably be expected to have an AmerUs
Material Adverse Effect.
(f) Sarbanes Oxley Act.
(i) AmerUs and its Subsidiaries are in compliance with
(A) the applicable provisions of the Sarbanes-Oxley Act of
2002 and the related rules and regulations promulgated
thereunder or under the Exchange Act (the Sarbanes
Oxley Act) and (B) the applicable listing and
corporate governance rules and regulations of the NYSE, except
where the failure to so comply, individually or in the
aggregate, would not reasonably be expected to have an AmerUs
Material Adverse Effect. Except as permitted by the Exchange
Act, including Section 13(k)(2) and (3), since the
enactment of the Sarbanes-Oxley Act, neither AmerUs, its
Subsidiaries nor any of its affiliates has made, arranged or
modified (in any material way) personal loans to any executive
officer or director of AmerUs or any of its Subsidiaries.
(ii) The Chief Executive Officer and Chief Financial
Officer of AmerUs (or each former Chief Executive Officer and
Chief Financial Officer of AmerUs, as applicable) have made all
certifications required by
Rule 13a-14
or 15(d) under the Exchange Act or Sections 302 and 906 of
the Sarbanes-Oxley Act and the rules and regulations of the SEC
promulgated thereunder with respect to AmerUs SEC Documents.
AmerUs has made available to Aviva a summary of any disclosure
made by the management of AmerUs to AmerUs independent
auditors and the audit committee of the Board of Directors of
AmerUs since December 31, 2003 referred to in such
certificates.
(iii) The management of AmerUs has (A) designed and
implemented disclosure controls and procedures (as defined in
Rule 13a-15(e)
of the Exchange Act), or caused such disclosure controls and
procedures to be designed and implemented under their
supervision, to ensure that material information relating to
AmerUs, including its Subsidiaries, is made known to management
of AmerUs by others within those entities and (B) has
disclosed, based on its most recent evaluation of internal
control over financial reporting (as defined in
Rule 13a-15(f)
of the Exchange Act), to AmerUs outside auditors and the
audit committee of the Board of Directors of AmerUs (1) any
significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
could reasonably be expected to adversely affect AmerUs
ability to record, process, summarize and report financial
information and (2) any fraud, whether or not material,
that involves management or other employees who have a
significant role in AmerUs internal control over financial
reporting. Since December 31, 2005, any material change in
internal control over financial report required to be disclosed
in any AmerUs SEC Document has been so disclosed.
(iv) Since December 31, 2005 (i) neither AmerUs
nor any of its Subsidiaries nor, to the knowledge of AmerUs, any
representative of AmerUs or any of its Subsidiaries has received
or otherwise obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures,
methodologies or methods of AmerUs or any of its Subsidiaries or
their respective internal accounting controls relating to
periods after December 31, 2005, including any material
complaint, allegation, assertion or claim that AmerUs or any of
its Subsidiaries has engaged in questionable accounting or
auditing practices (except for any of the foregoing received
after the date of this Agreement which have no reasonable
basis), and (ii) to the knowledge of AmerUs, no attorney
representing AmerUs or any of its Subsidiaries, whether or not
employed by AmerUs or its
A-17
Subsidiaries, has reported evidence of a material violation of
securities law, breach of fiduciary duty or similar violation,
relating to periods after December 31, 2005, by AmerUs or
any of its officers, directors, employees or agents of AmerUs to
the Board of Directors of AmerUs or any committee thereof or to
any director or executive officer of AmerUs.
(g) Legal Proceedings. There are
no suits, actions, investigations or proceedings (whether
judicial, arbitral, administrative or other) pending or, to the
knowledge of AmerUs, threatened, against or affecting AmerUs or
any Subsidiary of AmerUs, that, individually or in the
aggregate, would reasonably be expected to have an AmerUs
Material Adverse Effect, nor are there any judgments, decrees,
injunctions, rules or orders of any Governmental Entity
outstanding against AmerUs or any Subsidiary of AmerUs having or
which would reasonably be expected to have, individually or in
the aggregate, an AmerUs Material Adverse Effect.
(h) Taxes.
(i) All material Tax Returns required by applicable Law to
be filed with any Taxing Authority by, or on behalf of, AmerUs
or any of its Subsidiaries have been filed in the manner and
within the time prescribed by applicable Law, and all such Tax
Returns were, or shall be at the time of filing, true and
complete in all material respects.
(ii) There are no material liens for any Taxes upon the
assets of AmerUs or any of its Subsidiaries, other than
(A) statutory liens for Taxes not yet due and payable or
(B) liens which are being contested in good faith by
appropriate proceedings and have been disclosed in writing to
Aviva as of the date hereof.
(iii) AmerUs and each of its Subsidiaries has paid (or has
had paid on its behalf) or has withheld and remitted to the
appropriate Taxing Authority all material Taxes due and payable,
or has established (or has had established on its behalf and for
its sole benefit and recourse), in accordance with GAAP, an
accurate and sufficient accrual for all such Taxes on the
consolidated financial statements of AmerUs included in its
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2006, as filed with the SEC
prior to the date of this Agreement.
(iv) The federal income Tax Returns of AmerUs and its
Subsidiaries through the tax year ended December 31, 2003,
have been examined and closed or are Tax Returns with respect to
which the applicable period for assessment under applicable Law,
after giving effect to granted extensions or waivers, has
expired.
(v) There is no claim, audit, action, suit, proceeding or
investigation now in process, pending or, to AmerUs
knowledge, threatened against or with respect to AmerUs or its
Subsidiaries in respect of any material Tax or Tax Asset.
(vi) Neither AmerUs nor any of its Subsidiaries has
received written notice of any proposed or determined Tax
deficiency, proposed reassessment of any property or assessment
from any Taxing Authority.
(vii) To the extent that the following action relates to a
material amount of Taxes, neither AmerUs nor any of its
Subsidiaries has since December 31, 2005 (A) made or
changed any election concerning any Taxes, (B) changed an
annual accounting period or adopted or changed any accounting
method, (C) settled any Tax claim or assessment,
(D) received a Tax Ruling or entered into an agreement with
any Taxing Authority, (E) filed any amended Tax Returns or
(F) surrendered any right to claim a refund of any Taxes.
(viii) Neither AmerUs nor any of its Subsidiaries has
(A) entered into any transaction that resulted in a
material deferred intercompany gain (within the
meaning of Treasury
Regulation Section 1.1502-13)
for which such gain, in whole or in part, continues to be
deferred pursuant to the provisions of Treasury
Regulation Section 1.1502-13
as of the date hereof or (B) a material excess loss
account, as defined in Treasury
Regulation Section 1.1502-19,
in respect of the stock of any Subsidiary of AmerUs that is a
member of the United States affiliated group (as that term is
defined under Code Section 1504(a) and other similar
provisions of state or local Law) that includes AmerUs as a
common parent (AmerUs Common Group).
A-18
(ix) Neither AmerUs nor any of its Subsidiaries has been a
member of any affiliated group other than the AmerUs Common
Group.
(x) Neither AmerUs nor any of its Subsidiaries has engaged
in a trade or business, had a permanent establishment (within
the meaning of an applicable tax treaty or local Law) or has
received written notice of any claim made by a Taxing Authority
where AmerUs and its Subsidiaries, as applicable, do not file a
Tax Return that AmerUs or such Subsidiary is or may be subject
to income taxation by that jurisdiction, and neither AmerUs nor
any of its Subsidiaries that are U.S. persons,
as that term is defined in Section 7701 of the Code, has
branches in any jurisdiction outside of the United States.
(xi) Within the meaning of Section 355 of the Code,
none of AmerUs or any of its Subsidiaries was a
distributing corporation or a controlled
corporation in a transaction intended to be governed by
Section 355 of the Code (A) in the two years prior to
the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a plan or
series of related transactions in conjunction with
the Merger.
(xii) AmerUs and each of its Subsidiaries has withheld all
material amounts required to have been withheld in connection
with amounts paid or owed to any employee, independent
contractor, creditor, shareholder, policyholder, holder of an
Annuity Contract, insured or any other third party, and such
withheld amounts were either duly paid to the appropriate Taxing
Authority or set aside in accounts for such purpose. AmerUs and
each of its Subsidiaries has reported such withheld amounts to
the appropriate Taxing Authority and to each such employee,
independent contractor, creditor, shareholder, policyholder,
holder of an Annuity Contract, insured or any other third party,
as required under Law.
(xiii) AmerUs and its Subsidiaries have prior to the date
hereof, provided to Aviva true and complete copies of all
material Tax Sharing Agreements entered into by AmerUs or any of
its Subsidiaries.
(xiv) No asset or liability of AmerUs or of any of its
Subsidiaries is a debt obligation that (A) is a
registration-required obligation, as defined in
Section 163(f)(2) of the Code; (B) constitutes
corporate acquisition indebtedness within the
meaning of Section 279(b) of the Code; or (C) is a
disqualified debt instrument, as defined in
Section 163(l)(2) 163(b)(2) of the Code.
(xv) Neither AmerUs nor any of its Subsidiaries has
participated, within the meaning of Treasury
Regulation Section 1.6011-4(c),
or has been a material advisor or
promoter (as those terms are defined in
Section 6111 and 6112 of the Code) in (A) any
reportable transaction within the meaning of
Sections 6011, 6662A and 6707A of the Code, (B) any
confidential corporate tax shelter within the
meaning of Section 6111 of the Code or (C) any
potentially abusive tax shelter within the meaning
of Section 6112 of the Code.
(xvi) With respect to any reinsurance contracts to which
AmerUs or any of its Subsidiaries is a party, to the knowledge
of AmerUs or any of its Subsidiaries no facts, circumstances or
basis exists under which the IRS could make any reallocation,
recharacterization or other adjustment under Section 845(a)
of the Code, or make any adjustment arising from a determination
that any reinsurance contract had or has a significant tax
avoidance effect under Section 845(b) of the Code.
(xvii) To the extent within the control of AmerUs
and/or its
Subsidiaries (and to the extent not within the control of AmerUs
and/or its
Subsidiaries, to their knowledge), any Life Insurance Contract
or Annuity Contract issued, assumed, modified, exchanged,
marketed, sold or administered by an AmerUs Insurer qualifies in
all material respects for the tax treatment described in the
associated marketing materials designed by AmerUs or any of its
Subsidiaries, is in compliance in all material respects with the
requirements applicable to AmerUs and its Subsidiaries, under,
as relevant, Code Sections 72, 101, 130, 401, 403, 408,
457, 6047, 7702, 7702A and all other applicable Tax provisions,
including, to the extent applicable, the diversification rules
under Section 817(h), and satisfies all of the investor
controls and insurable interest rules.
Annuity Contract means any annuity
contract, funding agreement, guaranteed investment contract or
similar contract, including endorsements, riders and amendments
thereto, and forms with respect thereto.
A-19
Life Insurance Contract means any life
insurance contract, and any endorsements, riders, amendments and
forms with respect thereto.
Tax means (i) all federal, state,
local or foreign taxes, charges, fees, imposts, levies or other
assessments, including all income, gross receipts, capital,
sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, premium, property or estimated
taxes, customs duties, fees, assessments or charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any Taxing Authority in
connection with any item described in clause (i), or
(iii) any transferee liability in respect of any items
described in clause (i) or (ii) payable by reason of
contract, assumption, transferee liability, operation of law,
Treasury
Regulation Section 1.1502-6(a)
(or any predecessor or successor thereof or any analogous or
similar provision under Law) or otherwise.
Tax Asset means any net operating
loss, net capital loss, investment tax credit, foreign tax
credit, charitable deduction, or any other credit or tax asset
that could be carried forward or carried back to reduce Taxes
(including deductions and credits relating to guaranty fund
assessments and the alternative minimum tax).
Taxing Authority means the Internal
Revenue Service or any other Governmental Entity responsible for
the administration of any Tax.
Tax Return means any return, report or
statement required to be filed with respect to any Tax
(including any elections, declarations, schedules or attachments
thereto, and any amendment thereof) including any information
return, claim for refund, amended return or declaration of
estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of
entities.
Tax Sharing Agreement means any
written or unwritten agreement, indemnity or other arrangement
for the allocation or payment of Tax liabilities or payment for
Tax benefits.
(i) Certain Agreements. Except as
disclosed in the AmerUs SEC Documents filed or publicly
furnished to the SEC and made publicly available prior to the
date of this Agreement and except for this Agreement, neither
AmerUs nor any of its Subsidiaries is a party to or bound, as of
the date hereof, by any contract, arrangement, commitment or
understanding (i) which is a material contract
(as such term is defined in Item 601(b)(10) of
Regulation S-K
of the SEC), (ii) which restricts in any material respect
the ability of AmerUs or any of its Subsidiaries to compete in
any line of business, in any geographic area or with any person,
or which requires referrals of business or requires AmerUs or
any of its affiliates to make available investment opportunities
to any person on a priority, equal or exclusive basis,
(iii) with or to a labor union (including any collective
bargaining agreement), or (iv) which would prohibit or
delay the consummation of any of the transactions contemplated
by this Agreement. All contracts, arrangements, commitments or
understandings of the type described in this Section 3.1(i)
(collectively referred to herein as the AmerUs
Contracts) are valid and in full force and effect,
except to the extent they have previously expired in accordance
with their terms or if the failure to be in full force and
effect, individually or in the aggregate, would not reasonably
be expected to have an AmerUs Material Adverse Effect. AmerUs
has made available to Aviva true and complete copies of all
AmerUs Contracts. Neither AmerUs nor any of its Subsidiaries
has, and to the knowledge of AmerUs, none of the other parties
thereto has violated any provision of, or committed or failed to
perform any act, and no event or condition exists, which with or
without notice, lapse of time or both would constitute a default
under the provisions of, any AmerUs Contract, except in each
case for those violations, performance failures and defaults
that, individually or in the aggregate, would not reasonably be
expected to have an AmerUs Material Adverse Effect.
(j) Benefit Plans and Labor Matters.
(i) With respect to each material employee benefit plan
(including any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), including
multiemployer plans within the meaning of ERISA
Section 3(37) (Multiemployer Plans) and
all material equity-based compensation programs, including stock
purchase and stock option plans and programs, severance,
employment,
change-in-control,
fringe benefit, collective bargaining,
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bonus, incentive, deferred compensation, pension and other
material employee benefit plans, agreements, programs, policies
or other arrangements, whether or not subject to ERISA, whether
formal or informal, oral or written (all the foregoing being
herein AmerUs Benefit Plans), (A) under
which any employee, agent, director, or independent contractor
or former employee, agent, director, or independent contractor
of AmerUs or any of its Subsidiaries has any present or future
right to benefits, (B) maintained or contributed to by
AmerUs or any of its Subsidiaries or (C) under which AmerUs
or any of its Subsidiaries has any present or future liability
other than as disclosed in the consolidated financial statements
of AmerUs included in its Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2006, no event has occurred
and, to the knowledge of AmerUs, there exists no condition or
set of circumstances, in connection with which AmerUs or any of
its Subsidiaries could be subject to any material liability,
except for benefit payments in accordance with the terms of the
AmerUs Benefit Plans and this Agreement.
(ii) Section 3.1(j)(ii) of the AmerUs Disclosure
Letter contains a complete listing of all AmerUs Benefit Plans.
AmerUs has made available to Aviva with respect to each AmerUs
Benefit Plan true and complete copies of: (A) the plan
documents or agreement (including any insurance contracts or
trust agreements); (B) the summary plan descriptions and
summaries of material modification; (C) Form 5500
reports and, where applicable, audited financial statements and
audit reports for the most recent plan year available and the
most recent financial statement; (D) the most recent
actuarial report; (E) for plans intended to be qualified
under Code Section 401(a) a copy of the most recent IRS
determination letter with respect to such qualification; and
(F) employee handbooks, as currently in effect.
(iii) AmerUs and its Subsidiaries, with respect to the
AmerUs Benefit Plans, and the AmerUs Benefit Plans, are in
material compliance with ERISA, the Code (except as currently
permitted with respect to Section 409A under proposed
regulations and Internal Revenue Service guidance with respect
thereto) and other applicable Laws.
(iv) No AmerUs Benefit Plan (including any AmerUs Stock
Plan) exists that could result in the payment to any present or
former employee, agent, director or independent contractor of
AmerUs or any Subsidiary of AmerUs of any money or other
property or accelerate or provide any vesting or other rights or
benefits to any present or former employee, agent, director, or
independent contractor of AmerUs or any Subsidiary of AmerUs as
a result of the transactions contemplated by this Agreement,
either independently or in connection with any adverse
employment action and irrespective of whether or not such
payment would constitute a parachute payment within the meaning
of Code Section 280G.
(v) No AmerUs Benefit Plan is a Multiemployer Plan, and
neither AmerUs nor any of its Subsidiaries has, or could
reasonably be expected to have, any liability under any
Multiemployer Plan.
(vi) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event)
result in or cause: (A) the increase, acceleration of
timing of payment, funding or vesting of any benefits under any
AmerUs Benefit Plan; (B) the payment or provision of
benefits which are excess parachute payments as the
term is defined in Code Section 280G; or (C) payments
or benefits to be subject to the loss of deductions under Code
Section 162(m).
(vii) There are no pending or threatened claims by or on
behalf of, or investigations or governmental audits or requests
with respect to, any AmerUs Benefit Plan (other than routine
claims for benefits).
(viii) Each AmerUs Benefit Plan may be terminated without
incurring a material liability (other than previously accrued
benefit liabilities).
(ix) There are no collective bargaining agreements or other
labor union contracts applicable to any employees of AmerUs or
any of its Subsidiaries.
(x) Section 3.1(j)(x) of the AmerUs Disclosure Letter
lists, as of the date of this Agreement, the number of
outstanding Awards, including with respect to SARs and Units the
number of underlying reference shares of Common Stock that will
be converted into Award Consideration pursuant to
Section 2.3.
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(k) Subsidiaries. All of the
shares of capital stock of each of the Subsidiaries of AmerUs
are owned by AmerUs or by another AmerUs Subsidiary or
Subsidiaries and are (i) fully paid and nonassessable and
(ii) free and clear of any Lien.
(l) Agreements with
Regulators. Neither AmerUs nor any Subsidiary
of AmerUs is a party to any written agreement, consent decree or
memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or is subject to any
cease-and-desist
or other order or directive by, or has adopted any policies,
procedures or board resolutions at the request of, any
Governmental Entity which restricts materially the conduct of
the business of AmerUs and its Subsidiaries, taken as a whole,
or to the knowledge of AmerUs relates to AmerUs Insurers
capital adequacy or risk management policies, nor has AmerUs or
any Subsidiary of AmerUs been advised in writing by any
Governmental Entity that it is contemplating any such
undertakings.
(m) Absence of Certain Changes or
Events. Since December 31, 2005,
(i) AmerUs and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with
their past practices, (ii) there has not been any
(A) AmerUs Material Adverse Effect, (B) any
declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, (C) any
split, combination or reclassification of any of its capital
stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (D) any
material change in accounting methods, principles or practices
by AmerUs, except for such changes required by changes in SEC
guidelines, GAAP or SAP, (E) any material damage,
destruction or other casualty loss with respect to any material
asset or property owned, leased or otherwise used by AmerUs or
any of its Subsidiaries which is not covered by insurance or
(F) any material amendment of any of the AmerUs Benefit
Plans.
(n) Board Approval. The Board of
Directors of AmerUs, by resolutions duly adopted by unanimous
vote of those voting at a meeting duly called and held (the
AmerUs Board Approval), has
(i) determined that this Agreement and the Merger are fair
to and in the best interests of AmerUs and its shareholders,
(ii) approved and adopted this Agreement and the plan of
merger contained herein and (iii) recommended that
shareholders of AmerUs approve each of the matters constituting
the Required AmerUs Vote and directed that such matter be
submitted for consideration by AmerUs shareholders at the AmerUs
Shareholders Meeting, subject to the terms and conditions set
forth herein.
(o) Vote Required. Pursuant to
Section 490.1104(5) of the IBCA, the approval of the
holders of Common Stock at a meeting at which a quorum
consisting of at least a majority of the votes entitled to be
cast on the plan of merger exists (the Required AmerUs
Vote) is the only vote of the holders of any class or
series of AmerUs capital stock necessary to approve this
Agreement and the transactions contemplated hereby (including
the Merger).
(p) Properties. AmerUs or one or
more of its Subsidiaries (i) has good and marketable title
to all the properties and assets reflected in the latest audited
balance sheet included in the AmerUs SEC Documents as being
owned by AmerUs or one or more of its Subsidiaries or acquired
after the date thereof (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of
business), free and clear of all claims, liens, charges,
security interests or encumbrances of any nature whatsoever
(Liens), except (A) statutory liens
securing payments not yet due, (B) such imperfections or
irregularities of title, claims, liens, charges, security
interests or encumbrances as do not affect the use of the
properties or assets subject thereto or affected thereby or
otherwise impair business operations at such properties, other
than, in each case, which individually or in the aggregate,
would not reasonably be expected to have an AmerUs Material
Adverse Effect and (C) zoning and building codes and other
applicable Laws regulating the use, development and occupancy of
real property and permits consents and rules under such Laws
that do not materially affect the use, development and occupancy
of such real property or otherwise impair the business
operations at such property and (ii) is the lessee of all
leasehold estates reflected in the latest audited balance sheet
included in the AmerUs SEC Documents as being leased by AmerUs
or one or more of its Subsidiaries or leased after the date
thereof (except for leases that have expired by their terms
since the date thereof) and is in possession of the properties
purported to be leased thereunder, and each such lease is valid
without default thereunder by the lessee or, to the knowledge of
AmerUs, the lessor other than, in each case, which individually
or in the aggregate, would not reasonably be expected to have an
AmerUs Material Adverse Effect.
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(q) Intellectual Property.
(i) AmerUs and its Subsidiaries own, or have valid and
enforceable licenses to use, all trademarks, service marks,
trade names and designs (including any registrations or
applications for registration, as well as common law rights in
any of the foregoing), together with all goodwill related to the
foregoing, patents (including any continuations, continuations
in part, renewals and applications for any of the foregoing) and
inventions, copyrights (including any registrations and
applications therefor and whether registered or unregistered),
Internet domain names, computer software, databases, works of
authorship, mask works, technology, trade secrets and other
confidential information, know-how, proprietary processes,
formulae, algorithms, models, user interfaces, inventions,
discoveries, concepts, ideas, techniques, methods, source codes,
object codes, methodologies and, with respect to all of the
foregoing, related confidential data or information
(collectively, the AmerUs Intellectual
Property), which in each case necessary for the
conduct of their respective business as conducted on the date
hereof, except where such failures to own or possess valid,
subsisting and enforceable licenses to use such AmerUs
Intellectual Property, either individually or in the aggregate,
would not reasonably be expected to have an AmerUs Material
Adverse Effect. Neither AmerUs nor any of its Subsidiaries has
received any written notice of infringement or conflict with,
and to AmerUs knowledge, there are no infringements of or
conflicts with, the rights of any third party with respect to
the use or ownership of any AmerUs Intellectual Property by
AmerUs and its Subsidiaries that, in either case, individually
or in the aggregate, would reasonably be expected to have an
AmerUs Material Adverse Effect. To the knowledge of AmerUs, all
AmerUs Intellectual Property that has been licensed by AmerUs or
any of its Subsidiaries from third parties is being used
substantially in accordance with the applicable license (as
amended) pursuant to which AmerUs or such Subsidiary acquired
the right to use such AmerUs Intellectual Property, except where
such uses, either individually or in the aggregate, would not
reasonably be expected to have an AmerUs Material Adverse Effect.
(ii) AmerUs and its Subsidiaries have established and are
in compliance with commercially reasonable security programs
that are designed to protect (A) the security,
confidentiality and integrity of transactions executed through
their computer systems, including security protocols and
techniques when appropriate, and (B) the security,
confidentiality and integrity of all confidential or proprietary
data except, in each case, which individually or in the
aggregate would not reasonably be expected to have an AmerUs
Material Adverse Effect. Neither AmerUs nor any of its
Subsidiaries has suffered a material security breach with
respect to their data or systems, and neither AmerUs nor any of
its Subsidiaries has notified consumers or employees of any such
information security breach.
(r) Brokers or Finders. Other than
Goldman Sachs & Co., no agent, broker, lawyer,
investment banker, financial advisor or other firm or person is
or will be entitled to any brokers or finders fee or
any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement.
(s) Opinion of AmerUs Financial
Advisor. AmerUs has received the written
opinion of its financial advisor, Goldman Sachs & Co.,
dated the date of this Agreement, to the effect that, as of the
date hereof, the Per Share Amount to be paid by Aviva to the
AmerUs shareholders pursuant to Section 2.1(a) is fair,
from a financial point of view, to the holders of Common Stock.
(t) Takeover Laws. None of the
business combination provisions of Section 490.1110 of the
IBCA or any similar provisions of the IBCA, Amended and Restated
Articles of Incorporation or Amended and Restated Bylaws of
AmerUs are applicable to the transactions contemplated by this
Agreement because such provisions do not apply by their terms or
because any required approvals of the Board of Directors of
AmerUs have been obtained.
(u) Information Supplied.
(i) The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and
applicable rules thereunder. The Proxy Statement and in the
notice of the meeting pursuant to Section 490.1104 of the
IBCA to the holders of Common Stock (the Notice of
AmerUs Shareholders Meeting), will not, at the date
mailed to the holders of Common Stock or at the time of the
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AmerUs Shareholders Meeting, contain any untrue statements 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.
(ii) Notwithstanding the foregoing provisions of this
Section 3.1(u), no representation or warranty is made by
AmerUs with respect to statements made or incorporated by
reference in the Proxy Statement based on information supplied
in writing by or on behalf of Aviva for inclusion or
incorporation by reference therein.
(v) Certain Securities Matters.
(i) Each AmerUs Broker-Dealer and AmerUs Adviser possesses
all licenses and registrations necessary to conduct its business
and is current in all material filings required by the SEC or
any other Governmental Entity, and is and has been since
December 31, 2003 in full compliance with all applicable
Laws, except for any failures to possess such licenses and
register or comply which would not, individually or in the
aggregate, reasonably be expected to have an AmerUs Material
Adverse Effect. Each AmerUs Broker-Dealer is a member in good
standing of the NASD and such other organizations in which its
membership is required in order to conduct its business as now
conducted, except such failures which would not, individually or
in the aggregate, reasonably be expected to have an AmerUs
Material Adverse Effect.
(ii) There is (A) no AmerUs Subsidiary, (B) no
separate account of any AmerUs Insurer, (C) no
affiliated person (within the meaning of the
Investment Company Act of 1940, and the rules and regulations of
the SEC promulgated thereunder (the Investment Company
Act)) nor (D) any AmerUs Fund, AmerUs Private
Fund or any portfolio thereof that is required to be registered
with the SEC under the Investment Company Act.
(iii) No AmerUs Adviser nor, to the knowledge of AmerUs,
any person associated (within the meaning of the
Investment Advisers Act of 1940, as amended, and the rules and
regulations of the SEC promulgated thereunder (the
Investment Advisers Act)) thereof, with an
AmerUs Adviser is ineligible pursuant to Section 203(e) of
the Investment Advisers Act to serve as an investment adviser or
as a person associated with an AmerUs Adviser to a registered
investment adviser. No AmerUs Broker-Dealer nor, to the
knowledge of AmerUs, any associated person (within
the meaning of the Exchange Act) thereof, is ineligible pursuant
to Section 15(b) of the Exchange Act to serve as a
broker-dealer or as an associated person to a registered
broker-dealer. The following terms shall have the meanings set
forth below:
AmerUs Adviser shall mean any AmerUs
Subsidiary that conducts activities of an investment adviser as
such term is defined in Section 2(a)(20) of the Investment
Company Act and Section 202(a)(11) of the Investment
Advisers Act.
AmerUs Broker-Dealer shall mean any
AmerUs Subsidiary that conducts activities of a broker or
dealer, as such terms are defined in Section 3(a) of the
Exchange Act.
AmerUs Fund shall mean any management
investment company, as defined under the Investment Company Act,
organized by an AmerUs Adviser or interests in which are offered
by AmerUs or its affiliates or any portfolio thereof that is
registered or required to be registered as an investment company
with the SEC and for which any AmerUs Adviser acts as an
investment adviser or sub-adviser.
AmerUs Private Fund shall mean any
collective investment entity organized by an AmerUs Adviser or
interests in which are offered by AmerUs or its affiliates,
other than an AmerUs Fund that is not required to be registered
as an investment company with the SEC and for which any AmerUs
Adviser acts as an investment adviser or sub-adviser.
AmerUs Insurer shall mean each AmerUs
Subsidiary that issues insurance policies.
(w) Insurance Reports.
(i) Each AmerUs Insurer is listed in Section 3.1(w) of
the AmerUs Disclosure Letter. Each of the AmerUs Insurers has
filed all annual and quarterly statements, together with all
exhibits, interrogatories,
A-24
notes, schedules and any actuarial opinions, affirmations or
certifications or other supporting documents in connection
therewith, required to be filed with or submitted to the
appropriate insurance regulatory authorities of the jurisdiction
in which it is domiciled or commercially domiciled on forms
prescribed or permitted by such authority (collectively, the
AmerUs SAP Statements), except for such
failures to file that, individually or in the aggregate, would
not reasonably be expected to have an AmerUs Material Adverse
Effect. AmerUs has delivered or made available to Aviva, to the
extent permitted by applicable Laws, copies of all annual AmerUs
SAP Statements for each AmerUs Insurer for the periods beginning
January 1, 2004 and through the date hereof and the
quarterly AmerUs SAP Statements for each AmerUs Insurer for the
quarterly period ended March 31, 2006, each in the form
(including exhibits, annexes and any amendments thereto) filed
with the applicable state domiciliary insurance regulatory
authority and true and complete copies of all financial
examination reports of insurance departments and any insurance
regulatory authorities received by AmerUs on or after
January 1, 2004 and through the date hereof relating to
AmerUs Insurers. Financial statements included in the AmerUs SAP
Statements were prepared in conformity SAP and present fairly in
all material respects the statutory financial position of the
relevant AmerUs Insurer as at the respective dates thereof and
the results of operations of such AmerUs Insurer for the
respective periods then ended. The AmerUs SAP Statements
complied in all material respects with all applicable Laws when
filed, and no material deficiency has been asserted in writing
by any Governmental Entity with respect to any AmerUs SAP
Statements which has not been cured. The annual statutory
balance sheets and income statements included in the AmerUs SAP
Statements have been audited by AmerUs independent
auditors, and AmerUs has delivered or made available to Aviva
true and complete copies of all audit opinions related thereto
for periods beginning January 1, 2004.
(ii) The policy reserves of the AmerUs Insurers recorded in
their respective AmerUs SAP Statements, as of their respective
dates since July 1, 2004: (A) have been computed in
all material respects in accordance with presently accepted
actuarial standards consistently applied as in effect on their
respective dates; (B) have been based on actuarial
assumptions that are consistent in all material respects with
applicable contract provisions; (C) met the requirements of
applicable Law in all material respects; and (D) were
computed on the basis of actuarial assumptions and actuarial
methods consistent in all material respects with those used to
compute the corresponding items in the AmerUs SAP Statements;
provided, however, that it is acknowledged and agreed that
AmerUs is not making any representation or warranty in this
Section 3.1(w)(ii) as to the adequacy or sufficiency of
such reserves.
(x) Insurance
Business. (i) All policies, binders,
slips, certificates, guaranteed insurance contracts, annuity
contracts and participation agreements and other agreements of
insurance, whether individual or group, in effect as of the date
hereof (including all applications, supplements, endorsements,
riders and ancillary documents issued in connection therewith)
that are issued by an AmerUs Insurer (collectively, the
AmerUs Insurance Contracts), to the extent
required under applicable Laws, on forms and at rates approved
by the insurance regulatory authority of the jurisdiction where
issued or, to the extent required by applicable Laws, have been
filed with and not objected to by such authority within the
period provided for objection, except as, individually or in the
aggregate, would not reasonably be expected to have an AmerUs
Material Adverse Effect.
(ii) A true and complete copy of the Actuarial Appraisal of
Insurance Operations of AmerUs as of September 30, 2005,
including all amendments, supplements, errata and annexes
thereto (the AmerUs Actuarial Analysis) has
been made available to Aviva prior to the date hereof. The
information and data furnished by AmerUs or any AmerUs Insurer
to its independent actuaries in connection with the preparation
of the AmerUs Actuarial Analysis were, to the knowledge of
AmerUs, accurate in all material respects for the periods
covered in the AmerUs Actuarial Analysis.
(iii) AmerUs has made available to Aviva true and complete
copies of (A) all policy and contract forms filed in the
domiciliary state of the AmerUs Insurer issuing the policy
relating to any annuity or universal life insurance contract
offering equity indexed or total return accounts issued by the
AmerUs Insurers (the EI Products) and all
forms of sales brochures, sales literature and advertising
materials, developed by an AmerUs Insurer for EI Products, each
to the extent utilized by an AmerUs Insurer during the period
beginning January 1, 2004 through the date of this
Agreement and (B) all material reports,
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written correspondence and written communications received from
an AmerUs Insurer or sent to an AmerUs Insurer by any
Governmental Entity relating to any material examinations or
investigations by any Governmental Entity regarding any EI
Product. AmerUs has received no written notice from any
Governmental Entity of any material pending examinations,
inspections or investigations, or alleging any material
violation of applicable securities Law, by any Governmental
Entity regarding any EI Product as of the date of this
Agreement, and to the knowledge of AmerUs, there are no such
pending or threatened examinations, inspections or
investigations as of the date of this Agreement.
(iv) AmerUs has made available to Aviva a true and complete
copy of its product analysis letter, including all annexes and
exhibits (but excluding the list of largest sellers), as
further described in Section 3.1(x)(iv) of the AmerUs
Disclosure Letter (the Product Letter). The
description of the products and marketing programs in the
Product Letter are fair summaries in all material respects of
the EI Products that are annuities and the related marketing
programs described therein and, as of the date hereof, AmerUs
has no actual knowledge of any other documents, events or
circumstances which could reasonably be expected to cause
AmerUs analysis of the regulatory status of such products
described therein to be materially different from AmerUs
analysis contained therein.
(y) Risk Management Instruments.
Since December 31, 2005, all derivative instruments,
including, interest rate swaps, caps, floors and option
agreements, entered into by AmerUs or its Subsidiaries, were
entered into in conformity in all material respects with
AmerUs written investment policies in effect at the time
any such derivative instrument was entered into.
(z) Producer Sales and Marketing.
(i) From and after January 1, 2004 (A) each
employee of AmerUs and its Subsidiaries, agent, manager,
intermediary, broker, broker-dealer, third-party administrator,
independent marketing organization (affiliated and
unaffiliated), producer, financial institution, registered
representative, consultant, advisor, call center personnel, or
distributor required to be licensed as a Producer in any state
(each, a Producer) who marketed, sold,
serviced, managed, advised or administered with holders of the
products issued by AmerUs and its Subsidiaries
(Transacted), at the time such Producer
Transacted business for AmerUs or the relevant Subsidiary, was
duly appointed by AmerUs or the relevant Subsidiary to act as a
Producer and, to the knowledge of AmerUs, was duly licensed or
registered as a Producer, in each case, in the particular
jurisdiction in which such Producer, placed, serviced, managed,
advised or administered such business; (B) there have been
no violations by Producers of any Law in connection with the
marketing or sale of products issued by AmerUs and its
Subsidiaries; (C) all compensation paid to each such
Producer was paid in accordance with applicable Law; and
(D) all training and instruction manuals pertaining to the
sale of the products by AmerUs and its Subsidiaries provided to
each such Producer by AmerUs and its Subsidiaries were in
compliance with all applicable Laws; except for, in the case of
clauses (A), (B), (C), or (D), such failures to appoint or
failures to be licensed (in the case of clause A),
violations (in the case of clause B), and failures to
comply with applicable Law (in the cases of clauses C and
D) that, individually or in the aggregate, would not
reasonably be expected to have an AmerUs Material Adverse
Effect, and provided that the representations in
clauses (A), (B), (C) and (D) are made to the
actual knowledge of AmerUs with respect to any Producer that is
not an employee of AmerUs or its Subsidiaries.
(aa) Reinsurance. With respect to
any ceded reinsurance or coinsurance agreement of any AmerUs
Insurer which either is in force or has outstanding reinsurance
recoverables (AmerUs Reinsurance Agreements),
except as would not, individually or in the aggregate,
reasonably be expected to have an AmerUs Material Adverse
Effect, each AmerUs Insurer has appropriately taken credit for,
outstanding reinsurance recoverables under the AmerUs
Reinsurance Agreements in any (i) AmerUs SAP Statements and
(ii) AmerUs SEC Documents. All AmerUs Reinsurance
Agreements are valid and in full force and effect, except to the
extent they have previously expired in accordance with their
terms or the failure to be valid and in full force and effect,
individually or in the aggregate, would not reasonably be
expected to have an AmerUs Material Adverse Effect. Neither
AmerUs nor any AmerUs Insurer, nor to the knowledge of AmerUs,
any other party to an AmerUs Reinsurance Agreement is in default
as to any provision thereof, and, to the knowledge of AmerUs, no
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condition exists that, with or without notice or lapse of time
or both, would constitute a default thereunder, except for any
such default or condition as would not, individually or in the
aggregate, reasonably be expected to have an AmerUs Material
Adverse Effect.
3.2. Representations and Warranties of Aviva
and Merger Sub. Aviva and Merger Sub jointly
represent and warrant to AmerUs as follows:
(a) Organization, Standing and
Power.
(i) Each of Aviva and Merger Sub is a corporation duly
organized and validly existing under the Laws of its
jurisdiction of incorporation or organization, has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted,
and is duly qualified to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in
such jurisdictions where the failure to so qualify would not,
either individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of Aviva or
Merger Sub to perform their respective obligations under this
Agreement (an Aviva Material Adverse Effect).
(ii) Aviva has previously made available to AmerUs true,
complete and correct copies of the organizational documents of
Aviva as of December 31, 2005, which are in full force and
effect and have not been amended or otherwise modified.
(b) Authority.
(i) Each of Aviva and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Aviva and
Merger Sub (including Aviva or a wholly owned Subsidiary of
Aviva in its capacity as the sole shareholder of Merger Sub) and
no other corporate or shareholder proceedings on the part of
Aviva or Merger Sub are necessary to authorize this Agreement
and consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Aviva and
Merger Sub and (assuming the due authorization, execution and
delivery by AmerUs) constitutes a valid and binding obligation
of each of Aviva and Merger Sub, enforceable against each of
Aviva and Merger Sub in accordance with its terms, except to the
extent the enforcement is limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws
of general applicability relating to or affecting
creditors rights and to general equitable principles.
(ii) The execution and delivery of this Agreement by each
of Aviva and Merger Sub do not, and the performance of its
respective obligations and consummation of the transactions
contemplated hereby will not, (A) result in any Violation
pursuant to any provision of the organizational documents of
Aviva or Merger Sub or (B) subject to obtaining or making
the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in
subsection (iii) below, result in any Violation of any
loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, permit, concession,
franchise, license, or Law applicable to Aviva or Merger Sub or
their respective properties or assets, which Violation, in the
case of clause (B), either individually or in the
aggregate, would reasonably be expected to have an Aviva
Material Adverse Effect.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental
Entity is required to be filed or obtained by Aviva or Merger
Sub in connection with the execution and delivery of this
Agreement by Aviva, Merger Sub or their respective Subsidiaries
or the consummation by Aviva or Merger Sub of the transactions
contemplated hereby, the failure to make or obtain which would
have an Aviva Material Adverse Effect, except for (A) the
filing of the Articles of Merger with the Secretary of State of
the State of Iowa, (B) such applications, filings,
authorizations, orders and approvals under the insurance laws of
the jurisdictions in which the AmerUs Insurers are domiciled or
commercially domiciled as set forth in, and assuming the
accuracy of, Section 3.1(c)(iii) of the AmerUs Disclosure
Letter and such other required filings with, and expiration of
applicable waiting periods of, the insurance departments or
other similar state authorities in the states in which the
AmerUs
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Insurers are licensed, (C) to the extent applicable,
consents, approvals of, filings with and notices to Governmental
Entities pursuant to the Exon-Florio Act, and (D) notices
or filings under the HSR Act.
(c) Information Supplied. The
information supplied in writing by or on behalf of Aviva and the
Merger Sub and included in the Proxy Statement with the written
consent of Aviva and the Merger Sub, as the case may be, will
not, at the date mailed to the holders of Common Stock or at the
time of the AmerUs Shareholders 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.
(d) Financing. Aviva has or will
have available, prior to the Effective Time, sufficient cash in
immediately available funds to pay or to cause Merger Sub to pay
the Merger Consideration pursuant to Article II hereof and
to consummate the Merger and other transactions contemplated
hereby.
(e) No Aviva Vote Required. No
vote or other action of the shareholders of Aviva is required by
applicable Law, the organizational documents of Aviva or
otherwise in order for Aviva and Merger Sub to consummate the
Merger and the transactions contemplated hereby.
(f) Aviva Ownership of AmerUs
Securities. Aviva and its affiliates do not
own of record or beneficially any shares of Common Stock,
Series A Preferred Stock or any options, warrants or other
rights to acquire Common Stock or Series A Preferred Stock.
(g) Merger Sub.
(i) True and complete copies of the organizational
documents of Merger Sub, each as in effect as of the date of
this Agreement, have previously been made available to AmerUs.
(ii) Aviva or a wholly owned Subsidiary of Aviva owns
beneficially owns all outstanding shares of the capital stock of
Merger Sub. Merger Sub was formed by Aviva solely for the
purpose of effecting the Merger and the other transactions
contemplated by this Agreement. Except as contemplated by this
Agreement, Merger Sub does not hold and has not held any
material assets or incurred any material liabilities, and has
not carried on any business activities other than in connection
with the Merger and the other transactions contemplated by this
Agreement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of
AmerUs. During the period from the date of
this Agreement and continuing until the Effective Time or such
earlier date as this Agreement may be terminated in accordance
with its terms, AmerUs agrees as to itself and its Subsidiaries
that, except (i) as expressly contemplated or permitted by
this Agreement, (ii) to the extent that Aviva shall
otherwise consent in writing, (iii) as may be required
under applicable Law or (iv) as set forth in the AmerUs
Disclosure Letter:
(a) Ordinary Course. AmerUs shall,
and shall cause its Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course consistent
with past practice and use all reasonable efforts to preserve
intact their present business organizations, maintain their
rights, franchises, licenses and other authorizations issued by
Governmental Entities and preserve their relationships with
employees, customers, suppliers and others having business
dealings with them to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect at the
Effective Time. AmerUs shall not, nor shall it permit any of its
Subsidiaries to: (i) enter into any new material line of
business; (ii) enter into, amend or terminate any material
reinsurance, coinsurance, modified coinsurance or any similar
contract (including any surplus relief or financial reinsurance
contract), whether as reinsurer or reinsured, without the
consent of Aviva (such consent not to be unreasonably withheld
or delayed); (iii) alter or amend in any material respect
their existing underwriting, claim handling, loss control,
actuarial, financial reporting or accounting practices,
guidelines or policies or any material assumption underlying an
actuarial practice or policy, except as may be required by GAAP
or SAP; (iv) incur or commit to any capital expenditures or
any obligations or liabilities in connection
A-28
therewith other than capital expenditures and obligations or
liabilities incurred or committed to in the ordinary course of
business consistent with past practice or (v) enter into or
terminate any material lease, contract or agreement, or make any
change to any existing material lease, contract or agreement,
except in the ordinary course of business consistent with past
practice.
(b) Dividends; Changes in
Stock. AmerUs shall not, nor shall it permit
any of its Subsidiaries to, or propose to, (i) declare or
pay any dividends on or make other distributions in respect of
any of its capital stock (whether in cash, stock or property or
any combination thereof), except (A) the declaration and
payment of regular quarterly cash dividends on the Series A
Preferred Stock in accordance with the terms of the
Series A Preferred Stock, and (B) for dividends by a
direct or indirect wholly owned Subsidiary of AmerUs,
(ii) split, combine or reclassify any of its capital stock,
or issue or authorize or propose the issuance or authorization
of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire, or permit any
Subsidiary to redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock (except for
(A) the acquisition of separate account shares in the
ordinary course of business consistent with past practice and
(B) the exercise or settlement of outstanding Awards under
the AmerUs Stock Plans in accordance with their terms).
(c) Issuance of Securities. Except
in connection with AmerUs obligations under the AmerUs
PRIDES, AmerUs shall not, nor shall it permit any of its
Subsidiaries to, issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, or pledge or otherwise
encumber any shares of its capital stock of any class, any
Voting Debt, any stock appreciation rights, stock unit,
performance unit or similar equity award or any securities
convertible into or exercisable or exchangeable for, or any
rights, warrants or options to acquire, any such shares or
Voting Debt, or enter into any agreement with respect to any of
the foregoing, other than the issuance of Common Stock upon the
exercise or settlement of Awards under the AmerUs Stock Plans.
(d) Governing Documents. AmerUs
shall not amend or propose to amend its Amended and Restated
Articles of Incorporation or Amended and Restated Bylaws.
(e) No Acquisitions or
Dispositions. AmerUs shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire,
or dispose of or agree to dispose of, by merging or
consolidating with, by purchasing a substantial equity interest
in or a substantial portion of the assets of, by forming a
partnership or joint venture with, or by any other manner, any
corporation, partnership, association or other business
organization or division thereof, or any material assets. Other
than activities in the ordinary course of business consistent
with past practice, AmerUs shall not, and shall not permit any
of its Subsidiaries to, sell, lease, assign, encumber or
otherwise dispose of, or agree to sell, lease, assign, encumber
or otherwise dispose of, any material assets (including capital
stock of its Subsidiaries and indebtedness of others held by
AmerUs and its Subsidiaries). Nothing contained in this
Section 4.1(e) shall apply to investments made by AmerUs
and its Subsidiaries in the ordinary course of business
consistent with past practice and their respective investment
policies.
(f) Indebtedness. Other than
incurring short-term indebtedness under AmerUs credit
facilities existing as of the date hereof or replacement of
existing indebtedness at a lower cost of capital, AmerUs shall
not, and shall not permit any of its Subsidiaries to,
(i) incur, create or assume any indebtedness for borrowed
money (or modify any of the material terms of any such
outstanding indebtedness) or guarantee any such indebtedness,
(ii) issue or sell any debt securities or rights to acquire
any debt securities of AmerUs or any of its Subsidiaries or
guarantee any debt securities of others, or (iii) enter
into any keep-well or other agreement to maintain
the financial condition of any other person (other than AmerUs
or one of its Subsidiaries) or any arrangement having the
economic effect of the foregoing.
(g) Liabilities. AmerUs shall not,
and shall not permit any of its Subsidiaries to, pay, discharge,
settle or satisfy any claims, litigation, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than payment, discharge,
settlement or satisfaction (i) made in the ordinary course
of business, (ii) made in accordance with the terms of
liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or the
notes thereto) of AmerUs included in the AmerUs
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SEC Documents and (iv) incurred since the date of such
financial statements in the ordinary course of business
consistent with past practice.
(h) Material Contracts. AmerUs
shall not, and shall not permit any of its Subsidiaries to,
(i) modify or amend any AmerUs Contract other than in the
ordinary course of business consistent with past practice or
terminate any AmerUs Contract (other than terminations resulting
from the expiration of an AmerUs Contract in accordance with its
terms) or (ii) enter into, modify, amend or terminate any
contract (other than the termination resulting from the
expiration of such contract in accordance with its terms) that
would meet the definition of an AmerUs Contract set forth in
Section 3.1(i) if entered into after the date hereof.
(i) Risk Policy. AmerUs shall not,
and shall not permit any of its Subsidiaries to, modify or amend
in any material respect or terminate any (i) insurance
coverage maintained by AmerUs or any of its Subsidiaries which
is not replaced by a comparable amount of insurance coverage or
(ii) investment, risk management or derivatives use policy
currently in effect, except as required by applicable Law or
changes in SAP or GAAP.
(j) Accounting Methods. Except as
disclosed in any AmerUs SEC Document filed by AmerUs prior to
the date of this Agreement, AmerUs shall not change its methods
of accounting in effect at March 31, 2006, except as
required by changes in SAP or GAAP.
(k) Compensation and Benefit
Plans. Neither AmerUs nor any Subsidiary will
(i) enter into, adopt, amend (except for such amendments as
may be required by Law or made to comply with Code
Section 409A) or terminate any AmerUs Benefit Plan, or any
other employee benefit plan or any agreement, arrangement, plan
or policy between AmerUs or a Subsidiary of AmerUs and one or
more of AmerUs or its Subsidiaries directors or
officers, (ii) except to the extent expressly permitted by
Section 4.1(c) or this Section 4.1(k), issue any new
or additional awards or grants, or pay or agree to pay any new
or additional compensation or benefits, enter into any severance
or
change-in-control
agreements, or increase in any manner the current compensation
or benefits, contingent or otherwise, of any AmerUs or its
Subsidiaries director, officer, agent, independent contractor or
employee, with the exception of (A) amounts required to be
contributed, distributed, granted or awarded under the terms and
provisions of plans and arrangements listed in
Section 3.1(j)(ii) of the AmerUs Disclosure Letter as in
effect as of the date hereof or amended in accordance herewith,
and (B) normal increases in compensation or additional
compensation or benefits both in the ordinary course of business
consistent with past practice (excluding for purposes of this
clause (B) ordinary course increases in favor of
executive officers or directors) or (iii) provide, with
respect to any equity-related award, that the vesting of any
such award shall accelerate or otherwise be affected by the
occurrence of any of the transactions contemplated by this
Agreement.
(l) No Liquidation. AmerUs shall
not, and shall not permit any of its Subsidiaries to, adopt a
plan of complete or partial liquidation or resolutions providing
for or authorizing such a liquidation or a dissolution,
restructuring, recapitalization or reorganization.
(m) Taxes. Except as will not
reasonably be likely to materially affect the Taxes or the Tax
Assets of AmerUs and its Subsidiaries after the Effective Time,
AmerUs shall not, and shall not permit any of its Subsidiaries
to:
(i) (A) Make, amend or change any material income tax
election; (B) make a request for a Tax Ruling or enter into
any agreement with a Taxing Authority; (C) settle or
compromise any material tax liability or Tax Claim in excess of
amounts specifically reserved therefor on the consolidated
financial statements of AmerUs included in its Quarterly Report
on
Form 10-Q
for the quarter ended March 31, 2006, as filed with the SEC
prior to the date of this Agreement; (D) except as
otherwise mandated by applicable Law, file any amendments to any
previously filed Tax Returns; (E) surrender any right to
claim a refund of any Taxes; (F) make any distributions or
enter into any transactions that are not within the ordinary
course of business (determined by the conduct of business by
AmerUs or any applicable Subsidiary of AmerUs over the course of
the preceding 12 month period) that could materially
increase the Taxes of AmerUs or its Subsidiaries or affect the
Tax Assets (including the amount of any Subsidiarys
previous tax earnings and profits and the amount of any
Subsidiarys foreign tax paid pool) of AmerUs or
A-30
any of its Subsidiaries; or (G) file any Tax Return in a
manner that could be materially inconsistent with past custom
and practice, except as may be required by applicable
Law; or
(ii) Change its method of tax accounting, except as
required by changes in applicable Law, GAAP or SAP.
(n) Advisory Contract Consents. To
the extent required by, and consistent with all requirements of,
the Investment Advisers Act, as soon as reasonably practicable,
AmerUs shall, and shall cause each of the applicable AmerUs
Advisers to, inform its and their respective advisory clients
(other than any AmerUs Fund) of the transactions contemplated by
this Agreement and shall, in compliance with the Investment
Advisers Act and any other applicable Law, request such
clients consent as may be necessary to effect the
assignment of their investment advisory agreements and any
related agreements. Aviva agrees that AmerUs may satisfy this
obligation, insofar as it relates to advisory clients (other
than the AmerUs Funds and the AmerUs Private Funds, as to which
the governing instruments or applicable Law require any
different or supplemental procedure, in which case such
different or supplemental procedures must be followed), by
providing each such client with the notice contemplated by the
first sentence of this Section 4.1(n) and obtaining either
a new investment advisory contract with such client effective at
the Closing Date or such clients consent in the form of an
actual written consent or in the form of an implied consent as
permitted by Law and complying with any other legal
requirements. AmerUs shall, and shall cause each of the
applicable AmerUs Advisers to, seek any consents or shareholder
approval required under the applicable agreements or Canadian
Law. AmerUs shall, and shall cause the AmerUs Insurers to,
consent to the continuation of any investment advisory
agreements and any related agreements between AmerUs or the
AmerUs Insurers and either (i) AmerUs Capital Management or
(ii) AmerUs Asset Management, following completion of the
transactions contemplated hereby.
(o) AmerUs SEC Documents. AmerUs
shall, and shall cause its Subsidiaries, including AmerUs
Insurers and their respective separate accounts to, file with or
publicly furnish to (as applicable) all required reports,
schedules, registration statements and other documents with or
to the SEC between the date of this Agreement and the Effective
Time (Interim AmerUs SEC Documents). All
Interim AmerUs SEC Documents shall comply in all material
respects with the Securities Act, or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder
and none of the Interim AmerUs SEC Documents shall, when filed
with or publicly furnished to the SEC, 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 therein, in light of the circumstances under which
they are made, not misleading. The financial statements of
AmerUs and its Subsidiaries, including the AmerUs Insurers and
their respective registered separate accounts, included in any
such Interim AmerUs SEC Documents, shall comply in all material
respects with all applicable accounting requirements and with
the published rules and regulations of the SEC with respect
thereto, will be prepared in accordance with GAAP and fairly
present in all material respects the consolidated financial
position of AmerUs and its consolidated Subsidiaries (in the
case of Interim AmerUs SEC Documents filed by AmerUs) or the
entities purported to be presented therein (in the case of
AmerUs SEC Documents filed by Subsidiaries or separate accounts)
and the consolidated results of operations, changes in
shareholders equity and cash flows of such companies or
entities as of the dates and for the periods shown (subject, in
the case of any unaudited interim financial statements, to
normal and recurring year-end adjustments that, individually or
in the aggregate do not have an AmerUs Material Adverse Effect).
(p) Other Actions. AmerUs shall
not, and shall not permit any of its Subsidiaries to,
intentionally take any action that would, or reasonably might be
expected to, result in any of its representations and warranties
set forth in this Agreement being or becoming untrue, or in any
of the conditions to the Merger set forth in Article VI not
being satisfied or in a violation of any provision of this
Agreement, or (unless such action is required by applicable Law)
which would adversely affect the ability of the parties to
obtain any of the AmerUs Requisite Regulatory Approvals or Aviva
Requisite Regulatory Approvals without imposition of a condition
or restriction of the types referred to in Sections 6.2(c)
or 6.3(c), respectively.
(q) Other Agreements. AmerUs shall
not, and shall not permit any of its Subsidiaries to, agree to,
or make any commitment to, take, or authorize, any of the
actions prohibited by this Section 4.1.
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4.2. Advice of Changes; Government
Filings.
(a) Each party shall promptly advise the other orally and
in writing of any change or event having, or which would
reasonably be expected to have, an AmerUs Material Adverse
Effect or an Aviva Material Adverse Effect, as the case may be,
or which would cause or constitute a material breach of any of
the representations, warranties or covenants of such party
contained herein; provided, however, that any
noncompliance with the foregoing shall not constitute the
failure to be satisfied of a condition set forth in
Article VI or give rise to any right of termination under
Article VII unless the underlying breach shall
independently constitute such a failure or give rise to such a
right. AmerUs and its Subsidiaries shall file all reports
required to be filed by each of them with the SEC between the
date of this Agreement and the Effective Time and shall make
available to Aviva copies of all such reports promptly after the
same are filed.
(b) Each party shall have the right to review in advance,
and each will consult with the other in advance, in each case
subject to applicable Laws relating to the exchange of
information, with respect to all the information relating to the
other party, and any of its respective Subsidiaries, which
appears in any filing made with, or materials submitted to, any
third party or any Governmental Entity, with respect to this
Agreement or the Merger.
(c) Each party shall consult with the other party prior to
participating in any substantive meeting, conference call,
discussion or communication, whether or not through
representatives, with any Governmental Entity in respect of any
filings, submissions, investigation or inquiry, with respect to
this Agreement or the Merger, and provide the other party and
its representatives the opportunity to attend and participate
thereat.
(d) Without limiting the rights of the parties in this
Section 4.2, each party shall furnish in advance to the
other party copies of all correspondence, filings, submissions
and written communications between them and their respective
representatives on the one hand, and any Governmental Entity, on
the other hand, with respect to this Agreement or the Merger and
consult with such other party on and take into account any
reasonable comments it may have to such correspondence, filings,
submissions and written communications prior to them being made.
Each party shall keep the other party apprised of the status of
matters relating to completion of the transactions contemplated
hereby, shall inform the other party of the substance of any
material oral communications with any Governmental Entity for
which it was impractical to have advance consultation or
participation in accordance with subsection (c) hereto
and shall respond to inquiries and requests received from any
Governmental Entity or third party, in each case with respect to
this Agreement or the Merger as promptly as practicable.
(e) Each party agrees not to extend any waiting period
under the HSR Act or enter into any agreement, arrangement or
understanding with any Governmental Entity not to consummate or
delay the transactions contemplated hereby, except with the
prior written consent of the other parties, which consent shall
not be unreasonably withheld or delayed.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Proxy Statement.
(a) As promptly as practicable following the date of this
Agreement, but in no event later than 45 days after the
date hereof, AmerUs shall prepare and file with the SEC proxy
materials which shall constitute the proxy statement relating to
the matters to be submitted to the AmerUs shareholders at the
AmerUs Shareholders Meeting (such proxy statement, and any
amendments or supplements thereto, the Proxy
Statement), and AmerUs shall use its reasonable best
efforts to respond as promptly as practicable to any comments of
the SEC with respect thereto and to cause the Proxy Statement to
be mailed to the AmerUs shareholders as promptly as practicable
following the date of this Agreement. Whenever any event occurs
which is required to be set forth in an amendment or supplement
to the Proxy Statement, AmerUs shall promptly inform Aviva of
such occurrence and shall file with the SEC
and/or mail
to the shareholders of AmerUs such amendment or supplement.
(b) AmerUs shall promptly take all actions in accordance
with applicable Law, its Amended and Restated Articles of
Incorporation, its Amended and Restated Bylaws and the rules of
the NYSE to call, give notice of, convene and hold a meeting of
its shareholders, such meeting to take place as promptly as
practicable following the date hereof (the AmerUs
Shareholders Meeting), for the purpose of obtaining
the Required AmerUs Vote with
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respect to the transactions contemplated by this Agreement.
Subject to applicable Law, AmerUs shall promptly send the Notice
of AmerUs Shareholders Meeting to all holders of the
Series A Preferred Stock as required by
Section 490.1104 of the IBCA. Subject to applicable Law,
the Board of Directors of AmerUs shall use its reasonable best
efforts to solicit the approval of the AmerUs shareholders of
the Required AmerUs Vote. In furtherance of and subject to the
foregoing, the Board of Directors of AmerUs shall recommend to
the AmerUs shareholders that they vote to approve this Agreement
and the plan of merger contained herein; provided,
however, that AmerUs shall not be obligated to make the
foregoing recommendation to the extent that the Board of
Directors of AmerUs reasonably determines in good faith (after
consultation with outside legal counsel) that such failure to so
recommend is required in order to comply with its fiduciary
duties under applicable Law; as provided, further,
that notwithstanding anything to the contrary in this Agreement,
AmerUs shall be obligated to submit this Agreement to its
shareholders for a vote on the approval to the extent consistent
with Section 490.1104 of the IBCA, and nothing contained
herein shall be deemed to relieve AmerUs of such obligation
unless this Agreement has been terminated in accordance with its
terms prior to the AmerUs Shareholders Meeting.
(c) AmerUs after consultation with Aviva, may adjourn or
postpone the AmerUs Shareholders Meeting (i) to the extent
necessary to ensure that any required supplement or amendment to
the Proxy Statement is provided to AmerUs shareholders,
(ii) if as of the time for which the AmerUs Shareholders
Meeting is originally scheduled (as set forth in the Proxy
Statement) there are insufficient shares of Common Stock
represented (in person or by proxy) to constitute a quorum
necessary to conduct the business of the AmerUs Shareholders
Meeting or (iii) for the purpose of soliciting additional
proxies if proxies granted by the time of the AmerUs
Shareholders Meeting are insufficient to provide the Required
AmerUs Vote; provided, however, that AmerUs will
reconvene or reschedule the AmerUs Shareholders Meeting as soon
as practicable after such adjournment or postponement.
(d) Nothing contained herein shall prohibit or impede
AmerUs from taking and disclosing to its shareholders a position
as required by
Rule 14d-9,
Rule 14e-2
or Item 1012(a) of
Regulation M-A
promulgated under the Exchange Act or from making any other
required disclosure to its shareholders if, in the good faith
judgment of the Board of Directors of AmerUs, after consultation
with outside legal counsel, failure so to disclose would be
inconsistent with applicable Law.
5.2. Access to Information.
(a) AmerUs shall (and shall cause each of its Subsidiaries
to) afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Aviva,
reasonable access, during normal business hours during the
period prior to the Effective Time, to all its properties,
books, contracts, records, commitments, officers and employees
and, during such period, to the extent permitted by applicable
Law, AmerUs shall (and shall cause each of its Subsidiaries to)
make available Aviva (i) a copy of each report, schedule,
statement and other document filed or received by it during such
period pursuant to the requirements of Federal or state
securities laws, the HSR Act, state insurance laws or the rules
and regulations of self regulatory organizations and
(ii) all other information concerning its business,
properties and personnel as Aviva may reasonably request.
Notwithstanding the foregoing, none of AmerUs or any of its
Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would
jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any Law.
(b) Aviva will hold any such information which is nonpublic
in confidence to the extent required by, and in accordance with,
the provisions of the Confidentiality Agreement dated
November 14, 2005, between AmerUs and Aviva (the
Confidentiality Agreement), which
Confidentiality Agreement will remain in effect as provided
under Section 8.5.
(c) No investigation pursuant to this Section 5.2
shall affect any representation or warranty in this Agreement or
any condition to the obligations of the parties hereto to
consummate the Merger.
5.3. Reasonable Best
Efforts.
(a) Upon the terms and subject to the conditions set forth
herein, each party hereto shall, and shall cause its respective
Subsidiaries to, use all reasonable best efforts (i) to
take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which
may be imposed on such party or its Subsidiaries with respect to
the Merger and to consummate the transactions contemplated by
this Agreement as
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promptly as practicable, (ii) to obtain (and to cooperate
with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental
Entity or any other public or private third party which is
required to be obtained or made by such party or any of its
Subsidiaries in connection with the Merger and the transactions
contemplated by this Agreement, and (iii) to cooperate in
connection with any financing transaction undertaken by Aviva to
fund the Merger Consideration, including cooperation by AmerUs
in facilitating customary due diligence and arranging senior
officers, mutually agreed by AmerUs and Aviva, to meet with
prospective lenders and investors in customary presentations
(including road show presentations and sessions with
rating agencies; provided that such participation shall be
subject to AmerUs compliance with Regulation FD of
the SEC and the indemnification (including the advancement of
reasonable defense costs) by Aviva of AmerUs and its
participating senior officers with respect to the subject
matters of this Section 5.3(a)(iii)), the preparation and
filing of any offering document or listing particulars, the
issuance of any comfort letter, the receipt of any auditors
consents, the preparation of consolidated pro forma financial
information and the use of commercially reasonable efforts to
cause each independent auditor to so cooperate. Each of AmerUs
and Aviva will promptly cooperate with and furnish information
to the other in connection with any such efforts by, or
requirement imposed upon, any of them or any of their
Subsidiaries in connection with the foregoing.
(b) Neither Aviva nor any of its Subsidiaries shall be
required to (i) sell, divest, hold separate, or otherwise
dispose of any of their or of AmerUs or any of its
Subsidiaries respective businesses, product lines or
assets, (ii) conduct their or AmerUs or any of its
Subsidiaries respective businesses in a specified manner or
(iii) agree to take any of the actions set forth in
clause (i) or (ii), or agree to take any other action or
agree to any restriction, limitation or condition that, in the
case of clause (i), (ii) or (iii), would or would
reasonably be likely to have (1) an AmerUs Material Adverse
Effect or (2) a material adverse effect on the benefits,
taken as a whole, Aviva reasonably expected to derive from the
transactions contemplated hereby, including the Merger, other
than those customarily imposed by regulatory agencies in
transactions of this type (such Material Adverse Effect on
either AmerUs or Aviva or such material adverse effect on such
benefits, a Regulatory Material Adverse
Effect). AmerUs shall agree if, but solely if,
requested by Aviva in writing to divest, hold separate or
otherwise take or commit to take any action with respect to the
businesses, services or assets of AmerUs or any of its
Subsidiaries in furtherance of this Section 5.3(b);
provided, however, that any such action shall be
conditioned upon the consummation of the Merger and other
transactions contemplated hereby. Each of AmerUs and Aviva
undertakes and agrees to file as soon as practicable a
Notification and Report Form under the HSR Act with the Federal
Trade Commission and the Antitrust Division of the
U.S. Department of Justice, and to make as soon as
practicable, but in no event later than 30 days after the
date hereof, such filings for such approvals and consents as are
required under the insurance laws of the states where the AmerUs
Insurers are domiciled or commercially domiciled or any foreign
state where they are licensed to do business.
5.4. Acquisition Proposals.
(a) AmerUs agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall cause its and its
Subsidiaries employees, agents and representatives
(including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or
indirectly, (i) initiate, solicit, encourage or knowingly
facilitate any inquiries or the making of any proposal or offer
with respect to, or a transaction to effect, a merger,
reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction involving it or any of its Subsidiaries or
any purchase or sale of 10% or more of the consolidated assets
(including stock of its Subsidiaries) of it and its
Subsidiaries, taken as a whole, or any purchase or sale of, or
tender or exchange offer for, its voting securities that, if
consummated, would result in any person (or the shareholders of
such person) beneficially owning securities representing 10% or
more of its total voting power (or of the surviving parent
entity in such transaction) or the voting power of any of its
Subsidiaries (any such proposal, offer or transaction (other
than a proposal or offer made by Aviva or an affiliate thereof)
being hereinafter referred to as an Acquisition
Proposal), (ii) have any discussions with or
provide any confidential information or data to any person
relating to an Acquisition Proposal, or engage in any
negotiations concerning an Acquisition Proposal, or knowingly
facilitate any effort or attempt to make or implement an
Acquisition Proposal or (iii) approve, adopt or recommend,
or propose to approve, adopt or recommend, or execute or enter
into, any letter of intent, agreement in principle, merger
agreement, asset purchase or share exchange
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agreement, option agreement or other similar agreement related
to any Acquisition Proposal or propose or agree to do any of the
foregoing.
(b) Notwithstanding the foregoing or any other provision of
this Agreement, the Board of Directors of AmerUs shall be
permitted, prior to the Required AmerUs Vote, and subject to
compliance with the other terms of this Section 5.4, to
engage in discussions and negotiations with, and, subject to
first entering into a confidentiality agreement with such
initiating person, which confidentiality agreement shall have
provisions that are no less favorable to AmerUs than those
contained in the Confidentiality Agreement, to provide nonpublic
information or data to, any person that has made a bona fide
unsolicited written Acquisition Proposal that the Board of
Directors of AmerUs has determined in good faith by majority
vote, after consultation with its financial advisor and outside
legal counsel, is, or is reasonably likely to lead to, a
Superior Proposal; provided that the Board of Directors has
determined in good faith, after consultation with its outside
legal counsel, that the failure to take such action in
connection therewith would result in a breach of its fiduciary
duties under applicable Law.
(c) AmerUs shall notify Aviva promptly (but in no event
later than 24 hours) after receipt of any Acquisition
Proposal, or any request for nonpublic information relating to
such party or any of its Subsidiaries by any person that informs
AmerUs or any of its Subsidiaries that it is considering making,
or has made, an Acquisition Proposal, or any inquiry from any
person seeking to have discussions or negotiations with AmerUs
relating to a possible Acquisition Proposal. Such notice shall
be made orally and confirmed in writing, and shall indicate the
identity of the person making the Acquisition Proposal, inquiry
or request and the material terms and conditions of any
inquiries, proposals or offers (including a copy thereof if in
writing and any related documentation or correspondence). AmerUs
shall also promptly, and in any event within 24 hours,
notify Aviva, orally and in writing, if it enters into
discussions or negotiations concerning any Acquisition Proposal
or provides nonpublic information or data to any person in
accordance with this Section 5.4 and keep Aviva informed of
the status and terms of any such proposals, offers, discussions
or negotiations on a reasonably current basis, including by
providing a copy of all material documentation or correspondence
relating thereto.
(d) AmerUs agrees that (i) it will and will cause its
Subsidiaries, and its and their officers, directors, agents,
representatives and advisors to, cease immediately and terminate
any and all existing activities, discussions or negotiations
with any third parties conducted heretofore with respect to any
Acquisition Proposal, and (ii) it will not release any
third party from, or waive any provisions of, any
confidentiality or standstill agreement to which it or any of
its Subsidiaries is a party with respect to any Acquisition
Proposal. AmerUs agrees that it will promptly inform its and its
Subsidiaries respective directors, officers, key
employees, agents and representatives of the obligations
undertaken in this Section 5.4.
(e) For purposes of this Agreement, Superior
Proposal means a bona fide unsolicited written
Acquisition Proposal not attributable to a breach of
Section 5.4(a) which the Board of Directors of AmerUs
concludes in good faith, after consultation with its financial
advisors and outside legal advisor, taking into account, among
other things, its obligations under applicable Law, the terms
and conditions of the proposal, including price, form of
consideration, financing conditions, closing conditions and
other aspects of the proposal and the person making the proposal
(including any
break-up
fees and expense reimbursement provisions), (i) is more
favorable to the shareholders of AmerUs from a financial point
of view, than the Merger and the other transactions contemplated
by this Agreement and (ii) is fully financed or reasonably
capable of being fully financed, reasonably likely to receive
all required governmental approvals and otherwise reasonably
capable of being completed on the terms proposed;
provided, however, that, for purposes of this
definition of Superior Proposal, the term
Acquisition Proposal shall have the meaning assigned to such
term in Section 5.4(a), except that the reference to
10% or more of its total voting power in the
definition of Acquisition Proposal shall be deemed
to be a reference to a majority of its total voting
power and the reference to 10% or more of the
consolidated assets shall be deemed to be a reference to
a majority of the consolidated assets.
5.5. Fees and
Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense, except as otherwise
provided in Section 7.3.
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5.6. Indemnification; Directors and
Officers Insurance.
(a) From and after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted by applicable
Law, indemnify, defend and hold harmless, and provide
advancement of expenses to, each person who is now, or has been
at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer, director or employee of AmerUs or
any of its Subsidiaries (the Indemnified
Parties) against all losses, claims, damages, costs,
expenses (including attorneys fees and expenses),
liabilities or judgments or amounts that are paid in settlement
of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole
or in part out of the fact that such person is or was a
director, officer or employee of AmerUs or any Subsidiary of
AmerUs, and pertaining to any matter existing or occurring, or
any acts or omissions occurring, at or prior to the Effective
Time, whether asserted or claimed prior to, or at or after, the
Effective Time (including matters, acts or omissions occurring
in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby)
(Indemnified Liabilities) to the same extent
such persons are indemnified or have the right to advancement of
expenses as of the date of this Agreement with respect to such
Indemnified Liabilities by AmerUs pursuant to AmerUs
Amended and Restated Articles of Incorporation, Amended and
Restated Bylaws and indemnification agreements and resolutions,
if any, in existence on the date hereof with any directors,
officers and employees of AmerUs and its Subsidiaries.
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the
current policies of directors and officers liability
insurance maintained by AmerUs (provided that the Surviving
Corporation may substitute therefor policies with a
substantially comparable insurer of at least the same coverage
and amounts containing terms and conditions which are no less
advantageous to the insured) with respect to claims arising from
facts or events which occurred at or before the Effective Time;
provided, however, that the Surviving Corporation
shall not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 200% of the
premiums paid as of the date hereof by AmerUs for such insurance
(AmerUs Current Premium), and if such
premiums for such insurance would at any time exceed 200% of
AmerUs Current Premium, then the Surviving Corporation
shall cause to be maintained policies of insurance which, in the
Surviving Corporations reasonable determination, provide
the maximum coverage available at an annual premium equal to
200% of AmerUs Current Premium. In lieu of such coverage,
the Surviving Corporation may substitute a prepaid
tail policy for such coverage, which AmerUs may
obtain prior to the Closing.
(c) The provisions of this Section 5.6 are
(i) intended to be for the benefit of, and shall be
enforceable by, each Indemnified Party, his or her heirs and
representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or
contribution that any such person may have by contract or
otherwise.
5.7. Employee Benefit Matters.
(a) Aviva agrees that those individuals who are employed by
AmerUs or any of its Subsidiaries immediately prior to the
Closing Date shall continue to be employees of the Surviving
Corporation or its Subsidiaries as of the Closing Date (each
such employee, an Affected Employee);
provided, however, that this Section 5.7
shall not be construed to limit the ability of the applicable
employer to terminate the employment of any Affected Employee at
any time.
(b) For a period of 24 months immediately following
the Closing Date, the compensation, benefits and coverage
provided to the Affected Employees pursuant to employee benefit
or compensation plans or arrangements maintained by Aviva or the
Surviving Corporation and its Subsidiaries shall be, in the
aggregate, not less favorable (as reasonably determined by Aviva
in good faith) than those provided to such Affected Employees
immediately prior to the Closing Date.
(c) Aviva shall, or shall cause the Surviving Corporation
and its Subsidiaries to, give the Affected Employees full credit
for purposes of eligibility and vesting for such Affected
Employees service with AmerUs or any Subsidiary of AmerUs
under employee benefit plans of Aviva, the Surviving Corporation
or its Subsidiaries, including plans established after the
Closing Date which plans replace existing corresponding plans
(Post Closing Plans) to the same extent
recognized by AmerUs or such Subsidiary immediately prior to the
Closing Date except to the extent that recognition of such
service for vesting purposes results in an actual duplication of
benefits. Additionally full credit shall be given for the
Affected Employees prior service with AmerUs or any
Subsidiary of AmerUs for benefit accrual purposes in any Post
Closing Plan which is a vacation or severance plan.
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(d) Aviva shall, or shall cause the Surviving Corporation
and its Subsidiaries to, (i) waive all limitations as to
preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plan
established by them, in which such Affected Employees may be
eligible to participate after the Closing Date, other than
limitations or waiting periods that are already in effect with
respect to such Affected Employees and that have not been
satisfied as of the date of such establishment under any welfare
plan maintained for the Affected Employees immediately prior to
the Effective Time, and (ii) provide each Affected Employee
with credit for any co-payments and deductibles paid prior to
the date of such establishment in satisfying any applicable
deductible or
out-of-pocket
requirements under any welfare plans that such Affected
Employees are eligible to participate in after the Closing Date.
(e) Aviva shall cause the Surviving Corporation and its
Subsidiaries to honor all employment, severance, consulting,
retention and similar agreements or arrangements and all AmerUs
Benefit Plans as in effect as of the date hereof, as set forth
in Section 3.1(j)(ii) of the AmerUs Disclosure Letter, or
that are entered into or amended prior to the Closing Date in
accordance with Section 4.1 hereof and employment
agreements with AmerUs officers approved by Aviva in connection
with this Agreement and executed as of the date hereof;
provided, however, that, except as expressly
provided in the provisions of this Section 5.7(e), this
Section 5.7 is not intended to prevent Aviva or the
Surviving Corporation from exercising their rights with respect
to such agreements or arrangements and all AmerUs Benefit Plans
in accordance with their terms, including, but not limited to,
any right provided by such terms to alter, terminate or
otherwise amend all such agreements and arrangements and AmerUs
Benefit Plans. Aviva shall permit AmerUs to amend the 401(k)
plan to provide that, upon an involuntary termination without
cause within the 24 month period immediately following the
Closing Date, the terminated participants account shall
immediately be fully vested to the extent permitted by
applicable Law. Aviva agrees that AmerUs may amend its Severance
and Transition Plans to cover position eliminations made within
the twenty-four (24) month period immediately following the
Closing Date, and that Aviva shall cause the Surviving
Corporation and its Subsidiaries to honor the Severance and
Transition Plans, as so amended, during such period, without
further amendment or termination. Aviva agrees that AmerUs may
amend each annual incentive plan (including, without limitation,
the Management Incentive Plan) to provide that, upon an
involuntary termination without cause within the
24-month
period immediately following the Closing Date, the terminated
participant shall receive a pro-rated bonus payment for the plan
year in which the termination occurs, calculated by multiplying
the participants target bonus for the termination year by
a fraction, the numerator of which shall be the number of days
in such year during which the participant was employed and the
denominator of which shall be 365, and the terminated
participant shall also receive, with respect to any completed
plan year as to which payment has not yet been made, a payment
equal to the amount of the participants target bonus for
such completed plan year. The amendment provisions described in
the immediately preceding three sentences shall not be altered
or amended during the
24-month
period immediately following the Closing Date. Notwithstanding
the foregoing, no employer match or payment shall be required to
be made in shares of the common stock of any party to this
Agreement.
(f) The parties agree that the consummation of the
transactions contemplated by this Agreement shall constitute a
Change of Control for purposes of the AmerUs Benefit
Plans listed on Section 3.1(j)(iv) of the AmerUs Disclosure
Letter and employment agreements with AmerUs officers approved
by Aviva in connection with this Agreement and executed as of
the date hereof. The parties further agree that, for purposes of
this Section 5.7(f), the term Change of Control
shall include all equivalent terms as required by context (by
way of illustration and not limitation Change in
Control).
5.8. Tax Matters.
(a) At the option of Aviva any or all Tax Sharing
Agreements between or among AmerUs and any of its Subsidiaries
shall be terminated immediately prior to the Effective Time and
shall have no continuing force or effect after the Effective
Time.
(b) At the option of Aviva, all powers of attorney issued
or granted by AmerUs and its Subsidiaries shall be terminated
immediately prior to the Effective Time and shall have no
continuing force or effect after the Effective Time.
(c) From the date of this Agreement to the Effective Time,
AmerUs and its Subsidiaries shall reasonably cooperate with
Aviva in the preparation, execution and filing of all Tax
Returns, questionnaires, applications or
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other documents regarding any sales, use, stamp, documentary,
filing, recording, transfer, real estate, stock transfer,
intangible property transfer, personal property transfer, gross
receipts, registration, duty, securities transactions or similar
fees, Taxes or governmental charges and any interest, penalties,
additions to tax or additional amount imposed in connection with
such fees, Taxes or charges as levied by any Taxing Authority in
connection with the transactions contemplated by this Agreement
(Transfer Taxes) and take all reasonable
steps necessary to obtain any exemptions from such Transfer
Taxes.
5.9. Public
Announcements. Aviva and AmerUs shall use
reasonable best efforts (i) to develop a joint
communications plan, (ii) to ensure that all press releases
and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint
communications plan, and (iii) except in respect of any
announcement required by applicable Law or by obligations
pursuant to any listing agreement with or rules of any
securities exchange, to consult with each other before issuing
any press release or, to the extent practical, otherwise making
any public statement with respect to this Agreement or the
transactions contemplated hereby. AmerUs shall provide Aviva
with its shareholder lists to allow Aviva to contact its
shareholders and following a Change in AmerUs Recommendation,
such contacts may be made without regard to the above
limitations of this Section 5.9.
5.10. Delisting. Each of
the parties agrees to cooperate with each other in taking, or
causing to be taken, all actions necessary to delist the Common
Stock from the New York Stock Exchange and to terminate
registration under the Exchange Act; provided,
however, that such delisting and termination shall not be
effective until after the Effective Time; provided further that
nothing in this Section 5.10 shall be deemed to affect the
listing or registration of Series A Preferred Stock.
5.11. Rule 16b-3. The
Board of Directors of AmerUs may adopt a resolution in advance
of the Effective Time providing that the disposition by Company
Insiders of equity securities of AmerUs (including derivative
securities with respect to the equity securities of AmerUs), in
each case in connection with the transactions contemplated
hereby, is intended to be exempt pursuant to
Rule 16b-3
under the Exchange Act. For purposes of this Agreement,
Company Insiders 5.11 means
those officers and directors of AmerUs and its subsidiaries who
immediately prior to the Closing are subject to the reporting
requirements of Section 16(a) of the Exchange Act with
respect to equity securities of AmerUs.
5.12. Takeover
Statute. AmerUs and the AmerUs Board of
Directors shall (i) take all actions reasonably necessary
to ensure that no takeover statute or similar statute or
regulation is or becomes applicable to this Agreement and the
transactions contemplated hereby and (ii) if any takeover
statute or similar statute or regulation becomes applicable to
this Agreement or any transactions contemplated hereby, take all
action reasonably necessary to ensure that the Merger and the
other transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute
or regulation on the Merger and the other transactions
contemplated hereby.
5.13. Principal Executive Offices of the
Surviving Corporation. Aviva acknowledges
its intention to maintain the Surviving Corporations
principal executive offices in Des Moines, Iowa after the
Effective Time.
5.14. Community
Commitments. Aviva acknowledges and agrees
that, after the Effective Time, it will cause the Surviving
Corporation (or its charitable foundation) to engage in
charitable and community giving and other charitable and
community activities to the same or greater degree as currently
undertaken by AmerUs. Without limiting the foregoing, after the
Effective Time, the Surviving Corporation (or its charitable
foundation) shall honor and fulfill all charitable and community
commitments made by AmerUs prior to the date of this Agreement.
5.15. Undertakings of
Aviva. Aviva shall cause Merger Sub to
perform, when due, all obligations of Merger Sub under this
Agreement.
5.16. Additional
Agreements. Subject to the terms and
conditions of this Agreement, in case any further action is
necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and
franchises of AmerUs, the proper officers and directors of each
party to this Agreement shall take all such necessary action at
the requesting partys expense.
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ARTICLE VI
CONDITIONS
PRECEDENT
6.1. Conditions to Each Partys Obligation
To Effect the Merger. The respective
obligation of each party to effect the Merger shall be subject
to the satisfaction prior to the Closing Date of the following
conditions, unless waived (subject to applicable Law) by both
Aviva and AmerUs:
(a) Shareholder Approval. AmerUs
shall have obtained the Required AmerUs Vote.
(b) HSR Approval. The applicable
waiting periods (and any extension thereof) under the HSR Act
shall have expired or been terminated.
(c) No Injunctions or Restraints;
Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be
in effect and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any Governmental Entity of
competent jurisdiction which makes the consummation of the
Merger illegal; provided, however, that prior to
asserting this condition, each of the parties shall have used
its reasonable best efforts to prevent the entry of any such
injunction, other order, other legal restraint or prohibition
and to appeal as promptly as possible any such injunction, other
order, other legal restraint or prohibition or other order that
may be entered.
6.2. Conditions to Obligations of Aviva and
Merger Sub. The obligations of Aviva and
Merger Sub to effect the Merger are further subject to the
satisfaction or waiver (subject to applicable Law) of the
following conditions:
(a) Representations and
Warranties. The representation and warranty
of AmerUs set forth in Section 3.1(m)(ii)(A) shall be true
and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date. The
representations and warranties of AmerUs set forth in
Sections 3.1(a)(i) and (ii), 3.1(b)(ii)-(v) and 3.1(j)(x)
shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date (except for representations and
warranties which address matters only as to a specified date,
which representations and warranties shall be true and correct
in all material respects with respect to such specified date).
All other representations and warranties of AmerUs set forth in
this Agreement, disregarding all qualifications and exceptions
therein relating to materiality or any use of the term
material, materiality, in all
material respects, AmerUs Material Adverse
Effect or similar terms or phrases, shall be tru