EXECUTION COPY
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of November 22, 1998, between
UNUM CORPORATION, a Delaware corporation ("UNUM"),
and PROVIDENT COMPANIES, INC., a Delaware
corporation ("Provident").
WHEREAS the respective Boards of Directors of UNUM and Provident have
approved and declared advisable this Agreement and the merger of UNUM with and
into Provident (the "Merger"), with Provident as the surviving corporation (the
"Surviving Corporation"), upon the terms and subject to the conditions set forth
in this Agreement, whereby each issued and outstanding share of common stock,
par value $.10 per share, of UNUM ("UNUM Common Stock"), other than shares owned
by Provident or UNUM, will be converted, subject to the prior effectiveness of
the Reverse Stock Split (as defined in Section 3.01(n)), into one share of
common stock, par value $.10 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock"); provided, however, that immediately prior to the
Effective Time (as defined in Section 1.03), Provident shall effect the Reverse
Stock Split, pursuant to which, among other things, each issued and outstanding
share of common stock, par value $1.00 per share, of Provident ("Provident
Common Stock") shall be reclassified and converted into (assuming the
effectiveness of the Merger) 0.730 of a validly issued, fully paid and
nonassessable share of Surviving Corporation Common Stock;
WHEREAS the respective Boards of Directors of UNUM and Provident have
each determined that the Merger and the other transactions contemplated hereby
are consistent with, and in furtherance of, their respective business strategies
and goals;
WHEREAS UNUM and Provident desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the
Merger will be accounted for as a pooling of interests transaction;
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WHEREAS, substantially concurrently herewith and as a condition and
inducement to UNUM's willingness to enter into this Agreement, UNUM and certain
stockholders of Provident have entered into a Stockholders Agreement (the
"Stockholders Agreement");
WHEREAS, immediately following the due execution and delivery of this
Agreement, Provident and UNUM will enter into a stock option agreement (the
"Provident Stock Option Agreement"), pursuant to which Provident will grant UNUM
the option (the "Provident Option") to purchase shares of Provident Common
Stock, upon the terms and subject to the conditions set forth therein; and
WHEREAS, immediately following the due execution and delivery of this
Agreement, UNUM and Provident will enter into a stock option agreement (the
"UNUM Stock Option Agreement" and, together with the Provident Stock Option
Agreement, the "Option Agreements"), pursuant to which UNUM will grant Provident
the option (the "UNUM Option") to purchase shares of UNUM Common Stock, upon the
terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
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SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), UNUM shall be merged with and into Provident at
the Effective Time. Following the Effective Time, Provident, as the Surviving
Corporation, shall succeed to and assume all the rights and obligations of UNUM
in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on the fifth business day after satisfaction or waiver
of the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions), unless another time or date is agreed to by the
parties hereto (the "Closing Date").
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SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall
acknowledge and file a certificate of merger or other appropriate documents (in
any such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such subsequent date or time as UNUM and Provident shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The Amended
and Restated Certificate of Incorporation of Provident, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time so as to
read in its entirety in the form set forth as Exhibit A-1 and, as so amended,
such Certificate of Incorporation shall be the certificate of incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of Provident, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so as to read in their
entirety in the form set forth as Exhibit A-2 and, as so amended, such By-laws
shall be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.06. Board of Directors and Officers. The Board of Directors
and the officers of the Surviving Corporation shall be as set forth on or
designated in accordance with Exhibit B hereto until the earlier of the
resignation or removal of any individual set forth on or designated in
accordance with Exhibit B or until their respective successors are duly elected
and qualified, as the case may be, it being agreed that if any director shall be
unable or unwilling to serve as a director at the Effective Time the party which
designated such individual as indicated in Exhibit B shall designate another
individual to serve in such individual's place. If any officer set forth on or
designated in accordance with Exhibit B ceases to be a full-time employee of
either Provident or UNUM at or before the Effective Time or shall be unable or
unwilling to serve as an officer of the Surviving Corporation at the Effective
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Time, the parties will agree upon another individual to serve in such
individual's stead.
ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations
------------------------
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Provident Common Stock or UNUM Common Stock:
(a) Cancelation of Treasury Stock and Provident-Owned Stock. Each share
of UNUM Common Stock that is owned by Provident or UNUM (in each case not held
on behalf of third parties) shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) Conversion of UNUM and Provident Common Stock. (i) Except as set
forth in Section 2.01(a), each issued and outstanding share of UNUM Common Stock
immediately prior to the Effective Time shall be converted into, subject to the
prior effectiveness of the Reverse Stock Split, one fully paid and nonassessable
share of Surviving Corporation Common Stock. As of the Effective Time, all
shares of UNUM Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of UNUM Common Stock shall cease to
have any rights with respect thereto, except that, from and after the Effective
Time, certificates representing UNUM Common Stock (other than shares to be
canceled in accordance with Section 2.01(a)) immediately prior to the Effective
Time shall be deemed for all purposes to represent the number of shares of
Surviving Corporation Common Stock into which they were converted pursuant to
this subparagraph (b) (provided that if an exchange of certificates formerly
representing UNUM Common Stock for certificates representing Surviving
Corporation Common Stock is required by law or applicable rule or regulation,
the parties will cause the Surviving Corporation to arrange for such exchange on
a one share-for-one share basis).
(ii) Each share of Provident Common Stock issued and outstanding
immediately prior to the Effective Time, assuming the prior effectiveness of the
Reverse Stock Split, shall remain an issued and outstanding share of Surviving
Corporation Common Stock.
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ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of Provident. Except as
disclosed in the Provident Filed SEC Documents (as defined in Section 3.01(g))
or as set forth on the Disclosure Schedule dated the date hereof and delivered
by Provident to UNUM in connection with the execution of this Agreement (the
"Provident Disclosure Schedule"), Provident represents and warrants to UNUM as
follows:
(a) Organization, Standing and Corporate Power. Each of Provident and
its subsidiaries (as defined in Section 8.03) is a corporation duly organized,
validly existing and in good standing under the laws of the respective
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. Each of Provident
and its subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, is not reasonably likely to have
a material adverse effect (as defined in Section 8.03) on Provident. Provident
has made available to UNUM prior to the date hereof complete and correct copies
of its Amended and Restated Certificate of Incorporation and By-laws and the
certificates of incorporation and by-laws of its subsidiaries, in each case as
amended to the date hereof.
(b) Subsidiaries. Exhibit 21 to Provident's Annual Report on Form 10-K
for the year ended December 31, 1997 (the "Provident Form 10-K"), lists each
subsidiary of Provident which as of the date of this Agreement is a Significant
Subsidiary (as defined in Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "SEC")). All the outstanding shares of capital stock
of, or other ownership interests in, each such Significant Subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly or
indirectly by Provident, free and clear of all liens and free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or such other ownership interest). Except for the
capital stock of, or other ownership interests in, its Significant Subsidiaries
noted above, Provident does not own, directly or indirectly, any capital stock
or other ownership interest in any corporation, partnership, limited liability
company,
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joint venture or other entity constituting a Significant Subsidiary.
(c) Capital Structure. The authorized capital stock of Provident
consists of 150,000,000 shares of Provident Common Stock and 25,000,000 shares
of preferred stock, par value $1.00 per share. At the close of business on
November 17, 1998, (i) 135,406,403 shares of Provident Common Stock and no
shares of preferred stock were issued and outstanding and (ii) 294,151 shares of
Provident Common Stock were held by Provident in its treasury. As of November
17, 1998, collectively, 6,983,551 shares of Provident Common Stock were subject
to options ("Provident Stock Options") granted under the Stock Plan of 1994,
Stock Option Plan of 1989, Employee Stock Option Plan of 1998, Non-Employee
Director Compensation Plan of 1998 and Amended and Restated Annual Management
Incentive Compensation Plan of 1994 (collectively, the "Provident Stock Plans").
As of November 17, 1998, there were 9,278,780 shares of Provident Common Stock
reserved for issuance under the Provident Stock Plans. Except as set forth
above, at the close of business on November 17, 1998, no shares of capital stock
or other voting securities of Provident were issued, reserved for issuance or
outstanding. There are no outstanding stock appreciation rights ("SARs") or
rights (other than the Provident Stock Options) to receive shares of Provident
Common Stock on a deferred basis granted under the Provident Stock Plans or
otherwise. Schedule 3.01(c) of the Provident Disclosure Schedule sets forth a
true and complete list, as of November 17, 1998, of all Provident Stock Options,
the number of shares subject to each such option, the grant dates and the
exercise prices thereof. All outstanding shares of capital stock of Provident
are, and all shares which may be issued pursuant to this Agreement or the
Provident Stock Plans will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. As of the
date of this Agreement, no bonds, debentures, notes or other indebtedness of
Provident having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
Provident may vote are issued or outstanding. Except as set forth above, as of
the date of this Agreement, there are no preemptive or other outstanding
securities, options, warrants, calls, rights, conversion rights, redemption
rights, repurchase rights, commitments, agreements, arrangements or undertakings
of any kind to which Provident or any of its subsidiaries is a party or by which
any of them is bound obligating Provident or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of Provident or any
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of its subsidiaries, or giving any person a right to subscribe for or acquire,
any securities of Provident or any of its subsidiaries or obligating Provident
or any of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, conversion right, redemption right,
repurchase right, commitment, agreement, arrangement or undertaking. There are
no outstanding contractual obligations of Provident or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of
Provident or any of its subsidiaries. There are no outstanding contractual
obligations of Provident to vote or to dispose of any shares of the capital
stock of any of its subsidiaries. To the knowledge of Provident, each individual
or entity executing the Stockholders Agreement contemporaneously with or prior
to the execution and delivery hereof is the record owner of, or is a trustee of
a trust that is the record holder of, a number of shares of Provident Common
Stock which is equal to the number of shares of Provident Common Stock set forth
opposite such individual's or entity's name on Schedule A to the Stockholders
Agreement.
(d) Authority; Noncontravention. (i) Provident has all requisite
corporate power and authority to enter into this Agreement and the Option
Agreements and, subject to receipt of the Provident Stockholder Approval (as
defined in Section 3.01(n)), to consummate the transactions contemplated by this
Agreement and the Option Agreements. The execution and delivery of this
Agreement and the Option Agreements by Provident and the consummation of the
transactions contemplated by this Agreement and the Option Agreements have been
duly authorized by all necessary corporate action on the part of Provident,
subject to receipt of the Provident Stockholder Approval in the case of this
Agreement. This Agreement and the Option Agreements have been duly executed and
delivered by Provident and, assuming the due execution and delivery of each such
agreement by the counterparties thereto, each such agreement constitutes a valid
and binding obligation of Provident as to Provident's obligations therein,
enforceable against Provident in accordance with its terms. The execution and
delivery of this Agreement and the Option Agreements do not, and the
consummation of the transactions contemplated by this Agreement, the Option
Agreements and the Stockholders Agreement and compliance with the provisions of
this Agreement and the Option Agreements by Provident will not, conflict with,
or result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien upon
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any of the properties or assets of Provident or any of its subsidiaries under,
(A) the Amended and Restated Certificate of Incorporation or By-laws of
Provident or the comparable charter or organizational documents of any of its
subsidiaries, (B) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to Provident or any of its subsidiaries or their respective
properties or assets or (C) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Provident or any of
its subsidiaries or their respective properties or assets, other than, in the
case of clauses (B) and (C), any such conflicts, violations, defaults,
obligations, losses, rights, liens, judgments, orders, decrees, statutes, laws,
ordinances, rules or regulations that, individually or in the aggregate, are not
reasonably likely to have a material adverse effect on Provident. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Federal, state or local government or any court, administrative agency
or commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Provident or any of
its subsidiaries in connection with the execution and delivery of this Agreement
and the Option Agreements by Provident or the consummation by Provident of any
of the transactions contemplated by this Agreement and the Option Agreements,
except for (A) the filing of a premerger notification and report form by
Provident under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (B) the filing with the SEC of (w) a registration
statement on Form S-4 relating to the issuance of Surviving Corporation Common
Stock in the Merger (the "Form S-4"), (x) a proxy statement relating to the
Provident Stockholders Meeting (as defined in Section 5.01(b)) (such proxy
statement, together with the proxy statement relating to the UNUM Stockholders
Meeting (as defined in Section 5.01(c)), in each case as amended or supplemented
from time to time, the "Joint Proxy Statement"), (y) such reports under Section
13(a), 13(d), 15(d) or 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this Agreement, the
Option Agreements and the transactions contemplated hereby and thereby and (z) a
registration statement on Form S-8 under the Securities Act of 1933, as amended
(the "Securities Act"); (C) the filing with the Delaware Secretary of State of
(x) an amendment to the Amended and Restated Certificate of Incorporation of
Provident to effect the Reverse Stock Split immediately prior to the occurrence
of the Effective Time and (y) the Certificate of Merger, and
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the filing of appropriate documents with the relevant authorities of other
states in which Provident is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state securities
or "blue sky" laws; (D) such filings with and approvals of the New York Stock
Exchange, Inc. (the "NYSE"), to permit the shares of Surviving Corporation
Common Stock that are to be issued in the Merger to be listed on the NYSE; (E)
filings in respect of, and approvals and authorizations of, and, as applicable,
the expiration of applicable waiting periods of, and, as applicable, the
expiration of applicable waiting periods of, the respective Commissioners of
Insurance of the states of Maine, New York, Delaware and South Carolina (the
"Designated State Insurance Approvals"); (F) such other filings in respect of,
and, to the extent necessary, approvals and authorizations of, and, as
applicable, the expiration of applicable waiting periods of, the respective
state Commissioners of Insurance or other similar state authorities to satisfy
applicable state insurance and competition control and licensing laws or the
expiration of applicable waiting periods (the "Other State Insurance Approvals",
and together with the Designated State Insurance Approvals, the "State Insurance
Approvals"); (G) notification under the Competition Act (Canada) and other
relevant Canadian approvals; and (H) such consents, approvals, orders or
authorizations the failure of which to be made or obtained, individually or in
the aggregate, is not reasonably likely to have a material adverse effect on
Provident.
(ii) As of the date hereof, the Board of Directors of Provident has
approved and declared advisable this Agreement, the Reverse Stock Split and the
Merger, and has approved the Option Agreements and the other transactions
contemplated by this Agreement and the Option Agreements.
(e) SEC Documents; Undisclosed Liabilities; SAP Statements. (i)
Provident has filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1997 (including all filed reports,
schedules, forms, statements and other documents whether or not required, the
"Provident SEC Documents"). As of their respective dates, the Provident SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Provident SEC
Documents, and none of the Provident SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
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statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Provident
SEC Document has been revised or superseded by a later filed Provident SEC
Document, none of the Provident SEC Documents contains any untrue statement of a
material fact or omits 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. The financial
statements of Provident included in the Provident SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of Provident and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
adjustments). Except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the most
recent consolidated balance sheet included in the Provident SEC Documents,
neither Provident nor any of its subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) required by
U.S. generally accepted accounting principles to be recognized or disclosed on a
consolidated balance sheet of Provident and its consolidated subsidiaries or in
the notes thereto.
(ii) Provident conducts its material insurance operations through
Provident Life and Accident Insurance Company, Provident Life and Casualty
Insurance Company, Provident National Assurance Company, The ▇▇▇▇ ▇▇▇▇▇▇ Life
Insurance Company, The ▇▇▇▇ ▇▇▇▇▇▇ Variable Annuity Insurance Company and The
▇▇▇▇ ▇▇▇▇▇▇ Protective Life Insurance Company (collectively, the "Provident
Insurance Subsidiaries"). Each of the Provident Insurance Subsidiaries has filed
all annual and quarterly statements, together with all exhibits,
interrogatories, 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 regulatory authorities of the
jurisdiction in which it is domiciled or commercially domiciled on forms
prescribed or permitted by such authority (collectively, the "Provident SAP
Statements"). Provident has delivered or
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made available to UNUM all Provident SAP Statements for each Provident Insurance
Subsidiary for the periods beginning January 1, 1996, each in the form
(including exhibits, annexes and any amendments thereto) filed with the
applicable state insurance regulatory agency. Financial statements included in
the Provident SAP Statements and prepared on a statutory basis, including the
notes thereto, were prepared in conformity with statutory accounting practices
prescribed or permitted by the applicable insurance regulatory authority
consistently applied for the periods covered thereby and present fairly the
statutory financial position of such Provident Insurance Subsidiaries as at the
respective dates thereof and the results of operations of such Provident
Insurance Subsidiaries for the respective periods then ended. The Provident SAP
Statements complied in all material respects with all applicable laws, rules and
regulations when filed, and no material deficiency has been asserted with
respect to any Provident SAP Statements by the applicable insurance regulatory
body or any other governmental agency or body. Except as indicated therein, all
assets that are reflected on Provident SAP Statements comply with all applicable
foreign, federal, state and local statutes and regulations regulating the
business and products of insurance and all applicable orders and directives of
insurance regulatory authorities (collectively, the "Insurance Laws") with
respect to admitted assets and are in an amount at least equal to the minimum
amounts required by Insurance Laws. The statutory balance sheets and income
statements included in the Provident SAP Statements have been audited by Ernst &
Young LLP and Provident has delivered or made available to UNUM true and
complete copies of all audit opinions related thereto for periods beginning
January 1, 1996. As promptly as practicable following the date of this
Agreement, Provident will deliver or make available to UNUM true and complete
copies of all examination reports of insurance departments and any insurance
regulatory agencies received by Provident on or after January 1, 1996 relating
to Provident Insurance Subsidiaries.
(f) Information Supplied. No statement, certificate, instrument or
other writing furnished or to be furnished by Provident or any affiliate (as
defined in Section 8.03) thereof to UNUM pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by Provident for inclusion or incorporation by reference in
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(i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Joint Proxy Statement will, at the
date the Joint Proxy Statement is first mailed to Provident's stockholders or at
the time of the Provident Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4 and the
Joint Proxy Statement will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and the
respective rules and regulations promulgated thereunder, except that no
representation or warranty is made by Provident with respect to statements made
or incorporated by reference therein based on information supplied by UNUM
specifically for inclusion or incorporation by reference in the Form S-4 or the
Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Provident SEC Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "Provident Filed SEC
Documents"), since the date of the most recent audited financial statements
included in the Provident Filed SEC Documents, Provident has conducted its
business only in the ordinary course, and there has not been since such date,
(i) any material adverse change (as defined in Section 8.03) in Provident, (ii)
except for regular quarterly cash dividends not in excess of $.10 per share
declared on Provident Common Stock and subject to Section 4.01(c), any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Provident's capital
stock, (iii) except for the Reverse Stock Split, 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, (iv) (x) any granting by
Provident or any of its subsidiaries to any director, executive officer or key
employee of Provident or any of its subsidiaries of any award or incentive
payment or increase in compensation or benefits, except in the ordinary course
of business consistent with past practice or as was required under employment
agreements in effect as of the date of this Agreement (copies of which have been
made available to
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UNUM), (y) any granting by Provident or any of its subsidiaries to any such
director, executive officer or key employee of any increase in severance or
termination pay, except as was required under any employment, severance or
termination agreements in effect as of the date of this Agreement (copies of
which have been made available to UNUM) or (z) any entry by Provident or any of
its subsidiaries into any employment, severance or termination agreement with
any such director, executive officer or key employee or (v) any change in
accounting methods, principles or practices by Provident materially affecting
its assets, liabilities or business, except insofar as may have been required by
a change in U.S. generally accepted accounting principles.
(h) Litigation. There is no suit, action or proceeding pending or, to
the knowledge of Provident, threatened against or affecting Provident or any of
its subsidiaries that, individually or in the aggregate, is reasonably likely to
have a material adverse effect on Provident nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Provident or any of its subsidiaries having, or which is reasonably
likely to have, individually or in the aggregate, a material adverse effect on
Provident; provided, that for purposes of this paragraph (h) any such suit,
action, proceeding, judgment, decree, injunction, rule or order arising after
the date hereof shall not be deemed to have a material adverse effect on
Provident if and to the extent such suit, action, proceeding, judgment, decree,
injunction, rule or order (or any relevant part thereof) is based on this
Agreement, the Option Agreements or the Stockholders Agreement or the
transactions contemplated hereby or thereby.
(i) Labor Relations. Neither Provident nor any of its subsidiaries is
the subject of any suit, action or proceeding which is pending or, to the
knowledge of Provident, threatened, asserting that Provident or any of its
subsidiaries has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or applicable state statutes) or is seeking to
compel it to bargain with any labor union or labor organization, nor is there
pending or, to the knowledge of Provident, threatened, nor has there been for
the past five years, any labor strike, dispute, walk-out, work stoppage,
slow-down, lockout or organizational effort involving Provident or any of its
subsidiaries that, individually or in the aggregate, is reasonably likely to
have a material adverse effect on Provident.
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(j) Benefit Plans. (i) Schedule 3.01(j) contains a list and brief
description of all "employee pension benefit plans" (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes collectively referred to herein as "Provident Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(l) of ERISA,
hereinafter a "Welfare Plan"), severance, termination, change in control,
incentive compensation profit sharing stock option, stock purchase, stock
ownership, phantom stock, deferred compensation plans, and other employee fringe
benefit plans or arrangements maintained, contributed to or required to be
maintained or contributed to by Provident or its subsidiaries for the benefit of
any present or former officers, employees, directors or independent contractors
of Provident or any of its subsidiaries (all the foregoing being herein called
"Provident Benefit Plans"). Provident has made available to UNUM true, complete
and correct copies of (1) each Provident Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (2) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with respect to each
Provident Benefit Plan (if any such report was required by applicable law), (3)
the most recent summary plan description for each Provident Benefit Plan for
which such a summary plan description is required by applicable law and (4) each
currently effective trust agreement and insurance or annuity contract relating
to any Provident Benefit Plan.
(ii) Each Provident Benefit Plan has been administered in accordance
with its terms except for any failure so to administer as, individually or in
the aggregate, is not reasonably likely to have a material adverse effect on
Provident. Provident, its subsidiaries and all the Provident Benefit Plans are
in compliance with the applicable provisions of ERISA, the Code and other
applicable laws as to the Provident Benefit Plans except for any failure so to
be in compliance as, individually or in the aggregate, is not reasonably likely
to have a material adverse effect on Provident.
(iii) With respect to the Provident Benefit Plans, individually and in
the aggregate, no event has occurred and, to the knowledge of Provident, there
exists no condition or set of circumstances, in connection with which Provident
or any of its subsidiaries could be subject to any liability that is reasonably
likely to have a material adverse effect on Provident under ERISA, the Code or
any other applicable law.
16
(iv) Each Provident Pension Plan that is intended to comply with the
provisions of Section 401(a) of the Code has been the subject of a determination
letter from the Internal Revenue Service to the effect that such Provident
Pension Plan is qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code; no such determination letter has
been revoked, and, to the knowledge of Provident, revocation has not been
threatened; and no amendment to such Provident Pension Plan as to which the
remedial amendment period has expired would adversely affect its qualification
or materially increase its cost. Provident has made available to UNUM a copy of
the most recent determination letter received with respect to each Provident
Pension Plan for which such a letter has been issued, as well as a copy of any
pending application for a determination letter. Schedule 3.01(j) lists all
Provident Pension Plan amendments as to which a favorable determination letter
has not yet been received.
(v) No employee of Provident will be entitled to any additional
benefits or any acceleration of the time of payment, funding or vesting of any
benefits under any Provident Benefit Plan as a result of the transactions
contemplated by this Agreement.
(vi) Since the date of the most recent audited financial statements
included in the Provident Filed SEC Documents, there has not been any adoption
or amendment in any material respect by Provident or any of its subsidiaries of
any collective bargaining agreement or any Provident Benefit Plans (whether or
not legally binding).
(k) Taxes. (i) Each of Provident and its subsidiaries has filed all tax
returns and reports required to be filed by it or requests for extensions to
file such returns or reports have been timely filed, granted and have not
expired, except to the extent that all such failures to file, taken together,
are not reasonably likely to have a material adverse effect on Provident. All
returns filed by Provident and each of its subsidiaries are complete and
accurate in all material respects to the knowledge of Provident. Provident and
each of its subsidiaries has paid (or Provident has paid on its behalf) all
taxes shown as due on such returns, and the most recent financial statements
contained in the Provident Filed SEC Documents reflect an adequate reserve for
all taxes payable by Provident and its subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed, asserted or
assessed against Provident or any of
16
its subsidiaries that are not adequately reserved for, except for deficiencies
that, individually or in the aggregate, are not reasonably likely to have a
material adverse effect on Provident, and no requests for waivers of the time to
assess any such taxes have been granted or are pending (other than with respect
to years that are currently under examination by the Internal Revenue Service or
other applicable taxing authorities). The statute of limitations on assessment
or collection of any taxes due from Provident or any of its subsidiaries has
expired for all taxable years of Provident or any of its subsidiaries through
1985. The Federal income tax returns of Provident and each of its subsidiaries
have been examined by and settled with the United States Internal Revenue
Service for all years through 1985.
(iii) Neither Provident nor any of its subsidiaries has taken any
action or has any knowledge of any fact or circumstance that is reasonably
likely to prevent the transactions contemplated hereby, including the Merger,
from qualifying as a reorganization within the meaning of Section 368 of the
Code.
(iv) Neither Provident nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code ) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(v) The amount of gain to be recognized by Provident or any of its
subsidiaries as a result of the Merger due to "intercompany transactions" (as
defined under Treasury Regulation Section 1.1502-13) will not exceed $75
million.
(l) No Excess Parachute Payments. No amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement, either alone or together with
other events, by any employee, officer or director of Provident or any of its
affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Provident Benefit
Plan currently in effect would be
17
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(m) Compliance with Applicable Laws. (i) Each of Provident and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
assets and to carry on its business as now conducted, and there has occurred no
default under or limitation with respect to any such Permit, except for the lack
of Permits and for defaults or limitations under Permits which, individually or
in the aggregate, are not reasonably likely to have a material adverse effect on
Provident. To the knowledge of Provident, Provident and its subsidiaries are,
and have been, in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, including Insurance
Laws, except for instances of noncompliance which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on
Provident. To the knowledge of Provident, the businesses and operations of each
of Provident and its subsidiaries are being and have been conducted in
compliance in all respects with all applicable Insurance Laws, except for
instances of noncompliance which, individually or in the aggregate, are not
reasonably likely to have a material adverse effect on Provident. No
investigation, examination or review by any Governmental Entity with respect to
Provident or any of its subsidiaries is pending or, to the knowledge of
Provident, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, except for those the outcome of which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on
Provident.
(ii) To the knowledge of Provident, the businesses of each of Provident
and its subsidiaries are being and have been conducted in compliance in all
respects with all applicable statutes, laws, ordinances, rules, orders and
regulations which are administered, interpreted or enforced by the U.S.
Environmental Protection Agency and state and local agencies with jurisdiction
over pollution or protection of the environment (collectively, "Environmental
Laws"), except for instances of noncompliance which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on
Provident.
(iii) There is no suit, action, proceeding or inquiry pending or, to
the knowledge of Provident, threatened before any court, governmental agency or
18
authority or other forum in which Provident or any of its subsidiaries has been
or, with respect to threatened suits, actions and proceedings, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material (as hereinafter defined), whether or not occurring at, on,
under or involving a site owned, leased or operated by Provident or any of its
subsidiaries, except for any such suits, actions, proceedings and inquiries
which, individually or in the aggregate, are not reasonably likely to have a
material adverse effect on Provident.
(iv) During the period of ownership or operation by Provident and its
subsidiaries of any of their respective current properties, there have been no
releases of Hazardous Material in, on, under or affecting such properties or, to
the knowledge of Provident, any surrounding site, except in each case for those
which, individually or in the aggregate, are not reasonably likely to have a
material adverse effect on Provident. Prior to the period of ownership or
operation by Provident and its subsidiaries of any of their respective current
properties, to the knowledge of Provident, there were no releases of Hazardous
Material in, on, under or affecting any such property or any surrounding site,
except in each case for those which, individually or in the aggregate, are not
reasonably likely to have a material adverse effect on Provident. "Hazardous
Material" shall mean any waste or other substance regulated under any
Environmental Law including any hazardous substance within the meaning of the
Comprehensive Environmental Response, Compensation, and Liability Act, or any
similar Federal, state or local law.
(v) Provident is not subject to any order, decree, injunction or other
arrangement with any Governmental Entity or any indemnity or other agreement
with any third party relating to liability under any Environmental Law or
relating to any Hazardous Substance except for any such order, decree,
injunction, arrangement, indemnity or other agreement which, individually or in
the aggregate, is not reasonably likely to have a material adverse effect on
Provident.
(n) Voting Requirements. The affirmative vote at the Provident
stockholders meeting (the "Provident Stockholder Approval") of (i) the holders
of sixty six and two-thirds percent of the voting power of all outstanding
shares of Provident Common Stock at the Provident Stockholders Meeting to (A)
adopt this Agreement is the only vote of the holders of any class or series of
Provident's
19
capital stock necessary to approve and adopt this Agreement, the Option
Agreements and, other than the Reverse Stock Split and the transaction
contemplated by clause (ii) below, the transactions contemplated hereby and
thereby and (B) adopt an amendment to the Provident Amended and Restated
Certificate of Incorporation to effect a reclassification of the Provident
Common Stock (the "Reverse Stock Split") such that, immediately prior to the
Effective Time, each issued and outstanding share of Provident Common Stock
shall be automatically reclassified and converted into (assuming the
effectiveness of the Merger) 0.730 (the "Ratio") of a validly issued, fully paid
and nonassessable share of Surviving Corporation Common Stock (with the
resulting number of shares of each registered holder of Provident Common Stock
being rounded down to the nearest whole number and with each such registered
holder being entitled to receive from Provident in lieu of any fractional shares
of Surviving Corporation Common Stock prior to such rounding down an amount in
cash (without interest) equal to the product obtained by multiplying (x) the
fraction of a share of Surviving Corporation Common Stock to which such holder
(after taking into account all shares of Provident Common Stock held immediately
prior to the Effective Time by such holder) would otherwise be entitled to and
(y) the closing price per share of UNUM Common Stock on the NYSE on the last
trading day prior to the date on which the Effective Time occurs) and (ii) the
holders of a majority of all shares of Provident Common Stock casting votes
(provided that the total vote cast represents more than fifty percent in
interest of all capital stock of Provident entitled to vote) is the only vote of
the holders of any class or series of Provident's capital stock necessary to
approve, in accordance with the applicable rules of the NYSE, the issuance of
Surviving Corporation Common Stock in the Merger.
(o) State Takeover Statutes. Provident has caused Section 203 of the
DGCL not to be applicable to Provident by opting out of the provisions of such
Section 203 in its Amended and Restated Certificate of Incorporation in
accordance with the DGCL. To the knowledge of Provident, no other state takeover
statute, and no anti-takeover provision in Provident's Amended and Restated
Certificate of Incorporation and By-laws, is applicable to the Merger or the
other transactions contemplated by this Agreement, the Option Agreements and the
Stockholders Agreement.
(p) Brokers. No broker, investment banker, financial adviser or other
person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., the fees and expenses of which
will be paid by
20
Provident, is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Provident.
Provident has delivered to UNUM true and complete copies of all agreements under
which any such fees or expenses are payable and all indemnification and other
agreements related to the engagement of the persons to whom such fees are
payable.
(q) Opinion of Financial Advisor. Provident has received an opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., dated as of the date hereof, that the Ratio (taking
into account the Merger) is fair, from a financial point of view, to the holders
of shares of Provident Common Stock, a copy of which opinion has been, or
promptly upon receipt thereof will be, delivered to UNUM.
(r) Accounting Matters. Provident has disclosed to its independent
public accountants all actions taken by it, its subsidiaries or its affiliates
that would impact the accounting of the business combination to be effected by
the Merger as a pooling of interests. As of the date hereof, Provident, based on
advice from its independent public accountants, believes that the Merger will
qualify for "pooling of interests" accounting.
(s) Material Contracts. Other than contracts or amendments thereto that
are required to be filed and have been filed as an Exhibit to the Provident Form
10-K, there are no contracts or agreements that are material to the business,
financial position or results of operations of Provident, including (A) any
employment, severance, termination, consulting or retirement contract providing
for aggregate payments to any individual in any calendar year in excess of
$250,000, (B) any contract relating to the borrowing of money or the guarantee
of any such obligation (other than contracts evidencing fully secured repurchase
agreements, trade payables, and contracts relating to borrowings or guarantees
made in the ordinary course of business), (C) any agency, third party
administrator, management or other service contracts and (D) any material
contract or agreement between or among Provident and its subsidiaries.
(t) Intellectual Property. (i) Except as, individually or in the
aggregate, is not reasonably likely to have a material adverse effect on
Provident: Provident does not have knowledge of any valid grounds for any bona
fide claims (A) to the effect that the manufacture, sale, licensing or use of
any product as now used, sold or
21
licensed or proposed for use, sale or license by Provident or any of its
subsidiaries, infringes on any copyright, patent, trademark, trade name, service
▇▇▇▇ or trade secret; (B) against the use by Provident or any of its
subsidiaries, of any copyrights, patents, trademarks, trade names, service
marks, trade secrets, technology, know-how or computer software programs and
applications used in the business of Provident or any of its subsidiaries as
currently conducted or as proposed to be conducted; (C) challenging the
ownership, validity or effectiveness of any of the Provident Intellectual
Property Rights or other trade secret material to Provident; or (D) challenging
the license or legally enforceable right to use of the Third-Party Intellectual
Rights by Provident or any of its subsidiaries.
(ii) As used in this Agreement, the term (x) "Intellectual Property"
means all patents, trademarks, trade names, service marks, copyrights and any
applications, therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or materials,
trademarks, trade names, service marks and copyrights; and (y) "Third-Party
Intellectual Property Rights" means Intellectual Property owned by any third
party; and (z) "Provident Intellectual Property Rights" means the Intellectual
Property owned by Provident or any of its subsidiaries.
(u) No Regulatory Disqualifications. To the knowledge of Provident, no
event has occurred or condition exists or, to the extent it is within the
reasonable control of Provident, will occur or exist with respect to Provident
that, in connection with obtaining any regulatory consents required for the
Merger, would cause Provident to fail to satisfy any applicable statute or
written regulation of any applicable insurance regulatory authority that,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on Provident.
(v) Reinsurance, etc. Provident has no reason to believe that any
material amount recoverable pursuant to any material reinsurance, coinsurance,
excess insurance, ceding of insurance, assumption of insurance or
indemnification with respect to insurance or similar material arrangements
(collectively, "Reinsurance Agreements") applicable to the Provident Insurance
Subsidiaries or their properties or assets reflected in the Provident SAP
Statements is not fully collectible in due course. Each Provident Insurance
Subsidiary is entitled to take full credit in its SAP Statements pursuant to
Insurance Laws, rules and regulations for such reinsurance, coinsurance or
excess insurance ceded pursuant to any such Reinsurance Agreement.
22
There are no assumption reinsurance contracts or arrangements entered into by
any Provident Insurance Subsidiary in which such Provident Insurance Subsidiary
has ceded risk to any other person which are material individually or in the
aggregate to Provident and its subsidiaries taken as a whole.
(w) Year 2000. All computer systems and computer software used by
Provident or any of its subsidiaries (i) recognize or are being adapted so that,
prior to December 31, 1999, they shall recognize the advent of the year A.D.
2000 without any adverse change in operation associated with such recognition,
(ii) can correctly recognize or are being adapted so that they can correctly
recognize and manipulate date information relating to dates before, on or after
January 1, 2000, including but not limited to accepting date input, performing
calculations on dates or portion of dates and providing date output, and the
operation and functionality of such computer systems and such computer software
will not be adversely affected by the advent of the year A.D. 2000 or any
manipulation of data featuring information relating to dates before, on or after
January 1, 2000, and (iii) can suitably interact with other computer systems and
computer software in a way that does not compromise (y) its ability to correctly
recognize the advent of the year A.D. 2000 or (z) its ability to correctly
recognize and manipulate date information relating to dates before, on or after
January 1, 2000 (the operations of clauses (i), (ii) and (iii) together,
"Millennium Functionality"), except in each case for such computer systems and
computer software, the failure of which to achieve Millennium Functionality,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on Provident. To the knowledge of Provident as of the date
hereof, the costs of the adaptions necessary to achieve Millennium Functionality
are not reasonably likely to have a material adverse effect on Provident.
Provident is in compliance with all applicable state insurance department
requests for "Year 2000" filings.
SECTION 3.02. Representations and Warranties of UNUM. Except as
disclosed in the UNUM Filed SEC Documents (as defined in Section 3.02(g)) or as
set forth on the Disclosure Schedule dated the date hereof and delivered by UNUM
to Provident in connection with the execution of this Agreement (the "UNUM
Disclosure Schedule"), UNUM represents and warrants to Provident as follows:
(a) Organization, Standing and Corporate Power. Each of UNUM and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the
23
laws of the respective jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of UNUM and its subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, is not reasonably
likely to have a material adverse effect on UNUM. UNUM has made available to
Provident prior to the date hereof complete and correct copies of its
Certificate of Incorporation and By-laws and the certificates of incorporation
and by-laws of its subsidiaries, in each case as amended to the date hereof.
(b) Subsidiaries. Exhibit 21 to UNUM's Annual Report on Form 10-K for
the year ended December 31, 1997 (the "UNUM Form 10-K"), lists each subsidiary
of UNUM which as of the date of this Agreement is a Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X of the SEC). All the outstanding shares
of capital stock of, or other ownership interests in, each such Significant
Subsidiary have been validly issued and are fully paid and nonassessable and are
owned directly or indirectly by UNUM, free and clear of all liens and free of
any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or such other ownership interest).
Except for the capital stock of, or other ownership interests in, its
Significant Subsidiaries noted above, UNUM does not own, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
limited liability company, joint venture or other entity constituting a
Significant Subsidiary.
(c) Capital Structure. The authorized capital stock of UNUM consists of
240,000,000 shares of UNUM Common Stock and 10,000,000 shares of preferred
stock, par value $.10 per share. At the close of business on November 17, 1998,
(i) 138,510,774 shares of UNUM Common Stock and no shares of preferred stock
were issued and outstanding (ii) 61,465,142 shares of UNUM Common Stock were
held by UNUM in its treasury, and (iii) 1,000,000 shares of Junior Participating
Preferred Stock, Series A, were reserved for issuance in connection with the
rights (the "UNUM Rights") to purchase shares of Junior Participating Preferred
Stock, Series A, issued pursuant to the Rights Agreement dated as of March 13,
1992, as amended (the "UNUM Rights Agreement"), between UNUM and First Chicago
Trust Company of New York, as
24
Right Agent. As of November 17, 1998, collectively, 10,242,262 shares of UNUM
Common Stock were subject to options ("UNUM Stock Options") granted under the
1998 Goals Stock Option Plan, 1996 Long-Term Stock Incentive Plan, 1990
Long-Term Stock Incentive Plan and the 1987 Executive Stock Option Plan of UNUM
(collectively, the "UNUM Stock Plans"). As of November 17, 1998, there were
15,857,738 shares of UNUM Common Stock reserved for issuance under the UNUM
Stock Plans. Except as set forth above, at the close of business on November 17,
1998, no shares of capital stock or other voting securities of UNUM were issued,
reserved for issuance or outstanding. There are no outstanding SARs or rights
(other than the UNUM Stock Options) to receive shares of UNUM Common Stock on a
deferred basis granted under the UNUM Stock Plans or otherwise. Schedule 3.02(c)
of the UNUM Disclosure Schedule sets forth a true and complete list, as of
November 17, 1998, of all UNUM Stock Options, the number of shares subject to
each such option, the grant dates and the exercise prices thereof. All
outstanding shares of capital stock of UNUM are, and all shares which may be
issued pursuant to the UNUM Stock Plans will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of UNUM having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of UNUM may vote are issued or outstanding. Except as set forth
above, as of the date of this Agreement, there are no preemptive or other
outstanding securities, options, warrants, calls, rights, conversion rights,
redemption rights, repurchase rights, commitments, agreements, arrangements or
undertakings of any kind to which UNUM or any of its subsidiaries is a party or
by which any of them is bound obligating UNUM or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of UNUM or any of its
subsidiaries, or giving any person a right to subscribe for or acquire, any
securities of UNUM or any of its subsidiaries, or obligating UNUM or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, conversion right, redemption right, repurchase right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of UNUM or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of UNUM or any of its
subsidiaries. There are no outstanding contractual obligations of UNUM to vote
or to dispose of any shares of the capital stock of any of its subsidiaries.
25
(d) Authority; Noncontravention. (i) UNUM has all requisite corporate
power and authority to enter into this Agreement, the Option Agreements and the
Stockholders Agreement and, subject to receipt of the UNUM Stockholder Approval
(as defined in Section 3.02(n)), to consummate the transactions contemplated by
this Agreement, the Option Agreements and the Stockholders Agreement. The
execution and delivery of this Agreement, the Option Agreements and the
Stockholders Agreement by UNUM and the consummation of the transactions
contemplated by this Agreement, the Option Agreements and the Stockholders
Agreement have been duly authorized by all necessary corporate action on the
part of UNUM, subject to receipt of the UNUM Stockholder Approval in the case of
this Agreement. This Agreement, the Option Agreements and the Stockholders
Agreement have been duly executed and delivered by UNUM, and, assuming the due
execution and delivery of each such agreement by the counterparties thereto,
each such agreement constitutes a valid and binding obligation of UNUM as to
obligations therein, enforceable against UNUM in accordance with its terms. The
execution and delivery of this Agreement, the Option Agreements and the
Stockholders Agreement do not, and the consummation of the transactions
contemplated by this Agreement, the Option Agreements and the Stockholders
Agreement and compliance with the provisions of this Agreement, the Option
Agreements and the Stockholders Agreement by UNUM will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of UNUM or any
of its subsidiaries under, (A) the Certificate of Incorporation or By-laws of
UNUM or the comparable charter or organizational documents of any of its
subsidiaries, (B) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to UNUM or any of its subsidiaries or their respective properties or
assets or (C) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to UNUM or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (B) and (C),
any such conflicts, violations, defaults, obligations, losses, rights, liens,
judgments, orders, decrees, statutes, laws, ordinances, rules or regulations
that, individually or in the aggregate, are not reasonably likely to have a
material adverse effect on UNUM. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
26
Entity is required by or with respect to UNUM or any of its subsidiaries in
connection with the execution and delivery of this Agreement, the Option
Agreements and the Stockholders Agreement by UNUM or the consummation by UNUM of
any of the transactions contemplated by this Agreement, the Option Agreements or
the Stockholders Agreement, except for (A) the filing of a premerger
notification and report form by UNUM under the HSR Act; (B) the filing with the
SEC of (x) the Joint Proxy Statement relating to the UNUM Stockholders Meeting
and (y) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange
Act as may be required in connection with this Agreement, the Option Agreements,
the Stockholders Agreement and the transactions contemplated hereby and thereby;
(C) the filing with the Delaware Secretary of State of (x) an amendment to the
Amended and Restated Certificate of Incorporation of Provident to effect the
Reverse Stock Split immediately prior to the occurrence of the Effective Time
and (y) the Certificate of Merger, and the filing of appropriate documents with
the relevant authorities of other states in which UNUM is qualified to do
business and such filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; (D) the State Insurance
Approvals; (E) filings with and approvals of the Insurance Directorate of the
Treasury of the United Kingdom (the "UK Insurance Approval"), and filings or
other approvals, if any, required by any Japanese Governmental Entity (the
"Japanese Insurance Approval, and together with the UK Insurance Approval and
the Designated State Insurance Approvals, the "Designated Insurance Approvals");
(F) notification under the Competition Act (Canada) and other relevant Canadian
approvals and (G) such consents, approvals, orders or authorizations the failure
of which to be made or obtained, individually or in the aggregate, is not
reasonably likely to have a material adverse effect on UNUM.
(ii) As of the date hereof, the Board of Directors of UNUM has approved
and declared advisable this Agreement and the Merger, and has approved the
Option Agreements, the Stockholders Agreement and the other transactions
contemplated by this Agreement, the Option Agreements and the Stockholders
Agreement.
(e) SEC Documents; Undisclosed Liabilities; SAP Statements. (i) UNUM
has filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1997 (including all filed reports, schedules,
forms, statements and other documents whether or not required, the "UNUM SEC
Documents"). As of their respective dates, the UNUM SEC Documents complied in
all
27
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such UNUM SEC Documents, and none of the UNUM SEC
Documents contained any untrue statement of a material fact or omitted to state
a 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. Except to the extent that information contained in any UNUM SEC
Document has been revised or superseded by a later filed UNUM SEC Document, none
of the UNUM SEC Documents contains any untrue statement of a material fact or
omits 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. The financial statements of UNUM included in the
UNUM SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with U.S. generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of UNUM and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end adjustments). Except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since the date
of the most recent consolidated balance sheet included in the UNUM SEC
Documents, neither UNUM nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by U.S. generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of UNUM and its consolidated
subsidiaries or in the notes thereto.
(ii) UNUM conducts its material insurance operations through UNUM Life
Insurance Company of America, First UNUM Life Insurance Company and Colonial
Life and Accident Insurance Company (collectively, the "UNUM Insurance
Subsidiaries"). Each of the UNUM Insurance Subsidiaries has filed all annual and
quarterly statements, together with all exhibits, interrogatories, 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 regulatory authorities of the jurisdiction in
28
which it is domiciled or commercially domiciled on forms prescribed or permitted
by such authority (collectively, the "UNUM SAP Statements"). UNUM has delivered
or made available to Provident all UNUM SAP Statements for each UNUM Insurance
Subsidiary for the periods beginning January 1, 1996, each in the form
(including exhibits, annexes and any amendments thereto) filed with the
applicable state insurance regulatory agency. Financial statements included in
the UNUM SAP Statements and prepared on a statutory basis, including the notes
thereto, were prepared in conformity with statutory accounting practices
prescribed or permitted by the applicable insurance regulatory authority
consistently applied for the periods covered thereby and present fairly the
statutory financial position of such UNUM Insurance Subsidiaries as at the
respective dates thereof and the results of operations of such UNUM Insurance
Subsidiaries for the respective periods then ended. The UNUM SAP Statements
complied in all material respects with all applicable laws, rules and
regulations when filed, and no material deficiency has been asserted with
respect to any UNUM SAP Statements by the applicable insurance regulatory body
or any other governmental agency or body. Except as indicated therein, all
assets that are reflected on UNUM SAP Statements comply with the Insurance Laws
with respect to admitted assets and are in an amount at least equal to the
minimum amounts required by the Insurance Laws. The statutory balance sheets and
income statements included in the UNUM SAP Statements have been audited by
PricewaterhouseCoopers LLP and UNUM has delivered or made available to Provident
true and complete copies of all audit opinions related thereto for periods
beginning January 1, 1996. As promptly as practicable following the date of this
Agreement, UNUM will deliver or make available to Provident true and complete
copies of all examination reports of insurance departments and any insurance
regulatory agencies received by UNUM on or after January 1, 1996 relating to
UNUM Insurance Subsidiaries.
(f) Information Supplied. No statement, certificate, instrument or
other writing furnished or to be furnished by UNUM or any affiliate thereof to
Provident pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by UNUM for
inclusion or incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented or
at the time it becomes effective under the Securities Act,
29
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) the Joint Proxy Statement will, at the date the Joint
Proxy Statement is first mailed to UNUM's stockholders or at the time of the
UNUM Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Joint Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder, except that no representation or
warranty is made by UNUM with respect to statements made or incorporated by
reference therein based on information supplied by Provident specifically for
inclusion or incorporation by reference in the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in the
UNUM SEC Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "UNUM Filed SEC
Documents"), since the date of the most recent audited financial statements
included in the UNUM Filed SEC Documents, UNUM has conducted its business only
in the ordinary course, and there has not been (i) since such date, any material
adverse change in UNUM, (ii) except for regular quarterly cash dividends not in
excess of $.14 3/4 per share declared on UNUM Common Stock and subject to
Section 4.01(c), any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
UNUM's capital stock, (iii) 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, (iv) (x) any granting by UNUM or any of its subsidiaries to any
director, executive officer or key employee of UNUM or any of its subsidiaries
of any award or incentive payment or increase in compensation or benefits,
except in the ordinary course of business consistent with past practice or as
was required under employment agreements in effect as of the date of this
Agreement (copies of which have been made available to Provident), (y) any
granting by UNUM or any of its subsidiaries to any such director, executive
officer or key employee of any increase in severance or termination pay, except
as was required under any employment, severance or termination agreements in
effect as of the date of this Agreement (copies of which have been made
available to Provident), or (z) any entry by
30
UNUM or any of its subsidiaries into any employment, severance or termination
agreement with any such director, executive officer or key employee or (v) any
change in accounting methods, principles or practices by UNUM materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in U.S. generally accepted accounting principles.
(h) Litigation. There is no suit, action or proceeding pending or, to
the knowledge of UNUM, threatened against or affecting UNUM or any of its
subsidiaries that, individually or in the aggregate, is reasonably likely to
have a material adverse effect on UNUM nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against UNUM or any of its subsidiaries having, or which is reasonably likely to
have, individually or in the aggregate, a material adverse effect on UNUM;
provided that, for purposes of this paragraph (h), any such suit, action,
proceeding, judgment, decree, injunction, rule or order arising after the date
hereof shall not be deemed to have a material adverse effect on UNUM if and to
the extent such suit, action, proceeding, judgment, decree, injunction, rule or
order (or any relevant part thereof) is based on this Agreement, the Option
Agreements or the Stockholders Agreement or the transactions contemplated hereby
or thereby.
(i) Labor Relations. Neither UNUM nor any of its subsidiaries is the
subject of any suit, action or proceeding which is pending or, to the knowledge
of UNUM, threatened, asserting that UNUM or any of its subsidiaries has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or applicable state statutes) or is seeking to compel it to
bargain with any labor union or labor organization, nor is there pending or, to
the knowledge of UNUM, threatened, nor has there been for the past five years,
any labor strike, dispute, walk-out, work stoppage, slow-down, lockout or
organizational effort involving UNUM or any of its subsidiaries that,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on UNUM.
(j) Benefit Plans. (i) Schedule 3.02(j) contains a list and brief
description of all "employee pension benefit plans" (as defined in Section 3(2)
of ERISA) (sometimes collectively referred to herein as "UNUM Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(l) of ERISA,
hereinafter a "Welfare Plan"), severance, termination, change in control,
incentive compensation profit sharing stock option, stock purchase, stock
ownership, phantom stock, deferred compensation plans,
31
and other employee fringe benefit plans or arrangements maintained, contributed
to or required to be maintained or contributed to by UNUM or its subsidiaries
for the benefit of any present or former officers, employees, directors or
independent contractors of UNUM or any of its subsidiaries (all the foregoing
being herein called "UNUM Benefit Plans"). UNUM has made available to Provident
true, complete and correct copies of (1) each UNUM Benefit Plan (or, in the case
of any unwritten Benefit Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each UNUM Benefit Plan (if any such report was required by applicable law),
(3) the most recent summary plan description for each UNUM Benefit Plan for
which such a summary plan description is required by applicable law and (4) each
currently effective trust agreement and insurance or annuity contract relating
to any UNUM Benefit Plan.
(ii) Each UNUM Benefit Plan has been administered in accordance with
its terms except for any failure so to administer as, individually or in the
aggregate, is not reasonably likely to have a material adverse effect on UNUM.
UNUM, its subsidiaries and all the UNUM Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and other applicable laws as to the
UNUM Benefit Plans except for any failure so to be in compliance as,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on UNUM.
(iii) With respect to the UNUM Benefit Plans, individually and in the
aggregate, no event has occurred and, to the knowledge of UNUM, there exists no
condition or set of circumstances, in connection with which UNUM or any of its
subsidiaries could be subject to any liability that is reasonably likely to have
a material adverse effect on UNUM under ERISA, the Code or any other applicable
law.
(iv) Each UNUM Pension Plan that is intended to comply with the
provisions of Section 401(a) of the Code has been the subject of a determination
letter from the Internal Revenue Service to the effect that such UNUM Pension
Plan is qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code; no such determination letter has been
revoked, and, to the knowledge of UNUM, revocation has not been threatened; and
no amendment to such UNUM Pension Plan as to which the remedial amendment period
has expired would adversely affect its qualification or, materially increase its
cost. UNUM has made available to Provident a copy of the most recent
determination letter received with respect to each UNUM Pension Plan for which
such a letter has been issued, as
32
well as a copy of any pending application for a determination letter. Schedule
3.02(j) lists all UNUM Pension Plan amendments as to which a favorable
determination letter has not yet been received.
(v) No employee of UNUM will be entitled to any additional benefits or
any acceleration of the time of payment, funding or vesting of any benefits
under any UNUM Benefit Plan as a result of the transactions contemplated by this
Agreement.
(vi) Since the date of the most recent audited financial statements
included in the UNUM Filed SEC Documents, there has not been any adoption or
amendment in any material respect by UNUM or any of its subsidiaries of any
collective bargaining agreement or any UNUM Benefit Plans (whether or not
legally binding).
(k) Taxes. (i) Each of UNUM and its subsidiaries has filed all tax
returns and reports required to be filed by it or requests for extensions to
file such returns or reports have been timely filed, granted and have not
expired, except to the extent that all such failures to file, taken together,
are not reasonably likely to have a material adverse effect on UNUM. All returns
filed by UNUM and each of its subsidiaries are complete and accurate in all
material respects to the knowledge of UNUM. UNUM and each of its subsidiaries
has paid (or UNUM has paid on its behalf) all taxes shown as due on such
returns, and the most recent financial statements contained in the UNUM Filed
SEC Documents reflect an adequate reserve for all taxes payable by UNUM and its
subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements.
(ii) No deficiencies for any taxes have been proposed, asserted or
assessed against UNUM or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that, individually or in the aggregate,
are not reasonably likely to have a material adverse effect on UNUM, and no
requests for waivers of the time to assess any such taxes have been granted or
are pending (other than with respect to years that are currently under
examination by the Internal Revenue Service or other applicable taxing
authorities). The statute of limitations on assessment or collection of any
taxes due from UNUM or any of its subsidiaries has expired for all taxable years
of UNUM or any of its subsidiaries through 1991. The Federal income tax returns
of UNUM and each of its subsidiaries have been examined by and settled with the
United States Internal Revenue Service for all years through 1991.
33
(iii) Neither UNUM nor any of its subsidiaries has taken any action or
has any knowledge of any fact or circumstance that is reasonably likely to
prevent the transactions contemplated hereby, including the Merger, from
qualifying as a reorganization within the meaning of Section 368 of the Code.
(iv) Neither UNUM nor any of its subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(l) No Excess Parachute Payments. No amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement, either alone or together with
other events, by any employee, officer or director of UNUM or any of its
affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or UNUM Benefit Plan
currently in effect would be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code).
(m) Compliance with Applicable Laws. (i) Each of UNUM and its
subsidiaries has in effect all Permits necessary for it to own, lease or operate
its assets and to carry on its business as now conducted, and there has occurred
no default under or limitation with respect to any such Permit, except for the
lack of Permits and for defaults or limitations under Permits which,
individually or in the aggregate, are not reasonably likely to have a material
adverse effect on UNUM. To the knowledge of UNUM, UNUM and its subsidiaries are,
and have been, in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, including Insurance
Laws, except for instances of noncompliance which, individually or in the
aggregate, are not reasonably likely
34
to have a material adverse effect on UNUM. To the knowledge of UNUM, the
businesses and operations of each of UNUM and its subsidiaries are being and
have been conducted in compliance in all respects with all applicable Insurance
Laws, except for instances of noncompliance which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on UNUM.
No investigation, examination or review by any Governmental Entity with respect
to UNUM or any of its subsidiaries is pending or, to the knowledge of UNUM,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same, except for those the outcome of which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on UNUM.
(ii) To the knowledge of UNUM, the businesses of each of UNUM and its
subsidiaries are being and have been conducted in compliance in all respects
with all applicable Environmental Laws, except for instances of noncompliance
which, individually or in the aggregate, are not reasonably likely to have a
material adverse effect on UNUM.
(iii) There is no suit, action, proceeding or inquiry pending or, to
the knowledge of UNUM, threatened before any court, governmental agency or
authority or other forum in which UNUM or any of its subsidiaries has been or,
with respect to threatened suits, actions and proceedings, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under or involving a site
owned, leased or operated by UNUM or any of its subsidiaries, except for any
such suits, actions, proceedings and inquiries which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on UNUM.
(iv) During the period of ownership or operation by UNUM and its
subsidiaries of any of their respective current properties, there have been no
releases of Hazardous Material in, on, under or affecting such properties or, to
the knowledge of UNUM, any surrounding site, except in each case for those
which, individually or in the aggregate, are not reasonably likely to have a
material adverse effect on UNUM. Prior to the period of ownership or operation
by UNUM and its subsidiaries of any of their respective current properties, to
the knowledge of UNUM, there were no releases of Hazardous Material in, on,
under or affecting any such property or any surrounding site, except in each
case for those which, individually or in the aggregate, are not reasonably
likely to have a material adverse effect on UNUM.
(v) UNUM is not subject to any order, decree, injunction or other
arrangement with any Governmental Entity or any indemnity or other agreement
with any third party relating to liability under any Environmental Law or
relating to any Hazardous Substance except for any such
35
order, decree, injunction, arrangement, indemnity or other agreement which,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on UNUM.
(n) Voting Requirements. The affirmative vote at the UNUM Stockholders
Meeting (the "UNUM Stockholder Approval") of the holders of a majority of the
voting power of all outstanding shares of UNUM Common Stock is the only vote of
the holders of any class or series of UNUM's capital stock necessary to approve
and adopt this Agreement, the Option Agreements, the Stockholders Agreement and
the transactions contemplated hereby and thereby.
(o) State Takeover Statutes; Certificate of Incorporation. The Board of
Directors of UNUM (including the disinterested directors thereof (as defined in
Article EIGHTH of the UNUM Certificate of Incorporation)) has unanimously
approved the terms of this Agreement, the Option Agreements and the Stockholders
Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement, the Option Agreements and the Stockholders
Agreement and, assuming the accuracy of Provident's representation and warranty
contained in Section 3.01(n), such approval constitutes approval of the Merger
and the other transactions contemplated by this Agreement, the Option Agreements
and the Stockholders Agreement by the UNUM Board of Directors under the
provisions of Section 203 of the DGCL and Article EIGHTH of the UNUM Certificate
of Incorporation, and represents all the actions necessary to ensure that such
Section 203 and the provisions of Article EIGHTH of the UNUM Certificate of
Incorporation do not apply to Provident in connection with the Merger and the
other transactions contemplated by this Agreement, by the Option Agreements and
by the Stockholders Agreement. To the knowledge of UNUM, no other state takeover
statute, and no other anti-takeover provision in the UNUM Certificate of
Incorporation or By-laws is applicable to the Merger or the other transactions
contemplated by this Agreement, the Option Agreements and the Stockholders
Agreement.
(p) Brokers. No broker, investment banker, financial adviser or other
person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co., the fees and expenses of
which will be paid by UNUM, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
UNUM. UNUM has delivered to Provident true and complete copies of all agreements
under which any such fees or
36
expenses are payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable.
(q) Opinion of Financial Advisor. UNUM has received an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co., dated as of the date hereof, that the Ratio
(taking into account the Merger), is fair, from a financial point of view, to
the holders of shares of UNUM Common Stock, a copy of which opinion has been, or
promptly upon receipt thereof will be, delivered to Provident.
(r) Accounting Matters. UNUM has disclosed to its independent public
accountants all actions taken by it, its subsidiaries or its affiliates that
would impact the accounting of the business combination to be effected by the
Merger as a pooling of interests. As of the date hereof, UNUM, based on advice
from its independent public accountants, believes that the Merger will qualify
for "pooling of interests" accounting.
(s) Material Contracts. Other than contracts or amendments thereto that
are required to be filed and have been filed as an Exhibit to the UNUM Form
10-K, there are no contracts or agreements that are material to the business,
financial position or results of operations of UNUM, including (A) any
employment, severance, termination, consulting or retirement contract providing
for aggregate payments to any individual in any calendar year in excess of
$250,000, (B) any contract relating to the borrowing of money or the guarantee
of any such obligation (other than contracts evidencing fully secured repurchase
agreements, trade payables, and contracts relating to borrowings or guarantees
made in the ordinary course of business), (C) any agency, third party
administrator, management or other service contracts and (D) any material
contract or agreement between or among UNUM and its subsidiaries.
(t) Intellectual Property. (i) Except as, individually or in the
aggregate, is not reasonably likely to have a material adverse effect on UNUM:
UNUM does not have knowledge of any valid grounds for any bona fide claims (A)
to the effect that the manufacture, sale, licensing or use of any product as now
used, sold or licensed or proposed for use, sale or license by UNUM or any of
its subsidiaries, infringes on any copyright, patent, trademark, trade name,
service ▇▇▇▇ or trade secret; (B) against the use by UNUM or any of its
subsidiaries, of any copyrights, patents, trademarks, trade names, service
marks, trade secrets, technology, know-how or computer software programs and
applications used in the business of UNUM or any of its
37
subsidiaries as currently conducted or as proposed to be conducted; (C)
challenging the ownership, validity or effectiveness of any of the UNUM
Intellectual Property Rights or other trade secret material to UNUM; or (D)
challenging the license or legally enforceable right to use of the Third-Party
Intellectual Rights by UNUM or any of its subsidiaries.
(ii) As used in this Agreement, "UNUM Intellectual Property Rights"
means the Intellectual Property owned by UNUM or any of its subsidiaries.
(u) No Regulatory Disqualifications. To the knowledge of UNUM, no event
has occurred or condition exists or, to the extent it is within the reasonable
control of UNUM, will occur or exist with respect to UNUM that, in connection
with obtaining any regulatory consents required for the Merger, would cause UNUM
to fail to satisfy any applicable statute or written regulation of any
applicable insurance regulatory authority that, individually or in the
aggregate, is reasonably likely to have a material adverse effect on UNUM.
(v) Reinsurance, etc. UNUM has no reason to believe that any material
amount recoverable pursuant to any Reinsurance Agreement applicable to the UNUM
Insurance Subsidiaries is not fully collectible in due course. Each UNUM
Insurance Subsidiary is entitled to take full credit in the UNUM SAP Statements
pursuant to Insurance Laws, rules and regulations for such reinsurance,
coinsurance or excess insurance ceded pursuant to any such Reinsurance
Agreement. There are no assumption reinsurance contracts or arrangements entered
into by any UNUM Insurance Subsidiary in which such UNUM Insurance Subsidiary
has ceded risk to any other person which are material individually or in the
aggregate to UNUM and its subsidiaries taken as a whole.
(w) UNUM Rights Agreement. The UNUM Rights Agreement has been amended
(the "UNUM Rights Plan Amendment") (i) to render the UNUM Rights Agreement
inapplicable to the Merger and the other transactions contemplated by this
Agreement, the Option Agreements and the Stockholders Agreement and (ii) to
ensure that (1) Provident is not deemed to be an Acquiring Person (as defined in
the UNUM Rights Agreement) pursuant to the UNUM Rights Agreement and (2) a
Distribution Date, a Triggering Event or Stock Acquisition Date (as such terms
are defined in the UNUM Rights Agreement) does not occur solely by reason of the
execution and delivery of this Agreement, the Option Agreements, the
Stockholders Agreement, the consummation of the Merger, or the consummation of
the other
38
transactions contemplated by this Agreement, the Option Agreements and the
Stockholders Agreement, and such amendment may not be further amended by UNUM
without the prior consent of Provident.
(x) Year 2000. All computer systems and computer software used by UNUM
or any of its subsidiaries have achieved or are being adapted so as to achieve
Millennium Functionality, except in each case for such computer systems and
computer software, the failure of which to achieve Millennium Functionality,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on UNUM. To the knowledge of UNUM as of the date hereof, the
costs of the adaptions necessary to achieve Millennium Functionality are not
reasonably likely to have a material adverse effect on UNUM. UNUM is in
compliance with all applicable state insurance department requests for "Year
2000" filings.
ARTICLE IV
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
Provident. During the period from the date of this Agreement to the Effective
Time, Provident shall, and shall cause its subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and, to the extent consistent therewith,
use all reasonable efforts to preserve intact their current business
organizations, licenses and authorizations, keep available the services of their
current officers and employees and preserve their relationships with
policyholders, customers, suppliers, licensors, licensees, distributors,
brokers, agents, reinsurers, managers and others having business dealings with
them to the end that their goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing, except
as set forth on the Provident Disclosure Schedule, as otherwise expressly
contemplated by this Agreement or the Provident Option Agreement or as consented
to by UNUM in writing, during the period from the date of this Agreement to the
Effective Time, Provident shall not, and shall not permit any of its
subsidiaries to:
(i) (x) declare, set aside or pay any dividends payable in cash, stock
or property on, or make any other distributions in respect of, any of its
capital stock, other than dividends and distributions by a
39
direct or indirect wholly owned subsidiary of Provident to its parent and
except that Provident may continue (1) the declaration and payment of
regular quarterly cash dividends not in excess of $.10 per share of
Provident Common Stock, with usual record and payment dates and in
accordance with Provident's past dividend policy, subject to Section
4.01(c) and (2) the declaration, and payment of dividends on participating
policies, (y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of or in
substitution for shares of its capital stock or (z) purchase, redeem or
otherwise acquire any shares of capital stock of Provident or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, other than, in
accordance with the terms thereof, the issuance of Provident Common Stock
upon the exercise of Provident Stock Options or otherwise pursuant to
equity stock-based awards, in each case outstanding on the date of this
Agreement and in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire (x) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof or (y) any assets that, in the
case of clause (x) or (y), are material, individually or in the aggregate,
to Provident;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets, except
sales of investment securities or other assets in the ordinary course of
business consistent with past practice;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other
40
rights to acquire any debt securities of Provident or any of its
subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business (or to refund existing or
maturing indebtedness) consistent with past practice and except for
intercompany indebtedness between Provident and any of its subsidiaries or
between such subsidiaries, or (y) make any loans, advances or capital
contributions to, or investments in, any other person, other than to
Provident or any direct or indirect wholly owned subsidiary of Provident
and other than investments made in the ordinary course of business
consistent with past practice as part of Provident's investment portfolio
and, in the case of any long-term investments, as to which Provident has
previously consulted with UNUM;
(vii) make or agree to make any new capital expenditure or
expenditures, or enter into any agreement or agreements providing for
payments which, individually, are in excess of $10,000,000 or, in the
aggregate, are in excess of $100,000,000;
(viii) make any tax election that, individually or in the aggregate, is
reasonably likely to have a material adverse effect on the tax liability of
Provident or settle or compromise any material income tax liability;
(ix) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities recognized or
disclosed in the most recent consolidated financial statements (or the
notes thereto) of Provident included in the Provident Filed SEC Documents
or incurred since the date of such financial statements, or waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which Provident or any of its
subsidiaries is a party;
(x) take any action that (without giving effect to any action taken or
agreed to be taken by UNUM or any of its affiliates) would prevent
Provident from accounting for the business combination to be effected by
the Merger as a pooling of interests or from
41
treating the Merger as a "reorganization" under Section 368 of the Code;
(xi) except as required by law or contemplated hereby and except for
labor agreements negotiated in the ordinary course, enter into, adopt or
amend in any material respect or terminate any Provident Benefit Plan or
any other agreement, plan or policy involving Provident or its
subsidiaries, and one or more of its directors, officers or employees, or
materially change any actuarial or other assumption used to calculate
funding obligations with respect to any pension plan, or change the manner
in which contributions to any pension plan are made or the basis on which
such contributions are determined;
(xii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not materially
increase benefits or compensation expenses of Provident or its
subsidiaries, or as contemplated hereby or by the terms of any contract the
existence of which does not constitute a violation of this Agreement,
increase the compensation of any director, executive officer or other key
employee or pay any benefit or amount not required by a plan or arrangement
as in effect on the date of this Agreement to any such person; or
(xiii) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Conduct of Business by UNUM. During the period from the date of
this Agreement to the Effective Time, UNUM shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use all reasonable efforts to preserve intact
their current business organizations, licenses and authorizations, keep
available the services of their current officers and employees and preserve
their relationships with policyholders, customers, suppliers, licensors,
licensees, distributors, brokers, agents, reinsurers, managers and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, except as set forth on the UNUM Disclosure
Schedule, as otherwise expressly contemplated by this Agreement or the UNUM
Option Agreement or as consented to by Provident in writing, during the period
from the date of
42
this Agreement to the Effective Time, UNUM shall not, and shall not permit any
of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends payable in cash, stock
or property on, or make any other distributions in respect of, any of its
capital stock, other than dividends and distributions by a direct or
indirect wholly owned subsidiary of UNUM to its parent and except that UNUM
may continue (1) the declaration and payment of regular quarterly cash
dividends not in excess of $.14 3/4 per share of UNUM Common Stock, with
usual record and payment dates and in accordance with UNUM's past dividend
policy, subject to Section 4.01(c) and (2) the declaration on and payment
of dividends on participating policies, (y) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of its capital stock
or (z) purchase, redeem or otherwise acquire any shares of capital stock of
UNUM or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities other than (x) upon the
exercise of the UNUM Rights or (y) in accordance with the terms thereof,
the issuance of UNUM Common Stock upon the exercise of UNUM Stock Options
or otherwise pursuant to equity stock-based awards, in each case
outstanding on the date of this Agreement and in accordance with their
present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire (x) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof or (y) any assets that, in the
case of clause (x) or (y), are material, individually or in the aggregate,
to UNUM;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of
43
any of its properties or assets, except sales of investment securities or
other assets in the ordinary course of business consistent with past
practice;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of UNUM or any of
its subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business (or to refund existing or
maturing indebtedness) consistent with past practice and except for
intercompany indebtedness between UNUM and any of its subsidiaries or
between such subsidiaries, or (y) make any loans, advances or capital
contributions to, or investments in, any other person, other than to UNUM
or any direct or indirect wholly owned subsidiary of UNUM and other than
investments made in the ordinary course of business consistent with past
practice as part of UNUM's investment portfolio and, in the case of any
long-term investments, as to which UNUM has previously consulted with
Provident;
(vii) make or agree to make any new capital expenditure or
expenditures, or enter into any agreement or agreements providing for
payments which, individually, are in excess of $10,000,000 or, in the
aggregate, are in excess of $100,000,000;
(viii) make any tax election that, individually or in the aggregate, is
reasonably likely to have a material adverse effect on the tax liability of
UNUM or settle or compromise any material income tax liability;
(ix) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities recognized or
disclosed in the most recent consolidated financial statements (or the
notes thereto) of UNUM included in the UNUM Filed SEC Documents or incurred
since the date of such financial statements or waive the benefits of, or
agree to modify in any manner, any confidentiality,
44
standstill or similar agreement to which UNUM or any of its subsidiaries is
a party;
(x) take any action that (without giving effect to any action taken or
agreed to be taken by Provident or any of its affiliates) would prevent
Provident from accounting for the business combination to be effected by
the Merger as a pooling of interests or from treating the Merger as a
"reorganization" under Section 368 of the Code; (xi) except as required by
law or contemplated hereby and except for labor agreements negotiated in
the ordinary course, enter into, adopt or amend in any material respect or
terminate any UNUM Benefit Plan or any other agreement, plan or policy
involving UNUM or its subsidiaries, and one or more of its directors,
officers or employees, or materially change any actuarial or other
assumption used to calculate funding obligations with respect to any
pension plan, or change the manner in which contributions to any pension
plan are made or the basis on which such contributions are determined;
(xii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not materially
increase benefits or compensation expenses of UNUM or its subsidiaries, or
as contemplated hereby or by the terms of any contract the existence of
which does not constitute a violation of this Agreement, increase the
compensation of any director, executive officer or other key employee or
pay any benefit or amount not required by a plan or arrangement as in
effect on the date of this Agreement to any such person;
(xiii) amend the UNUM Rights Agreement; or
(xiv) authorize, or commit or agree to take, any of the foregoing
actions.
(c) Coordination of Dividends. Each of UNUM and Provident shall
coordinate with the other regarding the declaration and payment of dividends in
respect of the UNUM Common Stock and the Provident Common Stock and the record
dates and payment dates relating thereto, it being the intention of UNUM and
Provident that any holder of UNUM Common Stock or Provident Common Stock shall
not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to its shares of UNUM Common Stock or Provident
Common Stock and/or any shares of
45
Surviving Corporation Common Stock any such holder receives in exchange therefor
pursuant to the Merger.
(d) Other Actions. Except as required by law, Provident and UNUM shall
not, and shall not permit any of their respective subsidiaries to, voluntarily
take any action that would, or that is reasonably likely to, result in any of
the conditions to the Merger set forth in Article VI not being satisfied.
(e) Advice of Changes. Provident and UNUM shall promptly advise the
other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it contained in this Agreement, the Option
Agreements or, in the case of UNUM, the Stockholders Agreement becoming untrue
or inaccurate in any respect where the failure of such representation to be so
true and correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein), individually or in the aggregate,
has had or is reasonably likely to have a material adverse effect on it, (ii)
the failure by it to comply in any material respect with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, the Option Agreements or, in the case of
UNUM, the Stockholders Agreement and (iii) any change or event having, or which,
insofar as can reasonably be foreseen, is reasonably likely to have a material
adverse effect on such party or on the truth of their respective representations
and warranties or the ability of the conditions set forth in Article VI to be
satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties (or remedies
with respect thereto) or the conditions to the obligations of the parties under
this Agreement, the Option Agreements or, in the case of UNUM, the Stockholders
Agreement.
SECTION 4.02. No Solicitation by Provident. (a) Provident shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize or permit
any of its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes any Provident Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any Provident Takeover
Proposal; provided, however, that, at any time prior to the publicly
46
announced date of the Provident Stockholders Meeting (the "Provident Applicable
Period"), Provident may, in response to a Provident Superior Proposal (as
defined in Section 4.02(b)) which was not solicited by it and which did not
otherwise result from a breach of this Section 4.02(a), and subject to providing
prior written notice of its decision to take such action to UNUM (the "Provident
Notice") and compliance with Section 4.02(c), following delivery of the
Provident Notice (x) furnish information with respect to Provident and its
subsidiaries to any person making a Provident Superior Proposal pursuant to a
customary confidentiality agreement (as determined by Provident after
consultation with its outside counsel) and (y) participate in discussions or
negotiations regarding such Provident Superior Proposal. For purposes of this
Agreement, "Provident Takeover Proposal" means any inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net revenues, net income or the
assets of Provident and its subsidiaries, taken as a whole, or 15% or more of
any class of equity securities of Provident or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of Provident
or any of its subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Provident or any of its subsidiaries, other than the transactions contemplated
by this Agreement.
(b) Except as expressly permitted by this Section 4.02, neither the
Board of Directors of Provident nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to UNUM,
the approval or recommendation by such Board of Directors or such committee of
this Agreement, the Reverse Stock Split, the Merger or the issuance of Surviving
Corporation Common Stock in the Merger unless in the good faith judgment of the
Board of Directors of Provident, after consultation with outside counsel, the
failure to take the foregoing actions would be inconsistent with its obligations
under applicable law, (ii) approve or recommend, or propose publicly to approve
or recommend, any Provident Takeover Proposal or (iii) cause Provident to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement related to any Provident Takeover Proposal (each, a
"Provident Acquisition Agreement"). Notwithstanding the foregoing, in response
to a Provident Superior Proposal which was not solicited by Provident and which
did not otherwise result from a breach of Section 4.02(a), the Board of
Directors of Provident may (subject to
47
this and the following sentences) terminate this Agreement (and concurrently
with or after such termination, if it so chooses, cause Provident to enter into
any Provident Acquisition Agreement with respect to any Provident Superior
Proposal), but only at a time that is during the Provident Applicable Period and
is after the fifth business day following UNUM's receipt of written notice
advising UNUM that the Board of Directors of Provident is prepared to accept a
Provident Superior Proposal, specifying the material terms and conditions of
such Provident Superior Proposal and identifying the person making such
Provident Superior Proposal. For purposes of this Agreement, a "Provident
Superior Proposal" means any proposal made by a third party to acquire, directly
or indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Provident Common
Stock then outstanding or all or substantially all the assets of Provident and
its subsidiaries taken together and otherwise on terms which the Board of
Directors of Provident determines in its good faith judgment (based on the
advice of a financial advisor of nationally recognized reputation) to be more
favorable to Provident's stockholders than the Merger and for which financing,
to the extent required, is then committed or which, in the good faith judgment
of the Board of Directors of Provident, is reasonably capable of being obtained
by such third party.
(c) In addition to the obligations of Provident set forth in paragraphs
(a) and (b) of this Section 4.02, Provident shall immediately advise UNUM orally
and in writing of any request for information or of any Provident Takeover
Proposal, the material terms and conditions of such request or Provident
Takeover Proposal and the identity of the person making such request or
Provident Takeover Proposal. Provident will keep UNUM reasonably informed of the
status and details (including amendments or proposed amendments) of any such
request or Provident Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit Provident
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
Provident's stockholders if, in the good faith judgment of the Board of
Directors of Provident, after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable
48
law; provided, however, that neither Provident nor its Board of Directors nor
any committee thereof shall withdraw or modify, or propose publicly to withdraw
or modify, its position with respect to this Agreement, the Reverse Stock Split,
the Merger or the issuance of Surviving Corporation Common Stock in the Merger
unless in the good faith judgment of the Board of Directors of Provident, after
consultation with outside counsel, the failure to take the foregoing actions
would be inconsistent with its obligations under applicable law, or approve or
recommend, or propose publicly to approve or recommend, a Provident Takeover
Proposal.
SECTION 4.03. No Solicitation by UNUM. (a) UNUM shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes any UNUM Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any UNUM Takeover
Proposal; provided, however, that, at any time prior to the publicly announced
date of the UNUM Stockholders Meeting (the "UNUM Applicable Period"), UNUM may,
in response to a UNUM Superior Proposal (as defined in Section 4.03(b)) which
was not solicited by it and which did not otherwise result from a breach of this
Section 4.03(a), and subject to providing prior written notice of its decision
to take such action to Provident (the "UNUM Notice") and compliance with Section
4.03(c), following delivery of the UNUM Notice (x) furnish information with
respect to UNUM and its subsidiaries to any person making a UNUM Superior
Proposal pursuant to a customary confidentiality agreement (as determined by
UNUM after consultation with its outside counsel) and (y) participate in
discussions or negotiations regarding such UNUM Superior Proposal. For purposes
of this Agreement, "UNUM Takeover Proposal" means any inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net revenues, net income or the
assets of UNUM and its subsidiaries, taken as a whole, or 15% or more of any
class of equity securities of UNUM or any of its subsidiaries, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of UNUM or any of its
subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving UNUM
or any of
49
its subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.03, neither the
Board of Directors of UNUM nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Provident, the approval or recommendation by such Board of Directors or such
committee of this Agreement or the Merger unless in the good faith judgment of
the Board of Directors of UNUM, after consultation with outside counsel, the
failure to take the foregoing actions would be inconsistent with its obligations
under applicable law, (ii) approve or recommend, or propose publicly to approve
or recommend, any UNUM Takeover Proposal, or (iii) cause UNUM to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any UNUM Takeover Proposal (each, a "UNUM Acquisition
Agreement"). Notwithstanding the foregoing, in response to a UNUM Superior
Proposal which was not solicitated by UNUM and which did not otherwise result
from a breach of Section 4.03(a), the Board of Directors of UNUM may (subject to
this and the following sentences) terminate this Agreement (and concurrently
with or after such termination, if it so chooses, cause UNUM to enter into any
UNUM Acquisition Agreement with respect to any UNUM Superior Proposal), but only
at a time that is during the UNUM Applicable Period and is after the fifth
business day following Provident's receipt of written notice advising Provident
that the Board of Directors of UNUM is prepared to accept a UNUM Superior
Proposal, specifying the material terms and conditions of such UNUM Superior
Proposal and identifying the person making such UNUM Superior Proposal. For
purposes of this Agreement, a "UNUM Superior Proposal" means any proposal made
by a third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of UNUM Common Stock then outstanding or all
or substantially all the assets of UNUM and its subsidiaries taken together and
otherwise on terms which the Board of Directors of UNUM determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to UNUM's stockholders than the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Board of Directors of UNUM, is
reasonably capable of being obtained by such third party.
50
(c) In addition to the obligations of UNUM set forth in paragraphs (a)
and (b) of this Section 4.03, UNUM shall immediately advise Provident orally and
in writing of any request for information or of any UNUM Takeover Proposal, the
material terms and conditions of such request or UNUM Takeover Proposal and the
identity of the person making such request or UNUM Takeover Proposal. UNUM will
keep Provident reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or UNUM Takeover
Proposal.
(d) Nothing contained in this Section 4.03 shall prohibit UNUM from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
UNUM's stockholders if, in the good faith judgment of the Board of Directors of
UNUM, after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that
neither UNUM nor its Board of Directors nor any committee thereof shall withdraw
or modify, or propose publicly to withdraw or modify, its position with respect
to this Agreement or the Merger unless in the good faith judgment of the Board
of Directors of UNUM, after consultation with outside counsel, the failure to
take the foregoing actions would be inconsistent with its obligations under
applicable law, or approve or recommend, or propose publicly to approve or
recommend, a UNUM Takeover Proposal.
ARTICLE V
Additional Agreements
---------------------
SECTION 5.01. Preparation of the Form S-4 and the Joint Proxy
Statement; Stockholders Meetings. (a) As soon as practicable following the date
of this Agreement, Provident and UNUM shall prepare and file with the SEC a
preliminary joint proxy statement relating to the Merger and use all reasonable
efforts to obtain and furnish the information required to be included by the SEC
in the Joint Proxy Statement and to respond promptly to any comments made by the
SEC with respect to the preliminary joint proxy statement. Provident shall
prepare and file with the SEC the Form S-4, in which the Joint Proxy Statement
will be included as a prospectus of Provident with respect to the Surviving
Corporation Common Stock to be issued in the Merger. Each of Provident and UNUM
shall use reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Provident will use
all reasonable efforts to cause the Joint
51
Proxy Statement to be mailed to Provident's stockholders, and UNUM will use all
reasonable efforts to cause the Joint Proxy Statement to be mailed to UNUM's
stockholders, in each case as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Provident shall also take any
action (other than qualifying to do business in any jurisdiction in which it is
not now so qualified or filing a general consent to service of process) required
to be taken under any applicable state securities laws in connection with the
issuance of Surviving Corporation Common Stock in the Merger and UNUM shall
furnish all information concerning UNUM and the holders of UNUM Common Stock as
may be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Form S-4 or the Joint Proxy Statement will be
made by either party without providing the other party the opportunity to review
and comment thereon. Provident will advise UNUM, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Surviving Corporation Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Joint Proxy Statement or the Form
S-4 or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to Provident or UNUM, or any of their respective
affiliates, officers or directors, should be discovered by Provident or UNUM
which should be set forth in an amendment or supplement to either the Form S-4
or the Joint Proxy Statement, so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the stockholders of Provident and
UNUM.
(b) Provident (i) shall, as soon as practicable following the Form S-4
being declared effective by the SEC, duly call, give notice of, convene and hold
a meeting of its stockholders (the "Provident Stockholders Meeting") for the
purpose of obtaining the Provident Stockholder Approval and (ii) shall, through
its Board of Directors, recommend to its stockholders the approval and adoption
of this Agreement, the Reverse Stock Split, the Merger, the issuance of
Surviving Corporation Common Stock in the Merger and the
52
other transactions contemplated hereby unless, in the case of this clause (ii),
in the good faith judgment of the Board of Directors of Provident, after
consultation with outside counsel, the failure to take the foregoing action
would be inconsistent with its obligations under applicable law. Without
limiting the generality of the foregoing but subject to its rights to terminate
this Agreement pursuant to Section 4.02(b), Provident agrees that its
obligations pursuant to clause (i) of this Section 5.01(b) shall not be affected
by the commencement, public proposal, public disclosure or communication to
Provident of any Provident Takeover Proposal or by the withdrawal or
modification by the Board of Directors of Provident, in accordance with clause
(ii) above, of its recommendation to the stockholders of Provident that such
stockholders approve and adopt this Agreement, the Reverse Stock Split, the
Merger, the issuance of Surviving Corporation Common Stock in the Merger and the
other transactions contemplated hereby.
(c) UNUM (i) shall, as soon as practicable following the Form S-4 being
declared effective by the SEC, duly call, give notice of, convene and hold a
meeting of its stockholders (the "UNUM Stockholders Meeting") for the purpose of
obtaining the UNUM Stockholder Approval and (ii) shall, through its Board of
Directors, recommend to its stockholders the approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby unless, in
the case of this clause (ii), in the good faith judgment of the Board of
Directors of UNUM, after consultation with outside counsel, the failure to take
the foregoing action would be inconsistent with its obligations under applicable
law. Without limiting the generality of the foregoing but subject to its rights
to terminate this Agreement pursuant to Section 4.03(b), UNUM agrees that its
obligations pursuant to clause (i) of this Section 5.01(c) shall not be affected
by the commencement, public proposal, public disclosure or communication to UNUM
of any UNUM Takeover Proposal or by the withdrawal or modification by the Board
of Directors of UNUM, in accordance with clause (ii) above, of its
recommendation to the stockholders of UNUM that such stockholders approve and
adopt this Agreement, the Merger and the other transactions contemplated hereby.
(d) UNUM and Provident will use all reasonable efforts to hold the
Provident Stockholders Meeting and the UNUM Stockholders Meeting on the same
date and as soon as practicable after the date hereof.
SECTION 5.02. Letters of Provident's Accountants. Provident shall use
reasonable efforts to cause to be
53
delivered to UNUM two letters from Provident's independent accountants, one
dated a date within two business days before the date on which the Form S-4
shall become effective and one dated a date within two business days before the
Closing Date, each addressed to UNUM, in form and substance reasonably
satisfactory to UNUM and customary in scope and substance for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.03. Letters of UNUM's Accountants. UNUM shall use reasonable
efforts to cause to be delivered to Provident two letters from UNUM's
independent accountants, one dated a date within two business days before the
date on which the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to Provident, in form
and substance reasonably satisfactory to Provident and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality. Subject to the
Confidentiality Agreement dated as of September 21, 1998, between UNUM and
Provident (the "Confidentiality Agreement") and as otherwise required by
applicable law, including, without limitation, any applicable antitrust laws,
each of Provident and UNUM shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, directors,
employees, accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours during the
period prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
Provident and UNUM shall, and shall cause each of its respective subsidiaries
to, furnish promptly to the other party (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws (b) all
Provident SAP Statements or UNUM SAP Statements, as the case may be, and (c) all
other information concerning its business, properties and personnel as such
other party may reasonably request. No review pursuant to this Section 5.04
shall have an effect for the purpose of determining the accuracy of any
representation or warranty given by either party hereto to the other party
hereto. Each of Provident and UNUM will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic
54
information in accordance with the terms of the Confidentiality Agreement.
SECTION 5.05. Filings; Other Action. Subject to the terms and
conditions provided in this Agreement, UNUM and Provident shall (a) promptly
make their respective filings and thereafter make any other required submissions
under the HSR Act and other regulatory filings with any relevant Governmental
Entity with respect to the Merger and the transactions contemplated by this
Agreement, the Option Agreements and, in the case of UNUM, the Stockholders
Agreement; and (b) use their respective reasonable efforts to promptly take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate under this Agreement and applicable laws
and regulations to obtain as promptly as practicable all consents, approvals,
orders, authorizations, registrations and permits required to be obtained from
any Governmental Entity or third party in connection with the execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement, the Option Agreements and, in the
case of UNUM, the Stockholders Agreement as soon as practicable after the date
hereof; provided, however, that neither Provident nor UNUM will be required to
agree to, or proffer to, (i) divest or hold separate any of Provident's, UNUM's
or any of their respective affiliates' businesses or assets or (ii) cease to
conduct business or operations in any jurisdiction in which Provident, UNUM or
any of their respective subsidiaries conducts business or operations as of the
date of this Agreement.
SECTION 5.06. Stock Options and Restricted Stock Units. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of UNUM
(or, if appropriate, any committee administering the UNUM Stock Plans) shall
adopt such resolutions or take such other actions as may be required to effect
the following:
(i) adjust the terms of all outstanding UNUM Stock Options granted
under the UNUM Stock Plans, whether vested or unvested, as necessary to
provide that, at the Effective Time, each such UNUM Stock Option
outstanding immediately prior to the Effective Time shall be amended and
converted, subject to the prior effectiveness of the Reverse Stock Split,
into an option to acquire one share of Surviving Corporation Common Stock
for each share of UNUM Common Stock subject to such UNUM Stock Option
(each, as so adjusted, an "Adjusted Option"); and
55
(ii) make such other changes to the UNUM Stock Plans as Provident and
UNUM may agree are appropriate to give effect to the Merger, including as
provided in Section 5.07.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of Provident (or, if appropriate, any committee administering
the Provident Stock Plans) shall adopt such resolutions or take such other
actions as may be required to effect the following:
(i) all outstanding Provident Stock Options granted under the Provident
Stock Plans, whether vested or unvested, shall be adjusted in accordance
with their terms to provide that at the effectiveness of the Reverse Stock
Split each such Provident Stock Option outstanding immediately prior to the
effectiveness of the Reverse Stock Split shall be converted into an option
to acquire a number of shares of Provident Common Stock giving effect to
the Reverse Stock Split at an exercise price that is correspondingly
adjusted; and
(ii) make such other changes to the Provident Stock Plans as Provident
and UNUM may agree are appropriate to give effect to the Merger, including
as provided in Section 5.07.
(c) As soon as practicable after the Effective Time, the Surviving
Corporation shall deliver to the holders of UNUM Stock Options appropriate
notices setting forth such holders' rights pursuant to the respective UNUM Stock
Plans and the agreements evidencing the grants of such UNUM Stock Options and
that such UNUM Stock Options and agreements shall be assumed by the Surviving
Corporation and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.06 after giving effect to
the Merger).
(d) A holder of an Adjusted Option may exercise such Adjusted Option in
whole or in part in accordance with its terms by delivering a properly executed
notice of exercise to the Surviving Corporation, together with the consideration
therefor and the Federal withholding tax information, if any, required in
accordance with the related UNUM Stock Plan.
(e) Except as otherwise contemplated by this Section 5.06 and except to
the extent required under the respective terms of the UNUM Stock Options, all
restrictions or limitations on transfer and vesting with respect to the
56
UNUM Stock Options awarded under the UNUM Stock Plans or any other plan, program
or arrangement of UNUM or any of its subsidiaries, to the extent that such
restrictions or limitations shall not have already lapsed, shall remain in full
force and effect with respect to such options after giving effect to the Merger
and the assumption by the Surviving Corporation as set forth above.
SECTION 5.07. UNUM Stock Plans and Certain Employee Matters. (a) At the
Effective Time, by virtue of the Merger, the UNUM Stock Plans shall be assumed
by the Surviving Corporation, with the result that all obligations of UNUM under
the UNUM Stock Plans, including with respect to awards outstanding at the
Effective Time under each UNUM Stock Plan, shall be obligations of the Surviving
Corporation following the Effective Time. Prior to the Effective Time, Provident
shall take all necessary actions (including, if required, to comply with Section
162(m) of the Code (and the regulations thereunder) or applicable law or rule of
the NYSE, obtaining the approval of its stockholders at the Provident
Stockholders Meeting) for the assumption of the UNUM Stock Plans, including the
reservation, issuance and listing of shares of Surviving Corporation Common
Stock in a number at least equal to the number of shares of Surviving
Corporation Common Stock that will be subject to Adjusted Options. No later than
the Effective Time, Provident shall prepare and file with the SEC a registration
statement on Form S-8 (or another appropriate form) registering a number of
shares of Surviving Corporation Common Stock determined in accordance with the
preceding sentence. Such registration statement shall be kept effective (and the
current status of the prospectus or prospectuses required thereby shall be
maintained) at least for so long as Adjusted Options or any unsettled awards
granted under the UNUM Stock Plans after the Effective Time remain outstanding.
(b) Following the Effective Time, Provident, as the Surviving
Corporation in the Merger, will assume and honor all obligations under
employment agreements of UNUM the existence of which does not constitute a
violation of this Agreement in accordance with the terms thereof.
(c) UNUM and Provident agree to take or cause to be taken all other
actions described in Schedule 5.07.
SECTION 5.08. Indemnification, Exculpation and Insurance. (a) Provident
agrees that all rights to indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time now existing in
favor of the current or former directors or
57
officers of UNUM or Provident and their respective subsidiaries as provided in
their respective certificates of incorporation or by-laws (or comparable
organizational documents) and any indemnification agreements of UNUM or
Provident, the existence of which does not constitute a breach of this
Agreement, shall be assumed by the Surviving Corporation in the Merger, without
further action, as of the Effective Time and shall survive the Merger and shall
continue in full force and effect in accordance with their terms. In addition,
from and after the Effective Time, directors and officers of UNUM or Provident
who become directors or officers of the Surviving Corporation will be entitled
to the same indemnity rights and protections as are afforded to other directors
and officers of the Surviving Corporation.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.08.
(c) For six years after the Effective Time, the Surviving Corporation
shall maintain in effect the better of UNUM's and Provident's respective current
directors' and officers' liability insurance covering acts or omissions
occurring prior to the Effective Time with respect to those persons who are
currently covered by either UNUM's or Provident's respective directors' and
officers' liability insurance policy on terms with respect to such coverage and
amount no less favorable than those of such policy in effect on the date hereof;
provided that the Surviving Corporation may substitute therefor policies of the
Surviving Corporation or its subsidiaries containing terms with respect to
coverage and amount no less favorable to such directors or officers; provided
further, that if the existing or substituted directors' and officers' liability
insurance expires, is terminated or canceled during such six-year period, the
Surviving Corporation will obtain as much directors' and officers' liability
insurance as can be obtained for the remainder of such period for a premium not
in excess of 150% of the higher of (x) the aggregate premiums paid by UNUM in
1998 and (y) the aggregate premiums paid by Provident in 1998, in each case on
an annualized basis for such purpose and that in no event shall the Surviving
Corporation be required to pay aggregate premiums for insurance under this
Section 5.08(c) in excess of 150%
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of the higher of the two amounts of aggregate premiums paid by UNUM and
Provident in 1998 on an annualized basis for such purpose.
(d) The provisions of this Section 5.08 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her 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.
SECTION 5.09. Fees and Expenses. (a) Except as provided in this Section
5.09, all fees and expenses incurred in connection with the Merger, this
Agreement, the Option Agreements, the Stockholders Agreement and the
transactions contemplated by this Agreement, the Option Agreements and the
Stockholders Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except that each of UNUM and
Provident shall bear and pay one-half of the costs and expenses incurred in
connection with (1) the filing, printing and mailing of the Form S-4 and the
Joint Proxy Statement (including SEC filing fees) and (2) the filings of the
premerger notification and report forms under the HSR Act (including filing
fees). Provident shall file any return with respect to, and shall pay, any state
or local taxes (including any penalties or interest with respect thereto), if
any, which are attributable to the transfer of the beneficial ownership of
UNUM's real property (collectively, the "Real Estate Transfer Taxes") as a
result of the Merger. UNUM shall cooperate with Provident in the filing of such
returns including, in the case of UNUM, supplying in a timely manner a complete
list of all real property interests held by UNUM and any information with
respect to such property that is reasonably necessary to complete such returns.
The fair market value of any real property of UNUM subject to the Real Estate
Transfer Taxes shall be as agreed to between UNUM and Provident.
(b) In the event that (1) a Provident Takeover Proposal shall have been
made known to Provident or any of its subsidiaries or has been made directly to
its stockholders generally or any person shall have publicly announced an
intention (whether or not conditional) to make a Provident Takeover Proposal and
thereafter this Agreement is terminated by either UNUM or Provident pursuant to
Section 7.01(b)(i) or (ii) or (2) this Agreement is terminated (x) by Provident
pursuant to Section 7.01(h) or (y) by UNUM pursuant to Section 7.01(e) or
Section 7.01(f), then Provident shall promptly, but in no event later than
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the date of such termination, pay UNUM a fee equal to $150 million (the
"Termination Fee"), payable by wire transfer of same day funds; provided,
however, that no Termination Fee shall be payable to UNUM pursuant to clause (1)
of this paragraph (b) or pursuant to a termination by UNUM pursuant to Section
7.01(e) or Section 7.01(f) unless and until within 18 months of such termination
Provident or any of its subsidiaries enters into any Provident Acquisition
Agreement or consummates any Provident Takeover Proposal (for the purposes of
the foregoing proviso the terms "Provident Acquisition Agreement" and "Provident
Takeover Proposal" shall have the meanings assigned to such terms in Section
4.02 except that the references to "15%" in the definition of "Provident
Takeover Proposal" in Section 4.02(a) shall be deemed to be references to "35%"
and "Provident Takeover Proposal" shall only be deemed to refer to a transaction
involving Provident, or with respect to assets (including the shares of any
subsidiary) of Provident and its subsidiaries, taken as a whole, and not any of
its subsidiaries alone), in which event the Termination Fee shall be payable
upon the first to occur of such events. Provident acknowledges that the
agreements contained in this Section 5.09(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
UNUM would not enter into this Agreement; accordingly, if Provident fails
promptly to pay the amount(s) due pursuant to this Section 5.09(b), and, in
order to obtain such payment, UNUM commences a suit which results in a judgment
against Provident for the fee set forth in this Section 5.09(b), Provident shall
pay to UNUM its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee(s) at
the prime rate of Citibank N.A. in effect on the date such payment was required
to be made.
(c) In the event that (1) a UNUM Takeover Proposal shall have been made
known to UNUM or any of its subsidiaries or has been made directly to its
stockholders generally or any person shall have publicly announced an intention
(whether or not conditional) to make a UNUM Takeover Proposal and thereafter
this Agreement is terminated by either UNUM or Provident pursuant to Section
7.01(b)(i) or (iii) or (2) this Agreement is terminated (x) by UNUM pursuant to
Section 7.01(d) or (y) by Provident pursuant to Section 7.01(i) or Section
7.01(j), then UNUM shall promptly, but in no event later than the date of such
termination, pay Provident the Termination Fee, payable by wire transfer of same
day funds; provided, however, that no Termination Fee shall be payable to
Provident pursuant to clause (1) of this paragraph (c) or
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pursuant to a termination by Provident pursuant to Section 7.01(i) or Section
7.01(j) unless and until within 18 months of such termination UNUM or any of its
subsidiaries enters into any UNUM Acquisition Agreement or consummates any UNUM
Takeover Proposal (for the purposes of the foregoing proviso the terms "UNUM
Acquisition Agreement" and "UNUM Takeover Proposal" shall have the meanings
assigned to such terms in Section 4.03 except that the references to "15%" in
the definition of "UNUM Takeover Proposal" in Section 4.03(a) shall be deemed to
be references to "35%" and "UNUM Takeover Proposal" shall only be deemed to
refer to a transaction involving UNUM, or with respect to assets (including the
shares of any subsidiary) of UNUM and its subsidiaries, taken as a whole, and
not any of its subsidiaries alone), in which event the Termination Fee shall be
payable upon the first to occur of such events. UNUM acknowledges that the
agreements contained in this Section 5.09(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Provident would not enter into this Agreement; accordingly, if UNUM fails
promptly to pay the amount(s) due pursuant to this Section 5.09(c), and, in
order to obtain such payment, Provident commences a suit which results in a
judgment against UNUM for the fee set forth in this Section 5.09(c), UNUM shall
pay to Provident its costs and expenses (including attorneys' fees and expenses)
in connection with such suit, together with interest on the amount of the fee(s)
at the prime rate of Citibank N.A. in effect on the date such payment was
required to be made.
SECTION 5.10. Public Announcements. UNUM and Provident will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, the Option Agreements and the Stockholders Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement and the Stockholders Agreement shall be in the form heretofore
agreed to by the parties.
SECTION 5.11. Affiliates. As soon as practicable after the date hereof,
and, in any event no later than 40 days prior to the Closing Date, UNUM shall
deliver to Provident a letter identifying all persons who are, in the
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opinion of UNUM, at the time this Agreement is submitted for adoption by the
stockholders of UNUM, "affiliates" of UNUM for purposes of Rule 145 under the
Securities Act or for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board ("APB
No. 16") and applicable SEC rules, regulations and interpretations thereunder.
UNUM shall use reasonable efforts to cause each such person to deliver to
Provident 30 days prior to the Closing Date, a written agreement substantially
in the form attached as Exhibit C-1 hereto. As soon as practicable after the
date hereof, and, in any event no later than 40 days prior to the Closing Date,
Provident shall deliver to UNUM a letter identifying all persons who are, in the
opinion of Provident, at the time this Agreement is submitted for adoption by
the stockholders of Provident, "affiliates" of Provident for purposes of
qualifying the Merger for pooling of interests accounting treatment under ▇▇▇
▇▇. ▇▇ and applicable SEC rules, regulations and interpretations thereunder.
Provident shall use reasonable efforts to cause each such person to deliver to
UNUM 30 days prior to the Closing Date, a written agreement substantially in the
form attached hereto as Exhibit C-2.
SECTION 5.12. NYSE Listing and De-Listing. Provident shall use
reasonable efforts to cause the Surviving Corporation Common Stock to be issued
in the Merger to be approved for listing on the NYSE, subject to official notice
of issuance, as promptly as practicable after the date hereof, and in any event
prior to the Closing Date. The Surviving Corporation shall use its best efforts
to cause the UNUM Common Stock to be de-listed from the NYSE and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
SECTION 5.13. Stockholder Litigation. Each of Provident and UNUM shall
give the other the reasonable opportunity to participate in the defense of any
stockholder litigation against Provident or UNUM, as applicable, and its
directors relating to the transactions contemplated by this Agreement, the
Option Agreements and the Stockholders Agreement.
SECTION 5.14. Tax Treatment. Each of UNUM and Provident shall use
reasonable efforts to cause the Merger to qualify as a reorganization under the
provisions of Section 368 of the Code and to obtain the opinions of counsel
referred to in Sections 6.02(c) and 6.03(c).
SECTION 5.15. Pooling of Interests. Each of Provident and UNUM shall
use reasonable efforts to cause the
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transactions contemplated by this Agreement, including the Merger, the Option
Agreements and the Stockholders Agreement to be accounted for as a pooling of
interests under ▇▇▇ ▇▇. ▇▇ and applicable SEC rules, regulations and
interpretations thereunder, and such accounting treatment to be accepted by each
of Provident's and UNUM's independent certified public accountants, and by the
SEC, respectively, and each of Provident and UNUM agrees that it shall
voluntarily take no action that would cause such accounting treatment not to be
obtained.
SECTION 5.16. Rights Agreement. The Board of Directors of UNUM shall
take all further action (in addition to that referred to in Section 3.02(w))
reasonably requested in writing by Provident in order to render UNUM's Rights
Agreement inapplicable to the Merger and the other transactions contemplated by
this Agreement, the Option Agreements, and the Stockholders Agreement. Except as
provided above with respect to the Merger and the other transactions
contemplated by this Agreement, the Option Agreements, and the Stockholders
Agreement, UNUM's Board of Directors shall not, without the prior written
consent of Provident, (a) amend the UNUM Rights Agreement or (b) take any action
with respect to, or make any determination under, the UNUM Rights Agreement,
including, a redemption of the UNUM Rights or any action to facilitate a UNUM
Takeover Proposal.
SECTION 5.17. Standstill Agreements; Confidentiality Agreements. During
the period from the date of this Agreement through the Effective Time, neither
Provident nor UNUM shall terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its respective
subsidiaries is a party. During such period, Provident or UNUM, as the case may
be, shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including by obtaining injunctions to prevent
any breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States of America or of any state
having jurisdiction.
SECTION 5.18. Stockholder Agreement Legend. Provident will inscribe
upon any certificate representing Subject Shares (as defined in the Stockholders
Agreement) tendered by a Stockholder (as defined in the Stockholders Agreement)
in connection with any proposed transfer of any Subject Shares by such
Stockholder in accordance with the terms of the Stockholders Agreement the
following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF
Provident, INC., REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
63
TO A STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 22, 1998, AND ARE SUBJECT TO
THE TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL
EXECUTIVE OFFICES OF PROVIDENT COMPANIES, INC."; and Provident will return such
certificate containing such inscription to such Stockholder within three
business days following Provident's receipt thereof.
SECTION 5.19. Reverse Stock Split. Provident shall take all actions
necessary to cause the Reverse Stock Split to become effective immediately prior
to the Effective Time (provided that Provident's obligation to cause the Reverse
Stock Split to become effective shall be subject to the prior satisfaction or
waiver, as applicable, of each of the conditions to the respective obligation of
each party to effect the Merger set forth in Article VI (other than Section
6.01(h)) shall have been satisfied or waived), including arranging for the
exchange of certificates representing Provident Common Stock for certificates
representing Surviving Corporation Common Stock following the effectiveness of
the Reverse Stock Split.
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. Each of the Provident Stockholder Approval
and the UNUM Stockholder Approval shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(c) Certain Other Approvals. Each of the Designated Insurance Approvals
and the Other State Insurance Approvals shall have been made or obtained,
except, in the case of the Other State Insurance Approvals, those Other State
Insurance Approvals the failure of which to obtain, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on the
combined businesses of UNUM and Provident (and their subsidiaries), assuming for
purposes of this Section 6.01(c) that the Merger is closed and consummated as
contemplated by this Agreement, and each
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such State Insurance Approval shall have been obtained free of any conditions
(other than those conditions that, individually or in the aggregate, are not
reasonably likely to have a material adverse effect on such combined
businesses).
(d) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition (collectively, "Restraints") shall be in
effect (i) preventing the consummation of the Merger or the other transactions
contemplated by this Agreement or (ii) which otherwise, individually or in the
aggregate, is reasonably likely to have a material adverse effect on the
combined businesses of UNUM and Provident (and their subsidiaries) assuming for
the purpose of this Section 6.01(d) that the Merger is closed and consummated as
contemplated by this Agreement; provided, however, that each of the parties
shall have used its reasonable efforts to prevent the entry of any such
Restraints and to appeal as promptly as practicable any such Restraints that may
be entered.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(f) NYSE Listing. The shares of Surviving Corporation Common Stock
issuable to the holders of UNUM Common Stock as contemplated by this Agreement
shall have been approved for listing on the NYSE, subject to official notice of
issuance.
(g) Pooling Letters. UNUM and Provident shall have each received (i)
from UNUM's independent accountants a letter, dated as of the Closing Date and
addressed to Provident and UNUM, to the effect that, subject to customary
qualifications, UNUM meets the requirements to be a party to a pooling of
interests transaction for financial reporting purposes under ▇▇▇ ▇▇. ▇▇ and
applicable SEC rules, regulations and interpretations thereunder and (ii) from
Provident's independent accountants a letter, dated as of the Closing Date and
addressed to Provident and UNUM, to the effect that, subject to customary
qualifications, the Merger qualifies for pooling of interests treatment for
financial reporting purposes under ▇▇▇ ▇▇. ▇▇ and applicable SEC rules,
regulations and interpretations thereunder.
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(h) Reverse Stock Split. The Reverse Stock Split shall have become
effective.
SECTION 6.02. Conditions to Obligations of UNUM. The obligation of UNUM
to effect the Merger is further subject to satisfaction or waiver by UNUM of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Provident set forth herein shall be true and correct both when made and at
and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein), individually or in the aggregate,
does not have, and is not reasonably likely to have, a material adverse effect
on Provident, and UNUM shall have received a certificate signed on behalf of
Provident by an executive officer of Provident to such effect.
(b) Performance of Obligations of Provident. Provident shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and UNUM shall have
received a certificate signed on behalf of Provident by an executive officer of
Provident to such effect.
(c) Tax Opinions. UNUM shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel to UNUM, on a date immediately prior to the mailing of the Joint
Proxy Statement and on the Closing Date, opinions, in each case dated as of such
respective dates and stating that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and that UNUM and Provident will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. In rendering such opinions,
counsel for UNUM shall be entitled to rely upon representations of officers of
UNUM and Provident substantially in the form of Exhibits D and E hereto.
SECTION 6.03. Conditions to Obligations of Provident. The obligation of
Provident to effect the Merger is further subject to satisfaction or waiver by
Provident of the following conditions:
(a) Representations and Warranties. The representations and warranties
of UNUM set forth herein
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shall be true and correct both when made and at and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "material adverse effect" set forth
therein), individually or in the aggregate, does not have, and is not reasonably
likely to have, a material adverse effect on UNUM, and Provident shall have
received a certificate signed on behalf of UNUM by an executive officer of UNUM
to such effect.
(b) Performance of Obligations of UNUM. UNUM shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Provident shall have received a
certificate signed on behalf of UNUM by an executive officer of UNUM to such
effect.
(c) Tax Opinions. Provident shall have received from ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to Provident, on a date immediately prior to the mailing of
the Joint Proxy Statement and on the Closing Date, opinions, in each case dated
as of such respective dates and stating that the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that UNUM and Provident will each be a party to that
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinions, counsel for Provident shall be entitled to rely upon
representations of officers of UNUM and Provident substantially in the form of
Exhibits D and E hereto.
SECTION 6.04. Frustration of Closing Conditions. Neither UNUM nor
Provident may rely on the failure of any condition set forth in Section 6.01,
6.02 or 6.03, as the case may be, to be satisfied if such failure was caused by
such party's failure to use reasonable efforts to consummate the Merger and the
other transactions contemplated by this Agreement, the Option Agreements and the
Stockholders Agreement, as required by and subject to Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether
67
before or after the Provident Stockholder Approval or the UNUM Stockholder
Approval:
(a) by mutual written consent of UNUM and Provident;
(b) by either UNUM or Provident:
(i) if the Merger shall not have been consummated by November 30,
1999; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.01(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of the Merger to be consummated by such time;
(ii) if the Provident Stockholder Approval shall not have been
obtained at the Provident Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof at which a proper vote on
such matters was taken;
(iii) if the UNUM Stockholder Approval shall not have been
obtained at the UNUM Stockholders Meeting duly convened therefor or at
any adjournment or postponement thereof at which a proper vote on such
matters was taken; or
(iv) if any Restraint having any of the effects set forth in
Section 6.01(d) shall be in effect and shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(iv) shall have used
reasonable efforts to prevent the entry of and to remove such
Restraint;
(c) by UNUM, if Provident shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 6.02(a) or (b) and (B) is incapable of being cured by Provident;
(d) by UNUM in accordance with Section 4.03(b); provided that, in order
for the termination of this Agreement pursuant to this paragraph (d) to be
deemed effective, UNUM shall have complied with all provisions contained in
Section 4.03, including the notice
68
provisions therein, and with applicable requirements, including the payment
of the Termination Fee, of Section 5.09(c);
(e) by UNUM, if Provident or any of its directors or officers shall
participate in discussions or negotiations in breach of Section 4.02;
(f) by UNUM, if the Board of Directors of Provident or any committee
thereof shall have withdrawn or modified in a manner adverse to UNUM its
approval or recommendation of the Merger or this Agreement;
(g) by Provident, if UNUM shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 6.03(a) or (b) and (B) is incapable of being cured by UNUM;
(h) by Provident in accordance with Section 4.02(b); provided that, in
order for the termination of this Agreement pursuant to this subparagraph
(h) to be deemed effective, Provident shall have complied with all
provisions of Section 4.02, including the notice provisions therein, and
with applicable requirements, including the payment of the Termination Fee,
of Section 5.09(b);
(i) by Provident, if UNUM or any of its directors or officers shall
participate in discussions or negotiations in breach of Section 4.03; or
(j) by Provident, if the Board of Directors of UNUM or any committee
thereof shall have withdrawn or modified in a manner adverse to Provident
its approval or recommendation of the Merger or this Agreement.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either Provident or UNUM as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of UNUM or Provident, other than the provisions of
Section 3.01(p), Section 3.02(p), the last sentence of Section 5.04, Section
5.09, this Section 7.02, Article VIII, the Confidentiality Agreement and the
letter agreement, dated as of October 13, 1998 between UNUM and Provident (the
"Letter Agreement") which provisions and agreements survive such termination,
and termination of this Agreement will not
69
relieve a breaching party from liability for any wilful and material breach by
such party of any of its representations, warranties, covenants or agreements
set forth in this Agreement giving rise to such termination.
SECTION 7.03. Amendment. This Agreement may be amended by the parties
at any time before or after the Provident Stockholder Approval or the UNUM
Stockholder Approval; provided, however, that after any such approval, there
shall not be made any amendment that by law requires further approval by the
stockholders of Provident or UNUM without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.03, waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require, in the case of UNUM or
Provident, action by its Board of Directors or, with respect to any amendment to
this Agreement, the duly authorized committee of its Board of Directors to the
extent permitted by law.
ARTICLE VIII
General Provisions
------------------
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit (a) any covenant or agreement
70
of the parties which by its terms contemplates performance after the Effective
Time or (b) the survival of Section 3.01(p), Section 3.02(p), the last sentence
of Section 5.04, Section 5.09, Section 7.02, this Article VIII, the
Confidentiality Agreement and the Letter Agreement, as set forth in Section
7.02.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to UNUM, to
UNUM Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and
(b) if to Provident, to
Provident Companies, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: F. ▇▇▇▇ ▇▇▇▇▇▇▇▇
71
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: H. ▇▇▇▇▇▇ ▇▇▇▇▇
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the
ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) "knowledge" of any person which is not an individual means the
knowledge of such person's executive officers after reasonable inquiry;
(c) "material adverse change" or "material adverse effect" means, when
used in connection with Provident or UNUM, any change, effect, event,
occurrence or state of facts that (x) is, or is reasonably likely to be,
materially adverse to the business, financial condition or results of
operations of such party and its subsidiaries taken as a whole, (y)
materially impairs the ability of such party to perform its obligations
under this Agreement or the Option Agreements or (z) prevents the
consummation of any of the transactions contemplated by this Agreement, the
Option Agreements or, in the case of UNUM, the Stockholders Agreement other
than any (1) change, effect, event, occurrence or state of facts (I) that
occurs as a result of any act or omission of either party hereto that has
been previously consented to in writing by the other party hereto or (II)
relating to (i) the United States economy or securities markets in general,
(ii) this Agreement or the transactions contemplated hereby or the
announcement thereof, (iii) to the insurance industry in general, and not
specifically relating to Provident or UNUM or their respective
subsidiaries, or (iv) any decline in the share price of either Provident
Common Stock or UNUM Common Stock
72
(but, with respect to either party, excluding any change or effect
underlying such decline to the extent such change or effect would otherwise
constitute a material adverse effect on such party) or (2) mandated change
in U.S. generally accepted accounting principles or interpretations thereof
or statutory accounting practices prescribed or permitted by the applicable
insurance regulatory authorities or interpretations thereof not applying
specifically to Provident and UNUM;
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which is owned directly
or indirectly by such first person).
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings for this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and
73
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein), the
Option Agreements, the Stockholders Agreement, the Confidentiality Agreement and
the Letter Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Article II, Section 5.06 and Section 5.08, are not intended to
confer upon any person other than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by either of the parties hereto without
the prior written consent of the other party. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.09. Enforcement; Waiver of Jury Trial. (a) The parties agree
that irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal court
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled
74
at law or in equity. In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iii)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE OPTION AGREEMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OPTION AGREEMENTS, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE OPTION AGREEMENTS. EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OPTION AGREEMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.09(b).
SECTION 8.10. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, unless the effects of such invalidity, illegality or
unenforceability would prevent the parties from realizing the major portion of
the economic benefits of the Merger that they currently anticipate obtaining
therefrom, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, UNUM and Provident have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
UNUM CORPORATION,
by
------------------------------------
Name:
Title: Chairman and Chief
Executive Officer
PROVIDENT COMPANIES, INC.,
by
------------------------------------
Name:
Title: Chairman, President
and Chief Executive
Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
----------------------
Term Page Millennium Functionality.............................22
Adjusted Option......................................54 Term Page
affiliate............................................71
APB No.16............................................61 NYSE..................................................9
Certificate of Merger.................................3 Option Agreements.....................................2
Closing...............................................2 Other State Insurance
Closing Date..........................................2 Approvals........................................ 9
Code..................................................1 Permits..............................................17
Confidentiality Agreement............................53 person...............................................72
Designated Insurance Approvals.......................25 Ratio................................................19
Designated State Insurance Real Estate Transfer Taxes...........................58
Approvals.........................................9 Reinsurance Agreements...............................21
DGCL..................................................2 Restraints...........................................64
Effective Time....................................... 3 Reverse Stock Split..................................18
Environmental Laws...................................17 SARs................................................. 6
ERISA................................................14 SEC.................................................. 5
Exchange Act..........................................8 Securities Act....................................... 8
Form S-4..............................................8 State Insurance Approvals.............................9
Governmental Entity.................................. 8 Stockholders Agreement................................2
Hazardous Material...................................18 subsidiary...........................................72
HSR Act.............................................. 8 Surviving Corporation.................................1
Insurance Laws.......................................11 Third-Party Intellectual
Intellectual Property................................21 Property Rights..................................21
Joint Proxy Statement................................ 8 UK Insurance Approval................................26
knowledge............................................71 Provident.............................................1
Letter Agreement.....................................68 Provident Acquisition
UNUM..................................................1 Agreement........................................46
UNUM Acquisition Agreement...........................49 Provident Applicable Period..........................46
UNUM Applicable Period...............................48 Provident Benefit Plans..............................14
UNUM Benefit Plans...................................30 Provident Common Stock................................1
UNUM Common Stock.....................................1 Provident Disclosure Schedule.........................5
UNUM Disclosure Schedule.............................22 Provident Filed SEC Documents........................12
UNUM Filed SEC Documents.............................29 Provident Form 10-K...................................5
UNUM Form 10-K.......................................23 Provident Insurance
UNUM Insurance Subsidiaries..........................27 Subsidiaries.....................................10
UNUM Intellectual Property Provident Intellectual
Rights...........................................37 Property Rights..................................21
UNUM Notice..........................................48 Provident Notice.....................................46
UNUM Option...........................................2 Provident Option......................................2
UNUM Pension Plans...................................30 Provident Pension Plans..............................14
UNUM Rights..........................................23 Provident SAP Statements.............................10
UNUM Rights Agreement................................23 Provident SEC Documents.............................. 9
UNUM Rights Plan Amendment...........................37 Provident Stock Options.............................. 6
UNUM SAP Statements..................................27 Provident Stock Option
UNUM SEC Documents...................................26 Agreement.........................................2
UNUM Stock Options...................................23 Provident Stock Plans................................ 6
UNUM Stock Option Agreement.......................... 2 Provident Stockholder
UNUM Stock Plans.....................................23 Approval.........................................18
UNUM Stockholder Approval............................35 Provident Stockholders
UNUM Stockholders Meeting............................52 Meeting..........................................51
UNUM Superior Proposal...............................49 Provident Superior Proposal..........................47
UNUM Takeover Proposal...............................48 Provident Takeover Proposal..........................46
material adverse change..............................71 Welfare Plan.........................................14
material adverse effect..............................71
Merger................................................1
EXHIBIT A-1
TO THE MERGER AGREEMENT
RESTATED
CERTIFICATE OF INCORPORATION
of
UNUM PROVIDENT CORPORATION
FIRST: The name of the Corporation is UNUM Provident Corporation.
SECOND: The address of the registered office of the Corporation in the state
of Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, in the city of Wilmington, county of New
Castle. The name of the Corporation's registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
FOURTH: A. The total number of shares of capital stock which the Corporation
shall have authority to issue is 500,000,000 shares, consisting of 475,000,000
shares of Common Stock, par value $.10 per share (the "Common Stock") and
25,000,000 shares of Preferred Stock, par value $.10 per share (the "Preferred
Stock").
B. Shares of Preferred Stock may be issued from time to time in one or more
classes or series as may be determined from time to time by the Board of
Directors of the Corporation (the "Board of Directors"), each such class or
series to be distinctly designated. Except in respect of the particulars fixed
by the Board of Directors for classes or series provided for by the Board of
Directors as permitted hereby, all shares of Preferred Stock shall be of equal
rank and shall be identical. All shares of any one series of Preferred Stock so
designated by the Board of Directors shall be alike in every particular, except
that shares of any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative. The voting rights, if
any, of each such class or series and the preferences and relative,
participating, optional and other special rights of each such class or series
and the qualifications, limitations and restrictions thereof, if any, may differ
from those of any and all other classes or series at any time outstanding; and
the Board of Directors of the Corporation is hereby expressly granted authority
to fix, by resolutions duly adopted prior to the issuance of any shares of a
particular class or series of Preferred Stock so designated by the Board of
Directors, the voting powers of stock of such class or series, if any, and
2
the designations, preferences and relative, participating, optional and other
special rights and the qualifications, limitations and restrictions of such
class or series, including, but without limiting the generality of the
foregoing, the following:
(1) The distinctive designation of, and the number of shares of Preferred
Stock which shall constitute, such class or series, and such number may be
increased (except where otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by like action of the Board of Directors;
(2) The rate and time at which, and the terms and conditions upon which,
dividends, if any, on Preferred Stock of such class or series shall be paid,
the extent of the preference or relation, if any, of such dividends to the
dividends payable on any other class or classes, or series of the same or
other classes of stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such class or
series to convert the same into, or exchange the same for, shares of any other
class or classes or of any series of the same or any other class or classes of
stock and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such class or series shall be subject
to redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions upon which, Preferred Stock of such class
or series may be redeemed;
(5) The rights, if any, of the holders of Preferred Stock of such class or
series upon the voluntary or involuntary liquidation of the Corporation;
(6) The terms of the sinking fund or redemption or purchase account, if any,
to be provided for the Preferred Stock of such class or series; and
(7) The voting powers, if any, of the holders of such class or series of
Preferred Stock.
C. Except as otherwise provided in this Certificate of Incorporation, the
Board of Directors shall have authority to authorize the issuance, from time to
time without any vote or other action by the stockholders, of any or all shares
of stock of the Corporation of any class or series at
3
any time authorized, and any securities convertible into or exchangeable for any
such shares, and any options, rights or warrants to purchase or acquire any such
shares, in each case to such persons and on such terms (including as a dividend
or distribution on or with respect to, or in connection with a split or
combination of, the outstanding shares of stock of the same or any other class)
as the Board of Directors from time to time in its discretion lawfully may
determine; provided, however, that the consideration for the issuance of shares
of stock of the Corporation having par value (unless issued as such a dividend
or distribution or in connection with such a split or combination) shall not be
less than such par value. Shares so issued shall be fully paid stock, and the
holders of such stock shall not be liable to any further call or assessments
thereon.
D. Except as provided in this Certificate of Incorporation, each holder of
Common Stock shall be entitled to one vote for each share of Common Stock held
by him.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
the Board of Directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors.
(2) The Board of Directors shall consist of not less than three nor more
than fifteen directors. The exact number of directors shall be determined from
time to time by resolution adopted by the affirmative vote of a majority of
the Board of Directors, subject to Article III, Section 11 of the By-laws of
the Corporation. The Directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of Directors constituting the
entire Board of Directors.
(3) Upon, or as soon as practicable following, the filing of the Certificate
of Merger to which this Certificate of Incorporation is attached, Class I
Directors shall be elected for a one-year term, Class II Directors for a
two-year term and Class III Directors for a three-year term. At each
succeeding annual meeting of stockholders, successors to the class of
Directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of Directors is changed in
4
accordance with the terms of this Certificate of Incorporation or the By-laws,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of Directors in each class as nearly equal as possible,
and any additional Director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of Directors shorten the term of any incumbent Director. A
Director shall hold office until the annual meeting for the year in which his
term expires and until his successor shall be elected and shall qualify,
subject, however, to the Director's prior death, resignation, disqualification
or removal from office. The stockholders shall not have the right to remove
any one or all of the Directors except for cause and in that event only by the
affirmative vote of the holders of eighty percent (80%) of the votes entitled
to be cast by the holders of all outstanding shares of Voting Stock (as
hereinafter defined) voting together as a single class. Any vacancy on the
Board of Directors that results from a newly created Directorship shall only
be filled by the affirmative vote of a majority of the Board of Directors then
in office, and any other vacancy occurring on the Board of Directors shall
only be filled by a majority of the Directors then in office, although less
than a quorum, or by a sole remaining Director. Any Director elected to fill a
vacancy not resulting from an increase in the number of Directors shall have
the same remaining term as that of his predecessor.
(4) Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect Directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such Directorships shall be governed by the
terms of this Certificate of Incorporation applicable thereto (including the
resolutions adopted by the Board of Directors pursuant to Section B of Article
FOURTH), and such Directors so elected shall not be divided into classes
pursuant to Paragraph (2) of this Article FIFTH unless expressly provided by
such terms. Election of Directors need not be by written ballot unless the
By-Laws so provide.
(5) The Board of Directors may from time to time determine whether, to what
extent, at what times and places and under what conditions and regulations the
accounts, books and papers of the Corporation, or any of
5
them, shall be open to the inspection of the stockholders, and no stockholder
shall have any right to inspect any account, book or document of the
Corporation, except as and to the extent expressly provided by law with
reference to the right of stockholders to examine the original or duplicate
stock ledger, or otherwise expressly provided by law, or except as expressly
authorized by resolution of the Board of Directors.
(6) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the Directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the statutes of
Delaware, this Certificate of Incorporation, and the By-laws.
(7) Except as may be otherwise determined by the Board of Directors in
fixing the terms of any class or series of Preferred Stock pursuant to Article
FOURTH hereof, no action shall be taken by stockholders of the Corporation
except at an annual or special meeting of stockholders of the Corporation and
the right of stockholders to act by written consent in lieu of a meeting is
specifically denied.
SIXTH: A. The Board of Directors shall have concurrent power with the
stockholders as set forth in this Certificate of Incorporation to make, alter,
amend, change, add to or repeal the By-Laws of the Corporation.
B. Subject to Article III, Section 11 of the By-laws, the Board of Directors
may amend the By-Laws of the Corporation upon the affirmative vote of the number
of directors which shall constitute, under the terms of the By-Laws, the action
of the Board of Directors. Stockholders may not amend the By-Laws of the
Corporation except upon the affirmative vote of at least eighty percent (80%) of
the votes entitled to be cast by the holders of all outstanding shares of Voting
Stock voting together as a single class.
SEVENTH: A. In addition to any affirmative vote required by law, this
Certificate of Incorporation, the By-Laws of the Corporation or otherwise,
except as otherwise expressly provided in Section B of this Article SEVENTH, the
Corporation shall not engage, directly or indirectly, in any Business
Combination (as hereinafter defined) with an Interested Stockholder (as
hereinafter defined) without the affirmative vote of (i) not less than eighty
percent (80%) of the votes entitled to be cast by the holders of all outstanding
shares of Voting Stock voting together as a
6
single class, and (ii) not less than a majority of the votes entitled to be cast
by the holders of all outstanding shares of Voting Stock which are beneficially
owned by persons other than such Interested Stockholder voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage or separate class vote
may be specified, by law or in any agreement with any national securities
exchange or otherwise.
B. The provisions of Section A of this Article SEVENTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote, if any, as is required by law, this
Certificate of Incorporation, the By-Laws of the Corporation, or otherwise, if
such Business Combination shall have been approved by a majority (whether such
approval is made prior to or subsequent to the acquisition of beneficial
ownership of Voting Stock that caused the Interested Stockholder to become an
Interested Stockholder) of the Continuing Directors (as hereinafter defined).
C. For the purposes of this Certificate of Incorporation:
(1) The term "Business Combination" shall mean:
(a) any merger or consolidation of this Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder or (ii) any
other corporation (whether or not itself an Interested Stockholder) which is
or after such merger or consolidation would be an Affiliate or Associate of
an Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) between the
Corporation or any Subsidiary and any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder involving any assets or
securities of the Corporation, any Subsidiary or any Interested Stockholder
or any Affiliate or Associate of any Interested Stockholder the value of
which would constitute, immediately prior to such transaction, a Substantial
Part (as hereinafter defined) of the assets of the Corporation; or
(c) the adoption of any plan or proposal for the liquidation or
dissolution of, or similar transaction involving, the Corporation proposed
by or on behalf of
7
an Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder; or
(d) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or otherwise involving an Interested
Stockholder) that has the effect, directly or indirectly, of increasing the
proportionate share of any class or series of Capital Stock, or any
securities convertible into Capital Stock or into equity securities of any
Subsidiary, that is beneficially owned by any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder; or
(e) any agreement, contract or other arrangement providing for any one
or more of the actions specified in the foregoing clauses (a) to (d).
(2) The term "Capital Stock" shall mean all capital stock of the Corporation
authorized to be issued from time to time under Article FOURTH of this
Certificate of Incorporation, and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
(3) The term "person" shall mean any individual, firm, corporation or other
entity and shall include any group comprised of any person and any other
person with whom such person or any Affiliate or Associate of such person has
any agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital Stock.
(4) The term "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary and other than any profit-sharing, employee
stock ownership or other employee benefit plan of the Corporation or any
Subsidiary or any trustee of or fiduciary with respect to any such plan or any
trust or any other entity formed for the purposes of holding Voting Stock for
the purpose of funding any such plan or funding other employee benefits for
employees of the Corporation or any Subsidiary, in each case when acting in
such capacity) who (a) is the beneficial owner of Voting Stock representing
fifteen percent (15%) or more of the votes entitled to be cast by the holders
of all then outstanding shares of Voting Stock; or (b) is an Affiliate or
Associate of the
8
Corporation and at any time within the two-year period immediately prior to
the date in question was the beneficial owner of Voting Stock representing
fifteen percent (15%) or more of the votes entitled to be cast by the holders
of all then outstanding share of Voting Stock.
(5) A person shall be a "beneficial owner" of any Capital Stock (a) which
such person or any of its Affiliates or Associates beneficially owns,
directly or indirectly; (b) which such person or any of its Affiliates or
Associates has, directly or indirectly, (i) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise
of conversion rights, exchange rights, warrants or options, or otherwise, or
(ii) the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Capital Stock. For the purposes
of determining whether a person is an Interested Stockholder pursuant to
Paragraph 4 of this Section C, the number of shares of Capital Stock deemed to
be outstanding shall include shares deemed beneficially owned by such person
through application of Paragraph 5 of this Section C, but shall not include
any other shares of Capital Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
(6) The terms "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Act"), (the term "registrant" in Rule 12b-2 meaning in
this case the Corporation).
(7) The term "Subsidiary" means any corporation of which a majority of any
class of equity security is beneficially owned by the Corporation; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in Paragraph 4 of this Section C, the term "Subsidiary" shall mean only
a corporation of which a majority of each class of equity security is
beneficially owned by the Corporation.
(8) The term "Continuing Director" means any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Affiliate or
9
Associate or representative of the Interested Stockholder and was a member of
the Board prior to the time that the Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing Director, while such
successor is a member of the Board of Directors, who is not an Affiliate or
Associate or representative of the Interested Stockholder and is recommended
or elected to succeed the Continuing Director by a majority of Continuing
Directors. In order for a Business Combination or other action to be approved,
or a fact or other matter to be determined, "by a majority of the Continuing
Directors" hereunder, there must be one or more Continuing Directors then
serving on the Board of Directors.
(9) The term "Substantial Part" means assets having an aggregate Fair Market
Value (as hereinafter defined) in excess of ten percent (10%) of the book
value of the total consolidated assets of the Corporation and its Subsidiaries
as of the end of the Corporation's most recent fiscal year ending prior to the
time the stockholders of the Corporation would be required to approve or
authorize the Business Combination involving assets constituting any such
Substantial Part.
(10) The term "Fair Market Value" means (a) in the case of cash, the amount
of such cash; (b) in the case of stock, the highest closing sale price, during
the 30-day period immediately preceding the date in question, of a share of
such stock on the Composite Tape for New York Stock Exchange, Inc. Listed
Stocks, or, if such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, Inc., or, if such stock is not listed on such exchange, on the
principal United States securities exchange registered under the Act on which
such stock is listed, or if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock, during
the 30-day period preceding the date in question, on the National Association
of Securities Dealers, Inc. Automated Quotation System or any similar system
then in use, or if no such quotations are available, the fair market value on
the date in question of a share of such stock as determined by a majority of
the Continuing Directors in good faith; and (c) in the case of property other
than cash or stock, the fair market value of such property on the date in
question as determined in good faith by a majority of the Continuing
Directors.
D. A majority of the Continuing Directors shall have the power and duty to
determine for the purposes of this Article SEVENTH, on the basis of information
known to them
10
after reasonable inquiry, (a) whether a person is an Interested Stockholder, (b)
the number of shares of Capital Stock or other securities beneficially owned by
any person, (c) whether a person is an Affiliate or Associate of another and (d)
whether the assets that are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by this
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value in excess of the amount set forth in Paragraph 1(b) of Section C of
this Article SEVENTH. Any such determination made in good faith shall be binding
and conclusive on all parties.
E. Nothing contained in this Article SEVENTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
EIGHTH: When considering a merger, consolidation, Business Combination or
similar transaction, the Board of Directors, committees of the Board, individual
directors and individual officers may, in considering the best interests of the
Corporation and its stockholders, consider the effects of any such transaction
upon the employees, customers and suppliers of the Corporation, and upon
communities in which offices of the Corporation are located.
NINTH: Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by law, this
Certificate of Incorporation or the By-Laws of the Corporation), (i) the
affirmative vote of the holders of not less than eighty percent (80%) of the
votes entitled to be cast by the holders of all outstanding shares of Voting
Stock, voting together as a single class, shall be required to amend or repeal,
or adopt any provisions inconsistent with, Articles FIFTH and SIXTH, and (ii)
the affirmative vote of the holders of (x) not less than eighty percent (80%) of
the votes entitled to be cast by the holders of all outstanding shares of Voting
Stock voting together as a single class, and (y) not less than a majority of the
votes entitled to be cast by the holders of all outstanding shares of Voting
Stock which are beneficially owned by persons other than Interested
Stockholders, if any, voting together as a single class, shall be required to
amend or repeal, or adopt any provisions inconsistent with, Articles SEVENTH and
NINTH; provided, however, that, with respect to Articles FIFTH, SIXTH, SEVENTH
and NINTH such special voting requirements shall not apply to, and such special
votes shall not be required for, any amendment, repeal or adoption recommended
by the Board if a majority of the directors then
11
in office are persons who would be eligible to serve as Continuing Directors.
TENTH: No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for any breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an improper personal
benefit. Any repeal of modification of this Article TENTH by the stockholders of
the Corporation shall not adversely affect any right of protection of a director
of the Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or modification.
ELEVENTH: Subject to the provisions of this Certificate of Incorporation,
the Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
thereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
EXHIBIT A-2
TO THE MERGER AGREEMENT
AMENDED AND RESTATED BY-LAWS
OF
UNUM PROVIDENT CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of the Corporation shall
be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of the stockholders for the election
of directors or for any other purpose shall be held at such time and place,
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
SECTION 2. Annual Meetings. The Annual Meetings of Stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meetings, at which
meetings the stockholders shall elect by a plurality vote the directors to be
elected at such meetings, and transact such other business as may properly be
brought before the meetings. Written notice of the Annual Meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days before the
date of the meeting.
SECTION 3. Special Meetings. Unless otherwise prescribed by law or by the
Certificate of Incorporation, Special Meetings of Stockholders, for any purpose
or purposes, may be called by either (i) the Chairman, if there be one, (ii) the
Chief Executive Officer or (iii) the President, and shall be called by any such
officer at the
2
request in writing of a majority of the Board of Directors. Such request shall
state the purpose or purposes of the proposed meeting. Written notice of a
Special Meeting stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting.
SECTION 4. Quorum. Except as otherwise provided by law or by the Certificate
of Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been trans acted at the meeting as originally
noticed. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled to vote at the
meeting. The foregoing provisions shall be subject to the voting rights of
holders of any Preferred Stock of the Corporation and any quorum requirements
relating thereto.
SECTION 5. Voting. Unless otherwise required by law, applicable stock
exchange rules or regulations, the Certificate of Incorporation or these
By-Laws, any question brought before any meeting of stockholders shall be
decided by a majority of the votes entitled to be cast by the holders of stock
represented and entitled to vote thereat and each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder. Such votes
may be cast in person or by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The Board
of Directors, in its discretion, or the officer of the Corporation presiding at
a meeting of stockholders, in his discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
SECTION 6. Proper Business at Annual Meetings. At any annual meeting of the
stockholders, only such business shall
3
be conducted as shall have been properly brought before such meeting. To be
properly brought before an annual meeting, business must be specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, or otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation, must be a stockholder of
the Corporation of record at the time of the delivery of said notice and must be
entitled to vote at the meeting. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Corporation, not less than 60 days nor more than 90 days prior to the annual
meeting; provided, however, that in the event that less than 75 days' notice or
prior public disclosure of the date of such meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 15th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was first made. A stock holder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting, including the complete text of any resolutions to be presented at the
meeting with respect to such business, and the reasons for conducting such
business at the annual meeting, (ii) the name and address of record of the
stockholder proposing such business and the beneficial owner, if any, on whose
behalf the proposal is made, (iii) the class and number of shares of the
Corporation which are beneficially owned by the stock holder and such beneficial
owner, (iv) any material interest of the stockholder and such beneficial owner
in such business and (v) a representation that the stockholder is a holder of
record of shares of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to propose such business. The
chairman of an annual meeting shall, if the facts warrant, determine and declare
to the meeting that such business was not properly brought before the meeting in
accordance with these provisions, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
SECTION 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
4
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
SECTION 8. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 9. (a) Organization. Meetings of stockholders shall be presided over
by the Chairman of the Board, if any, or in his absence by the Vice Chairman of
the Board, if any, or in his absence by the Chief Executive Officer, or in his
absence by the President, or in his absence by a Vice President, or in the
absence of the foregoing persons by a chairman designated by the Board of
Directors, or in the absence of such designation by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
(b) Conduct of Meetings. The date and time of the opening and the closing of
the polls for each matter upon which the stockholders will vote at a meeting
shall be announced at the meeting by the person presiding over the meeting. The
Board of Directors may adopt by resolution such rules and regulations for the
conduct of the meeting of stockholders as it shall deem appropriate. Except to
the extent inconsistent with such rules and regulations as adopted by the Board
of Directors, the chairman of any meeting of stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the
5
meeting; (ii) rules and procedures for maintaining order at the meeting and the
safety of those present; (iii) limitations on attendance at or participation in
the meeting to stockholders of record of the corporation, their duly authorized
and constituted proxies or such other persons as the chairman of the meeting
shall determine; (iv) restrictions on entry to the meeting after the time fixed
for the commencement thereof and (v) limitations on the time allotted to
questions or comments by participants. Unless and to the extent determined by
the Board of Directors or the chairman of the meeting, meetings of stockholders
shall not be required to be held in accordance with the rules of parliamentary
procedure.
ARTICLE III
DIRECTORS
SECTION 1. Number and Election of Directors. Subject to Article III, Section
11 of these By-laws, the number of directors constituting the Board of Directors
shall be fixed from time to time by the Board of Directors in the manner
prescribed in the Certificate of Incorporation and shall initially be 15, eight
of whom shall be designated by UNUM and seven of whom shall be designated by
Provident. Except as provided in Section 3 of this Article, the directors to be
elected at each Annual Meeting of Stockholders shall be elected by a plurality
of the votes cast at such Annual Meeting of Stockholders, and each director so
elected shall hold office until the third Annual Meeting following such election
and until his successor is duly elected and qualified, or until his earlier
resignation, retirement or removal. No person elected or re-elected a director
shall, after such person's seventy-second birthday, serve as a director of the
Corporation beyond the date of the Corporation's annual meeting ending the term
for which such person has been elected; provided, that, no person shall be
required to retire because of their age prior to such date. Any director may
resign at any time upon notice to the Corporation. Directors need not be
stockholders.
SECTION 2. Nomination Procedures. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors, by any nominating committee or person appointed by the
Board of Directors or by any stockholder of the Corporation entitled to vote for
the election of Directors at the meeting. Such
6
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation by a stockholder of the Corporation of record at the time of
the delivery of said notice who is entitled to vote at the meeting. To be
timely, a stockholder's notice shall be delivered to, or mailed and received at,
the principal executive offices of the Corporation not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 75 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 15th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was first made. Such stockholder's notice shall set forth
(a) as to each person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by the person, (iv) a description of all arrangements,
understandings or relationships between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder and (v) any other
information relating to the person that is required to be disclosed in
solicitations of proxies for election of Directors pursuant to Rule 14(a) under
the Securities Exchange Act of 1934, as amended (the "Act"), and any other
applicable laws or rules or regulations of any governmental authority or of any
national securities exchange or similar body overseeing any trading market on
which shares of the Corporation are traded, and (b) as to the stockholder giving
the notice (i) the name and address of record of the stockholder and the
beneficial owner, if any, on whose behalf the nomination is made, and (ii) the
class and number of shares of the Corporation which are beneficially owned by
the stockholder and such beneficial owner and (iii) a representation that the
stockholder is a holder of record of shares of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice. No person shall be
eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth herein. The chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he
7
shall so declare to the meeting and the defective nomination shall be
disregarded.
SECTION 3. Vacancies. Subject to the provisions of the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of directors, which increase shall be subject
to Article III, Section 11, shall only be filled by a majority of the directors
then in office, though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until the next annual election and
until their successors are duly elected and qualified, or until their earlier
resignation or removal.
SECTION 4. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done by the stockholders.
SECTION 5. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the state of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the Chief Executive Officer, the President, or
any three directors. Notice thereof stating the place, date and hour of the
meeting shall be given to each director either by mail not less than forty-eight
(48) hours before the date of the meeting, by telephone or telegram on
twenty-four (24) hours' notice, or on much shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
SECTION 6. Quorum. Except as may be otherwise specifically provided by law,
the Certificate of Incorporation or these By-Laws, at all meetings of the Board
of Directors, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
8
SECTION 7. Actions of Board. Unless otherwise provided by the Certificate of
Incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all the members of the Board of Directors or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or committee.
SECTION 8. Meetings by Means of Conference Telephone or Similar
Communications Equipment. Unless otherwise provided by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors of the
Corporation, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee by means of
a conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 8 shall constitute presence in person at such
meeting.
SECTION 9. Committees. (a) The Board of Directors may, by resolution passed
by a majority of the entire Board of Directors, designate one or more
committees, each commit tee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. Any committee, to the extent allowed by law
and provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation. Each committee shall
keep regular minutes and report to the Board of Directors when required.
(b) The Corporation shall have an Executive Committee which, among any other
powers which shall from time to time be granted to such committee by resolution
of the Board of Directors, shall have the sole power and authority to recommend
nominees to the Board of Directors (i) for
9
election to the Board of Directors at the stockholders meetings at which
directors are to be elected, (ii) to fill vacancies on the Board of Directors of
the Corporation in between such stockholders meetings and (iii) to serve on, and
fill vacancies in, any committee of the Board of Directors.
(c) Notwithstanding anything to the contrary contained in these By-laws,
until July 1, 2001, the Executive Committee will consist of three directors
which were initially designated by UNUM Corporation, which will include the
Chief Executive Officer of the Corporation (who will serve as Chairman of such
committee), and three directors which were initially designated by Provident
Companies, Inc., which will include the President, in each case in accordance
with the Agreement and Plan of Merger, dated as of November 22, 1998, between
UNUM Corporation and Provident Companies, Inc. (the "Merger Agreement").
SECTION 10. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes
are counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or trans action by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the shareholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
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SECTION 11. Certain Modifications. Notwithstanding anything to the contrary
contained in these By-laws, until July 1, 2001, the following actions taken
either directly or indirectly by the Board of Directors shall, when a quorum is
present, require the affirmative vote of not less than seventy-five percent of
the directors voting at a meeting for which proper notice of the actions taken
was duly given: (i) any change in the size of the Board of Directors or in the
size of any class of directors; (ii) any change in the composition or power and
authority of the Executive Committee of the Board of Directors or the
chairmanship thereof; (iii) any change or amendment to these By-laws; and (iv)
any proposals to be submitted to the stockholders of the Corporation by the
Board of Directors. From and after July 1, 2001, any of the actions set forth in
clauses (i) through (iv) of the immediately preceding sentence may be taken upon
the affirmative vote of the number of directors which shall constitute, under
the terms of these By-laws, the action of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a Chief Executive Officer, a President, a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and one or
more Vice-Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these By-Laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
SECTION 2. Election. The Board of Directors shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors.
11
SECTION 3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chief Executive Officer, the President or any
Vice-President and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to vote
in person or by proxy at any meeting of security holders of any corporation in
which the Corporation may own securities and at any such meeting shall possess
and may exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have exercised
and possessed if present. The Board of Directors may, by resolution, from time
to time confer like powers upon any other person or persons.
SECTION 4. Chairman of the Board of Directors. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. Except where by law the signature of the Chief
Executive Officer or the President is required, the Chairman of the Board of
Directors shall possess the same power as the Chief Executive Officer or the
President to sign all contracts, certificates and other instruments of the
Corporation which may be authorized by the Board of Directors. During the
absence or disability of the Chief Executive Officer and the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the Chief Executive Officer or the President. The Chairman of
the Board of Directors shall also perform such other duties and may exercise
such other powers as from time to time may be assigned to him by these By-Laws
or by the Board of Directors.
SECTION 5. Chief Executive Officer. The Chief Executive Officer shall,
subject to the control of the Board of Directors, have general supervision of
the business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. He shall execute all bonds,
mortgages, contracts and other instruments of the Corporation requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except that the other officers of the
Corporation may sign and execute documents when so authorized by these By-Laws,
the Board of Directors, the Chief Executive Officer or the President. In the
absence or disability of the Chairman of the Board of Directors, or if there be
none, the Chief Executive Officer shall preside at all meetings of the
12
stockholders and the Board of Directors. The Chief Executive Officer shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the Board of Directors.
SECTION 6. President. The President shall, subject to the control of the
Board of Directors and the Chief Executive Officer (provided that until July 1,
2001, the President and the Chief Executive Officer will participate equally in
setting the overall strategic direction of the Corporation), have general
supervision of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall execute
all bonds, mortgages, contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except that the other
officers of the Corporation may sign and execute documents when so authorized by
these By-Laws, the Board of Directors, the Chief Executive Officer or the
President. In the absence or disability of the Chairman of the Board of
Directors and the Chief Executive Officer, or if neither shall exist, the
President shall preside at all meetings of the stockholders and the Board of
Directors. The President shall also perform such other duties and may exercise
such other powers as from time to time may be assigned to him by these By-Laws
or by the Board of Directors.
SECTION 7. Vice-Presidents. At the request of the Chief Executive Officer or
the President or in the event of either of their absences or inability or
refusal to act (and if there be no Chairman of the Board of Directors), the
Vice-President or the Vice-Presidents if there is more than one (in the order
designated by the Board of Directors) shall perform the duties of the Chief
Executive Officer and President, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the Chief Executive Officer and
President. Each Vice-President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice-President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the Chief Executive Officer and President or in the event of the inability or
refusal of the Chief Executive Officer and President to act, shall perform the
duties of the Chief Executive Officer and President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the Chief
Executive Officer and President.
13
SECTION 8. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors, the Chief Executive Officer or
President, under whose supervision he shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors, the Chief Executive Officer or
the President may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by his signature. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.
SECTION 9. Treasurer. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Chief Executive Officer, the President and the Board of Directors, at its
regular meetings, or when the Board of Directors so requires, an account of all
his transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of
14
whatever kind in his possession or under his control belonging to the
Corporation.
SECTION 10. Assistant Secretaries. Except as may be otherwise provided in
these By-Laws, Assistant Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned to them by the Board
of Directors, the Chief Executive Officer, the President, any Vice-President, if
there be one, or the Secretary, and in the absence of the Secretary or in the
event of his disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
SECTION 11. Assistant Treasurers. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the Chief Executive Officer, the
President, any Vice-President, if there be one, or the Treasurer, and in the
absence of the Treasurer or in the event of his disability or refusal to act,
shall perform the duties of the Treasurer, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Treasurer. If
required by the Board of Directors, an Assistant Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
SECTION 12. Other Officers. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
SECTION 13. Certain Actions. Notwithstanding anything to the contrary
contained in these By-laws, until July 1, 2001, the removal of the current
Chairman and Chief Executive Officer or the current President and Chief
Operating Officer as of the effective date of the merger contemplated by the
Merger Agreement, any modification to the provisions of either of their
respective employment contracts which provide their respective terms of office
or
15
any modification to either of their respective roles, duties or authority shall,
when a quorum is present, require the affirmative vote of seventy-five percent
of the directors voting at a meeting for which proper notice of the actions
taken was duly given. From and after July 1, 2001, any of the actions set forth
in the immediately preceding sentence may be taken upon the affirmative vote of
the number of directors which shall constitute, under the terms of these
By-laws, the action of the Board of Directors.
ARTICLE V
STOCK
SECTION 1. Form of Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the Chief Executive Officer, the
President or a Vice-President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation.
SECTION 2. Signatures. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
SECTION 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation
16
with respect to the certificate alleged to have been lost, stolen or destroyed.
SECTION 4. Transfers. Stock of the Corporation shall be transferable in the
manner prescribed by law and in these By-Laws. Transfers of stock shall be made
on the books of the Corporation only by the person named in the certificate or
by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new certificate shall be
issued.
SECTION 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty days nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 6. Beneficial Owners. The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
ARTICLE VI
NOTICES
SECTION 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
17
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
SECTION 2. Waivers of Notice. Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may be
paid in cash, in property, or in shares of the capital stock. Before payment of
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
SECTION 2. Disbursements. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
SECTION 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
SECTION 4. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
18
ARTICLE VIII
INDEMNIFICATION
19
SECTION 1. Indemnification in Actions, Suits, or Proceedings Other Than
Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify each person who is or was, or is
threatened to be made, a party to or witness in any threatened, pending or
completed action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative (other than one by or in the right of the
Corporation), by reason of the fact that he is or was a director, officer or
employee of the Corporation or of Union Mutual Life Insurance Company, a Maine
mutual insurance company (the "Mutual Company"), or is or was serving at the
request of the Corporation or the Mutual Company as a director, officer,
employee or trustee of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorney's fees and expenses), judgments, fines, penalties, and amounts paid in
settlement, incurred by him in connection with defending, investigating,
preparing to defend, or being or preparing to be a witness in, such action,
suit, proceeding or claim, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
SECTION 2. Indemnification in Actions, Suits or Proceedings by or in the
Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify each person who is or was, or is threatened to be
made, a party to or witness in any threatened, pending or completed action,
suit, proceeding or claim by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer or employee of the Corporation or of the Mutual Company or is or was
serving at the request of the Corporation or the Mutual Company as a director,
officer, employee or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorney's fees and expenses), and, if and to the extent permitted by applicable
law, judgments, penalties and amounts paid in settlement, incurred by him in
connection with defending, investigating, preparing to defend, or being or
preparing to be a witness in, such action, suit, proceeding or claim, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; provided, however, that no
indemnification shall be made in respect of any such claim or any issue or
matter in any such action, suit or proceeding as to which such person shall have
been adjudged to be liable to the Corporation unless (and only to the
20
extent that) the Court of Chancery or the court in which such claim, action,
suit or proceeding was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnification for such
expenses and amounts which the Court of Chancery or such other court shall deem
proper.
SECTION 3. Authorization of Indemnification. (a) Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the person seeking indemnification is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or 2 of this Article VIII, as the case may be. Such determination (and
determinations under Sections 5 and 6 of this Article VIII) shall be made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit, proceeding or claim with respect to
which indemnification is sought ("disinterested directors"), or (ii) if such a
quorum is not obtainable, or if a quorum of disinterested directors so directs,
in a written opinion of independent legal counsel chosen by the Board of
Directors, or (iii) by the stockholders; provided, however, that if a Change in
Control (as defined in this Section 3) has occurred and the person seeking
indemnification so requests, such determination (and determination under
Sections 5 and 6 of this Article VIII) shall be made in a written opinion
rendered by independent legal counsel chosen by the person seeking
indemnification and not reasonably objected to by the Board of Directors (whose
fees and expenses shall be paid by the Corporation). To the extent, however,
that a director, officer, employee or trustee or former director, officer,
employee or trustee has been successful on the merits or otherwise in defense of
any action, suit, proceeding or claim described above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorney's fees and expenses) incurred by him in connection
therewith, without the necessity of authorization in the specific case.
(b) For purposes of the proviso to the second sentence of Section 3(a),
"independent legal counsel" shall mean legal counsel other than an attorney, or
a firm having associated with it an attorney, who has been retained by or who
has performed services for the Corporation, the Mutual Company or the person
seeking indemnification within the previous three years.
21
(c) A "Change in Control" shall mean a change in control of the Corporation
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A promulgated under the Act, whether or not the
Corporation is then subject to such reporting requirement; provided that,
without limitation, such a change in control shall be deemed to have occurred if
(i) any "person" (as such term is used in sections 13(d) and 14(d) of the Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Corporation representing 35% or
more of the combined voting power of the Corporation's then outstanding
securities without the prior approval of at least two-thirds of the members of
the Board of Directors in office immediately prior to such acquisition, or (ii)
the Corporation is a party to a merger, consolidation, sale of assets or other
reorganization, or proxy contest, as a consequence of which members of the Board
of Directors in office immediately prior to such transaction or event constitute
less than a majority of the Board of Directors thereafter, or (iii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any new director
whose election or nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period) cease for any reason to
constitute at least a majority of the Board of Directors.
SECTION 4. Good Faith Defined, Etc. (a) For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if such person relied on the records or books of account of the Corporation, the
Mutual Company or another enterprise, or on information supplied to him by the
officers of the Corporation, the Mutual Company or another enterprise, or on
information or records given or reports made to the Corporation, the Mutual
Company or another enterprise by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the
Corporation, the Mutual Company or another enterprise. The term "another
enterprise" as used in this Section 4(a) shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the
22
Corporation or the Mutual Company as a director, officer, employee or trustee.
(b) The termination of any action, suit, proceeding or claim by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, that he had no reasonable cause to believe that
his conduct was unlawful.
(c) References in this Article VIII to "penalties" include any excise taxes
assessed on a person with respect to an employee benefit plan; references in
this Article VIII to "serving at the request of the Corporation or the Mutual
Company" include any service as a director, officer or employee or former
director, officer or employee of the Corporation or the Mutual Company which
imposes duties on, or involves services by, such person with respect to an
employee benefit plan or its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the participants or beneficiaries of such an
employee benefit plan shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation.
(d) The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
SECTION 5. Right to Indemnification Upon Application; Procedure Upon
Application; Etc. Except as otherwise provided in the proviso to Section 2 of
this Article VIII:
(a) Any indemnification under Section 1 or 2 of this Article VIII shall be
made no later than 45 days after receipt by the Corporation of the written
request of the director, officer, employee or trustee or former director,
officer, employee or trustee unless a determination is made within said 45-day
period in accordance with Section 3 of this Article VIII that such person has
not met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII.
(b) The right to indemnification under Section 1 or 2 of this Article VIII
or advances under Section 6 of this
23
Article VIII shall be enforceable by the director, officer, employee or trustee
or former director, officer, employee or trustee in any court of competent
jurisdiction. Following a Change in Control, the burden of proving that
indemnification is not appropriate shall be on the Corporation. Neither the
absence of any prior determination that indemnification is proper in the
circumstances, nor a prior determination that indemnification is not proper in
the circumstances, shall be a defense to the action or create a presumption that
the director, officer, employee or trustee or former director, officer, employee
or trustee has not met the applicable standard of conduct. The expenses
(including attorney's fees and expenses) incurred by the director, officer,
employee or trustee or former director, officer, employee or trustee in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such action (or in any action or claim brought by him to
recover under any insurance policy or policies referred to in Section 9 of this
Article VIII) shall also be indemnified by the Corporation.
(c) If any person is entitled under any provision of this Article VIII to
indemnification by the Corporation for some or a portion of expenses, judgments,
fines, penalties or amounts paid in settlement incurred by him, but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify such person for the portion of such expenses, judgments, fines,
penalties and amounts to which he is entitled.
SECTION 6. Expenses Payable in Advance. Expenses (including attorney's fees
and expenses) incurred by a director, officer, employee or trustee or a former
director, officer, employee or trustee in defending, investigating, preparing to
defend, or being or preparing to be a witness in, a threatened or pending
action, suit, proceeding or claim against him, whether civil or criminal, may be
paid by the Corporation in advance of the final disposition of such action,
suit, proceeding or claim upon receipt by the Corporation of a written request
therefor and a written undertaking by or on behalf of the director, officer,
employee or trustee or former director, officer, employee or trustee to repay
such amounts if it shall be determined in accordance with Section 3 of this
Article VIII that he is not entitled to be indemnified by the Corporation;
provided, however, that if he seeks to enforce his rights in a court of
competent jurisdiction pursuant to Section 5(b) of this Article VIII, said
undertaking to repay shall not be applicable or enforceable unless and until
there is a final court determination that he is not entitled to indemni-
24
fication as to which all rights of approval have been exhausted or have expired.
SECTION 7. Certain Persons Not Entitled to Indemnification. Notwithstanding
any other provision of this Article VIII, no person shall be entitled to
indemnification under this Article VIII or to advances under Section 6 of this
Article VIII with respect to any action, suit, proceeding or claim brought or
made by him against the Corporation or the Mutual Company, other than an action,
suit, proceeding or claim seeking, or defending such person's right to,
indemnification and/or expense advances pursuant to this Article VIII or
otherwise.
SECTION 8. Non-Exclusivity and Survival of Indemnification. The provisions
of this Article VIII shall not be deemed exclusive of any other rights to which
the person seeking indemnification or expense advances may be entitled under any
agreement, contract, or vote of stockholders or disinterested directors, or
pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. Except as otherwise
provided in Section 7 of this Article VIII, but notwithstanding any other
provision of this Article VIII, it is the policy of the Corporation that
indemnification of and expense advances to the persons specified in Sections 1
and 2 of this Article VIII shall be made to the fullest extent permitted by law,
and, accordingly, in the event of any change in law, by legislation or
otherwise, permitting greater indemnification of and/or expense advances to any
such person, the provisions of this Article VIII shall be construed so as to
require such greater indemnification and/or expense advances. The provisions of
this Article VIII shall not be deemed to preclude the indemnification of any
person who is not specified in Section 1 or 2 of this Article VIII but whom the
Corporation has the power to indemnify under the provisions of the General
Corporation Law of the State of Delaware or otherwise. The provisions of this
Article VIII shall continue as to a person who has ceased to be a director,
officer, employee or trustee and shall inure to the benefit of the heirs,
executors and administrators of such person.
SECTION 9. Insurance. The Corporation may purchase and maintain at its
expense insurance on behalf of any person who is or was a director, officer or
employee of the Corporation or the Mutual Company or is or was serving at the
request of the Corporation or the Mutual Company as a director, officer,
employee or trustee of another
25
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability or expense asserted against or incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against such
liability or expense under the provisions of this Article VIII or the provisions
of Section 145 of the General Corporation Law of the State of Delaware. The
Company shall not be obligated under this Article VIII to make any payment in
connection with any claim made against any person if and to the extent that such
person has actually received payment therefor under any insurance policy or
policies.
SECTION 10. Successors; Meaning of "Corporation". This Article VIII shall be
binding upon and enforceable against any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Corporation. For purposes of this Article VIII,
but subject to the provisions of any agreement relating to any merger or
consolidation of the kind referred to in clause (i) below or of any agreement
relating to the acquisition of any corporation of the kind referred to in clause
(ii) below, references to "the Corporation" shall include (i) any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger with the Corporation which, if its separate existence
had continued, would have had power and authority to indemnify its directors,
officers and employees, so that any person who is or was a director, officer or
employee of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the Corporation as he would have with respect to
such constituent corporation if its separate existence had continued; and (ii)
any corporation of which at least a majority of the voting power (as represented
by its outstanding stock having voting power generally in the election of
directors) is owned directly or indirectly by the Corporation.
SECTION 11. Severability. The provisions of this Article VIII shall be
severable in the event that any provision hereof (including any provision within
a single section, subsection, clause, paragraph or sentence) is held invalid,
void or otherwise unenforceable on any ground by any court of competent
jurisdiction. In the event of any such holding, the remaining provisions of this
Article VIII
26
shall continue in effect and be enforceable to the fullest extent permitted by
law.
ARTICLE IX
AMENDMENTS
SECTION 1. Power to Amend. The Board of Directors shall have concurrent
power with the stockholders as set forth in the By-Laws and the Certificate of
Incorporation to make, alter, amend, change, add to or repeal the By-Laws.
SECTION 2. Required Vote. The Board of Directors may amend the By-Laws upon
the affirmative vote of the number of directors which shall constitute, under
the terms of the By-Laws, the action of the Board of Directors. Notwithstanding
anything to the contrary contained in these By-laws including, without
limitation, the last preceding sentence, until July 1, 2001, the amendment of
Article III, Section 11 or Article IV, Section 12 of these By-laws, shall, when
a quorum is present, require the affirmative vote of seventy-five percent of the
directors voting at a meeting for which proper notice of the actions taken was
duly given. Stockholders may not amend the By-Laws except upon the affirmative
vote of at least eighty percent (80%) of the votes entitled to be cast by the
holders of all outstanding shares of Voting Stock (as such term is defined in
the Certificate of Incorporation) voting together as a single class.
EXHIBIT B
TO THE MERGER AGREEMENT
Corporate Governance of the Surviving Corporation
-------------------------------------------------
Following the Effective Time
----------------------------
BOARD OF DIRECTORS
------------------
Composition. The By-laws of the Surviving Corporation will provide that the
Board of Directors of the Surviving Corporation will consist of 15 members,
eight of whom shall be designated by UNUM and seven of whom shall be designated
by Provident and no more than one member appointed by each party shall be an
"inside" director (i.e., any individual currently employed by such party or
employed by such party within the past three years). Provident shall be deemed
to have designated any director which Zurich Insurance Company shall have the
right to designate pursuant to the Amended and Restated Relationship Agreement
between Provident and Zurich Insurance Company, dated as of May 31, 1996. The
current Chairman and Chief Executive Officer of UNUM will serve as Chairman of
the Board of Directors of the Surviving Corporation. The current Chairman and
the Chief Executive Officer of Provident will serve as President and Chief
Operating Officer of the Surviving Corporation and will be a member of the Board
of Directors of the Surviving Corporation. Prior to the mailing of the Joint
Proxy Statement, each party will designate in writing the individual directors
that it is entitled to designate to the Board of Directors and will designate
the class to which each is to be assigned understanding that UNUM will designate
three directors, two directors and three directors to classes one, two and
three, respectively, and Provident will designate two directors, three directors
and two directors to classes one, two and three, respectively. Such written
designation shall be included as Annex I to this Exhibit B to the Merger
Agreement to be incorporated as part of the Joint Proxy Statement.
Nomination of Directors. The By-Laws of the Surviving Corporation will
provide that the Executive Committee of the Board of Directors will recommend
nominees to the Board of Directors (i) for election to the Board of Directors at
the stockholder meetings at which directors are to be elected, (ii) to fill
vacancies on the Board of Directors of the Surviving Corporation in between such
stockholders meetings and (iii) to serve on, and fill vacancies in, any
Committee of the Board of Directors. The By-Laws will also provide that if a
director reaches mandatory retirement age (not less than 70) during the term of
a directorship, such director may complete the term of the class to which he or
she is elected.
2
Composition of the Executive Committee. The By-Laws of the Surviving
Corporation will provide that, until July 1, 2001, the Executive Committee will
consist of three UNUM directors, including the Chief Executive Officer, and
three Provident directors, including the President. The Chief Executive Officer
will also serve as the Chairman of the Executive Committee.
EXECUTIVE OFFICERS
------------------
Composition. The Executive Officers of the Surviving Corporation will
initially be the following:
NAME TITLE
▇▇▇▇▇ ▇. ▇▇▇, III........................ Chairman of the Board and Chief
Executive Officer
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇....................... President and Chief Operating Officer
F. ▇▇▇▇ ▇▇▇▇▇▇▇▇......................... Executive Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇........................ Executive Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇.......................... Executive Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇......................... Executive Vice President
The employment contracts for each of ▇▇. ▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ will provide
that, from the Effective Time until July 1, 2001, ▇▇. ▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ will
participate equally in setting the overall strategic direction of the Company.
From and after July 1, 2001, ▇▇. ▇▇▇▇▇▇▇▇ will succeed ▇▇. ▇▇▇ as the Chief
Executive Officer, and ▇▇. ▇▇▇ will thereafter serve as executive Chairman of
the Board of Directors, in each case in accordance with the terms of their
respective employment contracts.
Management Committees. At the Effective Time a Corporate Policy Committee
and an Operating Committee will be established. The Corporate Policy Committee
will consist of ▇▇. ▇▇▇▇▇ and Messrs. Orr, Chandler, Copeland, Watjen, and
Crispin with ▇▇. ▇▇▇ as Chairman. Subject to the authority of the Board of
Directors, this committee will assist the Chief Executive Officer and the
President in setting the overall strategic direction for the Surviving
Corporation. In addition, during the integration period immediately following
the Effective Time this committee will serve as the transition committee.
Subject to the foregoing, ▇▇. ▇▇▇▇▇▇ will direct the transition and integration
team.
The Operating Committee will consist of ▇▇. ▇▇▇▇▇ and Messrs. Orr, Chandler,
Copeland, Watjen, and Crispin and may include certain other officers of the
Surviving Corporation
3
with ▇▇. ▇▇▇▇▇▇▇▇ as Chairman. Subject to the authority of the Board of
Directors and the Chief Executive Officer, this committee will assist the
President in managing the Surviving Corporation's North American operations.
AMENDMENTS
----------
The By-Laws of the Surviving Corporation will provide that, until July 1,
2001, the following actions will require the approval of at least 75% of the
directors voting at a meeting for which proper notice of the actions taken was
duly given (assuming for the purposes of such approval that a quorum is
present):
(i) the removal of ▇▇. ▇▇▇ or ▇▇. ▇▇▇▇▇▇▇▇ from their executive
positions, including the successorship arrangements, or any
breach of their respective employment agreements;
(ii) any change in the size of the Board of Directors;
(iii) any change in the composition or power and authority of the
Executive Committee of the Board of Directors or the chairmanship
thereof;
(iv) any change or amendment to the By-Laws; and
(v) any proposals to be submitted to the stockholders of the
Surviving Corporation by the Board of Directors.
EXHIBIT C-1
TO THE MERGER AGREEMENT
Form of Affiliate Letter
------------------------
for UNUM Affiliates
-------------------
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $.10 per
share ("UNUM Common Stock"), of UNUM Corporation, a Delaware corporation
("UNUM"), is entitled to receive in connection with the merger (the "Merger") of
UNUM with and into Provident Companies, Inc., a Delaware corporation
("Provident"), securities of Provident, as the surviving corporation in the
Merger (the "Surviving Corporation Securities"). The undersigned acknowledges
that the undersigned may be deemed an "affiliate" of UNUM within the meaning of
Rule 145 ("Rule 145") promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), by the Securities and Exchange Commission (the "SEC")
and may be deemed an "affiliate" of UNUM for purposes of qualifying the Merger
for pooling of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, although nothing
contained herein should be construed as an admission of either such fact.
If in fact the undersigned were an affiliate under the Securities Act,
the undersigned's ability to sell, assign or transfer the Surviving Corporation
Securities received by the undersigned in exchange for any shares of UNUM Common
Stock in connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d) promulgated
under the Securities Act. The undersigned understands that Provident will not be
required to maintain the effectiveness of any registration statement under the
Securities Act for the purposes of resale of Surviving Corporation Securities by
the undersigned.
The undersigned hereby represents to and covenants with Provident that
the undersigned will not sell, assign or transfer any of the Surviving
Corporation Securities received by the undersigned in exchange for shares of
UNUM Common Stock in connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act, (ii) in conformity
with the volume and other limitations of Rule 145 or (iii) in a transaction
which, in the opinion of the general counsel of Provident or
2
other counsel reasonably satisfactory to Provident or as described in a
"no-action" or interpretive letter from the Staff of the SEC specifically issued
with respect to a transaction to be engaged in by the undersigned, is not
required to be registered under the Securities Act; provided, however, that in
any such case, such sale, assignment or transfer shall only be permitted if, in
the opinion of counsel of Provident, such transaction would not have, directly
or indirectly, any adverse consequences for Provident with respect to the
treatment of the Merger for tax purposes.
The undersigned hereby further represents to and covenants with
Provident that the undersigned has not, within the preceding 30 days, sold,
transferred or otherwise disposed of any shares of UNUM Common Stock held by the
undersigned and that the undersigned will not sell, transfer or otherwise
dispose of any Surviving Corporation Securities received by the undersigned in
connection with the Merger until after such time as results covering at least 30
days of post-Merger combined operations of UNUM and Provident have been
published by Provident, in the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC on Form 10-K,
10-Q or 8-K, or any other public filing or announcement which includes such
combined results of operations, except as would not otherwise reasonably be
expected to adversely affect the qualification of the Merger as a
pooling-of-interests.
In the event of a sale or other disposition by the undersigned of
Surviving Corporation Securities pursuant to Rule 145, the undersigned will
supply Provident with evidence of compliance with such Rule, in the form of a
letter in the form of Annex I hereto and the opinion of counsel or no-action
letter referred to above. The undersigned understands that Provident may
instruct its transfer agent to withhold the transfer of any Surviving
Corporation Securities disposed of by the undersigned, but that (provided such
transfer is not prohibited by any other provision of this letter agreement) upon
receipt of such evidence of compliance, Provident shall cause the transfer agent
to effectuate the transfer of the Surviving Corporation Securities sold as
indicated in such letter.
Provident covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of Surviving
Corporation Securities by the undersigned under Rule 145 in accordance with the
terms thereof.
3
The undersigned acknowledges and agrees that the legends set forth
below will be placed on certificates representing Surviving Corporation
Securities received by the undersigned in connection with the Merger or held by
a transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to Provident from independent counsel reasonably satisfactory to
Provident to the effect that such legends are no longer required for purposes of
the Securities Act.
There will be placed on the certificates for Surviving Corporation
Securities issued to the undersigned, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is being accounted for as a pooling of interests,
in a transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares have not been acquired by the holder with a view
to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act of 1933. The shares may not be sold, pledged
or otherwise transferred (i) until such time as UNUM Provident Corporation
shall have published financial results covering at least 30 days of combined
operations after the Effective Time and (ii) except in accordance with an
exemption from the registration requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Surviving
Corporation Securities and (ii) the receipt by Provident of this letter is an
inducement to Provident's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT C-1
[Name] [Date]
On , the undersigned sold the securities of
Provident Companies, Inc. ("Provident"), described below in the space provided
for that purpose (the "Securities"). The Securities were received by the
undersigned in connection with the merger of UNUM Corporation, a Delaware
corporation, with and into Provident.
Based upon the most recent report or statement filed by Provident with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities Act
or in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
EXHIBIT C-2
TO THE MERGER AGREEMENT
Form of Affiliate Letter
------------------------
for Provident Affiliates
------------------------
Dear Sirs:
The undersigned is a holder of shares of common stock, par value $1.00
per share ("Provident Common Stock"), of Provident Companies, Inc., a Delaware
corporation ("Provident"). The undersigned acknowledges that the undersigned may
be deemed an "affiliate" of Provident for purposes of qualifying the merger of
UNUM Corporation, a Delaware corporation ("UNUM"), and Provident (the "Merger")
for pooling of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, although nothing
contained herein should be construed as an admission of such fact.
The undersigned hereby represents to and covenants with Provident that
the undersigned has not, within the preceding 30 days, sold, transferred or
otherwise disposed of any shares of Provident Common Stock held by the
undersigned and that the undersigned will not sell, transfer or otherwise
dispose of any Provident Common Stock held by the undersigned until after such
time as results covering at least 30 days of post-Merger combined operations of
Provident and UNUM have been published by Provident, in the form of a quarterly
earnings report, an effective registration statement filed with the SEC, a
report to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations, except as would
not otherwise reasonably be expected to adversely affect the qualification of
the Merger as a pooling-of-interests.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Provident
Common Stock and (ii) the receipt by UNUM of this letter is an inducement to
UNUM's obligations to consummate the Merger.
Very truly yours,
Dated:
EXHIBIT D
TO THE MERGER AGREEMEDNT
[Letterhead of UNUM Corporation]
November [ ], 1998
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
6.02(c) and 6.03(c) of the Agreement and Plan of Merger (the "Merger
Agreement"), dated November 22, 1998, among Provident Companies, Inc., a
Delaware corporation ("Provident"), and UNUM Corporation, a Delaware corporation
("UNUM"), and in connection with the filing with the Securities and Exchange
Commission (the "SEC") of the registration statement on Form S-4 (the
"Registration Statement"), which includes the Proxy Statement Prospectus of UNUM
and Provident, the undersigned certifies and represents on behalf of UNUM and as
to UNUM, after due inquiry and investigation, as follows (any capitalized term
used but not defined herein shall have the meaning given to such term in the
Merger Agreement):
1. The facts relating to the contemplated merger of UNUM with and into
Provident (the "Merger") as described in the Registration Statement and the
documents described in the Registration Statement are, insofar as such facts
pertain to UNUM, true, correct and complete in all material respects. The Merger
will be consummated in accordance with the Merger Agreement.
2
2. The formula set forth in the Merger Agreement pursuant to which each
issued and outstanding share of common stock, par value $.10 per share, of UNUM
(the "UNUM Common Stock") will be converted into common stock, par value $1.00
per share, of Provident ("Provident Common Stock") is the result of arm's length
bargaining.
3. (i) Neither UNUM nor any corporation related to UNUM has acquired or
has any present plan or intention to acquire any UNUM Common Stock in
contemplation of the Merger, or otherwise as part of a plan of which the Merger
is a part. To the best knowledge of the management of UNUM, neither Provident
nor any corporation that is related to Provident has a present plan or intention
to purchase UNUM Common Stock or any Provident Common Stock.
(ii) For purposes of this representation letter, two corporations shall
be treated as related to one another if immediately prior to or immediately
after the Merger (a) the corporations are members of the same affiliated group
(within the meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), but determined without regard to Section 1504(b) of the
Code) or (b) one corporation owns 50% or more of the total combined voting power
of all classes of stock of the other corporation that are entitled to vote or
50% or more of the total value of shares of all classes of stock of the other
corporation (applying the attribution rules of Section 318 of the Code, as
modified pursuant to Section 304(c)(3)(B) of the Code).
4. UNUM has not made and does not have any present plan or intention to
make any distributions (other than dividends made in the ordinary course of
business) prior to, in contemplation of or otherwise in connection with, the
Merger.
5. Provident, UNUM and holders of UNUM Common Stock will each pay their
respective expenses, if any, incurred in connection with the Merger. UNUM has
not agreed to assume, nor will it directly or indirectly assume, any expense or
other liability, whether fixed or contingent, of any holder of UNUM Common
Stock. Except to the extent specifically contemplated under the Merger Agreement
and the Shareholders Agreement, UNUM has not entered into any arrangement
pursuant to which Provident has agreed to assume, directly or indirectly, any
expense or other liability, whether fixed or contingent, of any holder of UNUM
Common Stock.
3
6. The liabilities of UNUM assumed by Provident and the liabilities to
which the transferred assets of UNUM are subject were incurred by UNUM in the
ordinary course of its business.
7. UNUM is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
8. UNUM will not take, and to the best knowledge of the management of
UNUM there is no present plan or intention by other stockholders of UNUM to
take, any position on any Federal, state or local income or franchise tax
return, or to take any other tax reporting position, that is inconsistent with
the treatment of the Merger as a reorganization within the meaning of Section
368(a) of the Code, unless otherwise required by a "determination" (as defined
in Section 1313(a)(1) of the Code) or by applicable state or local tax law (and
then only to the extent required by such applicable state or local tax law).
9. None of the compensation received by any stockholder-employee of
UNUM in respect of periods at or prior to the Effective Time represents separate
consideration for any of its UNUM Common Stock. None of the Provident Common
Stock that will be received by stockholder-employees of UNUM in the Merger
represents separately bargained for consideration which is allocable to any
employment agreement or arrangement. The compensation paid to any
stockholder-employees will be for services actually rendered and will be
determined by bargaining at arm's-length.
10. There is no intercorporate indebtedness existing between Provident
(or any of its subsidiaries) and UNUM (or any of its subsidiaries) that was
issued or acquired, or will be settled, at a discount (other than indebtedness
of UNUM (or any of its subsidiaries) acquired by Provident pursuant to the
express terms of the Merger Agreement or the Shareholders Agreement).
11. UNUM is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
12. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement represent the entire
understanding of UNUM with respect to the Merger.
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13. No assets of UNUM have been sold, transferred or otherwise disposed
of which would prevent Provident from continuing the "historic business" of UNUM
or from using a significant portion of the "historic business assets" of UNUM in
a business following the Merger (as such terms are defined in Treasury
regulation Section 1.368-1(d)).
14. On the date of the Merger, the fair market value of the assets of
UNUM will exceed the sum of its liabilities, plus the amount of liabilities, if
any, to which such assets are subject.
15. The undersigned is authorized to make all the representations set
forth herein on behalf of UNUM.
The undersigned acknowledges that (i) your respective opinions will be
based on the accuracy of the representations set forth herein and on the
accuracy of the representations and warranties and the satisfaction of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii) your respective opinions will be
subject to certain limitations and qualifications including that they may not be
relied upon if any such representations or warranties are not accurate or if any
of such covenants or obligations are not satisfied in all material respects.
The undersigned acknowledges that your respective opinions will not
address any tax consequences of the Merger or any action taken in connection
therewith except as expressly set forth in such opinions.
Very truly yours,
UNUM CORPORATION
by
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Name:
Title:
EXHIBIT E
TO THE MERGER AGREEMENT
[Letterhead of Provident Companies, Inc.]
November [ ], 1998
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
6.02(c) and 6.03(c) of the Agreement and Plan of Merger (the "Merger
Agreement"), dated November 22, 1998, among Provident Companies, Inc., a
Delaware corporation ("Provident"), and UNUM Corporation, a Delaware corporation
("UNUM"), and in connection with the filing with the Securities and Exchange
Commission (the "SEC") of the registration statement on Form S-4 (the
"Registration Statement"), which includes the Proxy Statement Prospectus of
Provident and UNUM, the undersigned certifies and represents on behalf of
Acquirer and as to Acquirer, after due inquiry and investigation, as follows
(any capitalized term used but not defined herein shall have the meaning given
to such term in the Merger Agreement):
1. The facts relating to the contemplated merger of Provident with and
into UNUM (the "Merger") as described in the Registration Statement and the
documents described in the Registration Statement are, insofar as such facts
pertain to Provident, true, correct and complete in all material respects. The
Merger will be consummated in accordance with the Merger Agreement.
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2. The formula set forth in the Merger Agreement pursuant to which each
issued and outstanding share of com mon stock, par value $.10 per share, of UNUM
(the "UNUM Common Stock") will be converted into common shares of Provident
common stock ("Provident Common Stock") is the result of arm's length
bargaining.
3. (i) Provident has no present plan or intention, following the
Merger, to reacquire, or to cause any corporation that is related to Provident
to acquire, any Provident Common Stock. To the best knowledge of the management
of Provident, no corporation that is related to Provident has a present plan or
intention to purchase any Provident Common Stock.
(ii) For purposes of this representation letter, two corporations shall
be treated as related to one another if immediately prior to or immediately
after the Merger (a) the corporations are members of the same affiliated group
(within the meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), but determined without regard to Section 1504(b) of the
Code) or (b) one corporation owns 50% or more of the total combined voting power
of all classes of stock of the other corpo ration that are entitled to vote or
50% or more of the total value of shares of all classes of stock of the other
corporation (applying the attribution rules of Section 318 of the Code, as
modified pursuant to Section 304(c)(3)(B) of the Code).
4. Provident has no present plan or intention, following the Merger to
sell or otherwise dispose of more than 20% of the assets held by UNUM
immediately prior to the Merger, except for dispositions of such assets in the
ordinary course of business and transfers described in Section 368(a)(2)(C) of
the Code.
5. Provident, UNUM and holders of UNUM Common Stock will each pay their
respective expenses, if any, incurred in connection with the Merger. Except to
the extent specifically contemplated under the Merger Agreement and the
Stockholders Agreement, Provident has not paid (directly or indirectly) or has
not agreed to assume any expenses or other liabilities, whether fixed or
contingent, incurred or to be incurred, by any stockholder of UNUM in connection
with or as part of the Merger or any related transactions.
6. Following the Merger, Provident or Provident's "qualified group," as
defined in Treasury regulation 1.368-1(d)(4)(ii), intends to continue its
"historic business" or
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to use a significant portion of its "historic business assets" in a business (as
such terms are defined in Treasury regulation Section 1.368-1(d)).
7. Provident is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
8. Provident will not take any position on any Federal, state or local
income or franchise tax return, or take any other tax reporting position, that
is inconsistent with the treatment of the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code, unless otherwise required by a
"determination" (as defined in Section 1313(a)(1) of the Code) or by applicable
state or local tax law (and then only to the extent required by such applicable
state or local tax law).
9. None of the compensation to be received by any stockholder-employee
of UNUM in respect of periods after the Effective Time represents separate
consideration for any of its UNUM Common Stock. None of the Provident Common
Stock that will be received by any stockholder-employee of UNUM in the Merger
represents separately bargained for consideration which is allocable to any
employment agreement or arrangement. The compensation paid to any
stockholder-employees will be for services actually rendered and will be
determined by bargaining at arm's-length.
10. There is no intercorporate indebtedness existing between Provident
(or any of its subsidiaries) and UNUM (or any of its subsidiaries) that was
issued or acquired, or will be settled, at a discount (other than indebtedness
of UNUM (or any of its subsidiaries) acquired by Provident pursuant to the
express terms of the Merger Agreement or the Stockholders Agreement).
11. Provident is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
12. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement represent the entire
understanding of Provident and UNUM with respect to the Merger.
The undersigned acknowledges that (i) your respective opinions will be
based on the accuracy of the representations set forth herein and on the
accuracy of the representations and warranties and the satisfaction of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii)
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your respective opinions will be subject to certain limitations and
qualifications including that they may not be relied upon if any such
representations or warranties are not accurate or if any of such covenants or
obligations are not satisfied in all material respects.
The undersigned acknowledges that your respective opinions will not
address any tax consequences of the Merger or any action taken in connection
therewith except as expressly set forth in such opinions.
Very truly yours,
PROVIDENT COMPANIES, INC.
by
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Name:
Title: