AGREEMENT AND PLAN OF MERGER
by and among
NATIONWIDE MUTUAL INSURANCE COMPANY
NATIONWIDE LIFE ACQUISITION CORPORATION
and
ALLIED LIFE FINANCIAL CORPORATION
Dated as of June 3, 1998
TABLE OF CONTENTS
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ARTICLE I THE OFFER......................................................... 2
Section 1.2 Allied Actions.................................................... 4
Section 1.3 Directors......................................................... 6
ARTICLE II THE MERGER........................................................ 7
Section 2.1 The Merger........................................................ 7
Section 2.2 Closing........................................................... 8
Section 2.3 Effective Time.................................................... 8
Section 2.4 Articles of Incorporation and By-Laws of the Surviving Corporation 9
Section 2.5 Board of Directors and Officers................................... 9
Section 2.6 Effect of Merger on Sub Capital Stock............................. 9
Section 2.7 Conversion of Allied Stock........................................ 10
Section 2.8 Exchange of Certificates and Related Matters...................... 10
Section 2.9 Dissenting Shares................................................. 13
Section 2.10 Adjustments to Prevent Dilution................................... 14
Section 2.11 Options........................................................... 14
ARTICLE III ADDITIONAL AGREEMENTS............................................. 14
Section 3.1 Preparation of Proxy Statement; Information Supplied.............. 14
Section 3.2 Meeting of Shareholders........................................... 15
Section 3.3 Filings; Other Action............................................. 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ALLIED.......................... 17
Section 4.1 Organization and Qualification.................................... 17
Section 4.2 Capitalization of Allied.......................................... 18
Section 4.3 Subsidiaries...................................................... 19
Section 4.4 Authority Relative to this Agreement.............................. 20
Section 4.5 No Violation; Governmental Filings................................ 21
Section 4.6 SAP Statements.................................................... 23
Section 4.7 GAAP Statements................................................... 24
Section 4.8 Reserves.......................................................... 24
Section 4.9 SEC Documents..................................................... 25
Section 4.10 Absence of Certain Changes or Events.............................. 26
Section 4.11 No Undisclosed Liabilities........................................ 26
Section 4.12 Takeover Statutes................................................. 27
Section 4.13 Compliance with Law............................................... 27
Section 4.14 Assets............................................................ 29
Section 4.15 Environmental Matters............................................. 31
Section 4.16 Contracts......................................................... 33
Section 4.17 Insurance Issued by Allied Insurers............................... 37
Section 4.18 Cancellations..................................................... 41
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Section 4.19 Operations Insurance.............................................. 41
Section 4.20 Taxes and Tax Returns............................................. 42
Section 4.21 Benefit Plans..................................................... 47
Section 4.22 Labor Relations and Employment.................................... 51
Section 4.23 Reserved.......................................................... 53
Section 4.24 Properties........................................................ 53
Section 4.25 Intellectual Property............................................. 53
Section 4.26 Transactions with Affiliates...................................... 53
Section 4.27 Voting Requirements............................................... 54
Section 4.28 Reserved.......................................................... 54
Section 4.29 Investment Company................................................ 54
ARTICLE V REPRESENTATIONS AND WARRANTIES OF NATIONWIDE AND SUB.............. 54
Section 5.1 Organization and Qualification.................................... 54
Section 5.2 Authority Relative to this Agreement.............................. 55
Section 5.3 No Violation...................................................... 55
ARTICLE VI CERTAIN COVENANTS................................................. 57
Section 6.1 Allied Conduct of Business Pending the Merger..................... 57
Section 6.2 Reserved.......................................................... 64
Section 6.3 Reasonable Efforts................................................ 64
Section 6.4 Access and Information............................................ 65
Section 6.5 Environmental Due Diligence....................................... 65
Section 6.6 Notice of Proceedings............................................. 65
Section 6.7 Notification of Certain Other Matters............................. 66
Section 6.8 Indemnification, Directors' and Officers' Insurance............... 67
Section 6.9 Intercompany Agreements........................................... 68
Section 6.10 Acquisition Proposals............................................. 69
ARTICLE VII CONDITIONS........................................................ 71
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger........ 71
Section 7.2 Conditions to Obligation of Allied to Effect the Merger........... 72
Section 7.3 Conditions to Obligation of Nationwide to Effect the Merger....... 72
ARTICLE VIII TERMINATION....................................................... 73
Section 8.1 Termination....................................................... 73
Section 8.2 Effect of Termination............................................. 75
ARTICLE IX MISCELLANEOUS..................................................... 76
Section 9.1 Survival of Representations and Warranties........................ 76
Section 9.2 Fees and Expenses................................................. 76
Section 9.3 Notices........................................................... 76
Section 9.4 Amendments........................................................ 77
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Section 9.5 No Waiver......................................................... 77
Section 9.6 Brokers........................................................... 78
Section 9.7 Publicity......................................................... 78
Section 9.8 Headings.......................................................... 79
Section 9.9 Nonassignability.................................................. 79
Section 9.10 Beneficiaries..................................................... 79
Section 9.11 Duplicates; Counterparts.......................................... 79
Section 9.12 Governing Law; Jurisdiction....................................... 79
Section 9.13 Entire Agreement.................................................. 80
Section 9.14 Severability...................................................... 80
Section 9.15 Specific Performance.............................................. 80
Section 9.16 Survival of Certain Covenants..................................... 81
Section 9.17 Counting.......................................................... 81
ARTICLE X DEFINITIONS....................................................... 81
Section 10.1 Definitions....................................................... 81
EXHIBITS
Exhibit A Conditions of the Offer
Exhibit B Nationwide Life Acquisition Corporation, Articles of
Incorporation and Code of By-laws
Exhibit C Shareholder Agreement
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 3, 1998 by and among
NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio mutual insurance company
("Nationwide"), NATIONWIDE LIFE ACQUISITION CORPORATION, an Ohio corporation and
a wholly-owned subsidiary of Nationwide ("Sub") and ALLIED LIFE FINANCIAL
CORPORATION, an Iowa corporation ("Allied") (hereinafter sometimes collectively
referred to as (the "parties").
WHEREAS, Nationwide and Sub propose to make a tender offer (as it may be
amended from time to time as permitted under this Agreement, the "Offer") to
purchase all outstanding shares of common stock, no par value, of Allied (the
"Common Shares"), at a purchase price of $30.00 per share, net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in this Agreement; and the Board of Directors of
Allied has adopted resolutions approving the Offer and recommending that holders
of Common Shares accept the Offer;
WHEREAS, the merger of Sub with Allied (the "Merger") upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding Common Share, other than Common Shares owned directly or indirectly
by Nationwide and, if applicable, Dissenting Shares (as defined in Section 2.9),
will be converted into the right to receive in cash the Offer Price, has been
authorized by all necessary corporate action on behalf of Nationwide and Sub and
has been adopted by the Board of Directors of Allied;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Nationwide to enter into this Agreement, Nationwide, Sub and
Allied Mutual Insurance Company ("Allied Mutual") are entering into a
Shareholder Agreement (the "Shareholder Agreement"), attached hereto as Exhibit
C, pursuant to which Allied Mutual has, among other things, agreed (1) to sell
all of its Common Shares to Sub at the
Offer Price, upon the terms and subject to the conditions set forth in the
Shareholder Agreement, and (2) to sell to Sub all of the outstanding shares of
6.75% Series Preferred Stock (the "Preferred Shares") owned by Allied Mutual;
WHEREAS, Nationwide, Sub and Allied desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Nationwide, Sub and Allied hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
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(a) Subject to the provisions of this Agreement, as promptly as practicable
but in no event later than five (5) Business Days after the public announcement
by Nationwide and Allied of this Agreement, Nationwide and Sub shall commence
the Offer. The obligation of Sub to, and of Nationwide to cause Sub to,
complete the Offer and accept for payment, and pay for, any Common Shares
tendered pursuant to the Offer shall be subject only to the conditions set forth
in the Offer to Purchase (any of which may be waived in whole or in part by Sub
in its reasonable discretion, except that Sub shall not waive the Minimum
Condition (as defined in Exhibit A) without the consent of Allied) and to the
terms and conditions of this Agreement. Sub expressly reserves the right to
modify the terms of the Offer, except that, without the consent of Allied, Sub
shall not (i) reduce the number of Common Shares subject to the Offer, (ii)
reduce the Offer Price, (iii) amend or add to the conditions to the Offer
described in Exhibit A, (iv) except as provided in the next sentence, extend the
Offer, (v) change the form of consideration payable in the Offer or (vi) amend
any other term of the Offer in any manner adverse to the holders of the Common
Shares. Notwithstanding the foregoing, Sub may, without the consent of Allied,
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(i) extend the Offer, if at the scheduled or extended expiration date of the
Offer any of the Offer Conditions shall not be satisfied or waived, until such
time as such conditions are satisfied or waived, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Offer and (iii) extend the Offer for any
reason on one or more occasions for an aggregate period of not more than 10
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence. Subject to the terms and
conditions of the Offer and this Agreement, Sub shall, and Nationwide shall
cause Sub to, accept for payment, and pay for, all Shares validly tendered and
not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as promptly as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Nationwide and Sub shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
with respect to the Offer, which contained an offer to purchase and a related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents included therein pursuant to which the Offer has been made, together
with any supplements or amendments thereto, the "Offer Documents"). Nationwide
and Sub agree that the Offer Documents shall comply as to form in all material
respects with the Exchange Act and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or given
to Allied's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no covenant is made by
Nationwide or Sub with respect to information supplied by Allied or any of its
shareholders specifically for inclusion or incorporation by reference in the
Offer Documents. Each of Nationwide, Sub and Allied agrees promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Nationwide and Sub further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer
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Documents as so corrected to be disseminated to Allied's shareholders, in each
case as and to the extent required by applicable federal securities laws.
Subsequent to the execution of this agreement, Allied and its counsel shall be
given reasonable opportunity to review and comment upon the Offer Documents
prior to their filing with the SEC or dissemination to the shareholders of
Allied. Nationwide and Sub agree to provide Allied and its counsel any comments
Nationwide, Sub or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
(c) Nationwide shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Common Shares
that Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer.
Section 1.2 Allied Actions.
--------------
(a) Allied hereby approves of and consents to the Offer and represents that
the Board of Directors of Allied, at a meeting duly called and held, duly and
unanimously adopted resolutions adopting this Agreement, approving the Offer and
the Merger (and effecting the other actions referred to herein), determining
that the terms of the Offer and the Merger are fair to, and in the best
interests of, Allied's shareholders, recommending that Allied's shareholders
accept the Offer, tender their shares pursuant to the Offer and approve this
Agreement (if required) and approving the acquisition of Common Shares by Sub
pursuant to the Offer and the other transactions contemplated by this Agreement.
Allied has been advised by each of its directors and executive officers that
each such person intends to tender all Common Shares owned by such person
pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, Allied shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (such Schedule 14D-9, as amended from time to time, the
"Schedule 14D-9") containing the recommendation described in paragraph (a) and
shall mail the Schedule 14D-9 to the shareholders of Allied. Allied agrees that
the Schedule 14D-9 shall comply (and, as amended from time to time, shall
comply) as to form in all material respects with
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the requirements of the Exchange Act and the rules and regulations promulgated
thereunder and, on the date filed with the SEC and on the date first published,
sent or given to Allied's shareholders, shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
covenant is made by Allied with respect to information supplied by Nationwide or
Sub specifically for inclusion in the Schedule 14D-9. Each of Allied, Nationwide
and Sub agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and Allied further agrees to take
all steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to Allied's shareholders, in each case as and to the extent
required by applicable federal securities laws. Nationwide and its counsel shall
be given reasonable opportunity to review and comment upon the Schedule 14D-9
prior to its filing with the SEC or dissemination to shareholders of Allied.
Allied agrees to provide Nationwide and its counsel any comments Allied or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger and simultaneously with the
execution of this Agreement, Allied shall cause its transfer agent to furnish
Sub promptly with mailing labels containing the names and addresses of the
record holders of Common Shares as of a recent date and of those persons
becoming record holders subsequent to such date, together with copies of all
lists of shareholders, security position listings and computer files and all
other information in Allied's possession or control regarding the beneficial
owners of Common Shares, and shall furnish to Sub such information and
assistance (including updated lists of shareholders, security position listings
and computer files) as Nationwide may reasonably request in communicating the
Offer and any and all amendment thereto to Allied's shareholders. Allied
further agrees that copies of any and all amendments to the Schedule 14D-9 shall
be disseminated to Allied's shareholders by
5
Nationwide and Sub. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Nationwide and Sub and their
agents shall hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
and the Merger and, if this Agreement shall be terminated, will, upon request,
deliver, and will use their reasonable efforts to cause their agents to deliver,
to Allied all copies and any extracts or summaries from such information then in
their possession or control.
Section 1.3 Directors. Promptly upon the acceptance for payment of
---------
Common Shares by Sub pursuant to the Offer, Sub shall be entitled to designate
such number of directors on the Board of Directors of (i) Allied as will give
Sub, subject to compliance with Section 14(f) of the Exchange Act, a majority of
such directors, and Allied shall, at such time, cause Sub's designees to be so
elected by its existing Board of Directors and (ii) each Subsidiary of Allied
and each committee of the Board of Directors of Allied and each such Subsidiary
as will give Sub a majority of such directors or committee, and Allied shall, at
such time, cause Sub's designees to be so elected. In the event that Sub's
designees are elected to the Board of Directors of Allied, until the Effective
Time such Board of Directors shall have at least two directors who are directors
on the date of this Agreement and who are not officers of Allied or directors of
Allied Mutual (the "Independent Directors"), provided that, in such event, if
the number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall designate a person to fill
such vacancy who shall be deemed to be an Independent Director for purposes of
this Agreement or, if no Independent Directors then remain, the other directors
shall designate two persons to fill such vacancies who shall not be officers or
affiliates of Allied or any of its subsidiaries, or officers or affiliates of
Nationwide or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement.
Subject to applicable law, Allied shall take all action requested by
Nationwide necessary to effect any such election, including mailing to its
stockholders the Information
6
Statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and Allied agrees to make such
mailing with the mailing of the Schedule 14D-9 (provided that Sub shall have
provided to Allied on a timely basis all information required to be included in
the Information Statement with respect to Sub's designees). In connection with
the foregoing, Allied will promptly, at the option of Nationwide, either
increase the size of Allied's Board of Directors and/or obtain the resignation
of such number of its current directors as is necessary to enable Sub's
designees to be elected or appointed to Allied's Board of Directors as provided
above.
Following the election or appointment of the Sub's designees pursuant to
this Section 1.3 and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors then in office shall be required by Allied
to (i) amend or terminate this Agreement by Allied, (ii) exercise or waive any
of Allied's rights or remedies under this Agreement or (iii) extend the time for
performance of Nationwide's and Sub's respective obligations under this
Agreement.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms of this Agreement and subject to
----------
the satisfaction of the conditions set forth herein, at the Effective Time Sub
shall be merged with and into Allied in accordance with the applicable
provisions of the Laws of the States of Ohio and Iowa and the separate corporate
existence of Sub shall thereupon cease, and Allied, which shall be the surviving
company (hereinafter sometimes referred to as the "Surviving Corporation"),
shall continue its corporate existence under the Laws of the State of Iowa under
the name "Allied Life Financial Corporation." From and after the Effective
Time, the Surviving Corporation shall possess all the Assets and other rights,
privileges, immunities, powers and purposes of each of Sub and Allied and shall
be liable for all of the Liabilities of Sub and Allied, all to the full extent
provided in Section 1701.82 of the Ohio Insurance Law and Section 490.1106 of
the Iowa Corporation Law.
7
Section 2.2 Closing. Unless this Agreement shall have been terminated
-------
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") will take place
at 9:00 a.m. on the second business day following the date on which the last of
the conditions set forth in Article VII shall be fulfilled or waived in
accordance with this Agreement (the "Closing Date"), at the offices of ▇▇▇▇▇▇ &
Coff, ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date, time or
place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. As soon as is practicable following the
--------------
execution of this Agreement, the parties shall cause this Agreement to be
provided to the Ohio Superintendent in accordance with, and in such form as
required by, Section 3941.38(A) of the Ohio Insurance Law and the regulations
promulgated thereunder, and to the Iowa Commissioner in accordance with Section
521A.3 of the Iowa Insurance Law and the regulations promulgated thereunder and
the Iowa Attorney General in accordance with Section 521.12 of the Iowa
Insurance Law, in each case together with all other documents as may be required
by applicable Law. Subject to the conditions set forth in Article VII of this
Agreement, the Merger shall become effective (the "Effective Time") upon the
last to occur of (a) the filing of the Certificate of Merger with the Ohio
Secretary of State, (b) the filing of the Articles of Merger with the Iowa
Commissioner and recording in the offices of the registers of deeds of the
counties in the State of Iowa in which the principal offices of Nationwide and
Allied are located and in the county in the State of Iowa in which the Surviving
Corporation will have its principal office in such state, and (c) such later
time as the parties designate in such filings; provided, however, the Effective
-------- -------
Time shall not be more than one year from the date of any required insurance
regulatory approval of the Merger. Upon the terms and subject to the conditions
of this Agreement, the parties hereto will use all reasonable efforts to assure
that the filings contemplated hereby are made, and the Effective Time occurs, as
soon as is practicable.
8
Section 2.4 Articles of Incorporation and By-Laws of the Surviving
------------------------------------------------------
Corporation. Following the Effective Time, the Articles of Incorporation of
-----------
Sub, as in effect immediately prior to the Effective Time, shall be the Articles
of Incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by Law. The Amended and Restated Code of By-Laws
of Sub, as in effect immediately prior to the Effective Time, shall be the
Amended and Restated By-Laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by Law. A copy of Sub's Articles of
Incorporation and Code of By-Laws are attached hereto as Exhibit B.
Section 2.5 Board of Directors and Officers. The directors of Sub
-------------------------------
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation immediately following the Effective Time, each of such directors to
hold office, subject to the applicable provisions of the Articles of
Incorporation and Code of By-Laws of the Surviving Corporation, until his or her
successor is duly elected and qualified, or his or her earlier death,
resignation or removal. The officers of Allied immediately prior to the
Effective Time shall be the officers of the Surviving Corporation at and
immediately following the Effective Time, each of such officers to hold their
respective offices, subject to the applicable provisions of the Articles of
Incorporation and Code of By-Laws of the Surviving Corporation, until his or her
successor is duly elected and qualified, or his or her earlier death,
resignation or removal.
Section 2.6 Effect of Merger on Sub Capital Stock. Each share of
-------------------------------------
capital stock of Sub issued and outstanding immediately prior to the Effective
Time shall, without further action by Sub or Nationwide, be converted into one
validly issued, fully paid and nonassessable share of common stock, no par
value, of the Surviving Corporation.
9
Section 2.7 Conversion of Allied Stock.
--------------------------
(a) Outstanding Common Stock. Subject to the other provisions of this
------------------------
Section 2.7, each Common Share issued and outstanding immediately prior to the
Effective Time (other than shares held as treasury shares by Allied and
Dissenting Shares (as defined in Section 2.9 below)) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive $30.00 per Common Share, net to the shareholder in
cash, without interest thereon (the "Merger Consideration").
(b) Preferred Stock. Subject to the other provisions of this Section 2.7,
---------------
each Series A ESOP Preferred Share issued and outstanding immediately prior to
the Effective Time (other than shares held as treasury shares by Allied) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be deemed converted into the right to receive Common Shares in
accordance with the procedures set forth in Section 8(b) of the Certificate of
Designations, Series A ESOP Convertible Preferred Stock of Allied.
(c) Treasury Shares. Each Common Share and Series A ESOP Preferred Share
---------------
issued and outstanding immediately prior to the Effective Time which is then
held as a treasury share by Allied immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of Allied, be
cancelled and retired and cease to exist, without any conversion thereof.
Section 2.8 Exchange of Certificates and Related Matters.
--------------------------------------------
(a) Paying Agent. As of the Effective Time, Nationwide shall deposit with
------------
a bank selected by Nationwide and reasonably acceptable to Allied (the "Paying
Agent"), for the benefit of the holders of Common Shares, cash in an aggregate
amount equal to the aggregate Merger Consideration (such amount being sometimes
hereinafter referred to as the "Payment Fund").
(b) Exchange Procedure. Upon surrender to the Paying Agent of a
------------------
certificate representing Common Shares for cancellation, together with a letter
of transmittal and such
10
other customary documents as may be required by the instructions to the letter
of transmittal (collectively, the "Certificate") and acceptance thereof by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the number of Common Shares
previously represented by such Certificate shall have been converted pursuant to
Section 2.7(a) or (b). The Paying Agent shall accept such Certificate upon
compliance with such reasonable terms and conditions as the Paying Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. If the Merger Consideration (or any portion thereof) is to be
delivered to any person other than the person in whose name the Certificate
representing Common Shares surrendered in exchange therefor is registered on the
record books of Allied, it shall be a condition to such exchange that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such exchange shall pay to the
Paying Agent any transfer or other taxes required by reason of the payment of
such consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable. After the Effective
Time, there shall be no further transfer on the records of Allied or its
transfer agent of any Certificate representing Common Shares and if any such
Certificate is presented to Allied for transfer, it shall be cancelled against
delivery of the Merger Consideration as hereinabove provided. Until surrendered
as contemplated by this Section 2.8(b), each Certificate representing Common
Shares (other than a Certificate representing Common Shares to be cancelled in
accordance with Section 2.7), shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration, without any interest thereon.
(c) Letter of Transmittal. Promptly after the Effective Time (but in no
---------------------
event more than five (5) Business Days thereafter), Nationwide shall require the
Paying Agent to mail to each record holder of Certificates that immediately
prior to the Effective Time represented Common Shares which have been converted
pursuant to Section 2.7, a letter of transmittal (which shall specify that
delivery shall be effective, and risk of loss and title
11
shall pass, only upon proper delivery of Certificates representing Common Shares
to the Paying Agent and shall be in such form and have such provisions as
Nationwide reasonably may specify) and instructions for use in surrendering such
Certificates and receiving the Merger Consideration to which such holder shall
be entitled therefor pursuant to Section 2.7.
(d) No Further Ownership Rights in Shares. The Merger Consideration paid
-------------------------------------
upon the surrender for exchange of Certificates representing Common Shares in
accordance with the terms of this Article II shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the Common Shares
theretofore represented by such Certificates, subject, however, to the Surviving
Corporation's obligation (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared by Allied on such Common Shares in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time.
(e) Termination of Payment Fund. Any portion of the Payment Fund which
---------------------------
remains undistributed to the holders of the Certificates representing Common
Shares for 120 days after the Effective Time shall be delivered to Nationwide,
upon demand, and any holders of Common Shares who have not theretofore complied
with this Article II shall thereafter look only to Nationwide and only as
general creditors thereof for payment, without interest, of their claim for any
Merger Consideration with respect to their Common Shares.
(f) No Liability. None of Nationwide, Sub, the Surviving Corporation or
------------
the Paying Agent shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates representing Common Shares or Preferred Shares shall not
have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any Merger
12
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any such cash, shares,
dividends or distributions payable in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation free and clear of all claims or interest of any person previously
entitled thereto.
Section 2.9 Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, the Common Shares or Preferred Shares outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
properly in writing appraisal for such Common Shares or Preferred Shares in
accordance with Sections 490.1301 through 490.1331 of the Iowa Corporation Law
and who shall not have withdrawn such demand or otherwise have forfeited
appraisal rights shall not be converted into or represent the right to receive
the Merger Consideration ("Dissenting Shares"). Such shareholders shall be
entitled to receive payment of the appraised value of such Common Shares or
Preferred Shares held by them in accordance with the Iowa Corporation Law,
except that all Dissenting Shares held by shareholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Common Shares or Preferred Shares held by them under the Iowa
Corporation Law shall thereupon be deemed to have been converted into and to
have become exchangeable, as of the Effective Time, for the right to receive,
without any interest thereon, the Merger Consideration, upon surrender, in the
manner provided in Section 2.8(b), of the Certificate or Certificates that
formerly evidenced such Common Shares or Preferred Shares. Allied shall give
Nationwide prompt notice of any demands of appraisal received by Allied,
withdrawals of such demands, and any other instruments served pursuant to Iowa
Corporation Law and received by Allied, and Nationwide shall have the right to
participate in all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, Allied shall not, except with the prior written
consent of Nationwide, make any payment with respect to any demands for
appraisal, or settle or offer to settle, any such demands.
13
Section 2.10 Adjustments to Prevent Dilution. In the event that Allied
-------------------------------
changes the number of Common Shares issued and outstanding prior to the
Effective Time as a result of a reclassification, stock split (including a
reverse split), stock dividend or distribution, recapitalization, merger,
subdivision or other similar transaction, the Merger Consideration shall be
equitably adjusted.
Section 2.11 Options. Allied has taken all necessary action so that,
-------
effective as of the Effective Time, (i) cause each outstanding employee or
director stock option (the "Options") to purchase Common Shares granted under
the Allied Life Financial Corporation Executive Stock Option Plan and the Allied
Life Financial Corporation Long-Term Management Incentive Plan (the "Option
Plans"), whether or not then exercisable or vested, will become fully
exercisable and vested, (ii) cause each Option that is then outstanding to be
cancelled and (iii) in consideration of such cancellation cause Allied (or, at
Nationwide's option, Sub) to pay to such holders of Options an amount in respect
thereof equal to the product of (A) the excess, if any, of the Merger
Consideration over the exercise price of each such Option and (B) the number of
Shares previously subject to the Option immediately prior to its cancellation
(such payment to be net of withholding taxes). Allied represents and warrants
that it will use all commercially reasonable efforts to ensure that (a) no
consent of any holder of an Option is required to effect the transactions
contemplated by this Section 2.11 and (b) following the Effective Time, no
Option or any other option, warrant or right will give any person any right to
acquire any securities of the Surviving Corporation.
ARTICLE III
ADDITIONAL AGREEMENTS
Section 3.1 Preparation of Proxy Statement; Information Supplied.
----------------------------------------------------
(a) Proxy Statement. As soon as practicable following the purchase of the
---------------
Common Shares pursuant to the Offer, Allied shall prepare and file with the SEC
the Proxy Statement (as defined below), if required. Allied will use its
reasonable best efforts
14
to cause the Proxy Statement to be mailed to Allied's shareholders as promptly
as practicable.
(b) Allied Information. Allied agrees that none of the information
------------------
supplied or to be supplied by Allied specifically for inclusion in the Proxy
Statement will, at the date it is first mailed to Allied's shareholders or at
the time of the Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder.
(c) Nationwide Information. Nationwide agrees that none of the information
----------------------
supplied or to be supplied by Nationwide specifically for inclusion in the Proxy
Statement will, at the date it is first mailed to Allied's shareholders or at
the time of the Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 3.2 Meeting of Shareholders. If necessary, Allied will take all
-----------------------
action necessary in accordance with applicable law and its Articles of
Incorporation and By-laws to convene a meeting of its shareholders (the
"Shareholders Meeting") to consider and vote upon the approval of this Agreement
and the Merger. Subject to Section 6.10 hereof, Allied will, through its Board
of Directors, recommend to its shareholders approval of this Agreement and the
Merger. Without limiting the generality of the foregoing, Allied agrees that,
subject to its right to terminate this Agreement pursuant to Section 8.1, its
obligations pursuant to the first sentence of this Section 3.2 shall not be
affected by (i) the commencement, public proposal, public disclosure or
communication to Allied of any Acquisition Proposal or (ii) the withdrawal or
modification by the Board of Directors of Allied of its approval or
recommendation of this Agreement or the Merger. Allied will use
15
its reasonable best efforts to hold the Shareholders Meeting as soon as
practicable after the
date hereof.
Section 3.3 Filings; Other Action. As promptly as practicable, (i)
---------------------
Allied, Nationwide and Sub shall make all filings and submissions under the HSR
Act, (ii) Nationwide shall make all filings required by the insurance regulatory
authorities in Iowa and Ohio and deliver notices and consents to jurisdiction to
such state insurance departments, each as reasonably may be required to be made
in connection with this Agreement and the transactions contemplated hereby, and
(iii) Allied and Nationwide shall cooperate in all reasonable respects with each
other in (A) determining if other filings are required to be made prior to the
Effective Time with, or if other material consents, approvals, permits, notices
or authorizations are required to be obtained prior to the Effective Time from
any Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (B)
timely making all such filings, giving all such notices, and timely seeking all
such consents, approvals, permits, notices or authorizations as required by
applicable law. In connection with the foregoing, Allied will provide
Nationwide, and Nationwide will provide Allied, with copies of correspondence,
filings or communications (or memoranda setting forth the substance thereof)
between such party or any of its representatives, on the one hand, and any
Governmental Entity or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby. Each
of Nationwide and Allied acknowledge that certain actions may be necessary with
respect to the foregoing in making notifications and obtaining clearances,
consents, approvals, waivers or similar third party actions which are material
to the consummation of the transactions contemplated hereby, and each of
Nationwide and Allied agree to take such action as is reasonably necessary to
complete such notifications and obtain such clearances, approvals, waivers or
third party actions.
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALLIED
Allied represents and warrants to Nationwide and Sub as follows:
Section 4.1 Organization and Qualification.
------------------------------
(a) Allied is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Iowa and has full corporate power,
authority and legal right to conduct its Business as it is currently being
conducted. Allied is duly qualified to do business, and is in good standing, in
the jurisdictions where the nature of its business or the ownership or leasing
of its properties makes such qualification necessary, except where the failure
to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect. Each of the Allied Subsidiaries is
listed in the Allied Disclosure Schedule.
(b) Each Allied Insurer is listed in the Allied Disclosure Schedule. Each
Allied Insurer (i) possesses an Insurance License in each jurisdiction in which
such Allied Insurer is required to possess an Insurance License and (ii) is duly
authorized in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business reported as being written in the
Allied SAP Statements for 1997. All such Insurance Licenses, including, but not
limited to, authorizations to transact reinsurance, are listed and described in
the Allied Disclosure Schedule and are in full force and effect without
amendment, limitation or restriction, other than as described in the Allied
Disclosure Schedule, and neither Allied nor any Allied Insurer has Knowledge of
any event, inquiry or Proceeding which is reasonably likely to lead to the
revocation, amendment, failure to renew, limitation, suspension or restriction
of any such Insurance License.
(c) Copies of the articles of incorporation and by-laws of Allied have
heretofore been delivered to Nationwide and copies of the articles of
incorporation and by-laws (or other constitutive documents) of each of the
Allied Subsidiaries have heretofore been delivered to Nationwide, and such
copies are accurate and complete as of the date hereof.
17
Allied does not have any other constitutive documents, other than its articles
of incorporation and by-laws.
(d) Except for the Allied Subsidiaries, Allied does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity
that directly or indirectly conducts any activity which is material to Allied.
Section 4.2 Capitalization of Allied. The authorized capital stock of
------------------------
Allied consists of 25,000,000 Common Shares and 7,500,000 Preferred Shares. At
the close of business on June 2, 1998 (i) 4,420,974 Common Shares were issued
and outstanding; (ii) no Common Shares were held as treasury stock; (iii) no
Common Shares were held by Allied Subsidiaries; (iv) 193,686 Common Shares were
reserved for issuance upon the exercise of issued options to purchase Common
Shares; and (v) 2,330,772 6.75% Series Preferred Shares were issued and
outstanding and 104,726 Series A ESOP Preferred Shares were issued and
outstanding. All outstanding shares of capital stock of Allied are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. No bonds, debentures, notes or other indebtedness of Allied
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the shareholders of Allied may
vote are issued or outstanding. The Allied Disclosure Schedule sets forth the
following information with respect to each Employee Option and Restricted Stock
award which has been forfeited by an eligible employee: (x) the name of the
recipient, (y) the number of Common Shares subject to such Employee Option and
Restricted Stock award, and (z) the applicable exercise price for each Employee
Option. Except as set forth above or in the Allied Disclosure Schedule, Allied
does not have any outstanding option, warrant, subscription or other right,
agreement or commitment which either obligates Allied to issue, sell or
transfer, repurchase, redeem or otherwise issue, acquire or vote any shares of
capital stock of Allied, or which restricts the transfer of Common Shares.
18
Section 4.3 Subsidiaries.
------------
(a) The Allied Disclosure Schedule sets forth the name of each Subsidiary
and the state or jurisdiction of its incorporation and indicates which Allied
Subsidiaries are insurance companies. Each Allied Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority and
all necessary government approvals to own, lease and operate its properties and
to carry on its Business as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power and authority
or necessary governmental approvals would not individually or in the aggregate
have a Material Adverse Effect. Each Allied Subsidiary is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not individually or in the aggregate have a Material Adverse
Effect. Except as disclosed in the Allied Disclosure Schedule, each of the
Allied Subsidiaries that is an insurance company is (a) duly licensed or
authorized as an insurance company in its jurisdiction of incorporation and (b)
duly licensed or authorized as an insurance company and in good standing in each
other jurisdiction where it is required to be so licensed or authorized as set
forth in Schedule T to the most recent Annual Statement. The Allied
subsidiaries (other than the Allied Subsidiaries), if considered as a whole,
would not constitute a "significant subsidiary" within the meaning of Rule 1-02
of Regulation S-X adopted pursuant to the regulations promulgated by the SEC.
(b) The Allied Disclosure Schedule sets forth, as to each Allied
Subsidiary, its authorized capital stock and the number of its issued and
outstanding shares of capital stock. Allied is, directly or indirectly, the
record and beneficial owner of all of the outstanding shares of capital stock of
each of the Allied Subsidiaries, and no capital stock of any Allied Subsidiary
is or may become required to be issued by reason of any options,
19
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
or exercisable for, shares of any capital stock of any Subsidiary, and there are
no contracts, commitments, understandings or arrangements by which Allied or any
Allied Subsidiary is or may be bound to issue, redeem, purchase or sell
additional shares of capital stock of any Allied Subsidiary or securities
convertible into or exchangeable or exercisable for any such shares. All of such
shares so owned by Allied are validly issued, fully paid and nonassessable and
are owned by it or by another wholly-owned Allied Subsidiary thereof free and
clear of all liens, claims, encumbrances, restraints on alienation, or any other
restrictions with respect to the transferability or assignability thereof (other
than restrictions on transfer imposed by federal or state securities laws).
Section 4.4 Authority Relative to this Agreement.
------------------------------------
(a) Allied has full corporate power, authority and legal right to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved and authorized by
the Board of Directors of Allied. Except for any required approval of this
Agreement by the shareholders of Allied, no other corporate proceedings on the
part of Allied are necessary to authorize this Agreement and the transactions
contemplated hereby. The affirmative vote of at least the majority of the votes
entitled to be cast by shareholders of Allied present or represented by properly
executed proxy at the meeting called pursuant to Section 3.2 hereof, if
required, is the only vote of shareholders of Allied necessary to approve this
Agreement and the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered by
Allied and (assuming this Agreement is a legal, valid and binding obligation of
Nationwide) constitutes a legal, valid and binding agreement of Allied
enforceable against Allied in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer,
20
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(c) Based upon the recommendation of the Coordinating Committee of the
Board of Directors of Allied (the "Special Committee") appointed by the Board of
Directors of Allied in connection with the Merger, the Board of Directors of
Allied (i) has declared that this Agreement, the Offer, the Merger and the other
transactions contemplated hereby and thereby are, as of the date hereof,
advisable and in the best interests of Allied, (ii) has authorized, approved
and adopted this Agreement, the Offer, the Merger and the other transactions
contemplated hereby and thereby, and (iii) has received the opinion of the
Special Committee's financial advisor, ▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ Inc., to the effect that
the consideration to be received by the shareholders in the Offer and Merger,
taken together, is fair to such shareholders from a financial point of view. It
is agreed and understood that such opinion is for the benefit of the Special
Committee and Allied's Board of Directors and may not be relied on by
Nationwide.
Section 4.5 No Violation; Governmental Filings.
----------------------------------
(a) Except as set forth in the Allied Disclosure Schedule, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not (i) constitute a breach or violation
of or default under the articles of incorporation or the by-laws (or similar
organizational documents) of Allied or of any of the Allied Subsidiaries, (ii)
violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the Assets
of Allied or of any of the Allied Subsidiaries under any of the terms,
conditions or provisions of any Contract to which Allied or any such Allied
Subsidiary is a party or to which it or any of its Assets may be subject or
(iii) constitute a breach or violation of or default under any Environmental
Permit, Law or License to which Allied or any of the Allied Subsidiaries is
subject, other
21
than, in the case of clauses (ii) and (iii), events or other matters that are
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect.
(b) Except for (i) the Governmental Approvals set forth in the Allied
Disclosure Schedule, (ii) the filing of this Agreement with and the approval of
such by the Iowa Commissioner and Iowa Attorney General under the Iowa Insurance
Law and such other applications, registrations, declarations, filings,
authorizations, Orders, consents and approvals as may be required under the Laws
of other jurisdictions listed in the Allied Disclosure Schedule, (iii) the
approval of this Agreement by the Members of Allied, if required by the Iowa
Commissioner, as contemplated by Section 3.2 hereof, (iv) the filings required
under the HSR Act and the expiration or other termination of any waiting period
applicable to the Merger under such act, (v) the filings pursuant to Section 2.3
hereof, (vi) the filing of appropriate documents with and such consents as may
be required under the Investment Company Act and the Investment Advisors Act,
(vii) the filing with the SEC of (x) a proxy statement relating to the approval
by the shareholders of Allied of the Merger (the "Proxy Statement"), and (y)
such reports under the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (viii) the filing
of the certificate of merger with the Iowa Secretary of State and appropriate
documents with the relevant authorities of other states in which Allied is
qualified to do business and (ix) any consent or filing that is disclosed in the
Allied Disclosure Schedule or that would not otherwise be required to be
disclosed pursuant to Section 4.5(a) hereof, no consent, approval, permit,
notice, Order or authorization of, or registration, application, declaration or
filing with (each a "Consent or Filing") any Person is required with respect to
Allied or any Allied Subsidiary in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
except for such Consents or Filings the failure of which to make or obtain would
not, individually or in the aggregate, prevent or be a material impediment to
the consummation of the transactions contemplated hereby or have a Material
Adverse Effect.
22
Section 4.6 SAP Statements. Allied has previously delivered to
--------------
Nationwide true and complete copies of the following:
(a) the Annual Statements for each Allied Insurer as of and for the years
ended December 31, 1995, 1996 and 1997;
(b) the Quarterly Statements for each Allied Insurer as of and for the
calendar quarter ended March 31, 1998;
(c) any supplemental or separate statutory annual statements or quarterly
statements for each Allied Insurer for any of the periods ended December 31,
1995, 1996 or 1997 or March 31, 1998, that are filed with any insurance
Governmental Entity and that differ from the Annual Statements or the Quarterly
Statements described in Section 4.6(a) or (b) hereto; and
(d) the audited SAP balance sheets of each Allied Insurer as of December
31, 1995, 1996 and 1997 and the related audited summary of operations and
statements of change in capital and surplus and cash flow of such Allied Insurer
for each such years, together with the notes related thereto and the reports
thereon of KPMG Peat Marwick, LLP (collectively with the items described in
Section 4.6(a), (b) and (c), the "Allied SAP Statements").
Since December 31, 1997, each Allied Insurer has filed all SAP Statements
required to be filed with or submitted to the appropriate regulatory
authorities, except for such filings or submissions, the failure to so file or
submit is not individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
Each Allied SAP Statement complied (and, as to SAP Statements filed after
the date of this Agreement, will comply) in all material respects with all
applicable Laws when so filed, and all material deficiencies with respect to any
such Allied SAP Statement, of which Allied has Knowledge, have been cured or
corrected. Each Allied SAP Statement
23
(and the notes related thereto) referred to in Section 4.6(a), (b), and (d)
hereof was prepared (and, as to SAP Statements filed after the date of this
Agreement, will be prepared) in accordance with SAP and presents (and, as to SAP
Statements filed after the date of this Agreement, will present) fairly the
financial position of the respective Allied Insurers as of the respective dates
thereof and the related summaries of operations and changes in capital and
surplus and cash flow of the respective Allied Insurers for the respective
periods covered thereby. To the Knowledge of Allied, each Allied SAP Statement
(including the notes related thereto) referred to in Section 4.6(c) hereof was
prepared (or, in the case of similar SAP Statements filed after the date of this
Agreement, will be prepared) in accordance with the statutory accounting
practices required by the insurance Governmental Entity in the jurisdiction in
which such statement was (or will be) filed.
Section 4.7 GAAP Statements. Except as set forth in the Allied
---------------
Disclosure Schedule, Allied has previously delivered to Nationwide true and
complete copies of the (i) audited GAAP Financial Statements for each of the
Allied Subsidiaries, other than Allied Insurers, for the years ended December
31, 1995, 1996 and 1997 and (ii) unaudited GAAP Financial Statements for each of
the Allied Subsidiaries, other than Allied Insurers, for the three months ended
March 31, 1998 (collectively, the "Allied GAAP Financial Statements"). Each
Allied GAAP Financial Statement was prepared in accordance with GAAP (except, in
the case of such unaudited GAAP Financial Statements, for the absence of notes)
and presents fairly the financial position of the Allied Subsidiaries as to
which such Allied GAAP Financial Statements have been provided as of the
respective dates thereof and the related results of operations and cash flow and
shareholders' interest of such Allied Subsidiaries for the respective periods
covered thereby.
Section 4.8 Reserves. The aggregate actuarial reserves and other
--------
actuarial amounts held in respect of Liabilities with respect to Insurance
Contracts of each Allied Insurer as established or reflected in its December 31,
1997 Annual Statement or in the March 31, 1998 Quarterly Statement, (the "Allied
1998 Quarterly Statement") of such
24
Allied Insurer: (a)(i) were determined in accordance with generally accepted
actuarial standards consistently applied, (ii) were fairly stated in accordance
with sound actuarial principles and (iii) were based on actuarial assumptions
that are in accordance with or more conservative than those specified in the
related Insurance Contracts; (b) met the requirements of the insurance Laws of
such Allied Insurer's state of domicile and all other applicable jurisdictions;
(c) included provision for all actuarial reserves and related statement items
which ought to be established and (d) were, in the reasonable judgment of
Allied, adequate at such date (under generally accepted actuarial standards
consistently applied) to cover the total amount of all reasonably anticipated
matured and unmatured Liabilities of such Allied Insurer under all outstanding
Insurance Contracts pursuant to which such Allied Insurer has any Liability. To
the Knowledge of Allied, the actuarial opinion delivered to its Board of
Directors with respect to the 1997 Annual Statement exhibits 8, 9, 10 and 11 of
Allied is true, complete and accurate in all material respects. Each of the
Allied Insurers owns Assets that qualify as admitted assets under applicable
insurance Laws in an amount at least equal to the sum of its statutory reserves
and other similar amounts.
Section 4.9 SEC Documents. Allied has timely filed all required
-------------
reports, schedules, forms, statements and other documents with the SEC since
January, 1998 (such reports, schedules, forms, statements and other documents
are hereinafter referred to as the "SEC Documents"). As of their respective
dates, the SEC Documents complied with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents, and none of the SEC Documents as of such dates 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. The consolidated financial statements of Allied included in the 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 GAAP
25
applied on a consistent basis during the periods presented (except as may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as permitted by Rule 10-01 of Regulation S-X) and fairly present, in
all material respects, the consolidated financial position of Allied and its
consolidated Allied 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 interim financial statements, to normal year-end audit
adjustments) in accordance with GAAP.
Section 4.10 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in the Allied Disclosure Schedule, since December 31, 1997, each of Allied and
the Allied Subsidiaries has conducted its Business only in the ordinary course
of business, consistent with past practice, and there has not occurred (i) a
Material Adverse Effect, or any event or events which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect; (ii) except
as required by GAAP or SAP, any material change by Allied in accounting
principles, practices or methods; (iii) any material addition, or any
development involving a prospective material addition, to Allied's consolidated
reserves for future policy benefits or other policy claims and benefits other
than as a result of ordinary sales activities or otherwise in the ordinary
course of business; or (iv) except as required by GAAP or SAP, any material
change in the accounting, actuarial, investment, reserving, underwriting or
claims administration policies, practices, procedures, methods, assumptions or
principles of Allied. Except as set forth in the Allied Disclosure Schedule,
since December 31, 1997, there has not been any increase in the compensation
payable or that could become payable by Allied or any of the Allied Subsidiaries
to officers or key employees or any amendment of any of the compensation and
benefit plans other than increases or amendments in the ordinary course.
Section 4.11 No Undisclosed Liabilities. Except as disclosed in the
--------------------------
Financial Statements delivered to Nationwide pursuant to Sections 4.6 and 4.7
hereof or as set forth in the Allied Disclosure Schedule, neither Allied nor any
of the Allied Subsidiaries has any Liabilities, other than Liabilities arising
since the date of the applicable Financial
26
Statement in the ordinary course of business and consistent with past practice
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect.
Section 4.12 Takeover Statutes. Allied has taken or will take all
-----------------
actions necessary such that no restrictive provision of any "fair price,"
"moratorium," "control share acquisition," "interested shareholder" or other
similar anti-takeover statute or regulation (including, without limitation,
section 490.1110 of the Iowa Corporation Law) (each a "Takeover Statute") or
restrictive provision of any applicable anti-takeover provision in the charter
or by-laws of Allied is, or at the Effective Time will be, applicable to Allied,
Nationwide, the Common Shares, the Offer, the Merger or any other transactions
contemplated by this Agreement.
Section 4.13 Compliance with Law.
-------------------
(a) Except as set forth in the Allied Disclosure Schedule, neither Allied
nor any Allied Subsidiary is in violation (or, with notice or lapse of time or
both, would be in violation) of any term or provision of any Law applicable to
it or any of its Assets, the violation of which is, individually or in the
aggregate with all other such violations, reasonably likely to have a Material
Adverse Effect. Allied has delivered to Nationwide all reports (including, but
not limited to, draft reports) of examinations of the affairs of each Allied
Insurer (including, but not limited to, market conduct examinations) issued by
insurance Governmental Entities for any period ending on a date on or after
January 1, 1992; except as set forth in the Allied Disclosure Schedule, all
deficiencies or violations in such reports for any prior period have been
resolved. Except as set forth in the Allied Disclosure Schedule, all
outstanding Insurance Contracts issued or assumed by any Allied Insurer are, to
the extent required by Law, on forms and at rates approved by the insurance
regulatory authorities of the jurisdictions where issued or have been filed with
and not objected to by such authorities within the periods provided for
objection.
27
(b) Except as set forth in the Allied Disclosure Schedule, neither Allied
nor any Allied Subsidiary is a party to any Contract with or other undertaking
to, or is subject to any Order by, or is a recipient of any supervisory letter
or other written communication of any kind from, any Governmental Entity which
(i) currently materially adversely affects or is reasonably likely to have a
Material Adverse Effect, or (ii) has been received since January 1, 1993 and
relates to its reserve adequacy or its marketing, sales, trade or underwriting
practices or policies, nor, to the Knowledge of Allied or of any of the Allied
Subsidiaries, has Allied or any of the Allied Subsidiaries been notified in
writing by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such Order, Contract, undertaking, letter or other written communication.
(c) Allied has implemented procedures and programs which are reasonably
designed to provide assurance that each of Allied, the Allied Insurers and their
respective agents and employees are in compliance in all material respects with
all applicable Laws, including, but not limited to, advertising, licensing and
sales Laws. Allied has previously provided Nationwide with a true, complete and
correct copy of Allied's compliance program and procedures and, except as
previously disclosed to Nationwide, Allied has no Knowledge of any noncompliance
therewith in any material respect.
(d) Allied, each Allied Subsidiary and each other Affiliate of Allied
which is required, and each of their officers, independent contractors,
subagents, consultants and employees who are required by reason of the nature of
their employment by Allied, an Allied Subsidiary or such Affiliate, to be
registered or appointed as an investment advisor, investment adviser
representative, broker-dealer agent, broker-dealer, registered representative,
sales person, insurance agent or insurance producer, commodity trading adviser,
commodity pool operator or real estate broker or salesman with the SEC or the
securities commission or insurance department of any state or any self-
regulatory body or other Governmental Entity or any insurer, is duly registered
or appointed as such and such registration or appointment is in full force and
effect, except where the failure to be
28
registered or to have such registration in full force and effect is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect. Except as set forth in the Allied Disclosure Schedule, to the Knowledge
of Allied, none of Allied or any of such other Persons has been enjoined,
indicted, convicted or made the subject of any consent decree or administrative
order on account of any material violation of applicable Law in connection with
such Person's actions in any of the foregoing capacities or, to the Knowledge of
Allied, any enforcement or disciplinary proceeding alleging any such violation
since January 1, 1993. Allied and each Allied Subsidiary which is a
broker/dealer Subsidiary have filed all forms, reports, statements and other
documents required by Law to be filed by them with the SEC, all other reports
(periodic or otherwise) and registration statements, including, without
limitation, reports in connection with sales of variable annuity or variable
life contracts, and all amendments and supplements to all such reports and
registration statements, and all such forms, reports, statements and other
documents did not at the time they were filed (at the time they became effective
and so long as they remain effective in case of registration statements and
amendments thereto) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Section 4.14 Assets.
------
(a) Except as set forth in the Allied Disclosure Schedule and except for
Assets disposed of since March 31, 1998 in the ordinary course of business and
consistent with past practice: (i) each of Allied and the Allied Subsidiaries
has good title to all Assets that are disclosed or otherwise reflected in its
March 31, 1998 Quarterly Statement or unaudited GAAP Financial Statements for
the three months ended March 31, 1998, as the case may be, and all Assets
acquired thereafter, and all such Assets are owned by such Persons, free and
clear of all Liens, other than Permitted Liens, and the bonds, notes, debentures
and other evidences of indebtedness that constitute Investment Assets, disclosed
or otherwise reflected in its March 31, 1998 Quarterly Statement or unaudited
GAAP Financial Statements for the three months ended March 31, 1998, as the case
may be, or acquired
29
thereafter, are, to the Knowledge of each of Allied and the Allied Subsidiaries,
as of the date of this Agreement, in all material respects collectible in
accordance with the terms of the Investment Assets and the documents relating
thereto; (ii)(A) Allied and each Allied Subsidiary owns good and indefeasible,
marketable fee simple title to, or has a valid leasehold interest in, all real
property used in the conduct of its Business or of a type which would be
required to be specifically disclosed by an Allied Insurer in Schedule A of its
Annual Statement, free and clear of all Liens, other than Permitted Liens; (B)
in the aggregate all real property, other than unimproved land, is, in all
material respects, in working condition, without need for repair and suitable
for its current uses; (C) no improvement on any such real property owned or
leased by Allied or any Allied Subsidiary encroaches upon any real property of
another Person without an appurtenant easement or other legal right allowing
such encroachment, nor encroaches over any applicable set back lines without the
benefit of non-conforming use status, a variance or adequate insurance insuring
against any Liability due to the attempted enforceability of the Law creating
such set back line, the result of which encroachments, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect; and (D)
Allied and each Allied Subsidiary owns, leases or, in all material respects, has
the valid right to use adequate means of ingress and egress to, from and over
all such real property; (iii) Allied and each Allied Subsidiary owns good and
indefeasible title to, or has a valid leasehold interest in or has a valid right
under Contract to use, all personal property that is material to the conduct of
its Business, free and clear of all Liens other than Permitted Liens, and, in
the aggregate, all such personal property is, in all material respects, in good
operating condition and repair, ordinary wear and tear excepted, and is, in all
material respects, suitable and adequate for its current uses; and (iv) Allied
and each Allied Subsidiary has the right to use free and clear of any royalty or
other payment obligations, claims of infringement or alleged infringement or
other Liens, other than Permitted Liens and other than contractual agreements
with respect to licensing and maintenance fees, all Intellectual Property that
is material to the conduct of its Business, all of which (other than related
documentation, manuals, training materials and policy forms), as of the date of
this Agreement, is listed in the Allied Disclosure Schedule; and neither Allied
nor any Allied Subsidiary is in material
30
conflict with or violation or infringement of, nor has Allied or any Allied
Subsidiary received any notice of any such conflict with or violation or
infringement of, any asserted rights of any other Person with respect to any
Intellectual Property, including, without limitation, the Intellectual Property
listed in the Allied Disclosure Schedule.
(b) No sales or brokerage commission or fee or other compensation is or
will be payable in connection with any Allied Real Property as a result of the
consummation of the transactions contemplated hereby.
Section 4.15 Environmental Matters.
---------------------
(a) Except as set forth in the Allied Disclosure Schedule, each of Allied
and the Allied Subsidiaries and, to the Knowledge of each of Allied and the
Allied Subsidiaries, all Allied Real Property (including all owners or operators
thereof) is in substantial compliance in all material respects with all
applicable Environmental Laws, which compliance includes, but is not limited to,
the possession of all Environmental Permits required under Environmental Laws
and compliance with the material terms and conditions thereof, other than such
Allied Real Property in respect of which the failure to comply with applicable
Environmental Laws is not reasonably likely (i) to have a Material Adverse
Effect or (ii) to result in costs of further investigation, clean-up and related
oversight, fines, penalties and third party claims exceeding $250,000 in any
individual case and $2,000,000 in the aggregate during the five-year period
commencing on the date hereof. Except as set forth in the Allied Disclosure
Schedule, neither Allied nor any Allied Subsidiary has received, nor do they
have Knowledge of, any communication (written or oral), whether from a
Governmental Entity, citizens' group, employee or otherwise, that alleges that
Allied or any Allied Subsidiary or any Allied Real Property (including any owner
or operator thereof) is not in such compliance, and, to the Knowledge of each of
Allied and of the Allied Subsidiaries, there are no circumstances that are
reasonably likely to prevent or interfere with such compliance in the future.
Neither Allied nor any Allied Subsidiary has been notified by, nor do they have
Knowledge of any notification by, any Governmental Entity that any such
Environmental Permit will be modified, suspended or
31
revoked or cannot be renewed or transferred in the ordinary course of business
consistent with past practice or in connection with the Merger.
(b) Except as set forth in the Allied Disclosure Schedule, there is no
Environmental Claim pending or, to the Knowledge of each of Allied and of the
Allied Subsidiaries, threatened against Allied, any Allied Subsidiary, any
Allied Real Property (including any owner or operator thereof) or any Person
whose Liability for any Environmental Claims Allied or any Allied Subsidiary has
or may have retained or assumed either contractually or by operation of Law and
there are no facts existing on the date hereof which are reasonably likely to
result in any such Environmental Claim.
(c) To the Knowledge of each of Allied and of the Allied Subsidiaries,
there have been no releases, spills, leaks or discharges of Hazardous Substances
at, from or to any Allied Real Property (other than those properties set forth
in the Allied Disclosure Schedule) or any other property which required or is
reasonably likely to require Allied or any Allied Subsidiary to undertake
investigation, abatement, removal, remedial, corrective or other response action
pursuant to applicable Environmental Laws. None of the Allied Real Property (i)
is listed or proposed for listing on any list maintained by any Governmental
Entity of sites that may require investigation, abatement, removal, remedial,
corrective or other response action, including, but not limited to, the CERCLIS
or the NPL, (ii) other than those properties set forth in the Allied Disclosure
Schedule, is the subject of any investigation, abatement, removal, remedial,
corrective or other response action, or (iii) is subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
(d) Except as set forth in the Allied Disclosure Schedule, no Hazardous
Substances were manufactured, generated, stored, treated, transported from or
otherwise managed at any Allied Real Property, nor were Hazardous Substances
from any Allied Real Property disposed of at any other property.
32
(e) To the Knowledge of each of Allied and the Allied Subsidiaries, there
are no conditions or circumstances concerning or related to the Business or
operations of Allied or such Allied Subsidiaries or at any Allied Real Property,
which are reasonably likely to pose a risk to the environment, natural resources
or the health and safety of any Person.
(f) Except as set forth in the Allied Disclosure Schedule, there is no
Allied Real Property or formerly owned Allied Real Property that was, or is,
subject to notification and/or disclosure requirements pursuant to state
property transfer statutes.
(g) Except as set forth in the Allied Disclosure Schedule, there are no
underground storage tanks or surface impoundments that ever existed, or
currently exist, upon, in or under any Allied Real Property.
Section 4.16 Contracts. The Allied Disclosure Schedule contains a true
---------
and complete list of all the following Contracts (true and complete copies of
all such written Contracts having been made available to Nationwide), currently
in force, to which Allied or any Allied Subsidiary is a party or by which any
Assets of Allied or any Allied Subsidiary are or may be bound, as such Contracts
may have been amended to the date hereof:
(a) all employment, consultation, retirement, termination, sign-on, buy-
out or other Contracts with any present or former officer, director, trustee,
employee, agent, broker or independent contractor of Allied or any Allied
Subsidiary (including, but not limited to, loans or advances to any such Person
or any Affiliate of such Person) providing for annual compensation of $100,000
or more or for compensation over the term of the Contract, and any renewal
thereof, of $200,000 or more (including, but not limited to, base salary, bonus
and incentive payments and other payments or fees, whether or not any portion
thereof is deferred);
(b) all Contracts (other than, with respect to Investment Assets,
Contracts containing customary restrictions on the ability to own or operate
competing real property
33
in a specified geographic area) with any Person including, but not limited to,
any Governmental Entity, containing any provision or covenant (i) limiting the
ability of Allied or any Allied Subsidiary to engage in any line of business, to
compete with any Person, to do business with any Person or in any location or to
employ any Person or (ii) limiting the ability of any Person to compete with or
obtain products or services from Allied or any Allied Subsidiary, which, in the
case of any such Contract described in clauses (i) and (ii) is, individually or
together with other such Contracts, reasonably likely to have a Material Adverse
Effect;
(c) all Contracts relating to the borrowing of money in excess of
$1,000,000 by Allied or any Allied Subsidiary or the direct or indirect
guarantee by Allied or any Allied Subsidiary of any obligation of any Person for
borrowed money or other financial obligation of any Person in excess of
$1,000,000 (other than indebtedness in respect of Investment Assets), or any
other Liability of Allied or any Allied Subsidiary in respect of indebtedness
for borrowed money or other financial obligation of any Person in excess of
$1,000,000 (other than indebtedness in respect of Investment Assets), including,
but not limited to, any Contract relating to or containing provisions with
respect to (i) the maintenance of compensating balances that are not terminable
by Allied or any Allied Subsidiary without penalty upon not more than ninety
(90) days' notice, (ii) any lines of credit or similar facilities, (iii) the
payment for property, products or services of any other Person even if such
property, products or services are not conveyed, delivered or rendered or (iv)
any obligation to satisfy any financial obligation or covenants, including, but
not limited to, take-or-pay, keep-well, make-whole or maintenance of working
capital, capital or earnings levels or financial ratios or to satisfy similar
requirements;
(d) all Contracts (other than Insurance Contracts and other Contracts
entered into in the ordinary course of business) with any Person containing any
provision or covenant relating to the indemnification or holding harmless by
Allied or any Allied Subsidiary of any Person which is reasonably likely to
result in a Liability to Allied or any of the Allied Subsidiaries of $1,000,000
or more;
34
(e) all leases or subleases of real property used in the conduct of the
Business of Allied or any Allied Subsidiary and all other leases, subleases or
rental or use Contracts providing for annual rental payments to be paid by or on
behalf of Allied or any Allied Subsidiary, involving, in the case of each of the
foregoing, annual payments in excess of $250,000;
(f) all Contracts relating to the future disposition (including, but not
limited to, restrictions on transfer or rights of first refusal) or acquisition
of any interest in any business enterprise, and all Contracts relating to the
future disposition of a material portion of the Assets of Allied or any Allied
Subsidiary other than in each case any Investment Asset or interest in any
business enterprise or Assets to be acquired or disposed of in the ordinary
course of business;
(g) all investment advisory Contracts with any investment company
registered under the Investment Company Act or with any investment advisory
client;
(h) all Insurance Contracts which constitute Contracts for reinsurance,
and any Contract pursuant to which any Allied Insurer receives or has received
surplus relief including, with respect to each such Contract, the ceding and
assuming Person, the business reinsured and the amount of the Liability
reinsured;
(i) all other Contracts (other than (i) Insurance Contracts, (ii)
Contracts relating to Investment Assets entered into in the ordinary course of
business, (iii) employment Contracts that are not otherwise required to be set
forth in the Allied Disclosure Schedule, (iv) Contracts solely between members
of the Allied Group and (v) other Contracts which are expressly excluded under
any other subsection of this Section 4.14) that involve or are reasonably likely
to involve the payment pursuant to the terms of such Contracts by or to Allied
of $500,000 or more, or that are otherwise material to Allied and the Allied
Subsidiaries taken as a whole;
35
(j) list of all Contracts between any Allied Insurer and any Person
involving agency Contracts and marketing relationships, which relationships have
a value over $250,000 per year;
(k) all Contracts or arrangements (including, but not limited to, those
relating to allocations of expenses, personnel, services or facilities) between
or among any Allied Insurer and any Subsidiary or Affiliate of Allied
(including, but not limited to, other Allied Insurers); and
(l) all outstanding proxies (other than routine proxies in connection with
annual meetings), powers of attorney or similar delegations of authority of
Allied or any Allied Subsidiary to an unrelated Person, other than those entered
into in the ordinary course of business in connection with Investment Assets.
The Allied Disclosure Schedule also contains a listing of all Third Party
Administrators of Allied and the Allied Subsidiaries. All Contracts the terms
of which provide that the Merger will give rise to a severance Liability for
Allied, any Allied Subsidiary or the Surviving Corporation have previously been
disclosed to Nationwide.
Each of the Contracts listed in the Allied Disclosure Schedule is in full
force and effect and constitutes a legal, valid and binding obligation of each
of Allied and the Allied Subsidiaries to the extent that it is a party thereto,
and, to the Knowledge of Allied, of each other Person that is a party thereto.
Except as set forth in the Allied Disclosure Schedule, neither Allied nor any
Allied Subsidiary is, and, to the Knowledge of Allied, no other party to such
Contract is, in material violation, breach or default of any such Contract or,
with or without notice or lapse of time or both, would be in material violation,
breach or default of any such Contract, except for any violation, breach or
default which, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect. Except as set forth in the Allied Disclosure
Schedule, to the knowledge of Allied, no such Contract contains
36
any provision providing that any party thereto other than Allied or any Allied
Subsidiary may terminate such Contract by reason of the execution of this
Agreement or the consummation of the transactions contemplated hereby.
Section 4.17 Insurance Issued by Allied Insurers. Except as set forth
-----------------------------------
in the Allied Disclosure Schedule:
(a) All material contracts, arrangements, treaties and agreements to which
any Allied Insurer is a party with respect to reinsurance applicable to
insurance in force on the date of this Agreement, and all material contracts,
arrangements, treaties and agreements under which any such Allied Insurer has
any obligation to cede insurance, are valid, binding and in full force and
effect in accordance with their terms. To the best Knowledge of any such Allied
Insurer, no Allied Insurer is, and no other party thereto is, in material
default of any provision thereof and no such material agreement contains any
provision providing that the other party thereto may terminate the same by
reason of the transactions contemplated by this Agreement or any other provision
which would be altered or otherwise become applicable by reason of such
transactions;
(b) Each insurance policy or certificate form, as well as any related
application form, written advertising material and rate or rule currently
marketed by each Allied Insurer, the use or issuance of which requires filing or
approval, has been appropriately filed, and if required, approved by the
insurance regulatory authorities of any state in which such policies and forms
are required to be filed. To the knowledge of each Allied Insurer, all such
policies and certificates, forms, applications, advertising materials and rates
or rules are in compliance in all material respects with all applicable Laws and
regulations;
(c) Since December 31, 1997 no form of Insurance Contract written by any
Allied Insurer has been amended in any material respect and, except with respect
to new states and new products, no sales of Insurance Contracts using any new
forms have been
37
commenced other than changes to forms which are not, in the aggregate, material
to any Allied Insurer;
(d) Since January 1, 1994 all claims and benefits claimed by any Person
under any Insurance Contract of any Allied Insurer have or will have in all
material respects been paid (or provision for payment thereof has been made) in
accordance with the terms of the Contracts under which they arose, and such
payments were not delinquent and were paid (or will be paid) without fines or
penalties, except for any such claims or claim for benefits of less than
$250,000 for which the affected Allied Insurer reasonably believes there is a
reasonable basis to contest payment and is taking (or is preparing to take) such
action;
(e) Except as set forth in the SAP Statements referred to in Section 4.6,
no provision in any policy in force gives policyholders the right to receive
dividends or distributions on their policies (other than accruals of interest on
cash values or as claim benefits) or otherwise share in the benefits, revenue or
profits of any Allied Insurer, provided that the practice in certain instances
of making premium refunds based upon policyholder loss experience shall not
violate the representation contained in this sentence. Except as paid in the
ordinary course of business, no Allied Insurer is liable to pay commissions upon
the renewal of any insurance policy nor is it a party to any agreement providing
for the collection of insurance premiums payable to any Allied Insurer by any
other Person;
(f) Reserved.
(g) Allied has provided Nationwide with a copy of all investment policies
and procedures for Allied and each Allied Insurer;
(h) To the Knowledge of Allied: (i) all amounts recoverable under
reinsurance, coinsurance or other similar Contracts to which any Allied Insurer
is a party (including, but not limited to, amounts based on paid and unpaid
Losses) are fully collectible, (ii) each
38
insurance agent or broker, at the time such agent or broker wrote, sold or
produced business for any Allied Insurer, was duly licensed as an insurance
agent or broker (for the type of business written, sold or produced by such
insurance agent or broker) in the particular jurisdiction in which such agent or
broker wrote, sold or produced such business for any Allied Insurer, and (iii)
no such insurance agent or broker violated (or with notice or lapse of time or
both would have violated) any term or provision of any Law or Order applicable
to any aspect (including, but not limited to, the marketing, writing, sale or
production) of the Business of any Allied Insurer;
(i) Neither Allied nor any Subsidiary of Allied is in violation of Law in
which the potential liability exceeds $25,000 regarding the Insurance Contracts;
(j) Except as set forth in the Allied Disclosure Schedule, no Allied
Subsidiary is engaged is any activity that would require registration as an
investment company, broker-dealer, investment advisor or fund administrator
under any state or Federal Law, including the Exchange Act, the Investment
Company Act and the Investment Advisers Act. Neither Allied nor any Allied
Subsidiary maintains or manages any open-end management investment company or
portfolio;
(k) Neither Allied nor any Allied Subsidiary is engaged in the business of
serving as a custodian or transfer agent;
(l) To the Knowledge of Allied, no Rating Agency has imposed any conditions
on retaining any rating assigned to Allied or any Allied Insurer or as of the
date hereof is reviewing any such rating for a potential downgrade; and
(m) Each Allied Insurer has duly and validly filed or caused to be filed
all material reports, statements, documents, registrations, filings or
submissions that were required by applicable Laws to be filed; all such filings
complied with all applicable Laws in all material respects when filed, and no
material deficiencies have been asserted with
39
respect to any such filings which have not been satisfied. All outstanding
insurance policies, annuity contracts and assumption certificates issued by any
Allied Insurer and now in force are, to the extent required under applicable
Laws, on forms approved by the insurance regulatory authority of the
jurisdiction where issued and utilize premium rates which if required to be
filed with or approved by insurance regulatory authorities have been so filed or
approved, except where such premium rates would not have a Material Adverse
Effect, and the premiums charged conform thereto, except where the failure to
conform would not have a Material Adverse Effect; and
(n) Except as set forth in the Allied Disclosure Schedule, and with respect
to all insurance issued:
(i) No outstanding insurance policy or annuity contract issued or
assumed by any Allied Insurer entitles the holder thereof or any other
Person to receive dividends, distributions or other benefits based on the
revenues or earnings of any Allied Insurer or any other individual,
partnership, firm, corporation, association, trust, unincorporated
organization, governmental authority or other entity, as well as any
syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act ;
(ii) To Allied's and each of Allied Insurers Knowledge, no other party
to any reinsurance, coinsurance or other similar agreement with any of the
Allied Insurers is in default thereunder, except for such defaults that
would not reasonably be expected to have a Material Adverse Effect; and
(iii) The Insurance Contracts of each Allied Insurer meet all the
applicable definitions of the Code and ERISA, and the regulations and
rulings thereunder, necessary to qualify for the tax and other benefits
intended and promised to contractholders, including, but not limited to,
treatment as life
40
insurance contracts or annuity contracts under Sections 7702 and 72 of the
Code, respectively.
Section 4.18 Cancellations. Except as set forth in the Allied
-------------
Disclosure Schedule, since December 31, 1997 no Person or group of Persons
acting in concert writing, selling or producing insurance business, which in the
aggregate accounted for one and one-half percent (1.5%) or more of the gross
premium income of Allied for the year ended December 31, 1997, has terminated or
substantially reduced, or threatened to terminate or substantially reduce, its
relationship with any Allied Insurer. Except as set forth in the Allied
Disclosure Schedule, to the Knowledge of Allied, since December 31, 1997, no
policyholder or group of policyholders acting in concert has withdrawn or given
notice of its intent to withdraw, or threatened to withdraw, funds under any
Insurance Contract to which an Allied Insurer is a party in excess of one and
one-half percent (1.5%) or more of the insurance reserves of Allied at December
31, 1997.
Section 4.19 Operations Insurance. The Allied Disclosure Schedule
--------------------
contains a true, complete and correct list of all liability, property, workers
compensation, directors and officers liability, and other similar Insurance
Contracts that insure the Business or properties of Allied or any Allied
Subsidiary or affect or relate to the ownership, use, or operations of any
Assets of Allied or any Allied Subsidiary and that have been issued to Allied or
any Allied Subsidiary (including, but not limited to, the names and addresses of
the insurers, the expiration dates thereof, any deductible amounts in respect
thereof, and the annual premiums and payment terms thereof) and a description of
all claims thereunder or, to the Knowledge of Allied or of any of the Allied
Subsidiaries, any events which have occurred and may be covered thereunder, in
either case in excess of $100,000 per incident since January 1, 1993 through the
date hereof. All such insurance is in full force and effect and, to the
Knowledge of Allied, is with financially sound and reputable insurers. To the
Knowledge of Allied or any of the Allied Subsidiaries, all notices of reportable
incidents with respect to such insurance occurring during the last five years
have been given in writing to appropriate carriers on a basis sufficiently
timely to preserve the right of
41
recovery of such insurance. Except as set forth in the Allied Disclosure
Schedule, to the Knowledge of Allied or of any of the Allied Subsidiaries, no
party to any Insurance Contract has stated an intent or threatened to terminate
or materially increase the premium in respect of any such Insurance Contract.
Section 4.20 Taxes and Tax Returns. Except as set forth in the Allied
---------------------
Disclosure Schedule:
(a) All Tax Returns required under applicable Law to be filed with or
provided to any Person by Allied or any Allied Subsidiary have been (and, as to
Tax Returns not filed as of the date hereof, will be) timely filed or provided
in the manner prescribed by Law and such Tax Returns were (and, as to Tax
Returns not filed as of the date hereof, will be) true, complete and correct,
and all taxes shown due on such Tax Returns have been timely paid, together with
any interest and penalties then due;
(b) Allied and each Allied Subsidiary have within the time and in the
manner prescribed by Law paid (and until the Effective Time will pay within the
time and in the manner prescribed by Law) all Taxes due and payable except for
those contested in good faith and for which adequate reserves have been taken.
No claim has ever been made by an authority in a jurisdiction where Allied or
any Allied Subsidiary does not file Tax Returns that such Person may be subject
to Taxation by that jurisdiction;
(c) Allied and each Allied Subsidiary have established (and until the
Effective Time will maintain) on their books and records (i) reserves adequate
to pay all Taxes not yet due and payable and all deficiencies asserted, proposed
or threatened against Allied or any Allied Subsidiary and (ii) reserves for
deferred Taxes, in each case, in accordance with GAAP. No differences exist
between the amounts of the book basis and the Tax basis of any Assets (net of
liabilities) of Allied or any Allied Subsidiary that are not accounted for by an
accrual on the books for federal income Tax purposes;
42
(d) There are no Tax Liens upon the Assets of Allied or any Allied
Subsidiary except Liens for Taxes not yet due;
(e) Allied and each Allied Subsidiary have materially complied (and until
the Effective Time will materially comply) with all applicable Laws relating to
information reporting or to the withholding of Taxes (including, but not limited
to, information reporting and withholding of Taxes pursuant to Sections 1441,
1442, 3402, 3405, 3406, 6041, 6041A, 6042 6047, 6049, 6051 and 6052 of the Code
or similar provisions under any state, local or foreign Laws) and have, within
the time and in the manner prescribed by Law, paid all amounts required to be so
withheld and paid over under all applicable Laws;
(f) Neither Allied nor any Allied Subsidiary has requested any extension of
time within which to file any Tax Return, which Tax Return has not since been
filed;
(g) Neither Allied nor any Allied Subsidiary has executed any outstanding
waivers, extensions or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns. The statute of
limitations for the assessment of all Taxes has expired for all applicable Tax
Returns of Allied and each Allied Subsidiary or those Tax Returns have been
examined by the appropriate Taxing authorities for all periods through 1993, and
no deficiency for any Taxes has been proposed, asserted or assessed against
Allied or any Allied Subsidiary that has not been resolved and paid in full;
(h) No outstanding deficiencies, assessments or written proposals for the
assessment of any Taxes have been proposed, asserted or assessed against Allied
or any of the Allied Subsidiaries;
(i) No audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of Allied or any
Allied Subsidiary. Neither Allied nor any Allied Subsidiary has any Knowledge
of any
43
threatened action, audit or administrative or court proceeding with respect to
any such Taxes or Tax Returns. Further, to the best of the Knowledge of Allied
and each Allied Subsidiary, no state of facts exists or has existed which would
constitute grounds for the assessment of any liability for Taxes with respect to
the periods which have not been audited by the IRS or other Taxing authority;
(j) No power of attorney currently in force has been granted by Allied or
any Allied Subsidiary with respect to any matter relating to Taxes;
(k) Neither Allied nor any Allied Subsidiary has received a Tax Ruling (as
defined below) or entered into a Closing Agreement (as defined below) with any
Taxing authority that would have a continuing adverse effect after the Effective
Time. "Tax Ruling" shall mean a written ruling of a Taxing authority relating
to Taxes. "Closing Agreement" shall mean a written and legally binding
agreement with a Taxing authority relating to Taxes;
(l) Allied and each Allied Subsidiary have made available (or, in the case
of Tax Returns not filed as of the date hereof or not immediately available,
will make available) to Nationwide complete and accurate copies of (i) all Tax
Returns, and any amendments thereto, filed by or on behalf of Allied and each
Allied Subsidiary for all Taxable years since 1994 and (ii) all audit reports
received from any Taxing authority relating to any Tax Return filed by Allied or
any Allied Subsidiary;
(m) Neither Allied nor any Allied Subsidiary is a party to any Tax
allocation or sharing agreement with any Person. In addition, neither Allied
nor any Allied Subsidiary has any liability for Taxes of any Person other than
Allied or an Allied Subsidiary under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Law), as a transferee or
successor, by Contract or otherwise;
44
(n) Neither Allied nor any Allied Subsidiary except Allied Life Insurance
Company is subject to Taxation under Part 1 of Subchapter L of the Code;
(o) Neither Allied nor any Allied Subsidiary is a party to any Contract or
arrangement that, separately or in the aggregate, could, by reason of the
transactions contemplated by this Agreement, give rise to the payment of any
"excess parachute payment" within the meaning of Section 280G of the Code;
(p) Except as set forth in the Allied Disclosure Schedule, no election
under Section 338 of the Code (or any predecessor provisions) has been made by
or with respect to Allied or any Allied Subsidiary or any of their respective
assets or properties;
(q) No property of Allied or any Allied Subsidiary is property that (i)
Allied or any Allied Subsidiary or any party to this transaction is or will be
required to treat as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Code (as in effect prior to its amendment by the Tax
Reform Act of 1986) or (ii) is subject to the "alternative depreciation system"
described in Section 168 of the Code;
(r) Neither Allied nor any Allied Subsidiary is required to include in
income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method as disclosed on IRS Form 3115 (copies of
which are available to be reviewed by Nationwide) initiated by Allied or any
Allied Subsidiary and neither Allied nor any Allied Subsidiary has proposed any
such adjustment or change in accounting method;
(s) All transactions that are likely to give rise to an understatement of
federal income Tax (within the meaning of Section 6661 of the Code for Tax
Returns filed on or before December 31, 1989, and within the meaning of Section
6662 of the Code for Tax Returns filed after December 31, 1989) have been
adequately disclosed (or, with respect to Tax Returns not yet filed as of the
date hereof, will be adequately disclosed) on the Tax
45
Returns in accordance with Section 6661(b)(2)(B) of the Code for Tax Returns
filed on or prior to December 31, 1989, and in accordance with Section
6662(d)(2)(B) of the Code for Tax Returns filed after December 31, 1989;
(t) All net operating loss carryovers available to offset future income of
Allied and the Allied Subsidiaries have been disclosed in the Allied Disclosure
Schedule. The Allied Disclosure Schedule discloses the amount of and year of
expiration of each net operating loss carryover, and such net operating loss
carryovers are not subject to any limitations or disallowances, including but
not limited to Sections 382, 269 and 482;
(u) All Tax credit carryovers available to offset future Tax liability of
Allied and the Allied Subsidiaries have been disclosed in the Allied Disclosure
Schedule. The Allied Disclosure Schedule discloses the amount of and year of
expiration of each Tax credit carryover, and such Tax credit carryovers are not
subject to any limitation or reduction;
(v) Allied is not and has not been a United States real property holding
company (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code;
(w) No indebtedness of Allied or any Allied Subsidiary is "corporate
acquisition indebtedness" within the meaning of Section 279(b) of the Code;
(x) Neither Allied nor any Allied Subsidiary has filed (or will file prior
to the Effective Time) a consent pursuant to Section 341(f) of the Code or has
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
"subsection (f) asset" (as that term is defined in Section 341(f)(4) of the
Code) owned by Allied or any Allied Subsidiary;
46
(y) Neither Allied nor any Allied Subsidiary has engaged in any
intercompany transactions within the meaning of Treasury Regulation Section
1.1502-13 or Temporary Treasury Regulation Section 1.1502-13T for which any
income or gain will remain unrecognized as of the date hereof and no "excess
loss accounts" exist with respect to the stock of any Allied Subsidiary, within
the meaning of Treasury Regulation Section 1.1502-19, as of the date hereof;
(z) Neither Allied nor any Allied Subsidiary has entered into a records
retention agreement with any taxing authority;
(aa) Neither Allied nor any Allied Subsidiary has invested in any low
income housing tax credit project for which a tax credit pursuant to Section 42
was available to either Allied or any Allied Subsidiary and such Tax credit was
so taken by Allied or any Allied Subsidiary; and
(bb) Neither Allied nor any Allied Subsidiary owns any interest in any
partnership or limited liability company, which interest has a negative capital
account.
Section 4.21 Benefit Plans. The Allied Disclosure Schedule sets forth a
-------------
complete and correct list of all Benefit Plans (as defined below). Except as
disclosed in the Allied Disclosure Schedule:
(a) Each "employee pension benefit plan" (as defined in Section 3(2) of the
ERISA) (hereinafter a "Pension Plan"), "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA) (hereinafter a "Welfare Plan"), and each other
plan, program, arrangement or policy (written or oral) relating to bonuses,
deferred compensation, performance compensation, compensation, stock purchases,
stock options, stock appreciation, severance, salary continuation, vacation,
sick leave, holiday pay, fringe benefits, personnel policies, reimbursement
programs, incentives, insurance, welfare or other employee benefits, in each
case
47
maintained or contributed to, or required to be maintained or contributed
to, by Allied and the Allied Subsidiaries for the benefit of any present or
former officers, employees, agents, directors or independent contractors of
Allied or the Allied Subsidiaries (all the foregoing being herein called
"Benefit Plans") has been administered in accordance with its terms and all
applicable laws and regulations. All required contributions to the Benefit
Plans have been made. Allied, the Allied Subsidiaries and all the Benefit Plans
are in compliance with the applicable provisions of ERISA, the Code, all other
applicable laws and all applicable collective bargaining agreements. Complete
and correct copies of all current and prior documents, including all amendments
thereto, with respect to each Benefit Plan have been delivered to Nationwide.
Except as described in the Allied Disclosure Schedule, copies of all summary
plan descriptions, summaries of material modifications, other communications
concerning the Benefit Plans, and the three most recent Forms 5500 for each
Benefit Plan have also been delivered to Nationwide.
(b) None of Allied or any other person or entity that together with Allied
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (each a "Commonly Controlled Entity") maintains, sponsors or contributes to
or within the past six years maintained, sponsored or contributed to a Pension
Plan covered by Title IV of ERISA (a "Title IV Plan").
(c) Neither Allied nor a Commonly Controlled Entity is required to
contribute to any "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) or has withdrawn from any multiemployer plan where such withdrawal has
resulted or would result in any "withdrawal liability" (within the meaning of
Section 4201 of ERISA) that has not been fully paid.
(d) Except as described in the Allied Disclosure Schedule, there are no
pending or threatened claims (other than routine benefit claims), lawsuits or
arbitrations which have been asserted or instituted against any Benefit Plan,
any of the fiduciaries thereof or Allied or the Allied Subsidiaries with respect
to their duties under the Benefit Plans.
48
(e) Neither Allied nor a Commonly Controlled Entity, nor any of their
respective employees or directors, nor any fiduciary, has engaged in any
transaction, including the execution and delivery of this Agreement and other
agreements, instruments and documents for which execution and delivery by Allied
is contemplated herein, in violation of Section 406(a) or (b) of ERISA or which
is a "prohibited transaction" (as defined in Section 4975(c)(i) of the Code) for
which no exemption exists under Section 408(b) of ERISA or Section 4975(d) of
the Code or for which no administrative exemption has been granted under Section
408(a) of ERISA.
(f) Except as set forth in the Allied Disclosure Schedule, the Benefit
Plans and their related trusts intended to qualify under Sections 401 and 501(a)
of the Code, respectively, received favorable determination letters from the IRS
and Allied believes such Plans and their related trusts continue to qualify and
operate as designed. Any voluntary employee benefit association which provides
benefits to current or former employees of Allied and the Allied Subsidiaries,
or their beneficiaries, received a favorable determination letter from the
Internal Revenue Service and Allied believes such associations continue to
qualify and operate as designed. Copies of all such determination letters have
been delivered to Nationwide. No such trust or voluntary employee beneficiary
association is subject to any excise tax or to taxation under Section 511 of the
Code.
(g) Allied and the Allied Subsidiaries have no liability (contingent or
otherwise) under Section 4069 of ERISA by reason of a transfer of any
underfunded pension plan.
(h) A complete and correct copy of the most recent actuarial report
(including for purposes of Financial Accounting Standards Board report nos. 87,
106 and 112) with respect to each Benefit Plan providing retiree medical or life
insurance coverage for employees of Allied and the Allied Subsidiaries have been
provided to Nationwide.
49
Except as disclosed in the Allied Disclosure Schedule, no current employee of
Allied or the Allied Subsidiaries would be entitled if his or her employment
with Allied and the Allied Subsidiaries is terminated to any retiree medical or
insurance coverage.
(i) Except as disclosed in the Allied Disclosure Schedule any amount that
could be received as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of Allied or any of the Allied
Subsidiaries under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G of the Code).
(j) Except as disclosed in the Allied Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will, as a result of such transactions or any
event occurring thereafter (i) result in any payment becoming due to any
employee (current, former or retired) of Allied and the Allied Subsidiaries,
(ii) increase any benefits under any Benefit Plan or (iii) result in the
acceleration of the time of payment of, vesting of or other rights with respect
to any such benefits.
(k) The Allied Disclosure Schedule sets forth the amounts accrued in the
financial statements of Allied for the amounts payable by Allied to any person
covered by the Benefit Plans as of December 31, 1997 and an accurate computation
based on the assumptions set forth therein of the amounts that will be payable
to any such person for periods thereafter under the Benefit Plans. The
financial statements of Allied include or will include proper accruals for all
applicable benefits and taxes with respect to the foregoing amounts.
(l) All group health plans of each Commonly Controlled Entity have been
operated in compliance with the requirements of Sections 162(k) (as in effect
immediately
50
prior to the Technical and Miscellaneous Revenue Act of 1988), 4980B of the
Code, and 9801 et seq. of the Code to the extent such requirements are
applicable.
(m) There has been no act or omission by any Commonly Controlled Entity
that has given rise to or may give rise to fines, penalties, taxes, or related
charges under Section 502(c), (i) or (l), Section 4071 of ERISA or Chapter 43 of
the Code.
Section 4.22 Labor Relations and Employment.
------------------------------
(a) Except to the extent set forth in the Allied Disclosure Schedule, (i)
there is no labor strike, material labor dispute, slowdown, stoppage or lockout
actually pending, or to the Knowledge of Allied or of any of the Allied
Subsidiaries, threatened against or affecting Allied or any of the Allied
Subsidiaries, and since January 1, 1993 there has not been any such action; (ii)
to the Knowledge of Allied or of any of the Allied Subsidiaries, no union claims
to represent the employees of Allied or any of the Allied Subsidiaries, there
are no current union organizing activities among the employees of Allied or of
any of the Allied Subsidiaries and Allied has not received notice of any unfair
labor practice complaint or charge against it pending before the National Labor
Relations Board; (iii) neither Allied nor any of the Allied Subsidiaries is a
party to or is bound by any collective bargaining or similar agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association, applicable to employees of Allied or of
any Allied Subsidiary; (iv) there are no written personnel policies, rules or
procedures applicable to employees of Allied or any of the Allied Subsidiaries,
other than those set forth in the Allied Disclosure Schedule; and (v) Allied is
in compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours except for claims
that could give rise to a liability of less than $25,000. The Allied Disclosure
Schedule sets forth all the employment agreements to which Allied or any Allied
Subsidiary is a party. Such agreements accurately set forth all compensation
which Allied or any Allied Subsidiary is legally obligated to pay each such
person. Except as set forth in the Allied Disclosure Schedule, no employee,
officer, director or independent contractor of Allied or any Allied Subsidiary
is entitled to any
51
payment of money or other thing of value or will receive any rights with respect
to the capital stock of Allied as a result of this Agreement. Except as set
forth in the Allied Disclosure Schedule, none of the transactions contemplated
by this Agreement shall constitute a triggering event under any employment,
severance or termination agreement or other compensation arrangement or any plan
currently in effect which (either alone or upon the occurrence of any additional
or subsequent event) is reasonably likely to result in any payment,
acceleration, vesting or increase in benefits to any current or former officer,
employee, director or independent contractor of Allied or any Allied Subsidiary
and which would constitute an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(b) Since the enactment of the WARN Act, Allied has not effectuated (i) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of Allied or any of the Allied Subsidiaries; or (ii) a "mass layoff"
(as defined in the WARN Act) affecting any site of employment or facility of
Allied; nor has Allied been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local Law. Except as set forth in the Allied Disclosure
Schedule, none of Allied's or any Allied Subsidiary's employees has suffered an
"employment loss" (as defined in the WARN Act) since December 31, 1997.
(c) Allied and each of the Allied Subsidiaries (i) has withheld all amounts
required by Law or by agreement to be withheld from the wages, salaries and
other payments to the employees, former employees, independent contractors,
directors and former directors of Allied and each of the Allied Subsidiaries,
(ii) is not liable for any arrears of wages or any Taxes or any penalty for
failure to comply with any of the foregoing, and (iii) is not liable for any
payment to any trust or other fund or to any Governmental Entity, with respect
to unemployment compensation benefits, social security or other benefits except,
in the cases of clauses (ii) and (iii) to the extent that any such
52
violation or liability is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect.
Section 4.23 Reserved.
--------
Section 4.24 Properties. Allied and each Allied Subsidiary has good
----------
title to, or in the case of leased property has valid leasehold interests in,
all of their respective properties and assets (whether or not personal or
intangible) except for imperfections in title or interests which would not have
a Material Adverse Effect. None of the properties is subject to any Liens other
than Liens that are disclosed in the SAP Statements or in the GAAP Statements.
Section 4.25 Intellectual Property. Except as set forth in the Allied
---------------------
Disclosure Schedule, Allied and each Allied Subsidiary owns or otherwise has
rights to use, free and clear of all Liens, all Intellectual Property used in
their respective businesses as currently conducted; and the consummation of this
transaction will not result in the loss of any rights. The use of the
Intellectual Property will not infringe or otherwise violate the rights of any
Person and no Person is challenging, infringing on or otherwise violating any
right with respect to the Intellectual Property.
Section 4.26 Transactions with Affiliates. Except as set forth in the
----------------------------
Allied Disclosure Schedule, the SAP Statements or the SEC Documents, neither
Allied nor any Allied Subsidiary has entered into any transaction with an
Affiliate in connection with which either Allied or an Allied Subsidiary has
continuing obligations, in the ordinary course of business or otherwise, which
is not on the terms at least as favorable to Allied or an Allied Subsidiary as
would have been applicable if such transaction had been entered into on an
arm's-length basis with an unaffiliated third party. Allied has not made or
declared any dividend or distribution that was disproportionate in favor of any
Affiliate.
53
Section 4.27 Voting Requirements. The affirmative vote of the holders
-------------------
of a majority of the outstanding Common Shares and outstanding Preferred Shares
voting together as one class and entitled to vote at the Shareholders Meeting is
the only vote of the holders of Allied's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
Section 4.28 Reserved.
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Section 4.29 Investment Company. None of the Allied Subsidiaries
------------------
maintains any separate accounts. Neither Allied nor any of its Subsidiaries
conducts activities of or is otherwise deemed under applicable law to control an
"investment advisor" as such term is defined in Section 2(a)(20) of the 1940
Act, whether or not registered under the Investment Advisers Act of 1940, as
amended. Neither Allied nor any of its Subsidiaries is an "investment company"
as defined under the 1940 Act, and neither Allied nor any of its Subsidiaries
sponsors any Person that is such an investment company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NATIONWIDE
AND SUB
Nationwide and Sub jointly and severally represent and warrant to Allied as
follows:
Section 5.1 Organization and Qualification. Nationwide is a mutual
------------------------------
insurance company and Sub is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Ohio and has full corporate
power, authority and legal right to conduct its Business as it is currently
being conducted. Each of Nationwide and Sub is duly qualified to do business,
and is in good standing, in the respective jurisdictions where the character of
its Assets owned or leased or the nature of its Business makes such
qualification necessary, except for failures to be so qualified or in good
standing which are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect. Nationwide possesses an Insurance License in
each jurisdiction in which Nationwide is required to possess an Insurance
License. All such Insurance Licenses, including, but not
54
limited to, authorizations to transact reinsurance, are in full force and effect
without amendment, limitation or restriction, and Nationwide does not have
Knowledge of any event, inquiry or Proceeding which is reasonably likely to lead
to the revocation, amendment, failure to renew, limitation, suspension or
restriction of any such Insurance License.
Section 5.2 Authority Relative to this Agreement.
------------------------------------
(a) Nationwide and Sub have full power, authority and legal right to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved and
authorized by the Board of Directors of Nationwide and by the Board of Directors
of Sub. No other corporate proceedings on the part of Nationwide or Sub are
necessary to authorize this Agreement and the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered by
Nationwide and Sub and (assuming this Agreement is a legal, valid and binding
obligation of Allied) constitutes a legal, valid and binding agreement of
Nationwide and Sub enforceable against Nationwide and Sub in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 5.3 No Violation.
------------
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) constitute a
breach or violation of or default under the articles of incorporation or the by-
laws of Nationwide or under the articles of incorporation or the by-laws of Sub,
(ii) violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
55
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the Assets
of Nationwide, Sub or any Nationwide Subsidiary under, any of the terms,
conditions or provisions of any Contract to which Nationwide, Sub or any
Nationwide Subsidiary is a party or to which it or any of its Assets may be
subject or (iii) constitute a breach or violation of or default under any
Environmental Permit, Law or License to which Nationwide, Sub or any Nationwide
Subsidiary is subject other than, in the case of clauses (ii) and (iii), events
or other matters that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect.
(b) Except for (i) the filing of this Agreement with and the approval of
such by the Ohio Superintendent under the Ohio Insurance Law and the Iowa
Commissioner under the Iowa Insurance Law, (ii) the filings required under the
HSR Act and the expiration or other termination of any waiting period applicable
to the Merger under such act, and (iii) any Consent or Filing that would not
otherwise be required to be disclosed pursuant to Section 5.3(a) hereof, no
Consent or Filing of or with any Person is required with respect to Nationwide,
Sub or any Nationwide Subsidiary or any Nationwide Affiliate in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, except for such Consents or Filings the
failure of which to make or obtain would not, individually or in the aggregate,
prevent or be a material impediment to the consummation of the transactions
contemplated hereby or have a Material Adverse Effect.
56
ARTICLE VI
CERTAIN COVENANTS
Section 6.1 Allied Conduct of Business Pending the Merger. Allied
---------------------------------------------
covenants and agrees as to itself and the Allied Subsidiaries that, at all times
up to and including the Effective Time, unless Nationwide shall otherwise
consent in writing (Nationwide agreeing that it will use its best efforts to
respond to any request received from Allied arising under this Article VI within
10 Business Days, or sooner as circumstances may require, after receipt of such
request), or as otherwise expressly permitted or contemplated by this Agreement:
(a) Subject to any applicable regulatory requirements, Allied shall, and
shall cause each Allied Subsidiary to, conduct its Business only in the ordinary
course and in substantially the same manner as heretofore conducted since
December 31, 1997 and in a manner which is not inconsistent with the
consummation of the transactions contemplated hereby, and Allied and each Allied
Subsidiary shall use all reasonable efforts to preserve intact its present
business organization and preserve its regular services to, and maintain its
relationships with policyholders, insurers, agents, sales and distribution
organizations, underwriters, investment customers, brokers, suppliers and all
others having business dealings with it to the end that its goodwill and ongoing
Business shall not be impaired in any material respect;
(b) Subject to any applicable regulatory requirements, Allied shall not,
and shall not permit any Allied Subsidiary to, make or propose to make any
change in its dividend practices or policies or in its underwriting, pricing,
claims, risk retention, investment, reinsurance practices or policies in any
material respect; and Allied agrees that it will notify Nationwide and provide
Nationwide with information in reasonable detail regarding any material
transactions (excluding investment transactions in the ordinary course of
business consistent with past practice, but including transactions involving the
securitization of Assets of Allied or of any Allied Subsidiary and transactions
involving
57
derivative securities), whether involving a purchase or sale, that it or any
Allied Subsidiary is seriously considering;
(c) Allied shall not, and shall not permit any Allied Insurer to, make any
material change in accounting methods or practices, including without limitation
any change with respect to establishment of reserves for unearned premiums,
losses (including without limitation incurred but not reported losses) and loss
adjustment expenses, or any change in depreciation or amortization policies or
rates adopted by it, except as required by Law, GAAP or SAP;
(d) Allied shall not, and shall not permit any Allied Subsidiary to, (i)
amend its charter or by-laws (unless contemplated hereby), (ii) incur any
individual Liability or series of related Liabilities in excess of $1,000,000
other than in the ordinary course of business consistent with past practice,
(iii) incur any indebtedness for money borrowed in the aggregate for Allied and
the Allied Subsidiaries in excess of $10,000,000 for any such indebtedness
having a maturity of 90 days or less or $1,000,000 for any such indebtedness
having a maturity of more than 90 days, (iv) agree to any merger, consolidation,
demutualization, acquisition, redomestication, sale of all or a substantial
portion of its Assets, bulk or assumption reinsurance arrangement or other
similar reorganization, arrangement or business combination, (v) prior to
notifying Nationwide, enter into any partnership, joint venture or profit
sharing Contract, (vi) enter into any Contract limiting the ability of Allied or
of any Allied Subsidiary to engage in any Business, to compete with any Person,
to do business with any Person or in any location or to employ any Person or
limiting the ability of any Person to compete with such party or any of the
Allied Subsidiaries, (vii) enter into any Contract relating to the direct or
indirect guarantee of any obligation of any Person in respect of indebtedness
for borrowed money or other financial obligation of any Person other than in the
ordinary course of business consistent with past practice, (viii) incur any
material deterioration in its ability to maintain, access and update
policyholder records which deterioration is not reasonably reparable, (ix) enter
into any Contract that could materially and adversely affect the consummation of
the transactions
58
contemplated hereby, or (x) modify any Contract with respect to the subject of
any of the foregoing clauses;
(e) Allied shall not permit any Allied Subsidiary to issue or sell any
shares of or interests in, or rights of any kind to acquire any shares of or
interests in, or to receive any payment based on the value of, the capital stock
of or other equity interests in or any securities convertible into shares of any
capital stock of or other equity interests in any Allied Subsidiary, or
otherwise take any actions that would alter the information set forth in the
Allied Disclosure Schedule other than in the ordinary course of business
consistent with existing agreements and arrangements;
(f) Except (x) as set forth in the Allied Disclosure Schedule, (y) in the
ordinary course of business consistent with past practice, or (z) as required by
the terms of agreements or plans already in effect, applicable Law or as
envisioned in the Statement of Operating Principles, Allied shall not, and shall
not permit any Allied Subsidiary to (i) adopt or implement, or commit to adopt
or implement, or materially amend, any collective bargaining, compensation,
employment, consulting, pension, profit sharing, bonus, incentive, group
insurance, termination, retirement or other employee benefit Contract, plan or
policy, (ii) enter into or materially amend any severance Contract, (iii)
increase in any manner the compensation of, or enter into any Contract relating
to the borrowing of money by, its directors, officers or other employees, except
pursuant to the terms of agreements or plans as currently in effect and except
for annual employee compensation increases made in the ordinary course of
business consistent with past practices; provided that in no event shall any
such individual increase in annual compensation exceed $400,000 per year, (iv)
increase by more than 0.5% the aggregate number of its employees, (v) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required by the current terms of any existing plan, agreement or arrangement to
any director, officer or other employee, whether past or present, (vi)
voluntarily recognize, or involuntarily become subject to, any labor
organization or any other Person as a collective bargaining representative of
one or more bargaining units comprising a material number of
59
employees, or (vii) other than obligations that arise by operation of law or
under the by-laws of a party as they exist on the date of this Agreement, enter
into, adopt or increase any indemnification or hold harmless arrangements with
any directors, officers or other employees or agents of such party or any of the
Allied Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past
practice, Allied shall not, and shall not permit any Allied Subsidiary to, make
any capital expenditures or expenditures or commitments for expenditures for the
purchase or lease of any products or services or group of products or services
(other than with respect to Investment Assets) which in one or a series of
related transactions exceed $500,000 or which in the aggregate for Allied and
the Allied Subsidiaries taken as a whole exceed $2,500,000, except for
expenditures relating to this Agreement and the consummation of the transactions
contemplated hereby, and expenditures required to be made pursuant to existing
Contracts to which Allied or any Allied Subsidiary is a party, which Contracts
are set forth in the Allied Disclosure Schedule;
(h) Other than in the ordinary course of business consistent with past
practice or in connection with the redemption of outstanding guaranteed
investment contracts in the exercise of Allied's reasonable judgment, Allied
shall not, and shall not permit any Allied Subsidiary to, waive any rights with
a value in excess of $100,000 or any other rights which are material to any
Contract or make any payment, direct or indirect, of any Liability in excess of
$100,000 before the same comes due in accordance with its terms, in each case,
including, but not limited to, any provision of any Insurance Contract to permit
a cash-out thereof;
(i) Allied shall not, and shall not permit any Allied Subsidiary to, other
than pursuant to the operation of separate accounts in the ordinary course of
business, consistent with existing strategies, (i) sell, lease, mortgage,
encumber or otherwise grant any interest in or dispose of any of its Assets
which, individually or in the aggregate, are material to the financial condition
of Allied or of Allied and the Allied Subsidiaries taken as a whole, and,
60
in addition, in the case of Liens, for Permitted Liens and Liens not
individually in excess of $500,000 and not aggregating in excess of $2,000,000
or (ii) restructure, amend, modify or otherwise affect any Investment Asset or
any Contract relating thereto which is material to the financial condition of
Allied or of Allied and the Allied Subsidiaries taken as a whole, and, in either
case described in clauses (i) and (ii), only in accordance with the statement of
investment policy set forth in the Allied Disclosure Schedule attached hereto;
and Allied shall furnish to Nationwide a monthly report, in detail reasonably
acceptable to Nationwide, of all such transactions or other changes (other than
changes in market values or ordinary course changes such as interest payments,
maturities, etc.) affecting Investment Assets of Allied or any Allied Subsidiary
which took place since the last such report;
(j) Allied agrees that it shall not, nor shall it permit any Allied
Subsidiary to, other than pursuant to the operation of separate accounts
involved in real estate in the ordinary course, consistent with existing
strategies, make any equity real estate investments (other than through
restructuring or foreclosure or pursuant to commitments existing at the date
hereof or to protect the value of existing investments in the exercise of
reasonable business judgment) and that neither Allied nor any Allied Subsidiary
shall take any action, other than in the exercise of reasonable business
judgment and following discussion with Nationwide, which results, individually
or in the aggregate, in (i) the realization of any gross capital loss or losses
in an amount of $10,000,000 or more or (ii) an adverse impact on the surplus of
Allied or of an Allied Subsidiary in an amount of $10,000,000 or more;
(k) Other than in the ordinary course of business consistent with past
practice, or as required by applicable regulations, Allied shall not, and shall
not permit any Allied Subsidiary to, enter into any material Contract or amend
or waive any material provision of any material Contract which would involve the
payment by Allied or any Allied Subsidiary of $500,000 or more;
(l) Other than in the ordinary course of business consistent with past
practice, Allied shall not, and shall not permit any Allied Subsidiary to,
settle or compromise any
61
claim in any action, proceeding or investigation which could result in an
expenditure for Allied and the Allied Subsidiaries in excess of $1,000,000;
(m) Allied shall not, and shall not permit any Allied Subsidiary to,
purchase or otherwise acquire, except pursuant to a Contract in effect on the
date of this Agreement, (i) any controlling equity interest in any Person (other
than Investment Assets), (ii) any non-publicly traded securities in excess of
$5,000,000 per transaction or $5,000,000 per issuer or credit, (iii) any
investments in fixed income securities rated in NAIC Class 4, 5 or 6, non-
publicly traded equity securities or Assets required to be shown on Schedule BA
of a Person's Annual Statement in excess of $5,000,000 per transaction or
$5,000,000 per issuer or credit, or (iv) any real property or mortgage
investments except in the ordinary course of managing the existing portfolio of
real property and mortgage investments, including foreclosing purchase money
mortgages, extensions and refinancings;
(n) Allied shall not, and shall not permit any Allied Subsidiary to, enter
into any new, or materially amend any existing, reinsurance Contracts or
arrangements, except in accordance with existing reinsurance agreements or in
the ordinary course of business and consistent with past practice;
(o) Allied shall, and shall cause each Allied Subsidiary to, maintain
uninterrupted its existing insurance coverage of all types in effect or procure
substantially similar substitute insurance policies with financially sound and
reputable insurance companies in at least such amounts and against such risks as
are currently covered by such policies if such coverage is available;
(p) Allied shall deliver to Nationwide as promptly as practicable after
preparation thereof, but in no event later than the date of filing with respect
to unaudited or audited, as the case may be, SAP Statements for each Allied
Insurer filed by or on behalf of such Allied Insurer after the date hereof;
62
(q) Reserved.
(r) Allied shall inform Nationwide regarding the progress of any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes;
(s) Neither Allied nor any Allied Subsidiary shall (i) make or rescind any
material express or deemed election relating to Taxes, (ii) make a request for a
Tax Ruling or enter into a Closing Agreement, settlement or compromise with
respect to any material Tax matter or (iii) with respect to any material Tax
matter, change any of its methods of reporting income or deductions for federal
income Tax purposes from those employed in the preparation of its federal income
Tax Return for the Taxable year ending December 31, 1997, except as may be
required by Law;
(t) Neither Allied nor any Allied Subsidiary shall declare, set aside or
pay any dividends or distributions (whether in cash, stock or property) in
respect of any capital stock of any Allied Subsidiary (except as consistent with
past practices) or redeem, purchase or otherwise acquire any of such Allied
Subsidiary's capital stock;
(u) Except as provided in the Allied Disclosure Schedule, neither Allied
nor any Allied Subsidiary shall settle pending or threatened litigation in an
amount exceeding $1,000,000, other than settlement of pending or threatened
litigation with respect to claims arising under contracts of insurance or
reinsurance underwritten, ceded or assumed by any Allied Subsidiary which
settlement will not have a Material Adverse Effect;
(v) Neither Allied nor any Allied Subsidiary shall do any other act which
would cause any representation or warranty of Allied or any Allied Subsidiary in
this Agreement to be or become untrue in any material respect, unless required
by applicable law; and
63
(w) Neither Allied nor any Allied Subsidiary shall agree, in writing or
otherwise, to take any of the actions prohibited by the foregoing clauses (a)
through (v).
Section 6.2 Reserved.
--------
Section 6.3 Reasonable Efforts.
------------------
(a) Upon the terms and subject to the conditions herein provided, each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken all action, to do, or cause to be done, and to assist and cooperate with
the other party hereto in doing or causing to be done, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including,
but not limited to, (i) the actions set forth in Article III hereof, (ii) the
obtaining of all Governmental Approvals, and all other necessary actions or
nonactions, waivers, consents and approvals from all appropriate Governmental
Entities and other Persons and the making of all necessary registrations and
filings, (iii) the obtaining of the opinions and other documents referred to in
Article VII hereof, (iv) the resolution of all organizational and human
resources issues relating to the transactions contemplated hereby, (v) the
obtaining or making of all Consents, Environmental Permits, Filings or Licenses
necessary or desirable to ensure that the Business of the Surviving Corporation
may be conducted without disruption consistent with the past practice of each of
the Constituent Companies and (vi) the defending of any Proceedings challenging
this Agreement or the consummation of the transactions contemplated hereby, the
defense of which shall, at the request of either Allied or Nationwide, be
conducted jointly by Nationwide and Allied on a basis that is satisfactory to
both Allied and Nationwide.
(b) Allied hereby grants Nationwide the right to decide for purposes of the
Form A regulatory hearings whether to submit regulatory applications for Allied,
Allied Group and Allied Mutual concurrently or separately, and whether to
conduct the regulatory hearing and approval process concurrently or separately
for each of Allied, Allied Group
64
and Allied Mutual. Both Allied and Nationwide agree to use their reasonable best
efforts to coordinate and cooperate during the regulatory approval process.
Section 6.4 Access and Information. Allied shall (a) afford to
----------------------
Nationwide's and Sub's accountants, legal counsel and other advisors full access
during normal business hours through the period immediately prior to the
Effective Time to all of its and the Allied Subsidiaries' Assets, books,
Contracts, commitments and records (including, but not limited to, Tax Returns),
and (b) during such period, Allied shall furnish promptly to Nationwide and Sub
all such information concerning its Business, Assets and personnel or those of
any of its Affiliates, in either clause (a) or (b), as Nationwide or Sub may
reasonably request. Information provided by Allied shall be kept confidential
by Nationwide and Sub and shall not be disclosed unless such information (1) was
known to Nationwide or Sub or was in their possession prior to the date of this
Agreement and was not identified by Allied as being confidential, (2) is or
becomes generally available to the public other than by unauthorized disclosure
by Nationwide or Sub, (3) becomes available to Nationwide or Sub from a third
party authorized to make such disclosure, (4) is independently developed by
Nationwide or Sub, or (5) is required to be disclosed by law or by court order.
Section 6.5 Environmental Due Diligence. Allied shall cooperate with,
---------------------------
and provide, to the extent practicable, reasonable access to, Nationwide and
Nationwide's representatives for environmental assessments and other
environmental due diligence of each Allied Real Property as Nationwide, in its
sole discretion, deems necessary. Nationwide shall conduct the environmental
assessments or other due diligence in a commercially reasonable manner and shall
use reasonable efforts to minimize any interference with or impairment of the
regular conduct of Allied's Business.
Section 6.6 Notice of Proceedings. Each of Nationwide and Allied shall
---------------------
promptly notify the other of, and provide to the other all information relating
to, any Proceedings or investigations commenced or, to the best of its
Knowledge, threatened
65
against, relating to or involving or otherwise affecting Nationwide or Allied or
any of their respective Subsidiaries, as the case may be, which, if pending on
the date hereof, would have been required to have been disclosed in writing
pursuant to Section 4.10 hereof or which relate to the execution of this
Agreement or the consummation of the transactions contemplated hereby.
Section 6.7 Notification of Certain Other Matters. Each party shall
-------------------------------------
promptly notify the other of any change or other event which, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect including,
but not limited to, any of the following:
(a) any written notice of a default or event which, with notice or lapse
of time or both, would become a default, received by such party or any of the
Allied Subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any material Contract to which such party or any of the
Allied Subsidiaries is a party or by which such party or any of the Allied
Subsidiaries or any of their respective Assets may be subject or bound;
(b) the occurrence of any event which, with notice or lapse of time or
both, is reasonably likely to result in a default under any material Contract to
which such party or any of the Allied Subsidiaries is a party;
(c) any written notice from or to any Person alleging that the consent of
such Person is or may be required in connection with the execution of this
Agreement or the consummation of the transactions contemplated hereby, and where
the failure to obtain such a consent is reasonably likely to have a Material
Adverse Effect;
(d) any written notice from or to any Governmental Entity in connection
with this Agreement or the transactions contemplated hereby; and
66
(e) any matter hereafter arising or discovered which, if existing or known
at the date hereof, would have been required to be set forth or described in the
Nationwide Disclosure Schedule or the Allied Disclosure Schedule, as the case
may be; provided, however, that no such supplemental or amended disclosure by
-------- -------
any party shall be deemed to cure any breach of a representation or warranty
made as of the date hereof, unless the other party so agrees in writing.
In furtherance of the foregoing, to the fullest extent permitted under
applicable Law, each party shall provide the other with copies (or, to the
extent written materials are not involved, oral notice) of proposed notices,
applications or any other communications to any Governmental Entity or rating
agency in connection with this Agreement or the transactions contemplated
hereby, including, but not limited to, in respect of the Governmental Approvals,
in each case at least three (3) Business Days prior to dispatch of written
materials (or, to the extent written materials are not involved, prior to
initiation) and neither Nationwide nor Allied will dispatch (or, to the extent
written materials are not involved, initiate) such notice, application or
communication without the prior consent of the other party, which consent shall
not be unreasonably withheld or delayed.
Section 6.8 Indemnification; Directors' and Officers' Insurance. ''
--------------------------------------------------- --
(a) From and after the Effective Time, Nationwide agrees that it will
indemnify and hold harmless each present and former director and officer of
Allied, (when acting in such capacity or as a member of the Special Committee)
determined as of the Effective Time (each, an Indemnitee and, collectively, the
"Indemnitees"), against any costs or expenses (including reasonable attorneys'
fees), judgements, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time,
including without limitation any and all shareholder lawsuits existing on the
date hereof, to the fullest extent that Allied would have been permitted under
Iowa law and its charter or by-laws in effect on the date hereof to indemnify
such Person (and Nationwide shall also advance expenses
67
as incurred to the fullest extent permitted under applicable law provided the
Person to whom expenses are advanced provides a written affirmation of his or
her good faith belief that the standard of conduct necessary for indemnification
has been met, and an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification).
(b) The Surviving Corporation shall maintain Allied's existing directors'
and officers' liability insurance ("D&O Insurance") or D&O Insurance that is
substantially comparable to Allied's existing D&O Insurance for a period of two
years after the Effective Time so long as the annual premium therefor is not
excess of 200% of the last annual premium paid prior to the date hereof (such
last annual premium being hereinafter referred to as the "Current Premium");
provided, however, that if the existing D&O Insurance or substantially
comparable D&O Insurance cannot be acquired during the two-year period for not
in excess of 200% of the Current Premium, then the Surviving Corporation will
obtain as much D&O Insurance as can be obtained for the remainder of such period
for a premium not in excess (on an annualized basis) of 200% of the Current
Premium. If the D&O Insurance is terminated prior to the end of the sixth
anniversary of the Effective Time, the Surviving Corporation will purchase
extended reporting coverage under D&O Insurance covering claims made during the
remainder of such period with respect to acts which occurred prior to the
Effective Time.
Section 6.9 Intercompany Agreements. From the execution date of this
-----------------------
Agreement through the termination of this Agreement, Allied covenants as follows
with respect to certain intercompany agreements relating to Allied and its
affiliates:
(a) Allied covenants not to invoke against Allied Group, Inc. or any of its
affiliates ("Allied Group") any of the covenants not to compete or agreements
not to compete contained in (1) that certain Amended and Restated Intercompany
Operating Agreement dated August 25, 1993, as amended (the "IOA"), and (2) that
certain Allied Group Joint Marketing Agreement dated August 30, 1993, as amended
(the "JMA"), respectively.
68
(b) Allied covenants not to invoke against Allied Group any of the change
of control provisions contained in (1) the IOA, (2) the JMA, (3) that certain
Management Information Services Agreement dated December 31, 1986, as amended,
and (4) that certain Stock Rights Agreement dated August 25, 1993, as amended,
between Allied Mutual and Allied, that Allied may otherwise be entitled to
exercise as a result of the transactions contemplated by (i) this Agreement,
(ii) that certain Agreement and Plan of Merger by and among Nationwide,
Nationwide Group Acquisition Corporation and Allied Group, Inc. or (iii) that
certain Agreement and Plan of Merger by and between Nationwide and Allied
Mutual.
Section 6.10 Acquisition Proposals. Allied will not, and will not
---------------------
permit or cause any of its Subsidiaries or any of the officers or directors of
it or its Subsidiaries to, and shall direct its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation or similar transaction involving, or any purchase
of 15 percent or more of the assets or any equity securities of, Allied or any
of its Subsidiaries, or any other business combination (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal"). Allied will
not, and will not permit or cause any of its Subsidiaries or any of the officers
and directors of it or its Subsidiaries to and shall direct its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
Person relating to an Acquisition Proposal, whether made before or after the
date of this Agreement, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing contained in
this Agreement shall prevent Allied or its Board of Directors from (i) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal or (ii) at any time after 180 days from the date hereof if the Merger
shall not by such date have
69
been approved by the requisite vote of Allied's shareholders or (iii) at any
time after one year from the date hereof if the Merger shall not by such date
have been approved by the Iowa Commissioner (A) providing information in
response to a request therefor by a Person who has made an unsolicited bona fide
written Acquisition Proposal if the Board of Directors receives from the Person
so requesting such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the Confidentiality Agreement;
(B) engaging in any negotiations or discussions with any Person who has made an
unsolicited bona fide written Acquisition Proposal; or (C) recommending such an
Acquisition Proposal to the shareholders of Allied, if and only to the extent
that, (i) in each such case referred to in clause (A), (B) or (C) above, the
Board of Directors of Allied determines in good faith after consultation with
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under applicable law and (ii)
in each case referred to in clause (B) or (C) above, the Board of Directors of
Allied determines in good faith (after consultation with its financial advisor)
that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal and would, if consummated,
result in a more favorable transaction than the transaction contemplated by this
Agreement, taking into account the long-term prospects and interests of Allied
and its shareholders. Allied will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Allied agrees that it will take
the necessary steps to promptly inform the individuals or entities referred to
in the first sentence hereof of the obligations undertaken in this Section 6.10
and under this Agreement. Allied will notify Nationwide immediately if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers and thereafter shall keep Nationwide
informed, on a current basis, on the status and terms of any such proposals or
offers and the status of any such negotiations or discussions.
70
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) 2,000,000 Common Shares shall have been purchased pursuant to the
Offer;
(b) if required by applicable Law, this Agreement and the Merger shall
have been approved and adopted by the requisite votes of the respective
shareholders of Allied at the Shareholders Meeting called for such purpose;
(c) the waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated and, other than the filings
provided for in subclauses (a) and (b) of the second sentence of Section 2.3,
all Governmental Approvals and other Consents or Filings which the parties have
agreed are required to be obtained prior to the Effective Time shall have been
obtained and not rescinded or adversely modified or limited (as set forth in the
proviso below) or, if merely required to be filed, such filings shall have been
made and accepted, and all waiting periods prescribed by applicable Law shall
have expired or been terminated in accordance with applicable Law; provided that
--------
no such Governmental Approval or other Consent or Filing shall contain any
conditions or limitations that compel or seek to compel the Surviving
Corporation to dispose of or to hold separately all or any material portion of
the Business or Assets of the parties and their respective Subsidiaries taken as
a whole or that impose or seek to impose any material limitation on the ability
of the Surviving Corporation and the Allied Subsidiaries, taken as a whole, to
conduct its Business or own its Assets after the Effective Time in substantially
the same manner as the parties and their respective Subsidiaries presently
conduct their Business or own their Assets; and
71
(d) no Order entered or Law promulgated or enacted by any Governmental
Entity shall be in effect which would prevent the consummation of the Merger or
any other material transactions completed hereby, and no Proceeding brought by a
Governmental Entity shall have been commenced and be pending which seeks to
restrain, enjoin, prevent, or materially delay or restructure the Merger or any
other material transactions contemplated hereby.
Section 7.2 Conditions to Obligation of Allied to Effect the Merger.
-------------------------------------------------------
The obligations of Allied to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions, any
one or more of which may be waived by Allied, but only to the extent permitted
by Law:
(a) Nationwide shall have performed and complied in all material respects
with all obligations, covenants and agreements required to be performed and
complied with by it under this Agreement at or prior to the Effective Time;
(b) The representations and warranties of Nationwide contained in this
Agreement shall be true and correct when made and at and as of the Effective
Time as if made at and as of such date and time, except to the extent that any
breaches of such representations and warranties, individually or in the
aggregate, have not resulted, or are not reasonably likely to result, in (i)
losses, damages or expenses in excess of $1,000,000 or (ii) a material adverse
effect on the financial condition of the Surviving Corporation, and Allied shall
have received a certificate dated as of the Effective Time of the Chairman and
Chief Executive Officer, the President or an Executive Vice President of
Nationwide as to the satisfaction of this condition.
Section 7.3 Conditions to Obligation of Nationwide to Effect the Merger.
-----------------------------------------------------------
The obligations of Nationwide to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions, any
one or more of which may be waived by Nationwide, but only to the extent
permitted by Law:
72
(a) Allied shall have performed and complied in all material respects with
all obligations, covenants and agreements required to be performed and complied
with by it under this Agreement at or prior to the Effective Time; and
(b) The representations and warranties of Allied contained in this
Agreement shall be true and correct in all material respects when made and at
and as of the Effective Time as if made at and as of such date and time, except
to the extent that any breaches of such representations and warranties,
individually or in the aggregate, have not resulted, or are not reasonably
likely to result, in (i) losses, damages or expenses in excess of $1,000,000 or
(ii) a material adverse effect on the financial condition of the Surviving
Corporation, and Nationwide shall have received a certificate dated as of the
Effective Time by any Vice President of Allied as to the satisfaction of this
condition.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
-----------
Merger abandoned at any time prior to the Effective Time, whether before or
after approval of the Merger by the shareholders of Nationwide or of Allied:
(a) by mutual consent of Nationwide and Allied;
(b) by Nationwide if the Board of Directors of Allied withdraws its
recommendation to the Allied shareholders to approve the Merger;
(c) by Nationwide or Allied if consummation of the Merger is barred by a
permanent injunction which is final and non-appealable;
73
(d) by Allied, if, prior to the purchase of Shares pursuant to the Offer,
there is an Acquisition Proposal which the Board of Directors determines
represents a more favorable transaction to Allied and its shareholders than the
transactions contemplated by this Agreement, and if the Board of Directors,
after consultation with outside counsel, shall have determined that failure to
terminate the Agreement is reasonably likely to be inconsistent with the
fiduciary duties of the Board of Directors under applicable Law and Allied has
given Nationwide three business days notice of the terms of such Acquisition
Proposal and has paid Nationwide the fee contemplated by Section 8.2(b);
(e) by Allied prior to the completion of the Offer, upon a material
breach of any representation or warranty of Nationwide or Nationwide's failure
to comply in any material respect with any of its covenants or agreements, or if
any representation or warranty of Nationwide or Sub shall be or become untrue in
any material respect, which breach or failure to comply or untruth is not
curable or, if curable, is not cured within 30 business days after written
notice thereof has been given to Nationwide;
(f) by Nationwide prior to the completion of the Offer upon, (i) a
material breach of any representation or warranty of Allied or if any
representation or warranty of Allied shall be or become untrue in any material
respect, which breach or failure to comply or untruth is not curable or, if
curable, is not cured within 30 business days after written notice thereof has
been given to Allied, or (ii) Allied's failure to comply in any material respect
with any of its covenants or agreements (materiality being construed in light of
the transactions contemplated by this Agreement); or;
(g) by Nationwide or by Allied, if Common Shares shall not have been
purchased pursuant to the Offer by December 31, 1998, provided that the right to
terminate this Agreement pursuant to this clause (g) shall not be available to a
party whose failure to fulfill any obligation under this Agreement has been the
cause of the failure of such purchase to occur by such date.
74
Section 8.2 Effect of Termination.
---------------------
(a) In the event of the termination of this Agreement by either Nationwide
or Allied, as provided above, this Agreement shall thereafter become void and,
except as provided in Section 8.2(b) and Section 9.2 hereof, there shall be no
Liability on the part of either party hereto against the other party hereto, or
on the part of its directors, officers, employees, shareholders or agents (or
those of any of the Allied Subsidiaries or Affiliates), except that any such
termination shall be without prejudice to the rights of either party hereto (or
any of the Allied Subsidiaries or Affiliates) arising out of the willful breach
by the other party (or any of the Allied Subsidiaries or Affiliates) of any
representation or warranty or any covenant or agreement contained in this
Agreement.
(b) In the event of termination of this Agreement by either Allied or
Nationwide pursuant to Section 8.1(b), (d), or (f), Allied shall pay Nationwide
an amount equal to all of the expenses incurred by Nationwide in connection with
this Agreement, the negotiations leading to its execution, the examination and
investigation of Allied, the preparation and negotiation of the Agreement and
related agreements, and in all other ways related to the Merger, including, but
not limited to, all fees and expenses incurred by investment bankers,
accountants, attorneys and other agents, plus the sum of $3 million in cash (the
"Termination Payment") as liquidated damages and not as a penalty, immediately
upon such termination, in same-day funds, provided that Nationwide shall not be
in material breach of its obligations under this Agreement. Moreover, Allied
shall pay the Termination Payment if the Closing does not occur either (i) due
to Allied's failure to satisfy a condition over which it has sole control prior
to December 31, 1998; or (ii) because prior to December 31, 1999, Allied or any
Subsidiary or Affiliate of Allied or any of their respective shareholders
publicly announces, enters into a letter of intent relating to, enters into a
definitive agreement providing for, or consummates, a transaction, which, as
announced, or as provided in such letter or agreement or as consummated,
provides for or relates to the disposition of a controlling interest in Allied
or the sale, transfer or other distribution of assets constituting a majority
(measured by fair market value) of the consolidated assets of Allied.
75
ARTICLE IX
MISCELLANEOUS
Section 9.1 Survival of Representations and Warranties. None of the
------------------------------------------
representations, warranties and agreements in this Agreement shall survive the
Effective Time except as otherwise provided in this Agreement and except for the
agreements contained in Article II and Section 6.8, which shall survive until
expressly provided therein or, if not so expressly provided, indefinitely.
Section 9.2 Fees and Expenses. Subject to Section 8.2(b) hereof, if the
-----------------
Merger is not consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses, except for expenses incurred in
connection with the printing, mailing and solicitation of proxies from
shareholders and all filing fees and related expenses which shall be borne
equally by Nationwide and Allied.
Section 9.3 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given, upon receipt,
if mailed by registered or certified mail, postage prepaid, return receipt
requested, overnight delivery, confirmed facsimile transmission or hand
delivery, as follows:
(a) If to Nationwide, to:
Nationwide Mutual Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Diamond, Vice President-Enterprise Controller
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
76
with a copy to:
Nationwide Mutual Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Allied, to:
Allied Life Financial Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the Person to whom notice is given may have
previously furnished to the other party in writing in accordance herewith.
Section 9.4 Amendments. This Agreement may be amended by the parties
----------
hereto at any time before or after the approval of this Agreement by the
shareholders of Nationwide or of Allied, but after such approval no amendment or
modification shall be made which in any way materially adversely affects the
rights of such shareholders without the further approval of such shareholders.
Any amendment, modification or material waiver of this Agreement shall be
subject to the approval of the Ohio Superintendent and the Iowa Commissioner.
This Agreement may not be amended, modified or supplemented except by written
agreement of the parties hereto.
Section 9.5 No Waiver. Nothing contained in this Agreement shall cause
---------
the failure of either party to insist upon strict compliance with any covenant,
obligation,
77
condition or agreement contained herein to operate as a waiver of, or estoppel
with respect to, any such covenant, obligation, condition or agreement by the
party entitled to the benefit thereof.
Section 9.6 Brokers. Allied represents and warrants that no broker,
-------
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Allied, except for Allied's financial
advisor, ▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ Inc., whose fees shall be paid by Allied. Nationwide
represents and warrants that no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Nationwide, except for Nationwide's financial advisor, Credit Suisse First
Boston, whose fees shall be paid by Nationwide.
Section 9.7 Publicity. So long as this Agreement is in effect, each of
---------
the parties hereto (i) shall not, and shall cause its Affiliates not to, issue
or cause the publication of any press release or other announcement to any
Person with respect to this Agreement or the transactions contemplated hereby
without the consent of the other party, which consent shall not be unreasonably
withheld or delayed; provided, however, that nothing contained herein shall (A)
-------- -------
limit the right of each of the parties hereto and their Affiliates to make a
legally required filing or communication, provided that, to the extent possible,
--------
such party shall consult with the other party before making such filing or
communication, or responding to any communications initiated by any non-
affiliated Person, including, but not limited to, any rating agency or
Governmental Entity, (B) prohibit either party hereto (or its Affiliates) from
initiating communications with, and making presentations to, any rating agency
or Governmental Entity relating to the transactions contemplated hereby if such
party gives prior notice thereof to the other party hereto, or (C) prohibit
Nationwide or Allied or any of their respective Affiliates from communicating to
any third party information in any way relating to the Merger that has been made
known to the general public, other than in violation of this Agreement, prior to
the time of such communication,
78
(ii) shall cooperate fully with the other party hereto with respect to issuing
or publishing any press release, or other announcement or other written
communication to any non-affiliated Person and preparing written and oral
communications to the employees and agents of each party hereto with the purpose
of effectuating the Merger in the best interests of the respective shareholders
of Nationwide and Allied and (iii) shall promptly notify the other party of any
announcements which are made to affiliated Persons and any communications
received from and responses provided to non-affiliated Persons, in either case,
with respect to this Agreement or the transactions contemplated hereby.
Section 9.8 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 9.9 Nonassignability. This Agreement shall not be assigned by
----------------
either party hereto by operation of Law or otherwise without the prior written
consent of the other party hereto.
Section 9.10 Beneficiaries. This Agreement shall be binding upon and
-------------
inure solely to the benefit of the parties hereto and their permitted assigns,
and nothing in this Agreement, expressed or implied, is intended to confer upon
any other Person (including, but not limited to, any policyholder or employee of
Allied, Nationwide or their Subsidiaries) any rights or remedies of any nature
under or by reason of this Agreement, except as expressly provided in Sections
6.8 hereof.
Section 9.11 Duplicates; Counterparts. This Agreement shall be executed
------------------------
in duplicate and may be executed in counterparts each of which shall be deemed
to constitute an original and constitute one and the same instrument.
Section 9.12 Governing Law; Jurisdiction. This Agreement shall be
---------------------------
governed by and construed and enforced in accordance with the laws of the State
of Ohio (except to the
79
extent that the Iowa Insurance Law and the Iowa Corporation Law shall be held to
govern the terms of the Merger) without regard to its conflict of laws rules.
Each of the parties hereto submits to the jurisdiction of the state and federal
courts sitting in the City of Columbus, County of Franklin and State of Ohio, in
any action or proceeding arising out of or relating to this Agreement and all
claims in respect of any such action or proceeding may be heard or determined in
any such court.
Section 9.13 Entire Agreement. This Agreement and the Confidentiality
----------------
Agreement constitute the entire agreement between the parties hereto and
supersede all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof and thereof.
Section 9.14 Severability. If any provisions hereof shall be held
------------
invalid or unenforceable by any court of competent jurisdiction or as a result
of future legislative action, such holding or action shall be strictly construed
and shall not affect the validity or effect of any other provision hereof;
provided, however, that the parties shall use reasonable efforts, including, but
-------- -------
not limited to, the amendment of this Agreement, to ensure that this Agreement
shall reflect as closely as practicable the intent of the parties hereto.
Section 9.15 Specific Performance. Each of the parties hereto
--------------------
acknowledges and agrees that the other party hereto would be irreparably damaged
in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
each of the parties hereto agrees that they each shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions thereof in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction, in addition to any other
remedy to which Nationwide or Allied may be entitled, at law or in equity.
80
Section 9.16 Survival of Certain Covenants. The provisions of Section
-----------------------------
6.8 hereof shall survive the Effective Time.
Section 9.17 Counting. If the due date for any action to be taken under
--------
this Agreement (including, but not limited to, the delivery of notices) is not a
Business Day, then such action shall be considered timely taken if performed on
or prior to the next Business Day following such due date.
ARTICLE X
DEFINITIONS
Section 10.1 Definitions. When used in this Agreement, the following
-----------
words or phrases have the following meanings:
"Acquisition Proposal" shall have the meaning set forth in Section 6.10
--------------------
hereof.
"Affiliate" shall mean a Person that directly, or indirectly through one or
---------
more intermediaries, controls, is controlled by or is under common control with
another Person or beneficially owns or has the power to vote or direct the vote
of ten percent (10%) or more of the voting stock (or of any other form of
general partnership, limited partnership or voting equity interest in the case
of a Person that is not a corporation) of such other Person. For purposes of
this definition, "control", including the terms "controlling" and "controlled",
means the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee, partner or executor or otherwise.
"Agreement" shall mean this Agreement and Plan of Merger, including all
---------
Exhibits.
"Allied" shall have the meaning set forth in the preamble to this
------
Agreement.
81
"Allied Disclosure Schedule" shall mean the disclosure schedule delivered
--------------------------
by Allied to Nationwide, dated the date hereof.
"Allied GAAP Financial Statements" shall have the meaning set forth in
--------------------------------
Section 4.7 hereof.
"Allied Group" shall mean Allied and the Allied Subsidiaries.
------------
"Allied Insurer" shall mean Allied and each Allied Subsidiary that
--------------
transacts or is authorized to transact an insurance or reinsurance business.
"Allied 1998 Quarterly Statement" shall have the meaning set forth in
-------------------------------
Section 4.8 hereof.
"Allied Real Property" shall mean any real property in which Allied or any
--------------------
of its Affiliates holds a Lien or owns an interest, or in the management of
which Allied or an Affiliate of Allied actively participates.
"Allied SAP Statements" shall have the meaning set forth in Section 4.6(d)
---------------------
hereof.
"Allied Subsidiary" or "Allied Subsidiaries" shall mean the Subsidiaries of
------------------------------------------
Allied and, without limiting the generality of the foregoing, shall include any
Subsidiary of Allied as to which Allied or an Allied Subsidiary has guaranteed
any obligations or owns any interest. References in this Agreement to
Subsidiaries of Allied shall include all of the Allied Subsidiaries.
"Annual Statements" shall mean, with respect to any Person, the annual
-----------------
statements of such Person filed with or submitted to the insurance regulatory
body in the jurisdiction in which such Person is domiciled on forms prescribed
or permitted by such regulatory body.
82
"Articles of Merger" shall mean the articles of merger in such form as
------------------
required by, and executed and acknowledged in accordance, with the Iowa
Corporation Law and the Iowa Insurance Law.
"Assets" shall mean, as to a Person, all rights, titles, franchises and
------
interests in and to every species of property, real, personal and mixed, and
choses in action thereunto belonging, including, but not limited to,
Environmental Permits, Investment Assets, Intellectual Property, Contracts,
Licenses, privileges and all other assets whatsoever, tangible or intangible, of
such Person.
"Benefit Plans" shall have the meaning set forth in Section 4.21 hereof.
-------------
"Business" shall mean, as to a Person, the business, operations, activities
--------
and affairs of such Person.
"Business Day" shall means any day other than Saturday, Sunday or any other
------------
day in which commercial banks in Columbus, Ohio are required to or permitted to
be closed.
"CERCLIS" shall mean the Comprehensive Environmental Response,
-------
Compensation, and Liability Information System.
"Certificate of Merger" shall mean a certificate of merger in such form as
---------------------
required by, and executed and acknowledged in accordance with, Section 1701.81
of the Ohio General Corporation Law.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
-------
"Closing Agreement" shall have the meaning set forth in Section 4.20(k)
-----------------
hereof.
83
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
------------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Commonly Controlled Entity" shall have the meaning set forth in Section
--------------------------
4.21(b) hereof.
"Common Share" shall mean share of common stock, no par value, of Allied.
------------
"Computer Software" shall mean any and all computer software consisting of
-----------------
sets of statements or instructions to be used, directly or indirectly, in a
computer, including, but not limited to, the following: (i) all source code,
object code and natural language code therefor and all component modules
thereof, (ii) all versions thereof, (iii) all screen displays and designs
thereof and (iv) all user, technical, training and other documentation relating
to any of the foregoing.
"Consent or Filing" shall have the meaning set forth in Section 4.5(b)
-----------------
hereof.
"Contract" or "Contracts" shall mean a contract, agreement, commitment,
-------- ----------
indenture, note, bond, mortgage, license, lease, assignment, arrangement or
understanding.
"Current Premium" shall have the meaning set forth in Section 6.8 hereof.
---------------
"D&O Insurance" shall have the meaning set forth in Section 6.8 hereof.
-------------
"Dissenting Shares" shall have the meaning set forth in Section 2.9 hereof.
-----------------
"Effective Time" shall have the meaning set forth in Section 2.3 hereof.
--------------
84
"Environmental Claim" shall mean any investigation, notice of violation,
-------------------
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial or
private in nature) arising: (A) pursuant to, or in connection with, an actual
or alleged violation of any Environmental Law; (B) in connection with any
Hazardous Substances or actual or alleged activity associated with any Hazardous
Substances; (C) from any abatement, removal, remedial, corrective or other
response action in connection with any Hazardous Substances, Environmental Law
or other order or directive of any federal, state or local governmental
authority; or (D) from any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment. Environmental Claim shall
not include claims for coverage by an insured.
"Environmental Law" shall mean any local, state or federal statute, rule,
-----------------
regulation, order, code, directive or ordinance and any binding judicial or
administrative interpretation thereof or requirements thereunder pertaining to:
(A) the regulation and protection of health, safety and the indoor or outdoor
environment; (B) the conservation, management, development, control and/or use
of land (including zoning laws and ordinances), natural resources and wildlife;
(C) the protection or use of surface water and ground water; (D) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal, remediation
or handling of, or exposure to, any Hazardous Substances; or (E) pollution
(including any release into air, land, surface water and ground water); and
includes without limitation the following federal statutes (and their
implementing regulations and the analogous state statutes and regulations): the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act; the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976,
as amended by the Hazardous and Solid Waste Amendments of 1984; the Federal
Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977.
85
"Environmental Permit" shall mean any permit, license, variance,
--------------------
certificate, consent, letter, clearance, closure, exemption, authorization,
decision or action or approval required to be obtained from any federal, state
or local governmental authority with jurisdiction over and pursuant to any
Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the SEC promulgated thereunder.
"Financial Statements" shall mean balance sheets, statements of income and
--------------------
statements of cash flows, including, but not limited to, all notes, schedules,
exhibits and other attachments thereto, whether consolidated, combined or
separate or audited or unaudited or prepared in accordance with SAP or GAAP.
"GAAP" shall mean generally accepted accounting principles applied on a
----
consistent basis.
"GAAP Financial Statements" shall mean Financial Statements prepared in
-------------------------
accordance with GAAP.
"Governmental Approvals" shall mean the Consents or Filings required to be
----------------------
obtained from the Iowa Commissioner and the Ohio Superintendent.
"Governmental Entity" or "Governmental Entities" shall mean a court,
------------------- ---------------------
executive office, legislature, governmental agency, commission or
administrative, regulatory or self-regulatory authority or instrumentality,
domestic or foreign.
86
"Hazardous Substances" shall mean chemicals, products, compounds, by-
--------------------
products, pollutants, contaminants, hazardous wastes or toxic or hazardous
substances regulated under any Environmental Law, including, but not limited to,
asbestos or asbestos-containing materials, polychlorinated biphenyls, pesticides
and oils, petroleum and petroleum products.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnitees" shall have the meaning set forth in Section 6.8 hereof.
-----------
"Insurance Contract" shall mean any Contract of insurance, including, but
------------------
not limited to, reinsurance contracts, variable annuity and fixed annuity
contracts or products, life insurance contracts, and funding agreements.
"Insurance License" shall mean a License granted by a Governmental Entity
-----------------
to transact an insurance or reinsurance business, issue fixed or variable
annuity contracts or products, or issue life insurance contracts.
"Intellectual Property" shall mean: trademarks, service marks, brand names,
---------------------
certification marks, trade dress, assumed names, trade names and other
indications of origin, good will associated with the foregoing and registrations
in any extension, modification or renewal of any such registration or
application; inventions, discoveries and ideas, whether patentable or not in any
jurisdiction; patents, applications for patents (including but not limited to
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not in any jurisdiction, and any renewals
or extensions thereof;
87
and any similar intellectual property or proprietary rights; provided, that
Intellectual Property shall include Computer Software.
"Investment Advisers Act" shall mean the Investment Advisers Act of 1940,
-----------------------
as amended, and the rules and regulations of the SEC promulgated thereunder.
"Investment Assets" shall mean bonds, notes, debentures, mortgage loans,
-----------------
collateral loans and all other instruments of indebtedness, stocks, partnership
or joint venture interests and all other equity interests (including, but not
limited to, equity interests in Subsidiaries or other Affiliates), real estate
and leasehold and other interests therein, certificates issued by or interests
in trusts, cash on hand and on deposit, personal property and interests therein
and all other assets acquired for investment purposes.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
----------------------
amended, and the rules and regulations of the SEC promulgated thereunder.
"Iowa Attorney General" shall mean the Attorney General of the State of
---------------------
Iowa.
"Iowa Commissioner" shall mean the Commissioner of Insurance of the State
-----------------
of Iowa.
"Iowa Corporation Law" shall mean Chapters 490 and 491 of the Iowa Code, as
--------------------
amended, and the rules and regulations promulgated thereunder.
"Iowa Insurance Law" shall mean Chapters 505 through 523I of the Iowa Code,
------------------
as amended, and the rules and regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service or any successor agency.
---
88
"Knowledge" shall mean, as to a Person, (i) receipt of notice by, or actual
---------
knowledge or reason to know (assuming for such purposes that reasonable inquiry
has been made) by any officer of such Person with the title of Vice President or
higher (or, if not a corporation, any person holding a similar title or
position) or (ii) the actual Knowledge of any Vice President (or, if not a
corporation, any person holding a similar title or position) of such Person with
respect to any matter or matters within the scope of such Person's
responsibilities.
"Law" shall mean a law, statute, ordinance, rule or regulation enacted or
---
promulgated, or Order issued or rendered, by any Governmental Entity.
"Liability" shall mean a liability, obligation, claim or cause of action
---------
(of any kind or nature whatsoever, whether absolute, accrued, contingent or
other, and whether known or unknown), including, but not limited to, any
liability, obligation, claim or cause of action arising pursuant to or as a
result of an Insurance Contract or pursuant to any Environmental Claim.
"License" shall mean a license, certificate of authority, permit or other
-------
authorization to transact an activity or business, whether granted by a
Governmental Entity or by any other Person.
"Lien" shall mean a lien, mortgage, deed of trust, deed to secure debt,
----
pledge, assessment, security interest, lease, sublease, charge, claim, levy or
other encumbrance of any kind.
"Losses" shall mean all losses, claims, damages, costs, expenses,
------
liabilities and judgments, including, but not limited to, court costs and
attorneys' fees.
"Material Adverse Effect" shall mean a material adverse effect on the
-----------------------
business, results of operations or financial condition of any party or any of
its Subsidiaries
89
(including, after the Merger, the Surviving Corporation), or of such party and
its Subsidiaries taken as a whole, or on the ability of such party to consummate
the transactions contemplated by this Agreement.
"Merger" shall have the meaning set forth in the preamble to this
------
Agreement.
"Merger Consideration" shall mean the amount of cash which holders of
--------------------
Common Shares shall have the right to receive in exchange for their Common
Shares as set forth in Section 2.7 hereof.
"NAIC" shall mean the National Association of Insurance Commissioners.
----
"Nationwide" shall have the meaning set forth in the preamble to this
----------
Agreement.
"Nationwide Disclosure Schedule" shall mean the disclosure schedule
------------------------------
delivered by Nationwide to Allied, dated the date hereof.
"Nationwide Subsidiaries" shall mean the Subsidiaries of Nationwide.
-----------------------
"NPL" shall mean the National Priority List.
---
"Offer" shall mean the tender offer for the Common Shares commenced by
-----
Nationwide pursuant to Section 1.1., as amended from time to time.
"Offer Documents" shall have the meaning set forth in Section 1.1 (b)
---------------
thereof.
"Offer Price" shall have the meaning set forth in the preamble to this
-----------
Agreement.
"Ohio Insurance Law" shall mean Title 39 of the Ohio Revised Code, as
------------------
amended, and the rules and regulations promulgated thereunder.
90
"Ohio Superintendent" shall mean the Superintendent of Insurance of the
-------------------
State of Ohio.
"Order" shall mean an order, writ, ruling, judgment, directive, injunction
-----
or decree of any arbitrator or Governmental Entity.
"Pension Plan" shall have the meaning set forth in Section 4.21(a) hereof.
------------
"Permitted Liens" shall mean, as to a party hereto, (a) those Liens set
---------------
forth in the Nationwide Disclosure Schedule or the Allied Disclosure Schedule,
or otherwise approved in writing by the other party, (b) any Lien that is set
forth in the public records or in title reports or title insurance binders that
have been made available to the other party relating to any interest in the real
property set forth in the Nationwide Disclosure Schedule or the Allied
Disclosure Schedule and any lease or sublease, (c) Liens for water and sewer
charges and current Taxes not yet due and payable or being contested in good
faith, (d) Liens arising from securities lending activities undertaken in the
ordinary course of business of a Person, (e) other Liens (including, but not
limited to, mechanic's, courier's, worker's, repairer's, materialman's,
warehouseman's and other similar Liens) arising or incurred in the ordinary
course of business as would not, individually or in the aggregate, materially
adversely affect the value of, or materially adversely interfere with the use
of, the property subject thereto, and (f) Liens arising or resulting from any
action taken by the other party hereto or any of its respective Subsidiaries
(but not including the execution, delivery or performance of this Agreement or
the Merger).
"Person" shall mean an individual, corporation, partnership, association,
------
joint stock company, limited liability company, Governmental Entity, business
trust, unincorporated organization or other legal entity.
91
"Preferred Shares" shall mean each share of 6.75% Series Preferred Shares
----------------
and Series A ESOP Preferred Shares, collectively
"6.75% Series Preferred Shares" shall mean each share of 6.75% Series
-----------------------------
preferred stock, no par value, of Allied.
"Proceedings" shall mean civil, criminal or administrative actions, suits,
-----------
hearings, claims, investigations and other similar proceedings.
"Proxy Statement" shall have the meaning set forth in Section 4.5(b)
---------------
hereof.
"Quarterly Statements" shall mean, with respect to any Person, the
--------------------
quarterly statements of such Person filed with or submitted to the insurance
regulatory body in the jurisdiction in which such Person is domiciled on forms
prescribed or permitted by such regulatory body.
"Rating Agencies" shall mean A.M. Best and Company, Standard and Poor's
---------------
Corporation, ▇▇▇▇▇'▇ Investor Services, Inc., and Duff & ▇▇▇▇▇▇ Credit Rating
Agency.
"SAP" shall mean statutory accounting practices prescribed by the NAIC and
---
prescribed or permitted by the applicable insurance regulatory body applied on a
consistent basis.
"SAP Statements" shall mean Annual Statements and Quarterly Statements.
--------------
"Schedule 14D-1" shall have the meaning set forth in Section 1.1(b) hereof.
--------------
"Schedule 14D-9" shall have the meaning set forth in Section 1.2(b) hereof.
--------------
"SEC" shall mean the Securities and Exchange Commission.
---
92
"SEC Documents" shall have the meaning set forth in Section 4.9 hereof.
-------------
"Series A ESOP Preferred Share" shall mean each share of Series A ESOP
-----------------------------
Convertible Preferred Stock, no par value, of Allied.
"Shareholders Meeting" shall mean a meeting set forth in Section 3.2
--------------------
hereof.
"Special Committee" shall have the meaning set forth in Section 4.4(c)
-----------------
hereof.
"Sub" shall have the meaning set forth in the preamble to this Agreement.
---
"Subsidiary" of a Person shall mean an Affiliate of such Person more than
----------
fifty percent of any class of voting stock (or of any other form of voting
equity interest in the case of a Person that is not a corporation) of which is
beneficially owned by the Person directly or indirectly through one or more
other Persons.
"Surviving Corporation" shall have the meaning set forth in Section 2.1
---------------------
hereof.
"Tax or Tax Return" shall mean a report, return or other information
-----------------
required under any applicable Law to be filed or provided to any Person with
respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes Nationwide or any
Nationwide Subsidiary on the one hand, or Allied or any Allied Subsidiary on the
other hand.
"Tax Ruling" shall have the meaning set forth in Section 4.20(k) hereof.
----------
"Taxes" shall mean any federal, state, county, local or foreign taxes,
-----
charges, fees, levies or other assessments, including all net income, gross
income, premiums, sales and use, ad valorem, transfer, gains, profits, windfall
profits, excise, franchise, real and
93
personal property, gross receipts, capital stock, production, business and
occupation, employment, disability, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes, other taxes or similar charges of any
kind whatsoever imposed by any Governmental Entity, whether imposed directly on
a Person or resulting under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), as a transferee or successor, by
Contract or otherwise and includes any interest and penalties (civil or
criminal) on or additions to any such taxes or in respect of a failure to comply
with any requirement relating to any Tax Return and any expenses incurred in
connection with the determination, settlement or litigation of any such tax
liability.
"Third Party Administrator" shall mean any third party administrator of
-------------------------
either Nationwide or Allied.
"Title IV Plan" shall have the meaning set forth in Section 4.21(b) hereof.
-------------
"Treasury Regulation" shall mean the regulations promulgated by the U.S.
-------------------
Department of the Treasury pursuant to the Code.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification Act
--------
of 1988, as amended.
"Welfare Plan" shall have the meaning set forth in Section 4.21(a) hereof.
------------
[SIGNATURE PAGE TO FOLLOW]
94
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Nationwide, of Sub and of Allied as
of the date first above written.
NATIONWIDE MUTUAL INSURANCE
COMPANY
/s/ ▇▇▇▇▇ ▇. Diamond
By: _________________________________
Name: ▇▇▇▇▇ ▇. Diamond
Title: Vice President-Enterprise
Controller
NATIONWIDE LIFE ACQUISITION CORPORATION
/s/ ▇▇▇▇▇ ▇. Diamond
By: _________________________________
Name: ▇▇▇▇▇ ▇. Diamond
Title: Vice President-Enterprise
Controller
ALLIED LIFE FINANCIAL
CORPORATION
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
95
Exhibit A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Sub shall not be
required to accept for payment, or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered Common Shares after the
termination or withdrawal of the Offer), to pay for any Common Shares not
theretofore accepted for payment or paid for (i) unless (A) there are validly
- -
tendered and not properly withdrawn prior to the expiration of the Offer
2,000,000 Common Shares (the "Minimum Condition"), and (B) all insurance
-
regulatory approvals necessary for Nationwide and Sub's acquisition of control
of Allied and its Subsidiaries are obtained on terms and conditions reasonably
satisfactory to Nationwide (the "Insurance Regulatory Condition") and any
waiting period applicable to the consummation of the Offer and the Merger under
the HSR Act shall not have expired or been terminated, or (ii) if at any time on
--
or after the date of the Merger Agreement and at or before the time that the
particular Common Shares are accepted for payment (whether or not any other
Common Shares shall theretofore have been accepted for payment or paid for
pursuant to the Offer) any of the following conditions exists:
(a) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, or (iii) a commencement
of a war, armed hostilities or other international or national calamity
directly involving the United States
Exhibit A-1
which has a material adverse effect on the general economic conditions in
the United States;
(b) any statute, rule, regulation, a temporary, preliminary or
permanent order or injunction shall be promulgated, enacted, entered,
enforced or deemed applicable to the Offer, the Merger or performance under
this Agreement, by any state, federal or foreign government or governmental
authority or court or governmental agency of competent jurisdiction that
(i) prohibits the consummation of the Offer or the Merger or (ii) imposes
material limitations on the ability of Sub effectively to exercise full
rights of ownership with respect to the Common Shares, including, without
limitation, the right to vote any Common Shares purchased by it on all
matters properly presented to the stockholders of Allied; provided that the
Nationwide and Sub shall have used their best efforts to have any such
decree, order or injunction vacated or reversed;
(c) Allied shall have entered into an agreement obligating Allied to
enter into an Acquisition Transaction with a person other than Nationwide,
Sub or an affiliate of either;
(d) (i) Allied shall have breached or failed to perform in any material
respect any of its material obligations covenants or agreements under the
Agreement or (ii) there shall have occurred, on the part of Allied, a
breach of any representation or warranty contained in the Agreement as of
the date of the Agreement or at the time of the consummation of the Offer
(other than representations and warranties made as of a specified date
prior to the date of the Agreement) which, in either case, if not cured
would reasonably be expected to have a Material Adverse Effect and which is
not curable or, if
Exhibit A-2
curable, is not cured with the later of (x) 30 calendar days after written
notice of such breach is given by Nationwide to Allied of such breach and
(y) the time of satisfaction of all conditions to the Offer not related to
such breach; provided, however, that the representations contained in
Sections 4.2 and 4.4 shall be true as of the consummation of the Offer.
(e) the Allied Board shall have withdrawn its recommendation or modified
its recommendation in a manner adverse to Nationwide or Sub;
(f) the failure to obtain any Governmental Approvals or third party
Contracts, which failure, in the aggregate, would have a Material Adverse
Effect;
(g) Any insurance regulatory approval necessary for the merger of Allied
Mutual with and into Nationwide (the "Mutual Merger") shall not have been
obtained on terms and conditions reasonably satisfactory to Nationwide;
(h) the requisite vote of Allied Mutual policyholders in support of the
mutual Merger shall not have been obtained; and
(i) the nominees of Nationwide to the Allied Mutual Board pursuant to
the Mutual Merger shall not have been duly elected or appointed so as to
constitute a majority of the directors on the Allied Mutual Board.
The foregoing conditions are for the sole benefit of Sub and may be
asserted by Sub regardless of the circumstances giving rise to any such
condition or may be waived by Sub in whole or in part at any time and from time
to time in its sole discretion (subject to the terms of the Merger Agreement).
The failure by Sub at any time to exercise any of the
Exhibit A-3
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
The capitalized terms used in this Exhibit A shall have the meanings set forth
in the Merger Agreement.
Exhibit A-4
Exhibit B
Nationwide Life Acquisition Corporation Articles
of Incorporation and Code of By-laws
Exhibit B-1
Exhibit C
Shareholder Agreement
Exhibit C-1