EXHIBIT 10(d)
AMENDMENT NO. 1 TO
INVESTMENT AND STRATEGIC ALLIANCE AGREEMENT
between
20th CENTURY INDUSTRIES
(hereinafter called the "Company")
and
AMERICAN INTERNATIONAL GROUP
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This Amendment No. 1 to Investment and Strategic Alliance Agreement ("Amendment
No. 1") is made and entered into this 23rd day of March, 1995 by and between
20th Century Industries, a corporation organized and existing under the laws of
the State of California (the "Company"), and American International Group, Inc.,
a corporation organized and existing under the laws of the State of Delaware
(the "Investor").
RECITALS
WHEREAS, the Company and the Investor entered into an Investment and
Strategic Alliance Agreement (the "Agreement") on October 17, 1994, pursuant to
which the Company issued to affiliates of the Investor (a) 200,000 shares of
Series A Convertible Preferred Stock, stated value $1,000 per share, having the
rights, preferences, privileges and restrictions set forth in the Certificate of
Determination of the Company (the "Series A Certificate of Determination")
governing the Series A Convertible Preferred Stock (the "Series A Preferred
Shares"), and (b) 16,000,000 Series A Warrants, each exercisable for one share
of Common Stock, no par value, of the Company ("Common Stock"), subject to
adjustment, having the terms set forth in a Warrant Certificate dated December
16, 1994 (the "Warrant Certificate") (the "Series A Warrants");
WHEREAS, on January 27, 1995, the California Department of Insurance (the
"DOI") and the Company entered into a Stipulation, and, on January 28, 1995, the
DOI issued an Order under California Insurance Code Sections 1065.1 and 1065.2,
pursuant to which the DOI has required that the Company raise an additional $50
million of capital for contribution to the Company's insurance subsidiaries (the
"DOI Capital Requirement"), the first $30 million of which must be raised by
March 31, 1995 and the remaining $20 million of which must be raised by December
31, 1995; and
WHEREAS, the Company and the Investor have agreed upon a $20 million
capital contribution to the Company by the Investor to fund a portion of the DOI
Capital Requirement, in exchange for which the Company will issue additional
Series A Preferred Shares to the Investor pursuant to Section 4.3 of the
Agreement, and, in connection therewith, the Company and the Investor desire to
amend Section 4.3 of the Agreement as set forth herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
Section 1. Issuance of Series A Preferred Shares.
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Concurrently with the execution of this Amendment No. 1, the Investor is
contributing $20 million to the Company pursuant to Section 4.3 of the Agreement
to fund a portion of the DOI Capital Requirement. The Company and the Investor
agree that, notwithstanding the formula set forth in Section 4.3 for determining
the number of Series A Preferred Shares to be issued to the Investor in respect
of such contribution, the Investor and the Company agree that, in consideration
for such contribution, the Company shall issue to the Investor 20,000 Series A
Preferred Shares, having an aggregate liquidation value equal to the amount
contributed to the Company by the Investor.
Section 2. Amendment.
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In order to memorialize the agreement of the Company and the Investor to
modify the formula for determining the number of Series A Preferred Shares to be
issued in respect of the Investor's $20 million contribution to the Company,
Section 4.3 of the Agreement is hereby amended to read in its entirety as
follows:
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"Section 4.3 Investor Contribution and Additional Shares; Adjustment to
Series A Warrants Exercise Price. If at any time (before or after the
Closing Date) there shall be any Excess Loss Amount as defined above, the
Investor shall, if requested in writing by the Company after the Closing
Date (and subject to the Closing hereunder), contribute to the capital of
the Company at the request of the Company, in whole or in part, an amount
up to the lesser of (i) $70,000,000 or (ii) the Excess Loss Amount (the
"Investor Contribution"). In consideration for the first $20 million of the
Investor Contribution pursuant to this Section 4.3 (the "$20 Million
Contribution"), the Company shall issue to the Investor that number of
fully paid and nonassessable Series A Preferred Shares having an aggregate
liquidation value equal to $20 million. In consideration of the
contribution of the remainder of the Investor Contribution following the
$20 Million Contribution (the "Remaining Investor Contribution"), the
Company shall issue to the Investor that number of fully paid and
nonassessable Series A Preferred Shares having an aggregate liquidation
value equal to (x) the amount of the Remaining Investor Contribution plus
(y) an amount equal to the product of, (1) the Remaining Investor
Contribution, (2) 0.65 and (3) the quotient of (I) the number of shares of
Common Stock beneficially owned or obtainable by the Investor and its
affiliates by virtue of ownership of the Series A Preferred Shares
(including any additional shares actually issued by virtue of the provision
permitting payment of dividends in kind on the Series A Preferred Shares)
and the Series A Warrants and conversion or exercise thereof divided by
(II) the sum of (A) the total number of shares of Common Stock of the
Company outstanding at the date of this Agreement plus (B) the number of
shares referred to in (I); provided, however, that the aggregate
liquidation value of any Series A Preferred Shares issued pursuant to this
sentence (without taking into account any Series A Preferred Shares
issuable as a dividend in kind on any outstanding Series A Preferred
Shares) shall not exceed $63.2474 million. The amount represented as "(y)"
in the above formula is designed to represent Investor's proportional share
of the Company's after-tax loss resulting from the Excess Loss Amount.
Successive contributions under this Section 4.3 for partial amounts
reflecting development over time shall be permitted, with minimum cash
contributions prior to the final contribution being for no less than $10
million. In the event that the Excess Loss Amount exceeds $95,000,000, the
exercise price of the Series A Warrants shall be reduced as provided in the
Series A Warrants."
Section 3. Defined Terms.
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Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.
Section 4. Reconfirmation of Agreement.
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Except as otherwise provided herein, all of the terms and provisions of the
Agreement shall remain in full force and effect. Section 5. Counterparts. This
Amendment No. 1 shall be executed in any number of counterparts, each of which
shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company and the Investor have executed this Amendment
No. 1 as of the date first above written.
20TH CENTURY INDUSTRIES
By: William L. Mellick
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Title: President & Chief Executive Officer
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AMERICAN INTERNATIONAL GROUP, INC.
By: Robert M. Sandler
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Title: Senior Vice President
By Kathleen E. Shannon
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Title: Secretary
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