-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T/Ycm0Lnd0osi2Ip+dvSsH2HtObO+pXcgEFSCYsPXiDJ/bzU60mfbRVfbrZlJjk5 NxNwXFh2im8K98ROJUDMGQ== 0000950123-98-001102.txt : 19980209 0000950123-98-001102.hdr.sgml : 19980209 ACCESSION NUMBER: 0000950123-98-001102 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19980206 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANKERS INSURANCE GROUP INC CENTRAL INDEX KEY: 0000350571 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 591985922 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: SEC FILE NUMBER: 005-31838 FILM NUMBER: 98524502 BUSINESS ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 BUSINESS PHONE: 3052532244 MAIL ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANKERS INSURANCE GROUP INC CENTRAL INDEX KEY: 0000350571 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 591985922 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 BUSINESS PHONE: 3052532244 MAIL ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 SC 14D9 1 AMERICAN BANKERS INSURANCE GROUP, INC. 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 AMERICAN BANKERS INSURANCE GROUP, INC. (NAME OF SUBJECT COMPANY) AMERICAN BANKERS INSURANCE GROUP, INC. (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $1.00 PER SHARE, INCLUDING THE ASSOCIATED SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS (TITLE OF CLASS OF SECURITIES) 24456 10 5 (CUSIP NUMBER OF CLASS OF SECURITIES) GERALD N. GASTON VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER AMERICAN BANKERS INSURANCE GROUP, INC. 11222 QUAIL ROOST DRIVE MIAMI, FL 33157-6596 (305) 253-2244 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT) ------------------------ COPIES TO: MORTON A. PIERCE, ESQ. JOSEPHINE CICCHETTI, ESQ. JONATHAN L. FREEDMAN, ESQ. JORDEN BURT BERENSON & JOHNSON LLP DEWEY BALLANTINE LLP 777 BRICKELL AVENUE, SUITE 500 1301 AVENUE OF THE AMERICAS MIAMI, FL 33131 NEW YORK, NY 10019 (305) 371-2600 (212) 259-8000
================================================================================ 2 ITEM 1. SECURITY AND SUBJECT COMPANY The name of the subject company is American Bankers Insurance Group, Inc., a Florida corporation (the "Company" or "American Bankers"), and the address of the principal offices of the Company is 11222 Quail Roost Drive, Miami, FL 33157-6596. The title of the class of equity securities to which this statement relates is the Common Stock, par value $1.00 per share, of the Company (the "Common Stock"), including the associated Series A Participating Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement dated as of February 24, 1988, as amended and restated as of November 14, 1990, and as further amended on December 19, 1997 and February 5, 1998 (the "Rights Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C., as successor Rights Agent (such Common Stock and the Rights being collectively referred to herein as the "Shares"). ITEM 2. TENDER OFFER OF THE BIDDER This statement relates to the tender offer by Season Acquisition Corp. ("Purchaser"), a New Jersey corporation and a wholly-owned subsidiary of Cendant Corporation, a Delaware corporation ("Cendant"), to purchase 23,501,260 Shares at a price of $58.00 per Share, net to the seller in cash, without interest thereon, as disclosed in the Tender Offer Statement on Schedule 14D-1, dated January 27, 1998 (the "Schedule 14D-1"), filed by Purchaser and Cendant with the Securities and Exchange Commission (the "SEC"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 27, 1998, and the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Cendant Offer"). The Schedule 14D-1 states that the principal executive offices of Cendant and Purchaser are located at 6 Sylvan Way, Parsippany, New Jersey 07054. ITEM 3. IDENTITY AND BACKGROUND (a) The name and business address of the Company, which is the person filing this Statement, are set forth in Item 1 above. (b) Except as described herein, to the knowledge of the Company, as of the date hereof, there are no material contracts, agreements, arrangements or understandings, or any actual or potential conflicts of interest between the Company or its affiliates and (i) any executive officer or director of the Company or (ii) Purchaser, Cendant or their respective executive officers, directors or affiliates. Certain contracts, agreements, arrangements or understandings between the Company or its affiliates and certain of its executive officers, directors or affiliates are described in the Company's Proxy Statement, dated April 11, 1997 (the "Proxy Statement") mailed to shareholders in connection with the Annual Meeting of Shareholders of the Company held on May 23, 1997 (the "Annual Meeting") under the sections entitled "Directors' Compensation," at pages 13-14 of the Proxy Statement, "Approval of American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan," at pages 17-22 of the Proxy Statement, "Compensation of Executive Officers," at pages 22-31 of the Proxy Statement, and "Certain Relationships and Transactions," at page 11 of the Proxy Statement. A copy of the relevant portions of the Proxy Statement are filed as Exhibit 1 hereto and are incorporated by reference herein. As described in the Proxy Statement, American Bankers is currently a party to severance agreements (the "Severance Agreements") with Messrs. Gerald N. Gaston, Floyd G. Denison, Michael Ray, Stephen T. Williams, Leonardo F. Garcia, Jason J. Israel, Thomas Hayes, Arthur W. Heggen, R. Kirk Landon, Jay R. Fuchs, Eugene E. Becker, Sanford Neubarth, and Philip Bruce Camacho (each, an "Officer," and collectively "Officers"). Pursuant to such severance agreements, the Officers will receive severance payments if they are terminated under certain circumstances. Severance Agreements that were entered into prior to 1989 (the "Prior Severance Agreements") provide that an Officer is entitled to receive payment of an amount (the "Designated Amount") equal to twice the Officer's Current Annual Salary (as defined in the Severance Agreement) in the event that American Bankers is Merged or Sold (as defined in the Severance Agreement), regardless of whether the Officer has terminated 2 3 his employment. Under the terms of the Prior Severance Agreements, American Bankers would be treated as having been Merged or Sold as a result of consummation of the Cendant Offer, and the Officers would be entitled to payment of an amount equal to the Designated Amount. The estimated aggregate amount payable to the Officers under the Prior Severance Agreements as a result of the consummation of the Cendant Offer is $4,785,000. Severance Agreements that were entered into after 1988 (the "Recent Severance Agreements") provide that if, within 24 months following a Change of Control (as defined in the Recent Severance Agreements) of American Bankers, an Officer in good faith determines that there has been a significant adverse change in circumstances affecting such Officers' position or status within American Bankers, such Officer may terminate his employment and be entitled to receive payment of an amount (the "Maximum Amount") equal to the maximum amount that will not constitute a "parachute payment" as defined in Section 280G of the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder (the "Code") (or any successor provision or, if no such provision exists, as defined in such provision immediately prior to its repeal) and as calculated by American Bankers' independent auditors. The Recent Severance Agreements also provide that within fifteen (15) business days following the occurrence of a Change in Control (as defined in the Recent Severance Agreements) of American Bankers, American Bankers is required to deposit with an escrow agent an amount (the "Escrow Deposit") equal to the Maximum Amount calculated as of the date of such Change in Control. Under the terms of the Recent Severance Agreements, a change of control of American Bankers will be treated as having occurred as a result of the consummation of the Cendant Offer. Assuming each Officer who is a party to a Recent Severance Agreement terminated employment immediately following the consummation of the Cendant Offer because such Officer determined that there has been an adverse change in circumstances affecting such Officers' position or status, the estimated aggregate amount payable to such Officers as a result of such terminations would be approximately $18,385,000. As described in the Proxy Statement, American Bankers maintains various plans pursuant to which stock option awards and restricted stock awards are made to its executive officers. Under the 1994 Senior Management Stock Option Plan (the "1994 Senior Plan"), the 1991 Stock Option/Restricted Stock Award Plan (the "1991 Award Plan") and the 1991 Stock Incentive Compensation Plan (the "1991 Incentive Plan"), upon the exercise of a stock option, the optionee is entitled to receive shares of Common Stock which are subject to restrictions on transfer ("Restricted Stock") (which, in the case of the 1994 Senior Plan and the 1991 Award Plan, are in addition to non-restricted shares of Common Stock received upon such exercise). Pursuant to the terms of the 1994 Senior Plan, the 1991 Award Plan and the 1991 Incentive Plan, upon a "change in control" (as defined in such plans), the restrictions applicable to shares of Restricted Stock then held by executive officers on account of the exercise of options under such plans will lapse. Consummation of the Cendant Offer will constitute a change in control under such plans and, accordingly, the restrictions on shares of Restricted Stock then held by executive officers on account of the exercise of options under such plans will lapse. American Bankers has also granted options to purchase Common Stock under the 1997 Equity Incentive Plan (the "1997 Incentive Plan"). Pursuant to the award agreements entered into under the 1997 Incentive Plan, all outstanding stock options will become fully vested and exercisable upon a change in control (as defined under the 1997 Incentive Plan). Upon the exercise of an option under the 1997 Incentive Plan, the optionee is entitled to receive shares of Restricted Stock (as well as non-restricted shares of Common Stock). Consummation of the Cendant Offer will constitute a change in control under the 1997 Incentive Plan and, accordingly, all unvested options under such plan will become immediately vested and exercisable upon consummation of the Cendant Offer and shares of Restricted Stock then held on account of the exercise of options under the 1997 Incentive Plan will become fully vested. Certain members of management of the Company and members of the Board of Directors have certain interests in the Proposed AIG Merger. Such interests are described on pages 35-36 and 55-56 of the Proxy Statement/Prospectus, which material is filed as part of Exhibit 1 hereto and is incorporated by reference herein in its entirety. 3 4 Mr. James F. Jorden, a director of American Bankers, is the Managing Senior Partner of the law firm of Jorden Burt Berenson & Johnson LLP, which provides legal services to American Bankers, including in connection with the Proposed AIG Merger (as defined below) and the Cendant Offer, for which it will receive compensation. ITEM 4. THE SOLICITATION OR RECOMMENDATION (a)-(b) Recommendation, Reasons for the Recommendation and Background. The Board of Directors of the Company (the "Board of Directors" or the "Board") has unanimously determined (with one director absent) that, in light of all the relevant circumstances and for the reasons set forth below, it is unable to take a position with respect to the Cendant Offer and is making no recommendation at this time with respect to the Cendant Offer. The reasons for this determination include the following: (1) The Board of Directors, along with its legal and financial advisors, considered the fact that the Cendant Offer currently contemplates a price of $58 per Share, a 23% premium over the $47 per Share in the Proposed AIG Merger. However, because of the provisions of the AIG Merger Agreement which prohibit the Company from engaging in negotiations with or having discussions with Cendant concerning the Cendant Offer as well as the lack of certain information which the Company expects will be disclosed in the regulatory process, the Board of Directors has been unable to assess several aspects of the Cendant Offer, including the following: - Cendant's relatively high level of financial leverage, which would be further increased by the indebtedness it intends to incur to finance the Cendant Offer, and the effect of such leverage on the opeations of the Company; - Cendant's proposed business plans for the Company following the Cendant Offer if the Cendant Offer were successful, including treatment of accounts, employees and policyholders; - Cendant's experience in owning and operating insurance companies; - The ability of Cendant to provide licensed facilities outside of the United States to permit international distribution of the Company's products; - The ability of Cendant to realize the synergies that Cendant has indicated will be achieved; - Whether increased revenue levels projected by Cendant require additional capital infusions in the Company's operating subsidiaries and the source of such capital; - Cendant's plans with respect to intercompany transactions with the Company's insurance subsidiaries involving intercompany royalties and fees; - The potential reaction of the Company's producers and reinsurers to Cendant; and - The potential volatility of the Cendant common stock, par value $.01 per share (the "Cendant Common Stock"). (2) The Board of Directors continues to believe that the transaction contemplated (the "Proposed AIG Merger") by the Agreement and Plan of Merger (the "AIG Merger Agreement"), dated as of December 21, 1997, as amended and restated as of January 7, 1998 and as further amended on January 28, 1998, among the Company, American International Group, Inc. ("AIG") and AIGF, Inc., a Florida corporation and a wholly-owned subsidiary of AIG ("AIGF") represents a more attractive alternative than operating on a stand-alone basis because: - AIG represents a strong long-term strategic partner for the Company and AIG is a market leader in the insurance industry with an excellent and long-standing operating history; - AIG has extensive knowledge of and experience in regulatory matters; 4 5 - The Board believes that AIG's long-term debt rating will enable the Company to have access to capital on more favorable terms than it previously experienced. The Board also believes that the favorable claims-paying ratings of AIG's insurance subsidiaries would enhance sales of the Company's insurance products; and - The Board believes that a combination with AIG would allow access to AIG's considerable international experience and substantial resources, at a time of industry consolidation, which would enable the Company to expand beyond the domestic market. The Board of Directors also believes that a combination with AIG would allow the Company to enjoy opportunities for operating efficiencies and synergies as a result of the Proposed AIG Merger, particularly in the international distribution of the Company's products. (3) The Board of Directors believes that the Cendant Offer has commenced a process which may lead to higher bids or offers for the Company from Cendant, AIG or others. Consequently, the Board of Directors believes that it would be premature to make a recommendation with respect to the Cendant Offer at this time. The Company has not to date received any such higher bids or offers from Cendant, AIG, or others. The Board did not assign relative weights to the factors listed above. A discussion of the background of the events leading up to the execution of the AIG Merger Agreement by the Company, and the reasons for the determination of the Board to recommend approval and adoption of the AIG Merger Agreement are set forth on pages 22-31 of the Proxy Statement/Prospectus of the Company and AIG filed with the SEC on January 30, 1998 (the "Proxy Statement/Prospectus"), a complete copy of which is filed as Exhibit 3 hereto, and such material on pages 22-31 is incorporated by reference herein in its entirety. The AIG Merger Agreement is filed as Exhibit 2 hereto and is incorporated by reference herein in its entirety. In connection with the AIG Merger Agreement, (i) AIG and the Company entered into a Stock Option Agreement, dated as of December 21, 1997 (the "Stock Option Agreement") pursuant to which the Company granted AIG an option to purchase a number of newly issued shares of Common Stock equal to approximately 19.9% of the outstanding shares of Common Stock upon the occurrence of certain events and (ii) R. Kirk Landon, Chairman of the Company and Gerald N. Gaston, Vice Chairman, President and Chief Executive Officer of the Company (collectively, the "Shareholders") entered into a Voting Agreement dated as of December 21, 1998 with AIG (the "Voting Agreement"), pursuant to which each of Messrs. Landon and Gaston and certain entities affiliated with Mr. Landon agreed to vote all of the Shares beneficially owned by such shareholder (representing approximately 8.2% of the outstanding Shares) (i) in favor of adoption and approval of the AIG Merger Agreement and the Proposed AIG Merger at every meeting of the shareholders of the Company at which such matters are considered and at every adjournment thereof and (ii) against any action or proposal that would compete with or could serve to materially interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Proposed AIG Merger. The Stock Option Agreement and the Voting Agreement are filed as Exhibit 4 and Exhibit 5 hereto, respectively, and are incorporated in their entirety herein by reference. Descriptions of the terms of the Stock Option Agreement and the Voting Agreement are set forth on pages 52-54 of the Proxy Statement/Prospectus, and such material on pages 52-54 is incorporated by reference herein in its entirety. A description of the terms of the AIG Merger Agreement is set forth on pages 38-51 of the Proxy Statement/Prospectus, and such material on pages 38-51 is incorporated by reference herein in its entirety. The descriptions of the AIG Merger Agreement, the Stock Option Agreement and the Voting Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, complete copies of which are filed as Exhibits 2, 4 and 5, respectively, hereto. On January 27, 1998, Cendant publicly announced a proposal to acquire the Company for $58 per share of Common Stock, to be paid in cash and common stock of Cendant. Such proposal was communicated in a letter (the "Cendant Offer Letter") to the members of the Board of Directors from Henry R. Silverman, President and Chief Executive Officer of Cendant, and Walter A. Forbes, Chairman of Cendant. A copy of the Cendant Offer Letter is filed as Exhibit 6 hereto and is incorporated in its entirety herein by reference. On January 27, 1998, Cendant filed its tender offer documents with the SEC on Schedule 14D-1. Pursuant to the 5 6 Cendant Offer, Purchaser seeks to purchase 23,501,260 Shares, subject to the terms and conditions stated therein, at $58 per Share in cash. Cendant contemplates that after consummation of the Cendant Offer, the Company would be merged with and into a subsidiary of Cendant (the "Cendant Merger") and all Shares not tendered in the Cendant Offer would be converted into that number of shares of Cendant Common Stock having a value equal to $58. Cendant also contemplates that in such merger, each outstanding share of $3.125 Series B Cumulative Convertible Preferred Stock of the Company (the "Preferred Stock") would be converted into one share of a new series of convertible preferred stock of Cendant having similar terms, except that such shares would be convertible into shares of Cendant common stock in accordance with the terms of the Preferred Stock. The Cendant Offer is subject to a number of conditions, including (a) there being validly tendered and not properly withdrawn prior to the expiration of the Cendant Offer a number of Shares which, together with Shares owned by Cendant and Purchaser, constitute at least 51% of the Shares outstanding on a fully diluted basis; (b) Purchaser being satisfied, in its sole discretion, that the provisions of Section 607.0901(2) of the Florida Business Corporation Act (the "FBCA") are inapplicable to the Cendant Merger; (c) Purchaser being satisfied, in its sole discretion, that the provisions of Section 607.0902 of the FBCA continue to be inapplicable to the acquisition of Shares pursuant to the Cendant Offer; (d) the purchase of Shares pursuant to the Cendant Offer having been approved for purposes of rendering the supermajority vote requirement of the Company's Third Amended and Restated Articles of Incorporation (the "Articles") inapplicable to Cendant and Purchaser; (e) the Rights having been redeemed by the Board, or Purchaser being satisfied, in its sole discretion, that the Rights are invalid or otherwise inapplicable to the Cendant Offer and to the Cendant Merger; (f) the option contemplated by the Stock Option Agreement having been terminated or invalidated without any Shares having been issued thereunder; and (g) Cendant and Purchaser having obtained all insurance regulatory approvals necessary for their acquisition of control over the Company's subsidiaries on terms and conditions satisfactory to Purchaser, in its sole discretion. In connection with its proposal, on January 27, 1998, Cendant commenced litigation against the Company, members of the Board, AIG and AIGF in the United States District Court for the Southern District of Florida, as described more fully in Item 8 below. Also on January 27, 1998, the Company issued a press release, a copy of which is filed as Exhibit 7 hereto and is incorporated in its entirety herein by reference, announcing that the Board would review Cendant's proposal in due course, and requesting that holders of Shares not take any action until such time as the Company responds to the Cendant Offer. Subsequent to the announcement of the Cendant Offer, AIG on January 27, 1998 delivered notice to the Company exercising its option to purchase the 8,265,626 Shares issuable under the Stock Option Agreement. The consummation of such purchase is subject to applicable regulatory approvals. A copy of the AIG notice of exercise of the option under the Stock Option Agreement is filed as Exhibit 8 hereto and is incorporated in its entirety herein by reference. On January 28, 1998, the Board of Directors met telephonically to review the terms of the Cendant Offer. The Board was apprised of the nature of the litigation commenced by Cendant and others. Members of the Board were also advised as to their fiduciary duties with respect to the Cendant Offer and the Proposed AIG Merger as well as the Company's contractual obligations under the AIG Merger Agreement. The Board determined to meet again on February 5, 1998, at which time it would consider fully the Cendant Offer and the advice of its legal and financial advisors. Thereafter, representatives of Smith Barney Inc., now affiliated with Salomon Brothers Inc. ("Salomon Smith Barney"), financial advisor to the Company and Dewey Ballantine LLP and Jorden Burt Berenson & Johnson LLP, counsel to the Company had periodic discussion with representatives of Goldman, Sachs & Co., financial advisor to AIG ("Goldman Sachs") and Sullivan & Cromwell, counsel to AIG, to discuss AIG's position with respect to the Cendant Offer. 6 7 On January 30, 1998, the Company and AIG filed the Proxy Statement/Prospectus with the Commission, and on February 2, 1998 copies of the Proxy Statement/Prospectus were distributed to shareholders of the Company. On January 30, 1998, the Company and AIG were informed that they had been granted early termination, effective January 30, 1998, of the waiting period for approval of the Proposed AIG Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder. The early termination also applies to AIG's option to purchase Shares under the Stock Option Agreement. On January 30, 1998, Cendant filed preliminary proxy materials with the SEC to solicit shareholders of the Company in opposition to the Proposed AIG Merger. Concurrently, Cendant announced its intention to send proxy materials to shareholders of the Company promptly after such materials are finalized in accordance with federal securities laws. At its meeting on February 5, 1998, the Board of Directors, along with its legal and financial advisors, fully considered the Cendant Offer, as well as the fiduciary duties of the Board and its obligations under Florida law to consider the impact of the Cendant Offer on other constituencies such as policyholders, accounts and employees, and determined that, in light of all the relevant circumstances and for the reasons set forth above, it is unable to take a position with respect to the Cendant Offer and is making no recommendation at this time with respect to the Cendant Offer. As described more fully in Item 8 below, at its meeting on February 5, 1998, the Board of Directors also unanimously approved an amendment to the Rights Agreement providing that the Board of Directors may extend a Distribution Date (as defined in the Rights Agreement) beyond the dates set forth in the Rights Agreement, upon approval by a majority of the Continuing Directors (as defined in the Rights Agreement). Pursuant to the Rights Agreement, as so amended, the Board of Directors resolved that the Distribution Date shall not occur until such date as may be determined by action of the Board of Directors in accordance with the terms of the Rights Agreement, as amended. In addition to the matters set forth above, at its meeting on February 5, 1998, the Board of Directors of the Company approved the filing of this Statement as well as a letter to be sent to shareholders (the "Shareholder Letter") and a press release (the "February 6 Company Press Release"), each dated February 6, 1998, describing the position of the Board of Directors set forth herein. Copies of the Shareholder Letter and the February 6 Company Press Release are filed as Exhibits 9 and 10, respectively, hereto and are incorporated by reference herein. On February 5, 1998, the Company issued a press release (the "Earnings Release") announcing operating results for the year ended December 31, 1997. The Earnings Release, which includes summarized financial statement tables for the quarter ended and year ended December 31, 1997, is filed as Exhibit 11 hereto and is incorporated herein by reference in its entirety. The Earnings Release sets forth the following information. Net operating income for the fourth quarter of 1997 was $29.2 million or $.62 per share on a diluted basis. This compares with net operating income of $25.2 million or $.54 per share for the same period in 1996. Operating results for the fourth quarter 1997 increased $4.0 million or 16% as compared with the same period in 1996. On a basic earnings per share basis, net operating income for the fourth quarter of 1997 was $.66 per share compared with $.57 per share for the same period of 1996. Gross collected premiums for the fourth quarter of 1997 increased approximately 10% from $652.6 million to $720.2 million. Gross collected premiums for 1997 were $2.740 billion versus $2.493 billion for 1996. This represents an increase of approximately 10% in 1997 over 1996. Operating results in the fourth quarter were driven by the growth in net earned premiums of 10% over the same period in 1996, coupled with consistently good underwriting results and a favorable operating expense ratio. The ratio of claims and commission expenses to net earned premiums was 78.7% which continues to reflect favorable underwriting trends experienced throughout 1997. Operating expenses in the quarter totaled $74.2 million or 11.2% of gross earned premiums. This compared with an operating expense ratio of 12.2% for the same period in 1996. The quarter also benefited from a lower effective tax rate of 25.9% compared with 7 8 31.3% in the same period in 1996. The overall effective tax rate for 1997 was 28% compared with 30.5% for 1996. Net income for the fourth quarter of 1997 was $30.0 million or $.64 per share on a diluted basis, compared with $26.2 million or $.56 per share for the same period in 1996. On a basic earnings per share basis, net income for the fourth quarter of 1997 was $28.2 million or $.68 per share compared with $24.3 million or $.59 per share for the same period in 1996. Fourth quarter net income includes realized investment gains, net of tax, of $.8 million or $.02 per share compared with realized investment gains, net of tax, of $1.0 million or $.02 per share for the same period in 1996. Weighted average shares outstanding on a diluted basis for the quarter were 47.1 million compared with a split adjusted figure of 46.7 million for the same period in 1996. The Company declared a two-for-one Common Stock split in August 1997. As a result of the stock split all common shareholders of record on August 29, 1997 received one additional share for each share they held. On a diluted basis net operating income increased $18.6 million or 21% in 1997 over 1996. Net operating income for the year ended December 31, 1997 was $108.3 million or $2.31 per share compared with net operating income of $89.7 million or $2.04 per share in 1996. On a basic earnings per share basis, net operating income per share for 1997 was $2.44 per share compared with $2.12 per share for 1996. Adjusted net income for the year ended December 31, 1997 was $115.1 million or $2.45 per share on a diluted basis, compared with net income of $94.7 million or $2.16 per share for 1996. Stockholders' equity was $698.9 million (excluding $115 million of preferred stock) and book value per common share was $16.83 at December 31, 1997. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED The Company has retained Broadgate Consultants, Inc. as a public relations advisor in connection with the Cendant Offer and has retained MacKenzie Partners, Inc. to assist the Company in communications with shareholders and to provide other services in connection with the Proposed AIG Merger and the Cendant Offer. The Company will pay Broadgate Consultants, Inc. and MacKenzie Partners, Inc. reasonable and customary compensation for their services and will reimburse MacKenzie Partners, Inc. and Broadgate Consultants, Inc. for their reasonable out-of-pocket expenses incurred in connection therewith. The Company retained Salomon Smith Barney to explore and evaluate a strategic combination with AIG. The Company agreed to pay Salomon Smith Barney: (i) a retainer fee (the "Retainer Fee") of $100,000, which has been paid; and (ii) an additional fee of $1,000,000 (an "Opinion Fee"), which becomes payable upon delivery by Salomon Smith Barney of an Opinion (whether oral or written, as requested by the Company) to the Board of Directors of the Company as to whether the consideration to be received by the Company or its shareholders, as the case may be, in connection with either the transaction contemplated by the AIG Merger Agreement or the Cendant Offer (each a "Transaction") is fair to the Company or such shareholders from a financial point of view (provided, however, that the aggregate Opinion Fees payable shall not exceed $2,000,000) (Salomon Smith Barney rendered such an Opinion in connection with the approval by the Board of Directors of the Proposed AIG Merger and has been paid an Opinion Fee by the Company). In addition, the Company has agreed to pay Salomon Smith Barney a transaction fee (the "Transaction Fee") of $5.5 million (less the Retainer Fee and Opinion Fees referred to in (i) and (ii) above), except that in the event a Transaction involves the purchase of shares of Common Stock, an additional fee will be payable as follows: (A) if the total consideration per share paid to or received by the shareholders of the Company is greater than $40.00 but less than or equal to $58.00, the Company will pay to Salomon Smith Barney an additional fee in an amount equal to the lesser of (x) $6.6 million and (y) 2% of the aggregate amount of such consideration paid to all Company shareholders in excess of $40.00 per share; and (B) if the total consideration per share paid to or received by the shareholders of the Company is greater than $58.00, the Company will pay to Salomon Smith Barney an additional fee in an amount equal to (x) $6.6 million plus (y) 1% of the aggregate amount of such consideration paid to all Company shareholders in excess of $58.00 per share, provided, however, that the additional fee payable under this clause (B) shall not exceed $9.5 8 9 million. The Transaction Fee described in the preceeding sentence becomes payable upon the consummation of a Transaction. The Company also has agreed to reimburse Salomon Smith Barney for its out-of-pocket expenses, incurred by Salomon Smith Barney, including the fees and expenses of its legal counsel, subject to a cumulative maximum limit of $100,000, and to indemnify Salomon Smith Barney and related persons against certain liabilities under the federal securities laws, arising out of Salomon Smith Barney's engagement. Except as described above, neither the Company nor any person acting on its behalf has employed, retained or compensated any other person to make solicitations or recommendations to security holders on its behalf with respect to the Proposed AIG Merger or the Cendant Offer. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES (a) Other than normal periodic purchases made pursuant to the Company's various employee and director benefit plans and as described below, to the Company's best knowledge, no transactions in Shares have been effected during the past 60 days by the Company or, to the best knowledge of the Company, any executive officer, director, affiliate or subsidiary of the Company. On January 23 and 26, 1998, Messrs. Gaston and Landon, respectively, gave notice to the Company of their intention to convert $1,737,312.50 aggregate principal amount and $1,985,500 aggregate principal amount, respectively, of the Company's convertible debentures due May 24, 1999 held by them (the "Debentures") into 140,000 Shares and 160,000 Shares, respectively. The Debentures were issued to Messrs. Gaston and Landon pursuant to the Company's 1994 ABIG Key Executive Debenture Plan. On December 22, 1997, Watsco, Inc., a corporation of which Mr Albert H. Nahmad, a director of the Company, is President, Chairman of the Board and Chief Executive Officer, sold 8,000 Shares at a price of $45 3/4 per share, in open market transactions. (b) To the best knowledge of the Company, none of the Company's executive officers, directors, affiliates or subsidiaries intend, with respect to any Shares held of record or beneficially owned by such persons, to tender any Shares to Purchaser and Cendant. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY (a) Except for discussions among the financial advisors and counsel as described in Item 4 above, no negotiation is being undertaken or is underway by the Company in response to the Cendant Offer which relates or would result in: (1) An extraordinary transaction such as a merger or reorganization, involving the Company or any subsidiary of the Company; (2) A purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the Company; (3) A tender offer for or other acquisition of securities by or of the Company; or (4) Any material change in the present capitalization or dividend policy of the Company. (b) Except as set forth herein, the Company has not entered into any transaction, board resolution, agreement in principle or signed contract in response to the Cendant Offer which relates to or would result in one or more of the matters referred to in Item 7(a). However, the Board has determined that disclosure of the substance of negotiations concerning, or the possible terms of, or potential parties to any transaction or proposals of the type referred to in Item 7(a), if any, prior to an agreement in principle with respect thereto would jeopardize the initiation or continuation of negotiations with respect to such transactions and has, accordingly, adopted a resolution directing that no such disclosure with respect to any transaction be made until such agreement in principle has been reached. 9 10 ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED Litigation. On or about January 27, 1998, Cendant and Purchaser filed an action in the United States District Court, Southern District of Florida, Miami Division, alleging various causes of action relating to the Proposed AIG Merger: Cendant Corporation, et al. v. American Bankers Insurance Group, Inc., et al., Civil Action No. 98-0159 (the "Cendant Action"). On or about January 27, 1998, a putative class action was filed in the Circuit Court of the Eleventh Judicial District in and for Dade County, Florida, on behalf of the Company's shareholders, alleging causes of action relating to the Proposed AIG Merger: Goodman v. American Bankers Insurance Group Inc., et al., Case No. 98-01916-CA01 (the "Goodman State Court Action"). On or about January 28, 1998, a putative class action was filed in the United States District Court in Miami, on behalf of the Company's shareholders, alleging causes of action relating to the Proposed AIG Merger: Goodman v. American Bankers Insurance Group Inc., et al., Civil Action No. 98-0175 (the "Goodman Federal Court Action"). Also on or about January 28, 1998, another putative class action was filed in the United States District Court in Miami, on behalf of the Company's shareholders, alleging causes of action relating to the Proposed AIG Merger: Lopate, et al. v. Landon, et al., Civil Action No. 98-0168 (the "Lopate Federal Court Action"). On or about February 2, 1998, another putative class action was filed in the United States District Court in Miami, on behalf of the Company's shareholders, alleging causes of action relating to the Proposed AIG Merger: Bildstein v. American Bankers Insurance Group, et al., Civil Action No. 98-0212 (the "Bildstein Federal Court Action"). The defendants in the Cendant Action are the Company, AIG, AIGF and Gerald N. Gaston, R. Kirk Landon, Eugene M. Matalene, Jr., Armando Codina, Peter J. Dolara, James F. Jorden, Bernard P. Knoth, Albert H. Nahmad, Nicholas J. St. George, Robert C. Strauss, George E. Willamson II, Daryl L. Jones, Nicholas A. Buoniconti and Jack F. Kemp who are members of the Company's Board of Directors (collectively the "Individual Defendants"). The defendants in the Goodman State Court Action and the Goodman Federal Court Action are the Company, AIG, the Individual Defendants and William H. Allen, Jr., also a director of the Company. The defendants in the Lopate Federal Court Action are the Company, AIG, AIGF and the Individual Defendants, except Mr. Kemp. The defendants in the Bildstein Federal Court Action are the Company, AIG, the Individual Defendants and Mr. Allen. Each of the lawsuits identified above allege substantially similar causes of action: breaches of fiduciary duty against the Individual Defendants for having agreed to the Proposed AIG Merger, the Stock Option Agreement, the 120 day so-called "No-Shop" provision, the 180 day non-termination provision and the $66 million termination fee, and for having exempted the Proposed AIG Merger from the provisions of the Rights Agreement. The Cendant Action also alleges civil conspiracy to commit a breach of fiduciary duty against AIG and AIGF and violation of Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and the regulations promulgated thereunder against AIG. Plaintiffs in the Cendant Action allege that AIG's Schedule 13D filed on January 16, 1998 fails to disclose that Maurice R. Greenberg, the chairman of AIG, controls AIG. Plaintiffs claim that AIG failed to disclose that Mr. Greenberg controls approximately 30% of the outstanding shares of common stock of AIG through his alleged control of Starr International Company, Inc., C.V. Starr & Co. Inc. and the Starr Foundation, and his alleged influence over persons who, directly or indirectly, report to him. On February 2, 1998, plaintiffs in the Cendant Action filed an amended complaint, additionally claiming that the Proxy Statement/Prospectus is false and misleading and allegedly violates Sections 14(a) and 14(e) of the Exchange Act. The Amended Complaint alleges that the Proxy Statement/Prospectus is false and misleading in that it: (i) claims that AIG has exercised the option contemplated by the Stock Option Agreement, thereby suggesting that it will obtain the option shares in three to ten business days, when in fact the option contemplated by the Stock Option Agreement will not be exercisable until such time as AIG obtains the requisite regulatory approval, which is not imminent, as the Proxy Statements/Prospectus suggests; (ii) states that the Company and AIG expect the Proposed AIG Merger to close in March 1998, when they know that the likelihood of receiving all required regulatory approval prior to the second quarter of 10 11 1998 is remote; (iii) claims there are expense savings and synergies to be obtained as a result of the Proposed AIG Merger without disclosing the plans for achieving them and that in order to accomplish the cost savings desired by AIG, it is likely that jobs will be eliminated and employees of the Company will be terminated, including those based in Florida; (iv) misleadingly misrepresents the number of shares "contractually committed" to vote in favor of the Proposed AIG Merger; (v) misleadingly implies that AIG will be able to vote the Shares covered by the Stock Option Agreement at the special meetings of shareholders at which voting for the Proposed AIG Merger will be held; (vi) misleadingly fails to disclose that AIG is controlled by Mr. Greenberg, directly and indirectly, through his control of Starr International Company, Inc., Starr Foundation and C.V. Starr & Co. Inc.; and (vii) conceals the purportedly inadequate financial terms of the Proposed AIG Merger by, among other things, presenting the fairness opinion of its financial adviser, without revealing whether the opinion was based on projections that allegedly were revised by decreasing revenue and income growth from historical levels solely to create the illusion that economically the Proposed AIG Merger is "fair" and to gain approval for the Proposed AIG Merger. The Goodman State Court Action, the Goodman Federal Court Action, the Lopate Federal Court Action, and the Bildstein Federal Court Action allege breaches of fiduciary duty similar to those alleged in the Cendant Action, and the latter three actions include a claim against AIG for violation of Section 13(d) of the Exchange Act and the regulations promulgated thereunder. Each of the lawsuits, identified above seeks injunctive and declaratory relief against the actions allegedly taken by the defendants including corrective disclosure and an injunction against the Proposed AIG Merger as well as unspecified damages and attorneys' fees. Amendment to Rights Agreement. At its meeting on February 5, 1998, the Board of Directors of the Company unanimously approved Amendment No. 2 to the Rights Agreement ("Amendment No. 2") which provides that a Distribution Date under the Rights Agreement will be the Close of Business (as defined in the Rights Agreement) on the day (or such later date as may be determined by action of the Board of Directors, upon approval by a majority of the Continuing Directors (as defined in the Rights Agreement)) which is the earlier of (i) the tenth day after the first date of public announcement by the Company or an Acquiring Person (as defined in the Rights Agreement) that an Acquiring Person has become such or (ii) the tenth business day after the date that a tender or exchange offer by any person (other than the Company and certain exempted persons) is first published or sent or given within the meaning of Rule 14d-2(a), if upon consummation thereof, such person would become the beneficial owner of fifteen percent or more of the shares of Common Stock then outstanding. Amendment No. 2 is filed as Exhibit 13 hereto and is incorporated by reference herein. Pursuant to the Rights Agreement, as so amended, the Board of Directors resolved that the Distribution Date shall not occur until such date as may be determined by action of the Board of Directors in accordance with the terms of the Rights Agreement, as amended. Therefore, the Cendant Offer will not at this time cause a Distribution Date to occur, although the Board may cause a Distribution Date to occur in connection therewith in the future. Descriptions of the terms of the Rights Agreement and the FBCA, the Articles and the Company's By-Laws relating to business combination restrictions are set forth on pages 72-74 of the Proxy Statement/Prospectus, and such material on pages 72-74 is incorporated by reference herein in its entirety. Regulatory Process The completion of the Proposed AIG Merger and the Cendant Offer are each contingent upon the receipt of approvals from the insurance regulators in each domestic and foreign jurisdiction which is a domicile of an insurance company subsidiary of the Company. On or before January 9, 1998, AIG filed applications for such approvals in all such jurisdictions. On January 27, 1998, Cendant filed applications for such approvals. As required by the laws of the respective domestic jurisdictions, copies of such applications were delivered to the Company and/or its insurance company subsidiaries; however, the copies of Cendant's applications provided to the Company were incomplete. 11 12 Each jurisdiction has a statutory framework pursuant to which consideration of the applications is conducted. In certain jurisdictions, hearings are required. In other jurisdictions, hearings may be initiated by the regulator or at the request of an affected party. On February 2, 1998, Cendant petitioned to intervene in the consideration of AIG's application in Florida and to have such consideration consolidated with the consideration of its own application and petitioned for a hearing on the AIG application as provided for by Florida law. Cendant asserted that it should be admitted as party to the AIG approval process as provided by Florida law because its substantial interests as a shareholder and competing acquiror of the Company will be affected by the AIG application. Cendant further asserted that the AIG application raises disputed issues of material fact as to whether AIG's proposed acquisition of a controlling interest in the Florida domestic insurers should be approved, and that Cendant has a right to be heard on these issues through participation in the proceedings. The Florida Insurance Commissioner has not yet acted upon Cendant's petition for a hearing or request for consolidation. If Cendant's petition is granted, a hearing will be conducted within 60 days after the date of its petition and the 90 day period within which the Florida Insurance Commissioner is required to act on AIG's application will be tolled during the pendency of the hearing. Therefore, if a hearing is held as a result of Cendant's petition, the Proposed AIG Merger will not be approved (if approved at all) prior to the end of March, 1998. The Company has requested a hearing in connection with Cendant's application in Florida. In addition, the Company has sent a letter to the insurance regulatory authorities of certain other states where Cendant has filed applications for approval of the Cendant Offer, stating that such document provided to the Company was not complete, in that it omitted certain exhibits which are part of the application, and requesting that Cendant be instructed to provide the portions of the application not included in the initial delivery to the Company and all additional information filed with such regulatory authorities in respect of the application. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1.................. Pages 11, 13-14, 17-22 and 22-31 of the Company's Proxy Statement, dated April 11, 1997, in connection with the Annual Meeting of Shareholders of the Company held on May 23, 1997 and pages 35-36 and 55-56 of the Proxy Statement/Prospectus dated January 30, 1997 Exhibit 2.................. Agreement and Plan of Merger, dated as of December 1, 1997, as amended and restated as of January 7, 1998 and as further amended by Amendment No. 1 on January 28, 1998, among the Company, AIG and AIGF (incorporated by reference to Appendix I of the Proxy Statement/ Prospectus) Exhibit 3.................. The Proxy Statement/Prospectus (incorporated by reference to the Proxy Statement/Prospectus on Schedule 14A filed on January 30, 1998) (0-9633) Exhibit 4.................. Stock Option Agreement, dated as of December 21, 1997, between the Company and AIG (incorporated by reference to Appendix II of the Proxy Statement/Prospectus) Exhibit 5.................. Voting Agreement, dated as of December 21, 1997, between AIG, and Gerald N. Gaston, R. Kirk Landon, R. Kirk/B. Landon Foundation, R. Kirk Landon Revocable Trust, and Landon Corporation (incorporated by reference to Appendix III of the Proxy Statement/Prospectus) Exhibit 6.................. Letter, dated January 27, 1998, from Cendant to the Board of Directors of the Company Exhibit 7.................. Press Release, dated January 27, 1998, of the Company 12 13 Exhibit 8.................. Letter, dated January 27, 1998, from AIG to the Company, exercising the option to purchase 8,265,626 shares of Common Stock pursuant to the Stock Option Agreement Exhibit 9.................. Letter, dated February 6, 1998, from the Company to holders of Common Stock* Exhibit 10................. Press Release, dated February 6, 1998, of the Company Exhibit 11................. Earnings Press Release dated February 5, 1998, of the Company Exhibit 12................. Amended Complaint filed in Cendant Corporation, et al. v. American Bankers Insurance Group, Inc., et al., Civil Action No. 98-0159 (Moore) Complaint filed in Goodman v. American Bankers Insurance Group Inc., et al., Case No. 98-01915-0801 Complaint filed in Goodman v. American Bankers Insurance Group Inc., et al., Civil Action No. 98-0175 (Moreno) Complaint filed in Lopate, et al. v. Landon, et al., Civil Action No. 98-0168 (Moreno) Complaint filed in Bildstein v. American Bankers Insurance Group, Inc. et al., Civil Action No. 98-0212 (Brown) Exhibit 13................. Amendment No. 2, dated as of February 5, 1998, to the Rights Agreement, dated as of February 24, 1988, as amended and restated as of November 14, 1990 and as further amended on December 19, 1997, between the Company and ChaseMellon Shareholder Services, L.L.C. as successor Rights Agent Exhibit 14................. Form of Executive Compensation Agreement (incorporated by reference to Exhibit 10(a) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 15................. Form of Executive Severance Benefits Agreement (incorporated by reference to Exhibit 10(c) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 16................. 1991 Stock Incentive Compensation Plan, as amended February 18, 1994 (incorporated by reference to Exhibit 10(j) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 17................. 1991 Stock Option/Restricted Stock Award Plan, as amended February 18, 1994 (incorporated by reference to Exhibit 10(k) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 18................. 1994 Non-Employee Directors' Stock Option Plan (incorporated by reference to Exhibit 10(p) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 19................. 1997 Equity Incentive Plan (incorporated by reference to Exhibit B of the Company's Proxy Statement on Schedule 14A filed on April 11, 1997) - --------------- * Included in copies mailed to shareholders of the Company. 13 14 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. AMERICAN BANKERS INSURANCE GROUP, INC. By: /s/ GERALD N. GASTON --------------------------------------- Name: Gerald N. Gaston Title: Chief Executive Officer, President and Vice Chairman Date: February 6, 1998 14 15 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION Exhibit 1.................. Pages 11, 13-14, 17-22 and 22-31 of the Company's Proxy Statement, dated April 11, 1997, in connection with the Annual Meeting of Shareholders of the Company held on May 23, 1997 and pages 35-36 and 55-56 of the Proxy Statement/Prospectus dated January 30, 1997 Exhibit 2.................. Agreement and Plan of Merger, dated as of December 1, 1997, as amended and restated as of January 7, 1998 and as further amended by Amendment No. 1 on January 28, 1998, among the Company, AIG and AIGF (incorporated by reference to Appendix I of the Proxy Statement/ Prospectus) Exhibit 3.................. The Proxy Statement/Prospectus (incorporated by reference to the Proxy Statement/Prospectus on Schedule 14A filed on January 30, 1998) (0-9633) Exhibit 4.................. Stock Option Agreement, dated as of December 21, 1997, between the Company and AIG (incorporated by reference to Appendix II of the Proxy Statement/Prospectus) Exhibit 5.................. Voting Agreement, dated as of December 21, 1997, between AIG, and Gerald N. Gaston, R. Kirk Landon, R. Kirk/B. Landon Foundation, R. Kirk Landon Revocable Trust, and Landon Corporation (incorporated by reference to Appendix III of the Proxy Statement/Prospectus) Exhibit 6.................. Letter, dated January 27, 1998, from Cendant to the Board of Directors of the Company Exhibit 7.................. Press Release, dated January 27, 1998, of the Company Exhibit 8.................. Letter, dated January 27, 1998, from AIG to the Company, exercising the option to purchase 8,265,626 shares of Common Stock pursuant to the Stock Option Agreement Exhibit 9.................. Letter, dated February 6, 1998, from the Company to holders of Common Stock* Exhibit 10................. Press Release, dated February 6, 1998, of the Company Exhibit 11................. Earnings Press Release dated February 5, 1998, of the Company Exhibit 12................. Amended Complaint filed in Cendant Corporation, et al. v. American Bankers Insurance Group, Inc., et al., Civil Action No. 98-0159 (Moore) Complaint filed in Goodman v. American Bankers Insurance Group Inc., et al., Case No. 98-01915-0801 Complaint filed in Goodman v. American Bankers Insurance Group Inc., et al., Civil Action No. 98-0175 (Moreno) Complaint filed in Lopate, et al. v. Landon, et al., Civil Action No. 98-0168 (Moreno) Complaint filed in Bildstein v. American Bankers Insurance Group, Inc. et al., Civil Action No. 98-0212 (Brown) 16 EXHIBIT NO. DESCRIPTION Exhibit 13................. Amendment No. 2, dated as of February 5, 1998, to the Rights Agreement, dated as of February 24, 1988, as amended and restated as of November 14, 1990 and as further amended on December 19, 1997, between the Company and ChaseMellon Shareholder Services, L.L.C. as successor Rights Agent Exhibit 14................. Form of Executive Compensation Agreement (incorporated by reference to Exhibit 10(a) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 15................. Form of Executive Severance Benefits Agreement (incorporated by reference to Exhibit 10(c) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 16................. 1991 Stock Incentive Compensation Plan, as amended February 18, 1994 (incorporated by reference to Exhibit 10(j) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 17................. 1991 Stock Option/Restricted Stock Award Plan, as amended February 18, 1994 (incorporated by reference to Exhibit 10(k) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 18................. 1994 Non-Employee Directors' Stock Option Plan (incorporated by reference to Exhibit 10(p) of the Company's Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 19................. 1997 Equity Incentive Plan (incorporated by reference to Exhibit 8 of the Company's Proxy Statement on Schedule 14A filed on April 11, 1997) - --------------- * Included in copies mailed to shareholders of the Company. EX-99.1 2 CERTAIN PAGES FROM COMPANY'S 1997 PROXY STATEMENT 1 page 11 Exhibit 1 CERTAIN RELATIONSHIPS AND TRANSACTIONS Jorden Burt Berenson & Johnson LLP, of which Mr. Jorden is a Senior Managing Partner, serves as general counsel for the Company and its subsidiaries. In 1996, the firm received approximately $3,785,400 for legal services rendered and costs incurred in that capacity. Mr. St. George is President, Chief Executive Officer and Director of Oakwood Homes Corporation. ABLAC has reinsurance agreements with an affiliate of Oakwood Homes Corporation. In 1996, ABLAC ceded premium of $4,541,367 to Oakwood Life Insurance Company, LTD. under these reinsurance contracts. Mr. Williamson is President of Williamson Cadillac Company, Williamson Saturn Inc. and WWW Enterprises (automobile dealerships). In 1996, Mr. Williamson's automobile dealerships sold ABLAC Credit Life, Health and Disability policies. Total net written premium by these dealerships was $192,784 in 1996. The Company believes these transactions were made on terms no less favorable than that which could have been received by unaffiliated third parties. 2 page 13-14 DIRECTORS' COMPENSATION ANNUAL AND MEETING FEES Directors who are not officers or employees of the Company are paid a quarterly fee of $5,000 ($5,500, if chairman of a committee of the ABIG Board or chairman of the Boards of any subsidiary of the Company). Mr. Landon and Mr. Gaston, received no additional fees for their directorships. Directors who are not officers or employees of the Company are also paid a fee of $750 for each meeting of the Board of Directors or its committees which they attend and $375 for each meeting attended telephonically, but only one attendance fee is paid for attendance at meetings held on a single day. Directors who reside outside Miami are also reimbursed for transportation and other travel expenses. The Company's By-laws provide for indemnification of directors to the fullest extent permitted under Florida Statutes. DIRECTORS' DEFERRED COMPENSATION PLAN 2 3 The Company's Directors' Deferred Compensation Plan (the "Deferred Plan") was adopted by the Board of Directors of the Company in October 1980 and amended and restated in February 1994, subject to shareholder approval which was obtained on May 25, 1994. Under the Deferred Plan, directors may elect to defer the receipt of their compensation in cash or in stock equivalents. Upon termination from the Board of Directors, the Director will receive, as elected, either cash or actual shares of the Company's Common Stock for fees deferred as stock equivalents. Directors who elect to defer fees must make an election in writing prior to an annual meeting of the shareholders. All fees earned during each director's term shall be deferred until retirement, resignation or death. The deferral may be revoked with respect to future payments or the form of future payments to be deferred may be changed upon written notice delivered to the Company prior to an annual meeting of the shareholders. The revocation or change will be effective six months following receipt of the notice. For the year ended December 31, 1996, ten members of the Company's Board elected to defer their compensation under the plan. Under the Deferred Plan 100,000 shares of the Company's authorized but previously unissued Common Stock have been reserved. At this year's Meeting, a proposal to amend the Deferred Plan to increase the number of shares of Common Stock reserved for issuance from 100,000 to 200,000 will be presented to the shareholders. If approved, the amendment will immediately go into effect. NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN On May 25, 1994, shareholders approved the adoption of the 1994 Non-Employee Directors' Stock Option Plan ("Non-Employee Directors' Plan"). Under the terms of the plan, each non-employee director will receive 1,000 options at the annual Board of Directors meeting exercisable at prices equivalent to the fair market value of the Company's Common Stock on the date of grant. Options granted are not exercisable before the six-month anniversary nor after the fifth anniversary from the date of the grant. When adopted, there were 50,000 shares authorized and currently options for 39,000 shares have been issued. At this year's Meeting, a proposal to adopt the American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan will be presented to shareholders. This plan includes provisions under which each non-employee director will receive options on substantially the same terms as the Non-Employees Directors' Plan, except that the options will not be exercisable before the one year anniversary from the date of grant. If the proposed plan is approved, the Company shall cease making grants under the Non-Employee Directors' Plan. 3 4 page 17-22 APPROVAL OF AMERICAN BANKERS INSURANCE GROUP, INC. 1997 EQUITY INCENTIVE PLAN The American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan (the "Plan") was approved by the Board of Directors of the Company on February 19, 1997. The Board of Directors has determined that a new stock incentive plan is needed to promote the interests of the Company and its shareholders by providing the Company's directors, officers and employees with an incentive to undertake and continue service with the Company and its subsidiaries. Pursuant to the Plan, the Company proposes to grant to selected officers and employees of the Company and its subsidiaries stock options, stock appreciation rights, restricted stock awards, merit awards, performance share awards and cash awards ("Awards"). In addition, under the Plan, the Company will grant to each current member of its Board of Directors who is not an officer or employee of the Company ("Outside Director") an option to purchase 1000 shares of Common Stock on the date of each annual meeting of the Board. Except for performance share awards, there are approximately 260 full-time employees and Outside Directors who the Compensation and 4 5 Nominating Committee intends to consider as eligible to receive Awards. For performance share awards, the Compensation and Nominating Committee intends that all current full-time employees are eligible. At this time, there are approximately 2,860 full-time employees. The Plan will be effective and implemented only after approval of the Company's shareholders at the Meeting. If approved by the shareholders, no further grants will be made under the 1991 Stock Incentive Compensation Plan, 1994 Senior Management Stock Option Plan and 1994 Non-Employee Directors' Stock Option Plan. The principal provisions of the Plan are summarized below. This summary, however, does not purport to be complete and is qualified in its entirety by reference to the provisions of the Plan. A copy of the Plan is set forth as Exhibit B. Capitalized terms used without definition in this summary have the meanings specified under the Plan. SHARES AVAILABLE FOR ISSUANCE Under the Plan, 2,000,000 shares of the Company Common Stock will be available for grants of Awards. Of this amount, only 700,000 shares in the aggregate are authorized for the issuance of restricted stock and merit awards and only 200,000 shares in the aggregate are authorized for the issuance of performance share awards under the Plan. In general, if any Award under the Plan expires or terminates without having been fully exercised, or if any Award shall be forfeited, the shares subject to the unexercised or forfeited portion of such Award will become available for grants of new Awards under the Plan. In addition, if there is a change in capitalization of the Company the number of shares available for grants and the shares subject to outstanding Awards will be adjusted accordingly. PLAN ADMINISTRATION The Plan will be administered by the Compensation and Nominating Committee of the Board of Directors (the "Committee"). The Board and the Committee will have the authority to amend the Plan as it deems advisable; subject to any regulatory or shareholder approval required by law. The Committee may, subject to any regulatory or shareholder approval required by law, at any time modify or amend the terms of an outstanding Award so long as the rights of any holder of an outstanding Award are not adversely affected or no law is violated. Except with respect to Awards made to Outside Directors and subject to the terms of the Plan, the Committee will select the individuals to whom Awards will be granted, determine the number of shares subject to each Award, prescribe the terms and conditions of each Award granted under the Plan, and make any other determination necessary or advisable for administration of the Plan. STOCK OPTIONS Employee Stock Options 5 6 Options may be granted by the Committee as incentive stock options ("ISOs") intended to qualify for favorable tax treatment under the Federal tax law or as nonqualified stock options ("NQSOs"). The options may, in the Committee's discretion, be made transferable. The Plan requires that the exercise price of all options be equal to or greater than the fair market value of Common Stock on the date of grant of that option. The term of any ISO cannot exceed ten years from the date of grant, and the term of any NQSO cannot exceed ten years and one month from the date of grant. Subject to the terms of the Plan and any additional restrictions imposed at the time of grant, options ordinarily will become exercisable, at least in part, commencing one year after the date of grant. Outside Directors Stock Options Under the Plan, each Outside Director will receive options to purchase 1,000 shares of Common Stock on the date of each annual meeting of the Board. The exercise price of the Outside Directors' options will be equal to the last trade price of the Common Stock on the date of grant. The options will expire on the fifth anniversary of their grant. General Terms Options will become exercisable in whole or in part on such date as the Committee determines, but in no event prior to the first anniversary of their grant. No exercise of options may be for fewer than 50 shares (or the total remaining shares covered by the option if fewer than 50 shares). Subject to such rules as the Committee may impose, the exercise price of an option may be paid in cash, in shares of Common Stock owned by the optionee for at least six months and not used in a stock option exercise during the preceding six months, with a combination of cash and shares, or by effecting a "cashless exercise" with a broker, or with such other consideration as shall be approved by the Committee (including with respect to an employee stock option, if permitted by the Committee, the equivalent cash dividend paid upon each share of Common Stock by the Company during the period between the grant of the option and its exercise to the extent of the number of shares for which the option was exercised). The options of an employee or Outside Director who dies or becomes disabled during the term of the options will continue to be exercisable up to six months after the death or disability or up to the expiration of the options, whichever occurs earlier. The options of an employee or Outside Director who leaves the Company other than as a result of death or disability will terminate automatically upon termination of 6 7 employment. STOCK APPRECIATION RIGHTS The Committee may grant stock appreciation rights ("SARs"), in tandem with any options granted under the Plan or may solely grant SARs. An SAR granted in tandem with an option may be exercised only when the underlying option is exercisable. An SAR permits the holder to receive (in shares of Common Stock, cash, or a combination thereof) an aggregate value equal to the excess of the fair market value of one share of Common Stock over the exercise price specified in the SAR multiplied by the number of shares covered by such option or portion thereof which is to be exercised. The Plan requires that the exercise price of all SARs be equal or greater than the fair market value of the Common Stock on the date of grant of the SARs. For SARs granted in tandem with options, the exercise price shall be that of the related option. SARs will become exercisable on such date as the Committee determines, but in no case earlier than the first anniversary of their grant. RESTRICTED STOCK AND MERIT AWARDS TO EMPLOYEES The Committee may grant shares of Common Stock to participants in such amounts, and subject to such restrictions and additional terms and conditions, if any, as the Committee in its sole discretion shall determine consistent with the provisions of the Plan ("Restricted Stock"). The Committee may also grant from time to time shares of Common Stock to selected Plan participants free of restrictions ("Merit Awards") in such amounts as the Committee in its sole discretion shall determine consistent with the provisions of the Plan. As a condition to any award of Restricted Stock or Merit Award, the Committee may require a participant to pay an amount equal to, or in excess of, the par value of the shares of Restricted Stock or Common Stock awarded to him or her. Unless otherwise directed by the Committee, Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered during a "Restricted Period", which in the case of grants to employees shall not be less than one year from the date of grant. The Restricted Period with respect to any outstanding shares of Restricted Stock awarded to employees may be reduced by the Committee at any time. Except for such restrictions, the employee as the owner of such stock shall have all the rights of a shareholder including, but not limited to, the right to vote such stock and to receive dividends thereon as and when paid. In the event that an employee's employment is terminated for any reason, an employee's Restricted Stock will be forfeited; provided, however, that the Committee may limit such forfeiture in its sole discretion. At the end of the Restricted Period all shares of Restricted Stock shall be transferred free and clear of all restrictions to the employee. Employees may be offered the opportunity to defer receipt of their shares of Restricted Stock and may be granted a bonus for such deferral. 7 8 PERFORMANCE SHARE AWARDS The Committee may make, in its sole discretion and subject to the terms and conditions it may determine in accordance with the Plan, awards of Common Stock or Restricted Stock which shall be earned on the basis of the Company's performance in relation to established performance measures for a specific performance period ("Performance Shares"). Such measures may include, but shall not be limited to, return on investment, earnings per share, return on shareholders' equity, or return to shareholders. Unless otherwise determined by the Committee, Performance Shares may not be sold, assigned, transferred, pledged, or otherwise encumbered during the relevant performance period. The amount of any Performance Share award in the aggregate during the term of the Plan to an individual shall not exceed 100,000 shares of Common Stock. Performance Shares may be paid in cash, shares of Common Stock or shares of Restricted Stock in such proportion as the Committee may determine. An employee must be employed at the end of the performance period to receive payment of Performance Shares; provided, however, that in the event an employee's employment is terminated by reason of death, disability, retirement or other reason approved by the Committee, the Committee may limit such forfeiture in its sole discretion. Employees may be offered the opportunity to defer receipt of payment of earned Performance Shares and may be granted a bonus for such deferral. CASH AWARDS The Committee may, on such terms as it determines in its sole discretion, make grants of cash or loans in order to help defray in whole or in part the economic cost (including tax cost) of an Award ("Cash Awards"). The Cash Award may be granted at the time of grant of any award or upon exercise of any Award. CHANGE OF CONTROL In the case of the sale or other disposition of assets by the Company which results in the termination of an employee's employment or for a "change in control" of the Company (as defined in the Plan), Awards granted pursuant to the Plan, may become fully exercisable in the discretion of the Committee or as may otherwise be provided in the recipient's Award agreement. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following brief description of the tax consequences of awards under the Plan is based on Federal tax laws currently in effect and does not purport to be a complete description of such Federal tax consequences. 8 9 Options There are no Federal tax consequences either to the optionee or to the Company upon the grant of an ISO or a NQSO. On the exercise of an ISO, the optionee will not recognize any income and the Company will not be entitled to a deduction, although such exercise may give rise to alternative minimum tax liability for the optionee. Generally, if the optionee disposes of shares acquired upon exercise of an ISO within two years of the date of grant or one year of the date of exercise, the optionee will recognize ordinary income, and the Company will be entitled to a deduction, equal to the excess of the fair market value of the shares on the date of exercise over the option price (limited generally to the gain on the sale). Upon the ultimate sale of the shares, the balance of any gain or loss will be treated as a capital gain or loss to the optionee. If the shares are disposed of after the foregoing holding requirements are met, the Company will not be entitled to any deduction, and the entire gain or loss for the optionee will be treated as a capital gain or loss. On exercise of a NQSO, the excess of the date-of-exercise fair market value of the shares acquired over the option price will generally be taxable to the optionee as ordinary income and deductible by the Company. The disposition of shares acquired upon exercise of a NQSO will generally result in a capital gain or loss for the optionee depending on the cost and holding period of such shares, but will have no tax consequences for the Company. Stock Appreciation Rights The amount of any cash (or the fair market value of any Common Stock) received by the holder of an option upon the exercise of SARs under the Plan will be subject to ordinary income tax in the year of receipt and generally the Company will be entitled to a deduction for such amount. Restricted Stock Awards An employee who has been awarded Restricted Stock will not recognize taxable income at the time of the award unless he or she elects otherwise. At the time any restrictions applicable to the Restricted Stock award lapse, the recipient will recognize ordinary income and generally the Company will be entitled to a corresponding deduction equal to the excess of the fair market value of such stock at such time over the amount paid therefore. Dividends paid to the recipient on the Restricted Stock during the Restricted Period will be ordinary compensation income to the recipient and deductible as such by the Company. Merit Awards A grant of Common Stock pursuant to a Merit Award will result in income 9 10 for the employee, and a generally a tax deduction for the Company, equal generally to the fair market value of such shares less any amount paid for them. Performance Share Awards An employee who has been awarded Performance Shares will not recognize taxable income, and the Company will not be entitled to a deduction, at the time of the award. At the time the employee is entitled to the Performance Shares, the employee will recognize ordinary income equal to the sum of the cash and the fair market value of the shares of Common Stock at such time, and generally the Company will be entitled to a corresponding deduction. To the extent Performance Shares are paid in shares of Restricted Stock, the Federal income tax consequences described above applicable to Restricted Stock will apply. Cash Awards An employee who has been awarded cash under Cash Awards will recognize taxable income, and the Company will generally be entitled to a deduction, at the time of payment of the award. An employee who receives a bona fide loan under Cash Awards will not recognize taxable income on the amounts distributed under the loan. The Company will not be entitled to a deduction and will be taxed on the interest payments. PLAN BENEFITS AMERICAN BANKERS INSURANCE GROUP, INC. 1997 EQUITY INCENTIVE PLAN The Committee has made no determinations with respect to grants of stock options, SARs, Restricted Stock, Merit Awards or Performance Shares to officers and employees under the Plan. If the Plan is approved by the shareholders, the Outside Directors will be granted options at the annual meeting of the Directors which follows the Meeting. Accordingly, the benefits to the Outside Directors are as follows: NUMBER OF OPTIONS NAME AND POSITION GRANTS (1) ----------------- ---------- All Current Outside Directors 13,000 (1) The value of option grants cannot be determined at this time On March 7, 1997, the last trade price of Common Stock on Nasdaq Stock Market's National Market was $58.50 per share. RECOMMENDATION The Board of Directors of the Company is of the opinion that approval 10 11 of the adoption of the American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan is in the best interests of the Company and its shareholders, and accordingly, the Board of Directors recommends that the shareholders vote FOR the American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan. The affirmative vote of a majority of the shares of the Company's Common Stock represented in person or by proxy and entitled to vote at the Meeting will be required to approve the adoption of the American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan. page 22-31 COMPENSATION OF EXECUTIVE OFFICERS REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The Compensation and Nominating Committee of the Board of Directors (the "Committee") is responsible for establishing the various compensation programs for the executive officers. In addition, the Committee assists the Chairman of the Board and the Chief Executive Officer in the development of a management succession plan and reviews the qualifications of candidates for corporate officership and recommends the officers for approval by the Board of Directors. COMPENSATION POLICIES In developing compensation plans and setting compensation levels, the Committee reviewed a diverse group of insurance company salaries. The Committee also reviewed the same diverse group with respect to stock options and long term incentive plans. EXECUTIVE OFFICER COMPENSATION The Company's compensation program for executive officers consists of three key elements: a base salary, an annual bonus, and long-term incentives. The Committee believes that this approach best serves the interests of shareholders by ensuring that executive officers are compensated in a manner that advances both short-and long-term interests of shareholders. Base Salary. Base salaries of individual executive officers are reviewed by the Committee annually. In determining adjustments to base salary for a particular year, the Committee relies on reports from consultants and reports from the Company's Human Resources Department. Salaries for all officers, with the exception of the Chief Executive Officer, are based upon recommendations made by the officers' superiors taking into account the superiors' subjective assessment of the nature of the position, and the contribution, experience and Company tenure of 11 12 the executive officer. The Chief Executive Officer reviews all salary recommendations with the Committee, which is responsible for approving or disapproving those recommendations. Annual Bonus. Executive officers and other senior officers participate in the Management Incentive Plan ("MIP"). The Committee chooses those officers who will participate in the MIP, acting upon the advice of the Chief Executive Officer. Each participant's MIP is based on individual performance objectives, which may include profits, premiums, and other individual performance measures. The performance objectives have different weights, but in general, at least 40% of each participant's bonus must be based on the Company's profit objective. A target bonus percentage is established for each participant. For executive officers this percentage ranges from 30% to 100% of base salary. A participant can earn up to 200% of this target bonus percentage based on their actual performance on each category in their MIP. For each category three performance levels are determined in advance. The minimum is the minimum level of acceptable performance, where 0% of the target bonus percentage would be earned. The target is the planned performance level, where 100% of the target bonus percentage would be earned. The maximum is the most optimistic level of performance that has only a slight probability of being achieved, where 200% of the target bonus percentage would be earned. The actual performance is compared to the established objectives and the award for each item measured. Long-term Incentives. Long-term incentives include stock option grants and convertible debentures. A stock option permits the holder to buy Company stock at a specific price during a specific time period. As the price of Company stock rises, the option increases in value. The number of options granted to any one employee is based on a formula which is tied to the executive officer's base salary. However, other subjective factors are taken into consideration such as: the executive's level of responsibility, experience and long-term expected contribution to the Company. During 1996, the Company granted stock options to executive officers under the 1994 Senior Management Stock Option Plan. CHIEF EXECUTIVE OFFICER COMPENSATION Mr. Gaston was promoted to CEO, effective January 1, 1996. On February 5, 1996, commensurate with his increase in responsibilities, his salary was increased to $525,000. The Committee, in determining CEO base pay, reviewed a number of Executive Compensation analyses for insurance companies with comparable premium income. Median income for CEO's of insurance companies with comparable premium income, ranged between $600,000 to $745,000. Effective May 22, 1996, Mr. Gaston received a raise of 14.29% increasing his base pay to $600,000. His May 1996 increase was based on factors including the compensation analyses discussed above, increased earnings per share and stock price 12 13 performance. Mr. Gaston's MIP award for 1996 is expected to be $919,100, to be paid on the date of the Meeting. Fifty percent of his award was directly related to 1996 actual profits which exceeded the plan objective by 19.5%. Other categories used to determine Mr. Gaston's award included the gross written premium for the Company, stock price performance, completion of corporate projects, completion of building expansion and quality improvements having relative weights of 17%, 11%, 10%, 8% and 4%, respectively. Corporate projects involve criteria that are confidential and disclosure of such criteria would have an adverse effect on the Company. Mr. Gaston did not receive any option grants under the 1994 Senior Management Stock Option Plan. With respect to the Company's long-term incentive plans, he currently owns 33,000 of restricted shares issued under the 1991 Stock Option/Restricted Stock Award Plan and a debenture due May 24, 1999 convertible into 70,000 shares of stock issued under the 1994 Key Executive Debenture Plan. The restricted shares were scheduled to begin vesting in 1996. During 1995, this plan was amended to allow the Company to grant recipients the option to extend the original vesting period for one, two, or three years. Mr. Gaston elected to defer vesting for an additional one year period that will expire during 1997. COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M) Section 162(m) of the Internal Revenue Code, generally disallows a tax deduction to public companies for compensation over $1 million paid to the corporation's Chief Executive Officer and four other most highly compensated executive officers. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met. The Compensation and Nominating Committee reviews the compensation of its executive officers (which currently consists of the Management Incentive Plan and the stock option plans described above). At this time, this is a limited issue for the Company and the Compensation and Nominating Committee believes that the financial impact of any loss of deduction to the Company is immaterial. The Compensation and Nominating Committee monitors the executives' compensation and the related deduction under Section 162(m). CONCLUSION The Compensation and Nominating Committee has the responsibility for ensuring that the Company's compensation program continues to be in the best interests of its shareholders. The Committee consists entirely of non-employee directors. The Committee's objective is to assist the Company, through a sound and reasonable structured compensation program, in the recruitment, retention and motivation of talented managers capable of contributing significantly to the Company's increased profitability and to the creation, over time, of enhanced shareholder value. The Committee administers the program, which 13 14 encompasses base pay and long and short-term incentive plans and reviews the general compensation philosophy of the Company, as well as, the specific elements of the compensation program. The advice of qualified outside advisors and independent compensation experts is obtained to assist the Compensation and Nominating Committee in establishing and evaluating compensation policies, especially in relation to other comparable companies. Finally, the Compensation and Nominating Committee also reviews the results of the Company's compensation programs to determine if such programs are performing appropriately and achieving the desired results. Armando M. Codina, Chairman Nicholas A. Buoniconti Peter J. Dolara Malcolm G. MacNeill George E. Williamson II COMPENSATION AND NOMINATING COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Present members of the Compensation and Nominating Committee are Messrs. Armando M. Codina (Chairman), Nicholas A. Buoniconti, Peter J. Dolara and Malcolm G. MacNeill. Mr. Dolara succeeded Mr. Williamson in October 1996. Mr. Williamson is President of Williamson Cadillac Company, Williamson Saturn Inc. and WWW Enterprises (automobile dealerships). In 1996, Mr. Williamson's automotive sold ABLAC Credit Life, Health and Disability Policies. Total net written premium by these dealerships was $192,784 in 1996. SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The Summary Compensation Table below indicates the cash compensation paid by the Company and its subsidiaries as well as certain other compensation paid or accrued to the Chief Executive Officer and the four other highest paid executive officers, for services rendered in all capacities during the fiscal years ended December 31, 1996, 1995 and 1994, respectively. SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION ------------------------------------------ OTHER 14 15 ANNUAL COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) - --------------------------- ---- --------- ----------- ------------ R Kirk Landon 1996 544,135 454,600 -- Chairman and Chief International 1995 482,992 437,000 -- Marketing Officer ABIG 1994 451,652 241,000 -- Gerald N Gaston 1996 560,481 919,100 -- President, Vice Chairman and 1995 428,230 405,600 -- Chief Executive Officer ABIG 1994 390,063 233,200 -- Eugene E Becker 1996 253,423 229,900 -- Executive Vice President and 1995 230,973 171,600 -- Chief Marketing Officer of 1994 217,296 122,500 -- ABIG Jay R Fuchs 1996 194,329 159,200 -- President of ABLAC and 1995 178,310 125,800 -- ABIC 1994 169,369 84,300 -- Jason J Israel 1996 175,138 129,300 -- Executive Vice President of 1995 136,436 76,600 -- Administration 1994 128,310 65,400 -- (TABLE CONTINUED) LONG TERM COMPENSATION ----------------------------------- AWARDS --------------------- RESTRICTED STOCK OPTIONS/ ALL OTHER AWARDS SARS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($)(3)(4) (#)(3) ($)(5) - --------------------------- ---- ---------- -------- ------------ R Kirk Landon 1996 -- -- 21,728 Chairman and Chief International 1995 -- -- 18,954 Marketing Officer ABIG 1994 -- -- 13,126 Gerald N Gaston 1996 -- -- 21,728 President, Vice Chairman and 1995 -- -- 18,954 Chief Executive Officer ABIG 1994 -- -- 13,126 Eugene E Becker 1996 123,000 4,500 21,728 Executive Vice President and 1995 84,700 4,200 18,954 Chief Marketing Officer of 1994 61,950 4,200 13,126 ABIG Jay R Fuchs 1996 90,200 3,300 21,728 President of ABLAC and 1995 66,550 3,300 18,954 ADIC 1994 48,675 3,300 13,126 Jason J Israel 1996 82,000 3,000 21,319 Executive Vice President of 1995 42,350 2,100 17,238 Administration 1994 30,975 2,100 10,608 15 16 (1) Estimated. Bonuses earned during a fiscal year are not paid until May of the following fiscal year. (2) Officers also receive certain perquisites and personal benefits; however, such items do not exceed the lesser of $50,000 or 10% of such Officer's salary and bonus and, therefore, are not required to be reported. (3) Officers received Restricted Stock under the 1994 Senior Management Stock Option Plan ("Senior Plan"). The 1994 Senior Plan provides that upon the exercise of an option for a "Primary Share," the grantee will receive two additional shares of "Restricted Shares," and the Restricted Shares vest three years from the date of exercise. Holders of Restricted Shares are entitled to receive dividends equal to those granted to the holders of the Company's Common Stock generally, and are entitled to vote such shares. The exercise price for the Primary Shares was $41.00. For specific terms of this plan, see the plan description on pages 25 and 26. (4) At December 31, 1996, Restricted Shares of Common Stock held by the executive officers named in the table and the market value thereof was as follows: Mr. Landon, 40,500 shares acquired under the 1991 Stock Option/Restricted Stock Award Plan ("1991 Plan"), $2,070,562; Mr. Gaston, 33,000 shares acquired under the 1991 Plan, $1,687,125; Mr. Becker 3,000 shares acquired under the 1991 Plan and 8,600 acquired under the Senior Plan, $593,050; Mr. Fuchs, 6,000 shares acquired under the 1991 Plan and 6,600 under the Senior Plan, $644,175; and Mr. Israel, 3,000 shares acquired under the 1991 Plan and 2,800 shares acquired under the Senior Plan, $296,525. (5) For 1996 this amount represents the estimated allocation of shares of the Company's Common Stock under the Leveraged Employee Stock Ownership Plan (LESOP). Mr. Landon, Mr. Gaston, Mr. Becker, Mr. Fuchs are estimated to receive 425 shares each and Mr. Israel is estimated to receive 417 shares. The value is based on the market value at year-end of $51.125 multiplied by the number of estimated shares allocated to each named executive officer. STOCK OPTIONS AND SARS The following table sets forth information with regard to grants of stock options to each of the named executive officers during the year ended December 31, 1996. Grants were made under the 1994 Senior Management Stock Option Plan. No SARs have been granted. OPTION GRANTS IN 1996 INDIVIDUAL GRANTS 16 17 OPTIONS GRANTED TO OPTIONS EMPLOYEES EXERCISE GRANTED IN FISCAL OF BASE EXPIRATION NAME (#)(1) YEAR(2) PRICE($/SH) DATE - ---- -------- ---------- ----------- ---------- R Kirk Landon -- -- -- -- Gerald N Gaston -- -- -- -- Eugene B Becker 4,500 5% 41.00 5/21/99 Jay R Fuchs 3,300 4% 41.00 5/21/99 Jason J Israel 3,000 3% 41.00 5/21/99 (TABLE CONTINUED) ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM ---------------------- NAME 5%($)(3) l0%($)(3) - ---- -------- --------- R Kirk Landon -- -- Gerald N Gaston -- -- Eugene E Becker 152,070 184,065 Jay R Fuchs 111,518 134,581 Jason J Israel 101,380 122,710 (1) Options were granted under the 1994 Senior Management Stock Option Plan to Mr. Becker, Mr. Fuchs and Mr. Israel. Mr. Becker and Mr. Fuchs exercised their options during November 1996. Upon exercise of the option, Mr. Becker received 3,000 Restricted Shares and Mr. Fuchs received 2,200 Restricted Shares. Mr. Israel has not exercised his option, however upon exercise of the option he will receive 2,000 Restricted Shares. See footnote (3) under Summary Compensation Table of this Proxy Statement for material terms of the options granted. (2) As a percentage of options granted under the 1994 Senior Management Stock Option Plan. During 1996, 29,400 stock options for Primary Shares were granted under the 1994 Senior Management Stock Option Plan which includes 3,600 Stock Options for Primary Shares granted to the named executive officers. An additional 74,300 stock options were granted under the, 1991 Stock Incentive Compensation Plan to key employees other than those named above. (3) Assumed annual rates of appreciation of 5% and 10% would result in the price of the Company's Common Stock increasing to $47.46 and $54.57, respectively. 17 18 OPTION EXERCISES AND HOLDINGS The following table sets forth information with regard to stock option exercises during 1996 by each of the named executive officers and December 31, 1996 values of all unexercised options held by such individuals. AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES SHARES ACQUIRED ON VALUE REALIZED NAME EXERCISE(#) ($)(1) - ---- ----------- -------------- R Kirk Landon -- -- Gerald N Gaston -- -- Eugene B Becker 4,500 170,250 Jay R Fuchs 23,701 773,642 Jason J Israel -- -- (TABLE CONTINUED) UNEXERCISED IN-THE-MONEY OPTIONS AT OPTIONS AT 12/31/96(#)(2) 12/31/96($)(3) ------------- ------------- EXERCISABLE/ EXERCISABLE/ NAME UNEXERCISABLE UNEXERCISABLE - ---- ------------- ------------- R Kirk Landon 162,843/0 5,897,975/0 Gerald N Gaston 141,636/0 5,121,698/0 Eugene E Becker 34,665/0 1,587,507/0 Jay R Fuchs 0/0 0/0 Jason J Israel 16,396/0 725,801/0 (1) Market value at date of exercise minus exercise price. (2) All unexercised options include options that were granted under the 1987 Executive Stock Option/Dividend Accrual Plan. Also included are: 80,000 shares for Mr. Landon and 70,000 shares for Mr. Gaston which are issuable upon conversion of the debentures granted under the 1994 ABIG Key Executive Debenture Plan and 3,000 shares for Mr. Israel under the 1994 Senior Management Stock Option Plan. (3) Market value at year-end minus exercise price. 18 19 OTHER BENEFIT PLANS/AGREEMENTS 1994 ABIG KEY EXECUTIVE DEBENTURE PLAN On May 25, 1994, shareholders of the Company approved the adoption of the 1994 ABIG Key Executive Debenture Plan (the "Debenture Plan"). The Debenture Plan provides for the offering for sale of subordinated debentures ("Debentures") to key executive officers of the Company and its subsidiaries. Such persons include individuals who hold the title of executive vice presidents and above. The Debentures are convertible to shares of the Company's Common Stock in accordance with the provisions of the plan. Under the Debenture Plan 150,000 shares of the Company's authorized but previously unissued Common Stock are reserved for issuance on conversion and all shares are subject to outstanding Debentures. 1994 SENIOR MANAGEMENT STOCK OPTION PLAN AND THE 1991 STOCK OPTION/RESTRICTED STOCK AWARD PLAN On May 25, 1994, shareholders approved the adoption of the 1994 Senior Plan (the "Senior Plan"). The Senior Plan is a non-qualified plan under the Internal Revenue Code of 1986, as amended. The Senior Plan provides for the issuance of up to 700,000 shares of the Company's authorized but previously unissued Common Stock to persons who are full-time, key management employees of the Company and its subsidiaries. Such persons include individuals who hold the titles of Business Board Chairman and senior vice presidents and above. There are approximately forty-five (45) individuals who are considered key management employees at this time. The Compensation and Nominating Committee (the "Committee") may at any regular quarterly or annual meeting, subject to the provisions of the Senior Plan, grant employees options to purchase shares of the Company's Common Stock ("Primary Shares") at the fair market value of such shares on the date of grant. The grantee will also receive, for no additional consideration, two shares of the Company's Common Stock subject to certain transfer restrictions ("Restricted Shares") for every one Primary Share purchased upon the exercise of the option. The restrictions will lapse on the Restricted Shares three years from the date the option is exercised, provided that the employee still holds the Primary shares purchased on the date the option was exercised. Payment of the purchase price for Primary Shares shall be made in cash or in such other form as the Company may approve including shares of Common Stock of the Company, held for at least six months, valued at their fair market value on the date of the exercise of the option. Options granted under the Senior Plan may not be exercised on or after the third anniversary of the grant date or such shorter time as determined by the Committee on the date of grant. No options will be granted pursuant to the Senior Plan after ten years from its adoption by the Board of Directors. 19 20 During a three-year vesting period, Restricted Shares are subject to a forfeiture in the event the related Primary Shares are disposed of or if employment with the Company is terminated except by death, disability or retirement. Dividends and voting rights on the Restricted Shares remain with the employee during the vesting period. Full vesting occurs on the third annual anniversary after the date the options are exercised or upon death, disability or retirement of the employee or a change in control of the Company. The 1991 Stock Option/Restricted Stock Award Plan was adopted by the Board of Directors in November 1990 subject to shareholder approval, which was obtained on May 22, 1991. Upon shareholder approval of the Senior Plan, the Company ceased granting options under this plan. Nevertheless, the options granted under this plan are outstanding. The terms of the plan are substantially similar to those of the Senior Plan except that (i) the employee is awarded three Restricted Shares for every Primary Share and (ii) originally, full vesting occurs on the fifth annual anniversary after the exercise date of the options. During 1995, the plan was amended to allow the Company to grant recipients the option to extend the original vesting period for either one, two or three years. Upon shareholder approval of the American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan, the Company will discontinue making grants under the Senior Plan. 1991 STOCK INCENTIVE COMPENSATION PLAN The 1991 Stock Incentive Compensation Plan provides for the issuance of options for up to 289,586 shares of the Company's Common Stock to persons who are key management employees of the Company and its subsidiaries. The plan was adopted by the Board of Directors in November 1990 subject to shareholder approval which was obtained on May 22, 1991. The plan, which is a non-qualified plan under the Internal Revenue Code, is effective for a period of ten years. Options issued pursuant to the plan are exercisable at fifty percent of the fair market value (as defined in the plan) on the grant date. Options must be exercised within sixty days of the grant date. Shares obtained upon exercise are subject to restrictions. Vesting occurs ratably over a five-year period or upon death, disability or retirement of the employee or a change in control of the Company. Non-vested shares are subject to forfeiture if employment is terminated except by death, disability or retirement. During the restricted period, employees receive all cash dividends paid and exercise the voting rights assigned to each share. Upon shareholder approval of the American Bankers Insurance Group, Inc. 1997 Equity Incentive Plan, the Company will discontinue making grants under this plan. EXECUTIVE STOCK OPTION/DIVIDEND ACCRUAL PLAN The 1987 Executive Stock Option/Dividend Accrual Plan provided for the 20 21 issuance of up to 1,000,000 shares of the Company's Common Stock to persons who are officers and key management employees of the Company. The plan became effective upon shareholder approval on May 27, 1987 and has a term of ten years. The Company has discontinued making grants under this plan. Options which were issued pursuant to the plan are exercisable at fair market value (as defined in the plan) on the date of grant. From the date of grant until the exercise date of options, and to the extent cash dividends are declared by the Company in respect of its Common Stock, cash is accrued for the benefit of the optionee as if the options had already been exercised and dividends were payable thereon, provided that all such accrued cash will be applied toward the exercise price of the options on the date of exercise. 1988 LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN ("LESOP") The 1988 LESOP is a defined contribution stock bonus plan and trust in which employees of ABIC and ABLAC and certain other subsidiaries of the Company are eligible to participate. Generally, an employee becomes eligible to participate in the plan following a 12-month period of employment. The LESOP trust fund acquired 1,752,537 shares of the Company's Common Stock, which will be allocated to participants annually over the 10-year period commencing December 31, 1989. The LESOP trust fund borrowed money (the "Loan") to purchase the stock. Each year the Company makes a contribution to the LESOP which is used to pay the Loan and certain LESOP expenses. As principal payments are made, stock held in the trust fund is allocated to participants' accounts. Participants have the right to instruct the LESOP trustee as to the voting of allocated shares. The vested value of a participant's account becomes payable upon termination of employment for any reason including death. However, the vested value of a participant's account becomes distributable upon final payment of the Loan. There is no partial vesting, but full vesting occurs after the completion of five years of service (including certain service prior to January 1, 1989), or upon the participant's earlier death, disability or retirement. If a participant terminates employment prior to vesting, his account is forfeited. The participant's interest in the vested value of their account is represented by their allocated shares of the Company's stock and by cash for fractional shares. CERTAIN CONTRACTS To help ensure that Senior Management will be prepared to function in the Company's best interests in the event of any possible change in 21 22 control of the Company, whether by merger, sale or other comparable action, and to help ensure the continuing services of such officers, the Board of Directors (with only non-employee directors participating) authorized the Company originally to enter into certain contracts with selected executive officers. While there was no reason to believe that a merger or sale was imminent, the Board of Directors believed it in the best interest of the Company and its shareholders that it act at that time to avoid the need for hasty action in the future and to ensure continuity of highly qualified management. The contracts generally provide the executive officers will receive the following compensation in the amounts and for the reasons indicated: (a) In the event the company becomes a party to a merger or sale, an amount up to two times his then current base salary or an amount equal to the maximum amount that will not constitute a "parachute amount" as defined in Section 280G of the Internal Revenue Service Code. As of March 15, 1996, the maximum allowable is up to, but not including three times the average of the individual's previous compensation for the past five years. Under the contract, a merger or sale is deemed to have taken place when any person (or group) obtains sufficient ownership of stock to exercise control over the operations of the Company. (b) Upon retirement at or after attainment of age 65, from 100% up to 150% of current base salary. Upon termination for the convenience of the Company, an amount equal to his then current annual base salary. Termination for convenience means termination at the behest of the Company, whether by dismissal, by requested resignation or by resignation which follows a greater than 20% decrease in the employee's salary. (c) In the event of termination of employment for certain illnesses or disabilities which preclude an employee from rendering satisfactory services for a period of three months or more, an amount from 50% up to 100% of his then current annual base salary. (d) In the event of death, an amount payable to his beneficiary or estate equal to 150% his annual base salary at the time of death. If, at December 31, 1996, a merger or sale had occurred as set forth above, the Company would have been obligated to make payments to Mr. Landon, Mr. Gaston, Mr. Becker, Mr. Fuchs and Mr. Israel in the amounts of $1,387,390, $1,251,606, $506,846, $388,658 and $403,969, respectively. RETIREMENT PLANS The Company has a non-contributory pension plan covering substantially all of its employees. The Company contributes such amounts as are necessary, on an actuarial basis, to provide the plan with assets 22 23 sufficient to meet the benefits to be paid to plan members. Contributions under the plan are based on length of service and average annual compensation. Compensation includes normal salary and wages and does not include bonuses, overtime pay, reimbursements or special pay. Upon normal retirement, age 65, the participant's monthly benefit will be equal to 2% of the "average monthly earnings" multiplied by the number of years of service to the Company less 50% of the monthly primary social security benefits to which the individual is entitled. The participant's "average monthly earnings" equals the average monthly compensation for the highest 60 consecutive months of compensation within the last 120 months immediately preceding retirement. There was no actuarially-determined pension expense as a result of the plan reaching the full funding limitation. On August 24, 1991, the Board of Directors approved the Non-qualified Supplemental Benefit Plan. The plan is a non-qualified, unfunded, deferred compensation arrangement designed solely to equalize the total benefits certain key executives would have received under the Company's Retirement Plan, but for the limitations on benefits imposed by Section 415 of the Internal Revenue Code (as reflected in Section 7.01 of the Retirement Plan). The plan is intended to benefit the Company and its affiliates by recognizing the value of the past and present services of the key executives covered by the plan and to encourage them to continue careers with the Company and its affiliates. The Compensation and Nominating Committee administers and interprets the provisions of the plan. Participants are those key executives designated from time to time by the Board of Directors. Following are the estimated annual benefits under both Retirement Plans for various lengths of service and compensation levels based on the assumption that the retiree will choose a life-only benefit and is retiring at age 65 during the year 1996. Election of the other available payment options could change the benefit; however, all benefits are actuarially equivalent. For annual benefits in excess of $120,000 or salaries in excess of $150,000, assume the employee is a member of both retirement plans. PENSION ACCRUAL BASED ON YEARS OF SERVICE 5 YEARS 10 YEARS 15 YEARS 20 YEARS AVERAGE ANNUAL SERVICE SERVICE SERVICE SERVICE - -------------- ------- -------- -------- -------- $100,000. 1,804 11,804 21,804 31,804 $150,000. 6,804 21,804 36,804 51,804 $200,000. 11,804 31,804 51,804 71,804 $250,000. 16,804 41,804 66,804 91,804 $300,000. 21,804 51,804 81,804 111,804 $350,000. 26,804 61,904 96,804 131,604 $400,000. 31,804 71,804 111,804 151,804 $450,000. 36,804 81,804 126,804 171,804 $500,000. 41,804 91,804 141,804 191,804 $550,000. 46,804 101,804 156,804 211,804 23 24 $600,000. 51,804 111,804 171,804 231,804 $650,000. 56,804 121,804 186,804 251,804 $700,000. 61,804 131,804 201,804 271,804 $750,000. 66,804 141,804 216,804 291,804 (TABLE CONTINUED) 25 YEARS 30 YEARS 35 YEARS 40 YEARS 45 YEARS AVERAGE ANNUAL SERVICE SERVICE SERVICE SERVICE SERVICE - -------------- -------- -------- -------- -------- -------- $100,000. 41,804 51,804 61,804 71,804 81,804 $150,000. 66,604 81,804 96,804 111,804 126,804 $200,000. 91,804 111,804 131,804 151,804 171,804 $250,000. 116,804 141,804 166,804 191,804 216,804 $300,000. 141,804 171,804 201,804 231,804 261,804 $350,000. 166,804 201,804 236,804 271,804 306,804 $400,000. 191,804 231,804 271,804 311,804 351,804 $450,000. 216,804 261,804 306,804 351,804 396,804 $500,000. 241,804 291,804 341,804 391,804 441,804 $550,000. 266,804 321,804 376,804 431,804 486,804 $600,000. 291,804 351,804 411,804 471,804 531,804 $650,000. 316,804 381,804 446,804 511,804 576,804 $700,000. 341,804 411,804 481,804 551,804 621,804 $750,000. 366,804 441,804 516,804 591,804 666,804 The years of service, as of December 31, 1996, for Mr. Landon, Mr. Gaston, Mr. Becker, Mr. Fuchs and Mr. Israel are 44, 19, 23, 19 and 11 years, respectively. 24 EX-99.6 3 LETTER TO BOARD OF DIRECTORS 1 Exhibit 6 [Letterhead of Cendant] January 27, 1998 Board of Directors American Bankers Insurance Group, Inc. 11222 Quail Roost Drive Miami, Florida 33157 Attention: Mr. R. Kirk Landon, Chairman Dear Members of the Board: On behalf of Cendant Corporation we are pleased to submit a proposal to acquire American Bankers Insurance Group, Inc. for $58 per common share payable in cash and stock. Our proposal, representing a premium of $11 (in excess of 23%) over the value of American International Group's proposal, is demonstrably superior to the AIG proposed transaction. Several months ago one of our senior executives had discussed with Mr. Gaston our interest in pursuing a business combination with American Bankers. As recently as December, in response to our inquiry as to whether American Bankers was engaged in discussions relating to an acquisition and to our expression of Cendant's strong interest in exploring such a transaction with American Bankers, Mr. Gaston said that American Bankers was not pursuing any acquisition transaction, and suggested that he meet with our senior executive in early January to discuss the matter further. In view of this, it is particularly disappointing that we were not made aware that American Bankers was interested in pursuing acquisition proposals and, accordingly, we did not have the opportunity to submit an offer prior to the announcement of your proposed transaction with AIG. 2 Board of Directors January 27, 1998 Page 2 We would have liked to discuss our proposal directly with you. However, the terms of Section 6.2 of your agreement with AIG purport to prohibit discussions with us or any other party until 120 days following the date of such agreement, at which time, as both you and AIG have publicly stated, the acquisition of American Bankers by AIG likely will have been completed, making any discussions between us irrelevant. We believe this is an extraordinary measure and raises questions about whether it is in the best interests of American Bankers' shareholders. Accordingly, we will be commencing promptly a cash tender offer directly to American Bankers' shareholders for 51% of American Bankers' shares at a price of $58 per common share to be followed by a second step merger in which shares of Cendant common stock with a fixed value of $58 per share will be exchanged on a tax-free basis for the balance of American Bankers' common stock and each share of American Bankers' preferred stock will be converted into one share of Cendant preferred stock having substantially similar terms, except that such shares will be convertible into shares of Cendant common stock calculated in accordance with the terms of the American Bankers' preferred stock. The provisions in your agreement with AIG include highly unusual and restrictive conditions which, in fact, represent a virtual forfeiture of the Board's fundamental mandate of protecting the interests of shareholders. Accordingly, we have today commenced litigation in federal court in Miami to ensure that your shareholders will have the opportunity to consider our offer and to assist your board in fulfilling its fiduciary obligations and to resolve certain other issues. 3 Board of Directors January 27, 1998 Page 3 Although we have determined that it is both necessary and appropriate, under the circumstances, to commence our cash tender offer and litigation, our strong preference would be to enter into a merger agreement with you containing substantially the same terms and conditions (other than price and inappropriate terms) as your proposed transaction with AIG. In addition to its significant economic superiority, the merits and the strategic value of the combination of Cendant and American Bankers are compelling. Cendant (NYSE:CD) is the product of the recent combination of CUC International Inc. and HFS Incorporated, creating the world's largest consumer and business services company. Cendant interacts with approximately 170 million customers and members around the world, several times each year. Cendant is investment grade rated and has a market value of approximately $30 billion. Cendant's 1997 revenues and net income are estimated by Wall Street analysts at approximately $5.1 billion and $900 million, respectively. Cendant has recently announced its acquisition of Providian Direct, a direct marketer of automobile insurance. Under separate cover, we have sent a copy of the proxy statement for the merger that created Cendant. Cendant's vision for American Bankers is one of exceptional growth and opportunity, which involves utilizing Cendant's distribution channels and customer base as an outlet for American Bankers' products and capitalizing on American Bankers existing relationship with financial institutions and retailers to increase penetration of Cendant's products. Consistent with this vision, and Cendant's past strategic acquisition practices, Cendant would expect American Bankers' management to continue with the company, would not expect significant employment reductions and would expect American Bankers to continue to maintain its headquarters in Miami. The price we are offering in our proposal clearly provides significantly greater value to your shareholders than the proposed transaction with AIG. It would also benefit Cendant's shareholders and be accretive to earnings within the first year. Our proposal is not subject 4 Board of Directors January 27, 1998 Page 4 to any due diligence or financing condition and the funds for the cash portion of our offer are available from existing cash resources and under our credit facilities. In addition, Cendant, having acquired control of insurers in the past, is extremely familiar with the insurance regulatory process, has obtained approvals of the type required to implement this proposal and will be able to complete our proposed transaction on a timely basis. Accordingly, we strongly believe that you are obligated by principles of fiduciary duty to consider and accept our proposal. Consistent with your clear fiduciary duties, we expect you will provide us with at least the same information you furnished to AIG in the course of your discussions and negotiations with them and that you will discuss and negotiate with us the details of our proposal. In addition, you should take whatever other actions are reasonably necessary or appropriate so that we may operate on a level playing field with AIG and any other companies which may be interested in acquiring American Bankers. Our Board of Directors is fully supportive of our proposal and has unanimously authorized and approved it and no other Cendant approval is required for this transaction. Consistent with our Board of Directors' action, we and our advisors stand ready to meet with you and your advisors at your earliest convenience. We want to stress that we are flexible as to all aspects of our proposal and are anxious to proceed to discuss and negotiate it with you as soon as possible. Should you find it helpful to do so in connection with reviewing and considering our proposal, you and your advisors should feel free to contact our outside advisors: Steven B. Wolitzer of Lehman Brothers and Jack Levy of Merrill Lynch & Co., our financial advisors, and David Fox of Skadden, Arps, Slate, Meagher & Flom LLP, our legal counsel. 5 Board of Directors January 27, 1998 Page 5 Personally and on behalf of our colleagues at Cendant, we look forward to hearing from you soon and working with you on our proposal. Sincerely, /s/ Henry R. Silverman /s/ Walter A. Forbes Henry R. Silverman Walter A. Forbes President and Chairman Chief Executive Officer cc: All Directors EX-99.7 4 PRESS RELEASE 1 Exhibit 7 [LETTERHEAD OF AMERICAN BANKERS INSURANCE GROUP] News Release ================================================================================ FOR IMMEDIATE RELEASE AMERICAN BANKERS INSURANCE GROUP, INC.'S BOARD TO REVIEW CENDANT'S UNSOLICITED TENDER OFFER Miami, FL, January 27, 1998,... American Bankers Insurance Group, Inc. (NYSE: ABI) announced today, in response to Cendant Corporation's proposed tender offer and second-step merger, that the Company's Board of Directors will review the terms of the tender offer in due course. American Bankers stated that the shareholders need not take any action at this time and requested that shareholders await the response of the American Bankers' Board. American Bankers Insurance Group, Inc. (ABI) concentrates on marketing affordable, specialty insurance products and services through financial institutions, retailers and other entities offering consumer financing as a regular part of their business. ABI, through its insurance subsidiaries, operates in the United States, Canada, the Caribbean, Latin America and the United Kingdom. Media Contact: Thomas C. Franco, Broadgate Consultants (212) 232-2222 #### EX-99.8 5 PURCHASE OPTION LETTER 1 Exhibit 8 [AMERICAN INTERNATIONAL GROUP, INC. Letterhead] January 27, 1998 American Bankers Insurance Group, Inc. 11222 Quail Roost Drive Miami, Florida 33157 Attention: Gerald N. Gaston, Vice Chairman, President and Chief Executive Officer Dear Mr. Gaston: In accordance with Section 1(b) of the Stock Option Agreement (the "Agreement"), dated as of December 21, 1997, between American International Group, Inc. ("AIG") and American Bankers Insurance Group, Inc. ("ABIG"), AIG hereby exercises its right to purchase 8,265,626 shares of Common Stock, par value $1.00 per share, of ABIG (the "Common Stock") at a cash purchase price equal to $47.00 per share. Subject to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and applicable insurance regulatory approvals, the closing of the purchase will occur at 9:00 A.M., local time, at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York, on the third business day following the date hereof or such later date as provided by Section 3 of the Agreement. AIG may provide notice at a later date of its election to consummate the purchase of that portion of the total number of shares for which applicable regulatory approvals have been received as of such date and to subsequently consummate the purchase of the balance of the shares following receipt of all applicable regulatory approvals. AIG will make payment for the shares of Common Stock by certified or official bank check. Sincerely, /s/ Kathleen E. Shannon Kathleen E. Shannon Vice President & Secretary cc: Josephine Cicchetti (Jorden Burt Berenson & Johnson LLP) Jonathan L. Freedman (Dewey Ballantine LLP) James C. Morphy (Sullivan & Cromwell) EX-99.9 6 LETTER TO COMMON STOCK HOLDERS 1 EXHIBIT 9 [AMERICAN BANKERS INSURANCE GROUP, INC. LETTERHEAD] R. KIRK LANDON CHAIRMAN OF THE BOARD February 6, 1998 Dear Common Stockholder: On January 27, 1998, Cendant Corporation launched an unsolicited $58 per share tender offer for 51% of the common stock of American Bankers Insurance Group, Inc. As you know, we had previously announced a planned merger with a subsidiary of American International Group, Inc. in which each share of American Bankers common stock would be converted into cash and/or AIG common stock with a value equal to $47. Your Board of Directors has determined at this time that it is unable to take a position with respect to the tender offer by Cendant and is making no recommendation with respect to the Cendant offer. The reasons for this decision are set forth in Item 4 of the enclosed Schedule 14D-9. This decision is based upon the fact that the Board of Directors has been unable to assess several aspects of the Cendant tender offer. The combination of the AIG merger agreement and the Cendant tender offer makes for a complex situation. We will keep you advised of future developments and we thank you for your continued support. Very truly yours, [/s/ R. Kirk Landon] R. Kirk Landon, Chairman of the Board [LETTERHEAD MEMBER COMPANIES] EX-99.10 7 PRESS RELEASE 1 Exhibit 10 [AMERICAN BANKERS INSURANCE GROUP LETTERHEAD] NEWS RELEASE Contact: P. Bruce Camacho Executive Vice President Investor Relations (305) 252-7060 FOR IMMEDIATE RELEASE AMERICAN BANKERS INSURANCE GROUP INC.'S BOARD RESPONDS TO CENDANT'S UNSOLICITED TENDER OFFER Miami, Fl. February 6, 1998.... American Bankers Insurance Group, Inc. (NYSE: ABI) announced today that after thorough and careful analysis and discussions with its financial and legal advisors its Board of Directors determined that it is unable to take a position with respect to the tender offer by Cendant Corporation and is making no recommendation at this time with respect to the Cendant offer. On January 27, 1998, Season Acquisition Corp., (a wholly owned subsidiary of Cendant Corporation) made an unsolicited offer to acquire American Bankers for $58 a share in cash and stock. American Bankers had previously announced that it had entered into a definitive merger agreement with American International Group, Inc. with respect to an acquisition of the Company by AIG in which each share of American Bankers common stock would be converted into cash and/or AIG common stock with a value equal to $47. The Board's decision to take no position with respect to the Cendant unsolicited tender offer was based upon the fact that the Board of Directors has been unable to assess several aspects of the Cendant offer, including, Cendant's relatively high level of leverage, Cendant's business plans for American Bankers, the synergies Cendant has indicated will be achieved, required capital infusions in Americn Bankers' operating subisdiaries and others. Such aspects are detailed in the Company's Schedule 14D-9 which will be filed with the Securities and Exchange Commission later today and mailed to shareholders of American Bankers. To aid in making these assessments, American Bankers intends to request a hearing in connection with Cendant's application to the Florida insurance regulatory authorities. American Bankers also announced that it had taken action with respect to its shareholders' rights plan so that a distribution date (as defined in the plan) will not at this time occur with respect to the Cendant offer. American Bankers Insurance Group, Inc. (ABI) concentrates on marketing affordable, specialty insurance products and services through financial institutions, retailers and other entities offering consumer financing as a regular part of their business. ABI, through its insurance subsidiaries, operates in the United States, Canada, Latin America, the Caribbean and the United Kingdom. EX-99.11 8 EARNINGS PRESS RELEASE 1 Exhibit 11 [AMERICAN BANKERS INSURANCE GROUP LETTERHEAD] NEWS RELEASE Contact: P. Bruce Camacho Executive Vice President Investor Relations (305) 252-7060 FOR IMMEDIATE RELEASE AMERICAN BANKERS INSURANCE GROUP, INC. REPORTS FOURTH OUARTER 1997 OPERATING EARNINGS PER SHARE OF $.62 MIAMI, FL, FEBRUARY 5,1998.... AMERICAN BANKERS INSURANCE GROUP, INC. (NYSE:ABI) today announced net operating income for the fourth quarter of 1997 was $29.2 million or $.62 per share on a diluted basis. This compares with net operating income of $25.2 million or $.54 per share for the same period in 1996. Operating results for the fourth quarter 1997 increased $4.0 million or 16% as compared with the same period in 1996. On a basic earnings per share basis, net operating income for the fourth quarter of 1997 was $.66 per share compared with $.57 per share for the same period of l996. Gross collected premiums for the fourth quarter of 1997 increased approximately 10% from $652.6 million to $720.2 million. Gross collected premiums for 1997 were $2.740 billion versus $2.493 billion for 1996. This represents an increase of approximately 10% in 1997 over 1996. Operating results in the fourth quarter were driven by the growth in net earned premiums of 10% over the same period in 1996, coupled with consistently good underwriting results and a favorable operating expense ratio. The ratio of claims and commission expenses to net earned premiums was 78.7% which continues to reflect favorable underwriting trends experienced throughout 1997. Operating expenses in the quarter totaled $74.2 million or 11.2% of gross earned premiums, this compared with an operating expense ratio of 12.2% for the same period in 1996. The quarter also benefited from a lower effective tax rate of 25.9% compared with 31.3% in the same period in 1996. The overall effective tax rate for 1997 was 28% compared with 30.5% for 1996. - more - 2 AMERICAN BANKERS INSURANCE GROUP, INC. NEWS RELEASE - PAGE 2 Net income for the fourth quarter of 1997 was $30.0 million or $.64 per share on a diluted basis, compared with $26.2 million or $.56 per share for the same period in 1996. On a basic earnings per share basis, net income for the fourth quarter of 1997 was $28.2 million or $.68 per share compared with $24.3 million or $.59 per share for the same period in 1996. Fourth quarter net income includes realized investment gains, net of tax, of $.8 million or $.02 per share compared with realized investment gains, net of tax, of $1.0 million or $.02 per share for the same period in 1996. Weighted average shares outstanding on a diluted basis for the quarter were 47.1 million compared with a split adjusted figure of 46.7 million for the same period in 1996. The Company declared a two-for-one common stock split in August 1997. As a result of the stock split all common shareholders of record on August 29, 1997 received one additional share for each share they held. On a diluted basis, net operating income increased $18.6 million or 21% in 1997 over 1996. Net operating income for the year ended December 31, 1997 was $108.3 million or $2.31 per share compared with net operating income of $89.7 million or $2.04 per share in 1996. On a basic earnings per share basis, net operating income per share for 1997 was $2.44 per share compared with $2.12 per share for 1996. Adjusted net income for the year ended December 31, 1997 was $115.1 million or $2.45 per share on a diluted basis, compared with net income of $94.7 million or $2.16 per share for 1996. Stockholders' equity was $698.9 million (excluding $115 million of preferred stock) and book value per common share was $16.83 at December 31, 1997. American Bankers Insurance Group, Inc. (ABI) concentrates on marketing affordable, specialty insurance products and services through financial institutions, retailers and other entities offering consumer financing as a regular part of their business. ABI, through its insurance subsidiaries, operates in the United States, Canada, Latin America, the Caribbean and the United Kingdom. Earnings per share for all periods are reported in accordance with FASB statement 128. - more - 3 AMERICAN BANKERS INSURANCE GROUP, INC. NEWS RELEASE - PAGE 3 The comparative consolidated results are as follows: (in thousands)
Quarter Ended Year Ended December 31 December 31 ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Income before realized investment gains and income taxes $ 39,180 $ 36,578 $149,201 $128,133 Realized investment gains 1,295 1,528 10,394 7,812 -------- -------- -------- -------- Income before income taxes 40,475 38,106 159,595 135,945 Income tax expense 10,488 11,936 44,732 41,442 -------- -------- -------- -------- Net income $ 29,987 $ 26,170 $114,863 $ 94,503 ======== ======== ======== ========
- more - 4 AMERICAN BANKERS INSURANCE GROUP, INC. NEWS RELEASE - PAGE 4 The following is a breakdown of operating income and realized investment gains, net of taxes: (in thousands except per common share data)
Quarter Ended Year Ended December 31 December 31 ---------------------- ---------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Basic: Net operating income $ 27,348 $ 23,320 $ 100,918 $ 86,310 Net realized investment gains 842 993 6,757 5,078 --------- --------- --------- --------- Adjusted net income 28,190 24,313 107,675 91,388 Dividends on preferred stock 1,797 1,857 7,188 3,115 --------- --------- --------- --------- Net income as reported $ 29,987 $ 26,170 $ 114,863 $ 94,503 ========= ========= ========= ========= Basic per share data: Net operating income $ .66 $ .57 $ 2.44 $ 2.12 Net realized investment gains .02 .02 .16 .12 --------- --------- --------- --------- Adjusted net income $ .68 $ .59 $ 2.60 $ 2.24 ========= ========= ========= ========= Weighted average shares outstanding 41,576 40,830 41,433 40,697 ========= ========= ========= ========= Diluted: Net operating income $ 29,204 $ 25,234 $ 108,338 $ 89,653 Net realized investment gains 842 993 6,757 5,078 --------- --------- --------- --------- Adjusted net income 30,046 26,227 115,095 94,731 Interest on convertible debentures (59) (57) (232) (228) --------- --------- --------- --------- Net income as reported $ 29,987 $ 26,170 $ 114,863 $ 94,503 ========= ========= ========= ========= Diluted per share data: Net operating income $ .62 $ .54 $ 2.31 $ 2.04 Net realized investment gains .02 .02 .14 .12 --------- --------- --------- --------- Adjusted net income $ .64 $ .56 $ 2.45 $ 2.16 ========= ========= ========= ========= Weighted average shares outstanding 47,050 46,689 46,999 43,890 ========= ========= ========= =========
Earnings per share for all periods are reported in accordance with FASB statement 128. #### EX-99.12 9 COMPLAINTS FILED 1 Exhibit 12 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION CENDANT CORPORATION and SEASON ACQUISITION CORP., Plaintiffs, Case No. 98-0159-CIV-MOORE v. Magistrate Judge Johnson AMERICAN BANKERS INSURANCE GROUP, INC., GERALD N. GASTON, R. KIRK LANDON, EUGENE M. MATALENE, JR., ARMANDO CODINA, PETER J. DOLARA, JAMES F. JORDEN, BERNARD P. KNOTH, ALBERT H. NAHMAD, NICHOLAS J. ST. GEORGE, ROBERT C. STRAUSS, GEORGE E. WILLIAMSON II, DARYL L. JONES, NICHOLAS A. BUONICONTI, JACK F. KEMP, AMERICAN INTERNATIONAL GROUP, INC. and AIGF, INC., Defendants. - --------------------------------------/ AMENDED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF Plaintiffs Cendant Corporation ("Cendant") and Season Acquisition Corp. ("Season Acquisition"), by their counsel, for their Amended Complaint allege SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 2 Case No. 98-0159-CIV-MOORE upon knowledge as to themselves and their own acts and upon information and belief as to all other matters, as follows: JURISDICTION 1. The claims asserted herein arise under Sections 13(d), 14(a) and 14(e) of the Exchange Act, 15 U.S.C. ss.ss. 78m(d), 78n(a), and 78n(e), and the rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC"), and the law of the State of Florida. This Court has jurisdiction over this action pursuant to Section 27 of the Exchange Act, 15 U.S.C. ss. 78aa; 28 U.S.C. ss. 1331 (federal question); 28 U.S.C. ss. 1332 (diversity of citizenship); and 28 U.S.C. ss. 1367 (supplemental jurisdiction). VENUE 2. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28 U.S.C. ss. 1391(b). The claims asserted herein arose in this District, and the acts and transactions complained of have occurred, are occurring, and unless enjoined, will continue to occur in this District. PARTIES 3. Plaintiff Cendant is a corporation organized and existing under the laws of the State of Delaware with its principal of business located in Parsippany, New Jersey. Cendant is a global provider of direct marketing and other services to 2 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 3 Case No. 98-0159-CIV-MOORE consumers in the travel, real estate and insurance industries, among others. Cendant is the beneficial owner of 371,200 shares of the common stock of American Bankers Insurance Group, Inc. ("American Bankers" or the "Company"). Cendant publicly announced on January 27, 1998, that plaintiff Season Acquisition, a wholly owned subsidiary of Cendant, would commence a tender offer to purchase 51% of the outstanding common shares of American Bankers, with the remaining 49% of the shares to be acquired through a second-step merger more fully described below. Season Acquisition is a New Jersey corporation with its principal place of business also in Parsippany, New Jersey. 4. Defendant American Bankers is a Florida corporation with its principal place of business located in Miami, Florida. Through its subsidiaries, American Bankers is a specialty insurer providing primarily credit-related insurance products in the United States, Canada, Latin America, the Caribbean and the United Kingdom. Most of American Bankers' insurance products are sold through financial institutions and other entities that provide consumer financing as a regular part of their business. 5. Defendant Gerald N. Gaston has been President of American Bankers since 1980 and its Chief Executive Officer and Vice Chairman of the Board of Directors (the "Board") since 1996. Gaston is a member of the Executive, Finance 3 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 4 Case No. 98-0159-CIV-MOORE and Takeover Evaluation Committees of the Board. As an officer and director of American Bankers, Gaston owed and continues to owe fiduciary duties of loyalty and care to the Company's shareholders. Gaston is a control person of American Bankers pursuant to Section 20(a) of the Exchange Act, and therefore is jointly and severally liable for the violations of the federal securities laws committed by American Bankers. 6. Defendant B. Kirk Landon has been Chairman of the Board since 1980 and Chief International Officer of American Bankers since 1996. Landon is a member of the Planning, Executive, Finance and Takeover Evaluation Committees of the Board. As an officer and director of American Bankers, Landon owed and continues to owe fiduciary duties of loyalty and care to the Company's shareholders. Landon is a control person of American Bankers pursuant to Section 20(a) of the Exchange Act, and therefore is jointly and severally liable for the violations of the federal securities laws committed by American Bankers. 7. Defendants Eugene M. Matalene, Jr., Armando M. Codina, Peter J. Dolara, James F. Jorden, Bernard P. Knoth, Albert H. Nahmad, Nicolas J. St. George, Robert C. Strauss, George E. Williamson II, Daryl L. Jones, Nicholas A. Buoniconti and Jack F. Kemp are, and at all relevant times have been, directors of American Bankers. As directors, these defendants owed and continue to owe duties of loyalty and care to the Company's shareholders. These defendants are control 4 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 5 Case No. 98-0159-CIV-MOORE persons of American Bankers pursuant to Section 20(a) of the Exchange Act, and therefore are jointly and severally liable for the violations of the federal securities laws committed by American Bankers. 8. Defendant AIG is a Delaware corporation with its principal executive offices in New York, New York. AIG is a holding company engaged primarily in the general and life insurance businesses both in the United States and abroad. AIG is controlled by its Chairman, Maurice R. Greenberg ("Greenberg"), a material fact that AIG has wrongfully failed to disclose in violation of Section 13(d) of the Exchange Act. 9. Defendant AIGF, Inc. ("AIGF") is a Florida corporation wholly-owned by AIG. Pursuant to a merger agreement signed by American Bankers, AIG and AIGF in December 1997 (the "AIG Merger Agreement"), AIG has proposed to acquire American Bankers through a merger of American Bankers into AIGF, with AIGF to be the surviving corporation in the merger. NATURE OF THE ACTION 10. This action arises from an attempt by American Bankers and its directors to sell the Company to AIG at an inferior price, to the detriment of the Company's owners -- its shareholders, and through wrongful means. In furtherance of these unlawful objectives, defendants have taken and continue to take improper steps 5 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 6 Case No. 98-0159-CIV-MOORE to ensure the success of the inferior acquisition proposal made by AIG and to deter, impede and defeat a higher, competing bid for the Company announced by Cendant (the "Cendant Bid"). The price that Cendant has offered to pay -- $58.00 per American Bankers common share -- amounts to a 25% premium over the market price of American Bankers common stock when it was announced on January 26, 1998, and exceeds by more than 23% the price per share offered by AIG. 11. The Cendant Bid commenced on January 28, 1998 as a tender offer for 51% of the outstanding common shares of American Bankers by Season Acquisition (the "Season Tender Offer"). It will be followed by a subsequent merger of American Bankers into Season Acquisition (the "Season Merger"), with each non-tendering American Bankers common shareholder receiving stock with a value of $58.00 per American Bankers common share, the same price paid to common shareholders tendering into the Season Tender Offer. The total price to be paid to American Bankers common shareholders under the terms of the Cendant Bid amounts to approximately $2.7 billion, which exceeds the total price offered by AIG by approximately half a billion dollars. 12. American Bankers was aware prior to signing a deal with AIG that Cendant had expressed strong interest in acquiring American Bankers. Nevertheless, the Board considered only AIG's proposal, completely and improperly excluding 6 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 7 Case No. 98-0159-CIV-MOORE Cendant, to the detriment of the Company's shareholders and in breach of the Board's fiduciary obligations. The Company decided to sell to AIG at an inferior price without ever having approached a single third party to gauge the fair market value for American Bankers. The American Bankers management even prepared "revised" projections that incorporated lower revenue and income estimates solely for the purpose of considering the AIG Merger Proposal. Then, to prevent the emergence of any other bidder -- no matter how beneficial to American Bankers' shareholders -- the Board approved the terms of the proposed merger agreement with AIG (the "AIG Merger Proposal"), which purport to suspend the Board's fiduciary obligations by prohibiting the directors from evaluating any competing proposal, even one, like the Cendant Bid, that clearly is superior to the merger proposal made by AIG. In further breach of their duties, the Board adopted a "poison pill" rights plan (the "Rights Plan") that could irrevocably deprive the Company's shareholders of the much higher Cendant Bid if the Rights are distributed and become unredeemable -- an event that could occur as soon as two weeks from now. Cendant and Season Acquisition, therefore, have no recourse other than to seek emergency intervention of this Court to compel American Bankers and its directors to adequately discharge their fiduciary duties and negotiate with Cendant, the highest bidder, and to take all necessary action 7 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 8 Case No. 98-0159-CIV-MOORE to allow the Company's shareholders to decide for themselves which proposal they wish to accept on a level playing field free from coercion. 13. By approving the AIG Merger Proposal, the American Bankers Board has determined that the separate existence of American Bankers should be terminated and the Company's shareholders should sell and relinquish control of American Bankers to AIG, which will purchase control in exchange for cash and stock of AIG. Such a determination triggers a duty for the Board to sell the Company for the highest price. As demonstrated by the Cendant Bid, however, American Bankers is not for sale for the highest price. The Board has firmly resolved to deal with only one bidder, AIG, and as a result, Cendant and Season Acquisition are prevented from having any meaningful opportunity to present a higher offer and acquire the Company. In contrast, AIG has been allowed access to confidential information about American Bankers and has been allowed to negotiate a definitive agreement to buy American Bankers on terms highly favorable to AIG, but not to the Company's shareholders. 14. If the Board-approved impediments (further described below) to non-AIG tender offers or merger proposals are allowed to stand, Cendant and Season Acquisition will forever lose the opportunity to have their proposal fairly considered by the Board and will lose the opportunity to create a new combined entity with 8 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 9 Case No. 98-0159-CIV-MOORE unique business strengths. In addition, the American Bankers shareholders will be denied the right to receive approximately half a billion dollars more for their shares of American Bankers than AIG has offered. 15. The decision of the Company's directors to sell control of American Bankers imposes special obligations on the Board under Florida law. In particular, the directors are required to secure the transaction offering the best value reasonably available to the shareholders -- and they must exercise their fiduciary duties of loyalty and care to the corporation and its shareholders to further that end. In pursuing that goal, the directors must follow procedures, such as conducting an auction or adequately canvassing the market for potential buyers, to ensure that they have fulfilled their obligation to determine the existence and viability of all reasonably available alternatives. Arrangements which purport to restrict directors from taking those steps are invalid and unlawful. 16. As for the AIG Merger Agreement, American Bankers' loyalty to AIG has exceeded all reasonable and permissible limits. The Board's arrangements with AIG deny any kind of fair bidding process and impose potentially insuperable barriers to any and all competing bids that could provide the Company's shareholders with the best available value to which they are legally entitled. In exchange for the extraordinary defensive protections awarded by the Company to AIG, which are 9 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 10 Case No. 98-0159-CIV-MOORE rarely encountered -- and never countenanced -- in the corporate sale context, AIG is offering the Company's shareholders a skimpy control premium that was only six percent (6%) above the market price of American Bankers common stock upon announcement of the AIG transaction and is l5% less than the market price of American Bankers shares as of the time of this Amended Complaint. As a result, the Company's Board is denying shareholders the substantially higher control premium available through the Cendant Bid or other potential transactions. 17. The arsenal of defensive weapons improperly deployed by American Bankers to protect AIG includes an option permitting AIG to purchase 19.9% of the outstanding shares of American Bankers common stock (the "Lock-Up Option"). The Lock-Up Option would provide AIG with sufficient voting power to skew the voting process to attempt to block any and all competing bids, regardless of price and the desires of American Bankers' shareholders, and ensure the success of the inferior AIG Merger Proposal, which the Company is prohibited from abandoning for a period of 180 days, or six months, under the AIG Merger Agreement. The Lock-Up Option is conditioned upon several events occurring, one of which is the commencement of a tender offer. Since the Season Tender Offer was commenced last week, only regulatory approval of the Lock-Up Option stands in the way of AIG's exercise of the Lock-Up Option. Injunctive relief is therefore essential to prevent 10 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 11 Case No. 98-0159-CIV-MOORE AIG from irrevocably tilting the playing field in favor of its lowball Merger Proposal, to the irreparable detriment of Cendant and the other shareholders of American Bankers. 18. In addition to the Lock-Up Option and 180-day "no termination" provision, there are a number of additional obstacles to competing bids erected by American Bankers and AIG, including: (a) an agreement flatly prohibiting the Board from entertaining any other bids under any circumstances for a period of 120 days, i.e., before the AIG Merger Proposal is consummated; (b) a voting agreement obligating members of American Bankers management to vote their stock - -- 8.2% of the shares outstanding -- in favor of the AIG Merger Proposal; (c) an agreement to pay AIG a "termination" or "break-up" fee of at least $66 million if the AIG Merger Proposal is not consummated; and (d) an agreement to exempt AIG -- but only AIG from the American Bankers "poison pill" Rights Plan and to extend the life of the Rights Plan so as to deter all bids other than AIG's. 19. All of these measures are designed to prevent American Bankers shareholders from obtaining the best available transaction, are intended to prevent a fair auction process or even a fair test of what the market would be willing to pay, and are intended to deliver control of American Bankers to AIG cheaply in breach of the fiduciary duties owed by the Company's directors to its shareholders. 11 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 12 Case No. 98-0159-CIV-MOORE 20. For these reasons, the Lock-Up Option and other defensive measures approved by the Board are unreasonable, unlawful and unenforceable, and should be enjoined. American Bankers and its Board of Directors should be directed to dismantle their defensive arsenal and create a level playing field so that Cendant and Season Acquisition may present their superior bid to the Company's shareholders. 21. Apparently recognizing that the inferior price offered by AIG would never be accepted voluntarily by the American Bankers shareholders if free to select the superior Cendant Bid, defendants have already begun a campaign to attempt to stack the deck in AIG's favor. On January 27, 1998, the same day Cendant and Season Acquisition launched their Tender Offer, AIG issued a press release announcing that it purportedly had given notice to American Bankers of its intention to exercise the Lock-Up Option to acquire 19.9% of the outstanding shares of American Bankers at $47.00 per share -- 16% below the market price at the time of the announcement (the "Option Announcement"). The Option Announcement was deliberately designed to convey the false and materially misleading impression that AIG had issued a notice pursuant to the AIG Merger Agreement to purchase the Option Shares, a notice which must specify a closing date no more than 10 business days thereafter. In reality, AIG knows that it cannot exercise the Lock-Up Option within 10 business days and has no reasonable basis, to believe that it can, because any 12 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 13 Case No. 98-0159-CIV-MOORE such exercise of the Option is conditioned on certain insurance and other regulatory approvals that AIG knows cannot be obtained within 10 business days as AIG has falsely suggested in the Option Announcement. Nevertheless, AIG is conveying the misleading impression that the Option will be exercised much sooner than possible, to attempt to artificially manipulate American Bankers shareholders into believing that it knows that insurance and regulatory approvals are imminent, that the AIG merger is inevitable and that the Cendant Bid cannot succeed. The Option Announcement, therefore, constitutes a violation of both Sections 14(a) and 14(e) of the Exchange Act. 22. On January 30, 1998, defendants took additional steps in furtherance of their effort to force-feed the AIG Merger Proposal to the American Bankers shareholders. On that date, defendants began disseminating to the stockholders a materially false and misleading proxy statement and prospectus to solicit proxies to be voted in favor of the AIG Merger Proposal at special meetings of the Company's preferred and common shareholders, scheduled to be held on March 4 and March 6, respectively (the "Proxy Statement"). The Proxy Statement is false and misleading in that, among other things, it attempts to reinforce the false and misleading impression that the AIG merger will be able to close imminently by repeating the false claim that AIG has "exercised" the Lock-Up Option well in advance of obtaining the requisite 13 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 14 Case No. 98-0159-CIV-MOORE regulatory approvals needed to do so. It also states that the AIG merger is expected to close in March 1998, without disclosing any of the "facts" on which the statement is based. In truth and in fact, there is no basis to believe that the transaction can possibly be consummated that rapidly given the need to obtain numerous insurance regulatory approvals that will not be forthcoming by the end of March, particularly given that AIG's insurance regulatory filings in certain states are not complete, while other states have requested AIG to file additional information which, on information and belief, has not yet been filed. Moreover, on information and belief, no controlling person of AIG (including its Chairman, Greenberg) has made the appropriate filings with insurance regulators. Furthermore, insurance regulatory approval in certain states requires a public hearing prior to any approval, and, upon information and belief no hearing has even been noticed yet. 23. In the Proxy Statement, defendants also attempt to conceal the nature of the "expense savings" to be achieved by the AIG Merger. The Proxy Statement falls to disclose that for AIG to accomplish its contemplated "expense savings," it is likely that jobs will have to be eliminated and American Bankers personnel terminated, including those employed in Miami. 24. Notably, the Proxy Statement practically ignores the fact that since the Board signed the AIG Merger Agreement last December, a far superior 14 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 15 Case No. 98-0159-CIV-MOORE offer for American Bankers -- the Cendant Bid -- has emerged and the American Bankers stock price has increased to levels well above the AIG Merger Proposal price. Nowhere in the Proxy Statement are these recent material events evaluated in any way; nor does it seem that the Proxy Statement has incorporated them in evaluating the AIG Merger Proposal. 25. AIG should be compelled immediately to correct the materially misleading public disclosures it has made to date in connection with its AIG Merger Proposal. Specifically, defendants should be directed to make a corrective disclosure regarding the Option Announcement and the Proxy Statement and be enjoined from making any materially false and misleading statements, including by means of any proxy solicitations, during the pendency of the contest for control of American Bankers. Additionally, AIG should be compelled to disclose, as it must under Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), that Greenberg, the Chairman of AIG, is a person controlling AIG, and therefore would obtain control of American Bankers in the event the AIG Merger Proposal is consummated. 15 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 16 Case No. 98-0159-CIV-MOORE CHRONOLOGY OF EVENTS American Bankers Secretly Negotiates A Deal Exclusively With AIG 26. In December 1997, John H. Fullmer, Executive Vice President and Chief Marketing Officer of Cendant, spoke with the President of American Bankers, defendant Gerald Gaston, and asked him whether the Company was actively engaged in discussions relating to an acquisition, noting that if it was, representatives of Cendant would like to meet immediately with representatives of American Bankers to discuss Cendant's serious interest in acquiring the Company. Gaston assured Mr. Fullmer that the Company was not pursuing any acquisition transaction and did not pursue the subject further with Mr. Fullmer. In truth and in fact, defendant Gaston and his fellow directors had been for months actively negotiating a sale of American Bankers to AIG, which the Board had identified as the preferred bidder for the Company without adequately evaluating alternative transactions that could maximize the value of American Bankers shares to be received by all of the Company's shareholders. 16 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 17 Case No. 98-0159-CIV-MOORE The AIG Merger Proposal And Merger Agreement 27. By press release dated December 22, 1997 (the "Release"), American Bankers and AIG announced that they had entered into a "definitive" merger agreement -- the AIG Merger Proposal -- whereby AIG, through AIGF, would acquire 100% of the outstanding capital stock of American Bankers in exchange for a combination of AIG stock and cash totaling $47.00 per share. The total value of the transaction was estimated in the Release to be approximately $2.2 billion. The price offered pursuant to the AIG Merger Proposal represented a mere $2.75 per share -- or 6% -- premium above the previous day's closing price of American Bankers common stock on the New York Stock Exchange. A copy of the Release is attached hereto as Exhibit A. 28. The Release also revealed that in connection with the AIG Merger Proposal, American Bankers had issued an option to AIG to purchase up to 19.9% of American Bankers common stock -- the sole purpose for which is to improperly deter any competing bidders for American Bankers and to bolster support for AIG's economically inferior proposal. In this same vein, officers and directors of American Bankers who together held approximately 9% of American Bankers common stock were said to have already agreed to vote in favor of the AIG Merger Proposal. The 17 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 18 Case No. 98-0159-CIV-MOORE AIG Merger Proposal was, according to the Release, expected to close "early in 1998," but few other terms of the transaction were disclosed in the Release or any other document disseminated by American Bankers or AIG at the time. American Bankers Files A Form 8-K Attaching The AIG Merger Agreement 29. On January 13, 1998 -- more than three weeks following issuance of the Release -- American Bankers filed with the Securities and Exchange Commission a Form 8-K, disclosing, for the first time, the terms of the AIG Merger Proposal and attaching as exhibits the AIG Merger Agreement; a Stock Option Agreement (the Lock-Up Option) and a Voting Agreement. Copies of the AIG Merger Agreement, the Lock-Up Option and the Voting Agreement are attached hereto as Exhibits B, C and D. The AIG Merger Agreement Attempts To Lock up A Transaction With AIG At An Inferior Price And Impede The Financially Superior Bid From Cendant And Season Acquisition 30. The price to be received by American Bankers's shareholders in the AIG Merger Proposal provides a minuacule control premium (6%) over the price at which American Bankers shares were trading on the day it was made, and is by no means the best value that the directors could expect to receive. Incredibly, American Bankers admits in the Proxy Statement that it accepted AIG's lowball price despite 18 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 19 Case No. 98-0159-CIV-MOORE the fact that its financial advisor "was not requested to and did not approach third parties or hold discussions with third parties to solicit indications of interest in the possible acquisition of American Bankers." The Board's failure to use the AIG Merger Proposal as a market test to verify that a fair value was being paid by AIG or to attract the highest available bid was in violation of their fiduciary duties. 31. Besides failing to make ant attempt to determine if the price offered by AIG was a fair market value, the directors of American Bankers, who will be given continuing positions on the board of directors of the merged entity, have unlawfully attempted to end bidding for the Company before it could begin by approving and effecting an astonishing array of potent defensive devices in the AIG Merger Proposal designed to prematurely "lock up" the merger with AIG and deter any third parties from consummating any transaction, even if offering higher value to the Company's shareholders. Among these unlawful defense devices were a Lock-Up Option granting AIG the right to purchase 19.9% of the outstanding American Bankers shares in the event of a competing acquisition proposal; a "no-shop" provision which purports to prohibit the Board from even considering any other bids -- no matter how high the price -- for a period of 120 days; an agreement that American Bankers may not terminate the AIG Merger Agreement for 180 days, except under extremely limited circumstances inapplicable here; a "break-up" fee of at least $66 19 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 20 Case No. 98-0159-CIV-MOORE million to be paid to AIG if the AIG Merger Proposal is not consummated; and an undertaking to exempt the AIG Merger Proposal from the American Bankers "poison pill" Rights Plan and an agreement to extend the life of the Rights, currently scheduled to expire on March 10, 1998, thus deterring any acquisition proposals not approved by the Board. Gaston And Landon Have Already Agreed To Vote Their Shares In Favor Of The AIG Merger Proposal 32. Concurrently with the Board's approval of the AIG Merger Agreement, defendants Gaston and Landon entered into the Voting Agreement, whereby they have agreed to vote all of their American Bankers stock "(a) in favor of adoption and approval of the [AIG] Merger Agreement . . . and (b) against any action or proposal that would compete with or could serve to materially interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the [AIG Merger Proposal]." According to the American Bankers Form 8-K, as amended, the shares irrevocably committed to AIG pursuant to the Voting Agreement amount to approximately 8.2% of the outstanding shares of American Bankers. 20 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 21 Case No. 98-0159-CIV-MOORE American Bankers Has Granted AIG A "Lock-Up" Option For Nearly 20% Of American Bankers Outstanding Stock 33. In connection with the AIG Merger Agreement, American Bankers and AIG have entered into a Stock Option Agreement pursuant to which American Bankers has granted AIG an option, exercisable under certain conditions, to purchase 8,265,626 newly issued shares of American Bankers common stock at an exercise price of $47.00 per share. The Lock-Up Option represents 19.9% of American Bankers' outstanding common stock as of December 21, 1997. 34. The Lock-Up Option becomes exercisable by AIG in the event that, among other circumstances: a. any person or group commences a tender offer for at least 15% of American Bankers stock; b. any person announces publicly or delivers to American Bankers a proposal for the purchase of 15% or more of American Bankers's assets or of any class of American Bankers securities; or c. any person solicits, or announces an intention to solicit, proxies or consents from American Bankers shareholders for election of directors or to oppose the AIG Merger Proposal. 21 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 22 Case No. 98-0159-CIV-MOORE 35. Because the Lock-Up Option was triggered by the Season Tender Offer, AIG awaits only required regulatory approval to be able to exercise the option and purchase 19.9% of the Company's stock. The Lock-Up Option is designed for the sole purpose and effect of precluding consummation of any superior bid for American Bankers, including the Cendant Bid, in that AIG could use the 19.9% stake, along with the 8.2% block it directs pursuant to the Voting Agreement, to block any competing bids for American Bankers and to unfairly skew the vote statutorily required by the Florida corporation law in favor of its own merger proposal, thereby attempting to guarantee the success of its economically inferior proposal. In fact, AIG has already invoked the threat of directing 28.1% of the vote in an attempt to sour shareholder interest in the economically superior Season Tender Offer. The Option Announcement implies that AIG's control of enough shares to tank the Season Tender Offer and to skew the vote on the AIG Merger Proposal in its favor is inevitable, making an American Bankers shareholder's tender to Season Acquisition futile. 36. The chilling effect of the Lock-Up Option is exacerbated by Article VIII of American Bankers' Third Amended and Restated Articles of Incorporation (the "Charter") and Section 607.0901 of the Florida Business Corporation Act (the "Act"). If the Board of American Bankers refuses to approve the Season Tender 22 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 23 Case No. 98-0159-CIV-MOORE Offer or the Season Merger, both the Charter and the Act would operate to permit AIG to veto the proposed second-step merger with Season Acquisition upon completion of the Season Tender Offer, a result that effectively would prevent the acquisition of control of American Bankers, even if more than 50% of the Company's shareholders tender their shares in response to the Season Tender Offer. Consequently, the Lock-Up Option, along with the Charter and the Act, effectively permit AIG to block any and a11 competing bids no matter how favorable to the Company's shareholders. 37. The Lock-Up Option provides no economic or other benefit to American Bankers or its shareholders. Its only purpose is to deter other bids. AIG does not want to be a 19.9% shareholder of American Bankers and American Bankers does not want AIG as a 19.9% shareholder. This is shown by the provisions of the Lock-Up Option that (a) permit AIG to sell the option shares it acquires back to the Company in the event the AIG Merger Agreement terminates; and (b) allow the Company to repurchase the option shares acquired by AIG in the event no person obtains control of American Bankers within one year following termination of the AIG Merger Agreement. 23 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 24 Case No. 98-0159-CIV-MOORE American Bankers Agrees Not To Consider Any Other Offers 38. While the Lock-Up Option is, itself, a virtually insuperable barrier to competing bids, the defendant directors have created further impediments to competing bids in further breach of fulfillment of their fiduciary duty to maximize the value to be obtained in the sale of the Company. More specifically, Section 6.2 of the AIG Merger Agreement contains a "no-shop" provision that purports to prohibit the Board from entertaining any competing bids for a period of 120 days from the date of the AIG Merger Proposal. Pursuant to that provision, the directors are flatly prohibited from: (a) initiating, soliciting, encouraging or otherwise facilitating any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction; or (b) engaging in any negotiations concerning, or providing any confidential information or data to, or having any discussions with, any person relating to an acquisition proposal or otherwise facilitating any effort or attempt to make or implement an acquisition proposal (the "No-Shop Provision"). 39. The No-Shop Provision reflects a complete abdication of the directors' fiduciary obligations under Florida law. It is also highly unusual, in that it prohibits the Board from considering any competing proposal for 120 days under any 24 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 25 Case No. 98-0159-CIV-MOORE circumstances -- regardless of whether the competing proposal is demonstrably and significantly more favorable to American Bankers shareholders than the AIG Merger Proposal. Given that the Company and AIG have announced in the Proxy Statement that they can consummate the AIG Merger Proposal in March 1998, i.e., within 120 days of signing the AIG Merger Agreement, the No-Shop Provision unquestionably is designed and intended to make the AIG merger a fait accompli, without regard to whether it represents the best available transaction for the shareholders of American Bankers. The Board Has Agreed To An Unreasonable Termination Provision And Break-Up Fee 40. As if the No-Shop Provision, Voting Agreement, and Lock-Up Option were not enough to deter competing bids for American Bankers and to ensure the success of the AIG Merger Proposal, American Bankers has acquiesced to a termination provision (the "Termination Provision") in the AIG Merger Agreement that provides that even if the shareholders of American Bankers resoundingly reject the AIG Merger Proposal, American Bankers is stuck with that contract and cannot terminate it until 180 days -- 6 months -- after the date of its execution, providing AIG with a continuing advantage over any other bidder by effectively allowing AIG a continuing right of first refusal. 25 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 26 Case No. 98-0159-CIV-MOORE 41. The only way that American Bankers could terminate the AIG Merger Agreement prior to the 180 day period would be if the American Bankers shareholders fail to approve the AIG Merger Proposal and if no "Acquisition Proposals" are made prior to the time of the shareholder vote; the Season Tender Offer qualifies as an Acquisition Proposal under the AIG Merger Agreement and therefore this lone exception cannot apply here. 42. AIG, by contrast, has several circumstances under which it can terminate the AIG Merger Agreement, and collect a windfall by doing so. For example, if the AIG Merger Proposal is rejected by the Company's shareholders in the face of a competing acquisition proposal, like the Season Tender Offer, AIG may terminate the AIG Merger Agreement and collect from American Bankers a "termination fee" of $66 million dollars -- 3% of the total value of the AIG Merger (the "Break-Up Fee"). 43. The Break-Up Fee bears no reasonable relation to either the costs to AIG in making its proposal or to any effort by the Board to ensure that the American Bankers shareholders receive the best available price for their shares. The sole or primary purpose of the Break-Up Fee is to chill interest by competing bidders by forcing them to effectively pay a $66 million penalty for topping AIG's bid. 26 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 27 Case No. 98-0159-CIV-MOORE The Board Has Agreed To Terminate Its Poison Pill Only For The AIG Merger Proposal 44. American Bankers also has a shareholder Rights Plan, commonly known as a "poison pill," to deter unsolicited takeover attempts. Pursuant to the Rights Plan, each share of American Bankers common stock comes with a "Right." The Rights Plan provides that, absent appropriate action by the Board, the Rights will "detach" and be separately distributed to shareholders within 10 days of the commencement of acquisition proposals such as the Season Tender Offer. Ten days after distribution, the Rights become non-redeemable. If the Rights are not redeemed by the Company's Board and the Season Tender Offer were to close, the Rights Plan would allow all Rights holders, except for Cendant and Season Acquisition (whose Rights would be null and void) to acquire additional shares of American Bankers at a 50% discount, significantly diluting Cendant and Season Acquisition's ownership of American Bankers stock and making any acquisition of the Company prohibitively expensive for Cendant and Season Acquisition. Alternatively, if American Bankers were to merge with and into Season Acquisition, the Rights Plan would allow all Rights holders to acquire shares of Cendant at a 50% discount, inflicting the same kind of substantial financial penalty that would deter the Cendant Bid. Pursuant to an 27 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 28 Case No. 98-0159-CIV-MOORE amendment to the Rights Plan provided for in the AIG Merger Agreement, however, the Rights Plan does not apply to the AIG Merger Proposal. 45. If the American Bankers Board does not redeem the Rights or take other appropriate action to prevent the Rights from impeding the Cendant Bid, the Rights will become non-redeemable on February 17, 1998 absent the issuance of injunctive relief. Triggering of the Rights would either substantially dilute the holdings of Cendant and Season Acquisition in American Bankers upon closing of the Season Tender Offer, making it prohibitively expensive, or inflict a tremendous penalty on Cendant upon any acquisition of American Bankers by merger. Accordingly, absent injunctive relief, the Cendant Bid cannot be completed unless the American Bankers Board redeems the Rights or amends the Rights Plan to make it inapplicable to either the Season Tender Offer or the Season Merger. Failure to take such action prevents the shareholders of American Bankers from deciding for themselves the merits of the Cendant Bid. 46. While the Rights Plan is scheduled to expire on March 10, 1998, American Bankers has committed itself in the AIG Merger Agreement, to extending the Rights Plan, or adopting a new Rights Plan with identical terms, at AIG's request. Through this agreement, the Board of American Bankers has abdicated its fiduciary 28 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 29 Case No. 98-0159-CIV-MOORE obligations in connection with the Rights Plan by placing an important decision regarding its shareholders' rights in the hands of a third party -- AIG. The Company's Defensive Arsenal Constitutes A Breach Of The Directors' Duties 47. In the process of agreeing to adopt and implement the panoply of takeover defenses described above, including the Lock-Up Option, the No-Shop Provision, the Termination Provision, the Break-Up Fee, and the Rights Plan (the "Takeover Defenses"), the Board failed adequately to inform themselves of all relevant facts and circumstances. The illicit Takeover Defenses cannot be justified as needed to induce a bidder to make an offer for American Bankers; cannot be justified as needed to secure an enhanced price in the context of an ongoing bidding contest; and cannot otherwise be justified as a reasonable means of securing whatever advantage the Board perceived would be provided by a deal with AIG at $47.00 per share. Consequently, the Board breached its fiduciary duties when it approved the Takeover Defenses and it continues to breach its fiduciary duties in not dismantling them. 48. The Board of American Bankers agreed to the Takeover Defenses (a) despite its knowledge that potential acquirers other than AIG (including Cendant or its affiliates) were interested in making offers to acquire the Company; (b) after refusing to obtain indications whether such alternative buyers would offer terms more 29 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 30 Case No. 98-0159-CIV-MOORE attractive to American Bankers shareholders than those offered by AIG, and (c) despite its knowledge that the Takeover Defenses would prevent the Company's shareholders from receiving a substantial premium for relinquishing control of American Bankers. Thus, in direct breach of their fiduciary duties, the Company's directors have actually punished their own shareholders by rewarding AIG for making a lowball bid and deterring other interested parties from making higher offers. AIG Belatedly Files A Materially False And Misleading Schedule 13D 49. On January 16, 1998, fifteen days after it was legally obligated to do so, AIG belatedly filed a Schedule 13D with the SEC disclosing its beneficial ownership of the American Bankers shares subject to the voting Agreement, i.e., 8.2% of the shares outstanding. 50. The Schedule 13D is materially false and misleading in that AIG has failed to disclose, as it must under Section 13(d) of the Exchange Act, that AIG's Chairman of the Board, Greenberg, is a person "controlling" AIG, i.e., a person who has "possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise." 17 C.F.R. ss. 240.12b-2. Greenberg exercises control over AIG through, among other things, control of approximately 30 percent 30 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 31 Case No. 98-0159-CIV-MOORE of the outstanding shares of common stock of AIG, a portion of which is held directly -- and nominally -- by Starr International Company, Inc. ("Starr International"), The Starr Foundation ("Starr Foundation") and C.V. Starr & Co., Inc. ("C.V. Starr") -- private companies that Greenberg controls, and by other AIG officers and directors, whom Greenberg also controls. More specifically: o Greenberg controls Starr International, which owns 16.1% of the outstanding shares of AIG. Although not revealed in the Schedule 13D, Greenberg is the owner of 9.09% of the voting stock of Starr International and is the Chairman of Starr International's Board, which is comprised entirely of officers and employees of AIG or its affiliates who have been hand-picked and are controlled by Greenberg, on whom they depend for their continuing positions at AIG, and who collectively hold approximately 64% of the voting stock of Starr International. Accordingly, Greenberg and his underlings effectively control Starr International and its 16.1% of AIG. o Greenberg also controls C.V. Starr, which owns 2.40% of the outstanding shares of AIG. Although not revealed in the Schedule 13D, Greenberg is the owner of 24.39% of the common stock of C.V. Starr and the President, Chief Executive Officer and a member of the C.V. Starr Board, which is comprised entirely of officers and employees of AIG or its affiliates who have been hand-picked and are controlled by Greenberg, on whom they depend for their continuing positions at AIG, and who collectively hold approximately 70% of C.V. Starr's common stock. Accordingly, Greenberg and his underlings control C.V. Starr and its 2.4% of AIG. o Greenberg also controls Starr Foundation, which owns approximately 3.60% of the outstanding shares of AIG. Although not revealed in the Schedule 13D, Greenberg is the 31 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 32 Case No. 98-0159-CIV-MOORE Chairman of Starr Foundation and he controls its Board of Directors, most (if not all) of which is comprised of officers or employees of AIG or its affiliates who have been hand-picked and are controlled by Greenberg, on whom they depend for their continuing positions at AIG. Accordingly, Greenberg and his underlings control Starr Foundation and its 3.6% of AIG. o Approximately 4.6% of the outstanding shares of AIG are owned by officers and directors who are appointed, and therefore controlled by, Greenberg. o Greenberg is Chairman and Chief Executive Officer of AIG; he has admitted in various public filings to direct ownership of 2.28% of the outstanding shares of AIG. 51. Greenberg's position as Chairman and Chief Executive Officer of AIG and his control over almost one-third of that corporation's stock gives him the power, directly and indirectly, to direct or cause the direction of the management and policies of AIG. These material facts, which are legally required to be disclosed, have been illegally omitted from AIG's Schedule 13D. As a result, the shareholders of American Bankers remain unaware that Greenberg controls AIG, and that he would effectively control American Bankers in the event it is merged with AIG. THE CENDANT BID 52. The Season Tender Offer, commenced January 28, 1998 (the day after the original complaint in this action was filed), seeks 51% of the common shares of American Bankers, in exchange for $58.00 per common share in cash. As soon as 32 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 33 Case No. 98-0159-CIV-MOORE practicable after the tender offer doses, it is anticipated that Cendant, through Season Acquisition, will acquire the balance of the Company's outstanding common shares by means of the Season Merger with American Bankers, whereby all non-tendering American Bankers common shareholders would receive Cendant stock with a value equal to the Season Tender Offer price, $58.00 per share. Under the Season Tender Offer and Season Merger, the common shareholders of American Bankers would receive aggregate consideration of approximately $2.7 billion, approximately half a billion dollars more than anticipated by the AIG Merger Proposal. 53. The Season Tender Offer as expressly contingent upon satisfaction of certain conditions, including: (a) the tender of at least 51% of the outstanding common shares of American Bankers common stock on a fully diluted basis; (b) entry of an order invalidating the Lock-Up Option; (c) Board approval of the Season Offer and Season Merger pursuant to the Charter and the Act; and (d) redemption of the Rights or amendment of the Rights Plan to make it inapplicable to the Season Tender Offer and Season Merger. 54. By letter to the American Bankers Board dated January 27, 1998, Cendant has indicated its strong preference to enter into a merger agreement with American Bankers containing substantially the same terms and conditions (other than price and inappropriate terms) as those contained in the AIG Merger Agreement. The 33 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 34 Case No. 98-0159-CIV-MOORE American Bankers Board, however, has thus far declined to meet with Cendant or any of its subsidiaries or affiliates, including Season Acquisition, much less consent to the form of merger agreement proposed in the letter. Instead, the Board has merely announced in a press release that it would consider the Season Tender Offer "in due course." The Option Announcement 55. On January 27, 1998, the same day on which Cendant launched its bid, AIG issued a press release stating that it had "given notice to American Bankers Insurance Group (ABIG) of its intention to exercise its contractual right to acquire 19.9 percent of ABIG Common Stock at $47.00 per share, subject to receipt of regulatory approvals." This statement was calculated by AIG to create the impression that it had given "notice" within the meaning of the Lock-Up Option, i.e., written notice by AIG to American Bankers pursuant to Section 1(b) of the Option "specifying a date . . . not later than 10 business days and not earlier than three business days following the date such notice is given for the closing of such purchase (the "Stock Exercise Notice"). In this way, AIG has attempted to materially mislead the market into believing that it will be "closing" on the Option within three to ten business days, with the attendant ability to block and frustrate the Cendant Bid in that same time frame. In reality, AIG will not be in a position to lock-up its merger that quickly 34 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 35 Case No. 98-0159-CIV-MOORE because, contrary to the message it has delivered to the Company's shareholders, AIG is prohibited from obtaining any Option shares prior to, among other things, expiration or termination of AIG's waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and receipt of the other regulatory approvals, including insurance regulatory approvals, required to be obtained by AIG prior to the delivery of the shares, events which AIG knew would not occur on or before the expiration of ten business days from AIG's issuance of the Option Announcement. Nevertheless, AIG is creating the misleading impression that the Lock-Up Option will be exercised far sooner in an attempt to condition the Company's shareholders to believe that the AIG Merger will be approved by all the insurance and other regulatory authorities, and therefore can be consummated by the date the meeting of the shareholders is to be held. American Bankers And AIG Jointly File The Proxy Statement 56. On January 30, American Bankers and AIG jointly filed the Proxy Statement along with AIG's Form S-4 registration statement, which registered the AIG shares intended to be issued and exchanged for American Bankers shares pursuant to the AIG Merger Proposal. The Proxy Statement, which schedules preferred and common shareholder votes on the AIG Merger for March 4 and 6, 35 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 36 Case No. 98-0159-CIV-MOORE 1998, respectively, contains numerous materially false and misleading statements in an attempt to deceive American Bankers stockholders into believing that a transaction with AIG can close as soon as a vote can be held, and that the Cendant Bid cannot succeed. 57. The Proxy Statement repeats the materially false and misleading disclosures made in the Option Announcement that AIG "sent a notice to American Bankers exercising its option" under the Lock-Up Option. Like the Option Announcement, this statement in the Proxy Statement creates the false and misleading impression that AIG will be "closing" on the Option within three to ten business days. 58. The Proxy Statement also falsely states that American Bankers and AIG "expect to complete the Merger during March 1998." The Proxy Statement omits to disclose any facts supporting the claim that a closing in March can occur given required regulatory approvals. Although the Proxy Statement also states that AIG has "made all applicable filings" for insurance regulatory approval, in fact AIG's insurance regulatory filings are not complete in some states, while in other states the regulatory authorities have requested that AIG file supplemental information, which, on information and belief, AIG has not yet done. The omission of this information violates Item 14(a)(9) of Schedule 14A, which requires a proxy statement to disclose the status of any federal or state regulatory approval process. And Greenberg, who 36 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 37 Case No. 98-0159-CIV-MOORE controls AIG directly and through other entities that he controls, has, upon information and belief, failed to even apply for regulatory approval, as he must under applicable regulations. In light of the delays that will result from these incomplete or tardy filings and the time it will take to grant insurance regulatory approval, including a hearing process in certain jurisdictions, there is no reasonable basis to believe that the AIG Merger can reasonably be expected to close in the first quarter of 1998, and defendants' statement that they will consummate the AIG Merger Agreement in March 1998 is materially false and misleading. 59. The Proxy Statement also seeks to conceal from American Bankers shareholders the source of the "expense savings" to be achieved through the AIG Merger. The Proxy Statement nowhere specifies how the "expense savings" will be achieved and falls to disclose that AIG's contemplated cost savings are likely to be accomplished, among other ways, through elimination of jobs and termination of employees of American Bankers, including those in Florida. The failure to disclose this material information constitutes a violation of Sections 14(a) and 14(e) of the Exchange Act. 60. In seeking to further the impression that the AIG Merger is a fait accompli, the Proxy Statement also is materially misleading in its description of the extant voting arrangements between American Bankers management and AIG. 37 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 38 Case No. 98.0159-CIV-MOORE Specifically, the Proxy Statement claims that "approximately 16.0% of the number of shares of Common Stock required for approval of the Merger have contractually agreed to vote in favor of the Merger." In reality, pursuant to the Voting Agreement, 8.2% is the true percentage of the outstanding American Bankers shares "contractually committed" to vote for AIG, and the higher percentage touted by defendants is intended to create the erroneous impression that approval of the AIG Merger Proposal is a foregone conclusion. 61. In this same vein, the Proxy Statement describes at length the Lock-Up Option, and the false and misleading Option Announcement, but fails to disclose that AIG will not be able to vote any of the shares that it may obtain pursuant to the Lock-Up Option in favor of the AIG Merger Proposal, because AIG did not beneficially own those shares prior to or on the record date. 62. Like AIG's Schedule 13D, the Proxy Statement is also false and misleading in that it fails to reveal that AIG is controlled by Greenberg, directly and through Starr International, Starr Foundation and C.V. Starr. This material fact is omitted despite a lengthy description of AIG's capital stock in the Proxy Statement. No warning is given to the shareholders of American Bankers that, should the AIG Merger Agreement be consummated, the Company issuing stock in the AIG merger -- AIG -- is controlled by Greenberg. 38 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 39 Case No. 98-0159-CIV-MOORE 63. The Proxy Statement also attempts to conceal the bases on which the inadequate financial terms of the AIG Merger were approved. In connection with its review of the AIG Merger Proposal, the American Bankers management prepared "revised" internal projections that contained lower estimates of revenue and income. These lower projections were also provided to the American Bankers financial adviser, Salomon Smith Barney, in order to obtain its fairness opinion. The Proxy Statement falsely and misleadingly presents the opinion of Salomon Smith Barney, however, without disclosing the extent to which the financial adviser employed and relied on the lower "revised" projections in its analyses, and whether the fairness opinion could have been given or whether the analyses would have materially changed had the unrevised, higher projections been used. 64. The Proxy Statement also mentions some of the bases of evaluation of the fairness of the AIG Merger Proposal made by the Company's financial adviser. For example, the financial adviser relied on supposed "comparative analyses"; yet neither the transactions in the insurance industry nor the public insurance companies analyzed are remotely "comparable" to American Bankers or the AIG Merger Proposal. Only one of the insurance industry transactions reviewed was similar to the AIG Merger Proposal in size, and none of those transactions involved comparable businesses to AIG and American Bankers. Nor were the "selected public 39 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 40 Case No. 98-0159-CIV-MOORE companies" similar in business to American Bankers. These hand-picked comparisons could not form a reasonable basis for accepting the inferior AIG Merger Proposal price. IRREPARABLE INJURY 65. Absent relief from this Court, American Bankers and AIG may complete the AIG Merger Proposal without allowing the shareholders to fairly consider and choose from other, financially superior offers, including the Cendant Bid. Cendant and the Company's other shareholders therefore will suffer irreparable injury in that defendants' unlawful actions, unless enjoined, will deprive Cendant and Season Acquisition of the unique opportunity to acquire American Bankers and the other shareholders will be unable to obtain the best available value for their shares. In addition, in the absence of an order granting the relief requested, American Bankers shareholders and the investing public will continue to be fed materially misleading information and denied material information to which they are lawfully entitled under the federal securities laws and which is essential to informed decision making with respect to purchasing, selling and voting American Bankers stock. 40 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 41 Case No. 98-0159-CIV-MOORE FIRST CLAIM FOR RELIEF (Breach of Fiduciary Duty of Due Care Against the American Bankers Directors) 66. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 67. Directors of a corporation are fiduciaries. They owe a duty of care to the corporation and its shareholders. 68. The directors of American Bankers have breached their duty of care by, among other actions: a. approving the AIG Merger Agreement and the Takeover Defenses without making adequate efforts to determine whether those agreements, as opposed to any other offer or potential offer for control of American Bankers, including the Season Acquisition Offer and Merger, were in the best interests of the American Bankers shareholders; b. Failing adequately to inform themselves of, or adequately to consider, potential transactions available to American 41 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 42 Case No. 98-0159-CIV-MOORE Bankers before voting upon and approving the AIG Merger Agreement and the Takeover Defenses; c. falling adequately to inform themselves, or adequately to consider, the effect of the AIG Merger Proposal and the Takeover Defenses upon American Bankers's ability to obtain better offers and upon the interests of American Bankers shareholders; and d. falling adequately to inform themselves as to the probable illegality of several provisions of the AIG Merger Agreement and the Takeover Defenses. 69. Accordingly, approval of the AIG Merger Agreement and the Takeover Defenses violated the American Bankers directors' fiduciary duty of care, and are therefore void and unenforceable. 70. Plaintiffs have no adequate remedy at law. SECOND CLAIM FOR RELIEF (Breach of Fiduciary Duty to Sell the Company for the Highest Price Against American Bankers and its Directors) 71. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 42 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 43 Case No. 98-0159-CIV-MOORE 72. The AIG Merger Proposal would shift control of American Bankers to AIG and end American Bankers's separate corporate existence. Thus, before agreeing to the Takeover Defenses in the agreement with AIG, the Board had to adequately discharge its duty of care to determine if the bid made by AIG offered the best available price and other terms. 73. The Cendant Bid demonstrates that the AIG Merger Proposal is inadequate, and that American Bankers' directors acted in breach of their duties by entering into the AIG Merger Proposal and adopting the Takeover Defenses that were designed to ensure AIG's success. 74. American Bankers's swift acceptance of AIG's bid, without even engaging in discussions with Cendant or its affiliates, despite its expression of serious interest to defendant Gaston, the President of the Company, demonstrates that American Bankers's directors failed to take adequate steps to ensure that the Company's shareholders would receive the best possible price and terms for their shares. 75. Despite American Bankers's lack of knowledge as to whether AIG's bid represented the best possible transaction, American Bankers entered into the AIG Merger Agreement and the Takeover Defenses with the purpose and intent of foreclosing or unreasonably burdening any higher bid. By entering into the AIG Merger Agreement and the Takeover Defenses without adequate knowledge and information to reasonably 43 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 44 Case No. 98-0159-CIV-MOORE conclude that AIG's bid constituted the best available offer, and by impeding any competing offers for American Bankers, including the Cendant Bid, American Bankers' directors have breached their duty of care under applicable law, and the AIG Merger Agreement and the Takeover Defenses are thereby void and unenforceable. 76. Plaintiffs have no adequate remedy at law. THIRD CLAIM FOR RELIEF (Breach of Fiduciary Duty to Conduct a Proper Sale Against American Bankers and its Directors) 77. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 78. In considering the AIG Merger Proposal, which involves a change in control, the American Bankers directors were required to act reasonably under the circumstances. In treating different bidders unequally in the ways stated above, the American Bankers directors could comply with their duties only if their conduct was reasonably related to achieving the best price available to shareholders. 79. There was no basis for the Board to conclude that the AIG Merger Agreement represented the best available alternative for American Bankers and its shareholders. There was no basis for the Board to conclude that the unequal treatment of Season Acquisition and AIG is or was reasonably related to achieving the best price 44 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 45 Case No. 98-0159-CIV-MOORE available. The fact that no such basis ever existed is amply demonstrated by (among many other facts): a. Cendant's emergence as a serious, bona fide bidder attempting to negotiate an alternative transaction, and American Bankers's refusal to attempt to determine (through good faith discussions) whether Cendant would offer a transaction superior to AIG's; b. the nature, structure and massive size of the Takeover Defenses and the burden they place on competing bids; c. the Board's failure to contact Cendant or any of its subsidiaries or affiliates, including Season Acquisition, about a possible transaction with American Bankers, despite knowing of Cendant's interest in such a transaction; d. the Board's failure to make adequate efforts to determine whether any other party would make a bid superior to AIG's; and e. the Board's failure to properly canvass the market before agreeing to sell the Company to AIG; and 45 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 46 Case No. 98-0159-CIV-MOORE f. the Board's failure to negotiate with AIG a merger agreement permitting the Board to entertain superior acquisition proposals prior to submission of the AIG Merger Proposal to a vote of the Company's shareholders. 80. Under the circumstances, the approval of and adherence to the AIG Merger Agreement and the Takeover Defenses were and are violations of the fiduciary duties owed by the American Bankers directors. For the same reasons, the other measures the American Bankers Board has taken in treating Cendant and AIG unequally, including with respect to the Rights Plan, the Charter, the Act and other structural defenses, are breaches of duty. 81. Plaintiffs have no adequate remedy at law. FOURTH CLAIM RELIEF (Civil Conspiracy to Commit a Breach of Fiduciary Duty against AIG and AIGF) 82. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 83. AIG and AIGF knowingly conspired with American Bankers and its directors to commit the unlawful breaches of fiduciary duty by American Bankers and its directors detailed above. AIG and AIGF knew that American Bankers and its 46 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 47 Case No. 98-0159-CIV-MOORE directors owed fiduciary duties of care and loyalty to the shareholders of American Bankers, including a duty to, once deciding to sell American Bankers, obtain the best available price and other terms for the American Bankers shareholders. Despite this knowledge, and in furtherance of the conspiracy, AIG and AIGF, among other overt acts, negotiated and entered into the AIG Merger Agreement, the Lock-Up Option, and the Voting Agreement, contracts containing terms that purport to compel the Company's directors to abdicate their fiduciary responsibilities to the shareholders. 84. As AIG well knows, the AIG Merger Agreement, Lock-Up Option and Voting Agreement were designed and intended to enable AIG to acquire control of American Bankers at a price well below what other bidders are willing to pay and to preclude other bidders from successfully topping AIG's inadequate proposal. In seeking and obtaining this result, AIG and AIGF have conspired with the defendant directors to commit the above-mentioned breaches of fiduciary duty to the irreparable detriment of the American Bankers shareholders. 85. Plaintiffs have no adequate remedy at law. 47 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 48 Case No. 98-0159-CIV-MOORE FIFTH CLAIM FOR RELIEF (For Violations of Section 13(d) of the Exchange Act and the Rules and Regulations Promulgated Thereunder Against AIG) 86. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 87. Section 13(d) of the Exchange Act and Rule 13d-l thereunder provide that any person who acquires, directly or indirectly, beneficial ownership of more than 5 percent of any class of equity security of an issuer registered under Section 12 of the Exchange Act, shall, within 10 days after such acquisition, send to the issuer and file with the SEC and any exchange where the security is traded, a Schedule 13D pursuant to the SEC's Rule 13d-1 setting forth, among other things, the identity of the person who beneficially owns more than 5 percent of the issuer's stock and, in the event such person is a corporation, the identity of each person controlling such corporation. 88. The purpose of Section 13(d) is, among other things, to permit companies, their shareholders and the investing public generally to (i) be aware of accumulations of blocks of stock in excess of 5 percent of the outstanding shares of any equity security, and (ii) ascertain the background of, and other pertinent information relating to, the holders of such blocks -- and the persons who control such holders -- with respect to the particular issuer in question, all with a view toward enabling 48 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 49 Case No. 98-0159-CIV-MOORE shareholders and the public to make informed investment decisions based upon full disclosure of all relevant and material information concerning issuers and those in a position to assert control over them. 89. On January 16, 1998, defendant AIG filed a Schedule 13D with the SEC disclosing that it is the beneficial owner of 8.2 percent of the outstanding common shares of American Bankers common stock -- the shares that are subject to the Voting Agreement. The Schedule 13D does not disclose, however, that Greenberg is a person controlling AIG -- an omission that constitutes a violation of Section 13(d) of the Exchange Act and the rules and regulations promulgated by the SEC thereunder. AIG thus has deprived the shareholders of American Bankers and the investing public of the material information that they are entitled to receive. 90. Plaintiffs have no adequate remedy at law. SIXTH CLAIM FOR RELIEF (For Violations of Section 14(a) of the Exchange Act and the Rules and Regulations Promulgated Thereunder Against All Defendants) 91. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 49 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 50 Case No. 98-0159-CIV-MOORE 92. Section 14(a) of the Exchange Act provides that no person may make a solicitation of any proxies in contravention of such rules and regulations as the SEC may prescribe for the protection of shareholders. 93. Rule 14a-9 promulgated by the SEC pursuant to Section 14(a) of the Exchange Act prohibits any person making a solicitation by means of a written or oral communication containing a false or misleading statement with respect to any material fact, or which omits to state any material fact necessary to make the statements made not false or misleading. 94. The Option Announcement is a materially misleading proxy solicitation by AIG which fails to state material facts necessary to make the American Bankers shareholders aware that despite its claims, AIG cannot buy shares pursuant to the Lock-Up Option until it obtains the required regulatory approvals, which will not be forthcoming within three to ten business days from the date of the Option Announcement. The failure to disclose this information violates Section 14(a) and Rule 14a-9 promulgated thereunder. 95. The Proxy Statement is materially false and misleading in that it: a. claims that AIG has exercised the Lock-Up Option, thereby misleadingly suggesting that it will obtain the Option shares in three to ten business days, when in reality the Lock-Up Option 50 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 51 Case No. 98-0159-CIV-MOORE will not be exercisable until such time as AIG obtains the requisite regulatory approval, which is not imminent, as the Proxy Statement suggests; b. states that American Bankers and AIG expect the AIG Merger Agreement to close in March 1998, when they know that the likelihood of receiving all required regulatory approval prior to the second quarter of 1998 is remote; c. touts expense savings and synergies to be obtained as a result of the AIG Merger without disclosing the plans for achieving them and that in order to accomplish the cost savings desired by AIG, it is likely that jobs will be eliminated and employees of American Bankers will be terminated, including those based in Florida; d. misleadingly misrepresents the number of shares "contractually committed" to vote in favor of the AIG Merger Proposal; e. misleadingly implies that AIG will be able to vote the Lock-Up Option shares at the special meetings of shareholders at which voting for the AIG Merger Proposal will be held; 51 SHUTTS & BOWEN LLP / 1500 MIAMI CENTER / 201 SOUTH BISCAYNE BOULEVARD / MIAMI, FLORIDA 33131 / (305) 358-6300 52 Case No. 98.0159-CIV-MOORE f. misleadingly fails to disclose that AIG is controlled by Greenberg, directly and through his control of Starr International, Starr Foundation and C.V. Starr; and g. conceals the inadequate financial terms of the AIG Merger by, among other things, presenting the fairness opinion of its financial adviser, without revealing whether the opinion was based on projections that were revised by decreasing revenue and income growth from historical levels solely to create the illusion that economically the AIG Merger Proposal is "fair" and to gain approval for the AIG Merger Proposal. 96. Plaintiffs have no adequate remedy at law. SEVENTH CLAIM FOR RELIEF (For Violations of Section 14(e) of the Exchange Act and the Rules and Regulations Promulgated Thereunder Against All Defendants) 97. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 98. Section 14(e) of the Exchange Act prohibits any person from making any untrue statement of material fact or omitting to state any material fact necessary to make the statements made not misleading, or from engaging in any fraudulent, deceptive 52 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 53 Case No. 98-0159-CIV-MOORE or manipulative acts in connection with any tender offer or any solicitation of shareholders in opposition to a tender offer. 99. The Option Announcement and the Proxy Statement are materially misleading, as alleged above, in violation of Section 14(e) of the Exchange Act. 100. The misrepresentations in the Option Announcement and the Proxy Statement were made by American Bankers and AIG with knowledge of their false and misleading nature in order to dissuade American Bankers shareholders from accepting the Cendant Bid and to coerce them into voting in favor of the AIG Merger Proposal. 101. Plaintiffs have no adequate remedy at law. WHEREFORE, Plaintiffs respectfully request that this Court: A. Declare and decree that the AIG Merger Agreement is unlawful and void and was entered into in breach of the fiduciary duties of American Bankers and its directors; B. Enjoin, temporarily, preliminarily and permanently, AIG, its officers, employees, agents, nominees and affiliates, and all other persons acting in concert with them or on their behalf directly or indirectly, from: (i) acquiring or attempting to acquire any shares of American Bankers stock; 53 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 54 Case No. 98-0159-CIV-MOORE (ii) soliciting or arranging for the solicitation of orders to sell any shares of American Bankers stock; (iii) voting in person, by proxy or pursuant to the Voting Agreement any shares of American Bankers stock; and (iv) soliciting or arranging for the solicitation of proxies, consents or authorizations with respect to the shares of American Bankers stock unless and until AIG files a full and complete Schedule 13D with respect to American Bankers, unless and until such time in the future as the Court may determine that the effects of AIG's unlawful conduct has dissipated. C. Enjoin, temporarily, preliminarily and permanently, AIG, AIGF, their employees, agents and all other persons acting on their behalf from (i) issuing or causing to be issued false, misleading or omissive statements, whether written or oral, with respect to any proposed transaction involving either AIG or AIGF and American Bankers or Cendent or Season Acquisition and American Bankers; (ii) taking any steps whatsoever to consummate the AIG Merger Proposal until full corrective disclosure is made regarding the matters discussed in the Option Announcement and the Proxy Statement; (iii) soliciting any proxy, consent or authorization with respect to securities of American Bankers without first complying with the applicable provisions of Sections 14(a) and 14(c) of the Exchange Act and the Rules promulgated thereunder. 54 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 55 Case No. 98-0159-CIV-MOORE D. Enjoin, temporarily, preliminarily and permanently, any steps to carry out, implement or effectuate the AIG Merger Agreement, or to consummate the AIG Merger Proposal, unless and until: (i) the Lock-Up Option is revoked or invalidated or waived or otherwise rendered unexercisable; (ii) the No-Shop Provision is revoked or waived or otherwise invalidated; (iii) the Termination Provision is revoked or waived or invalidated or otherwise rendered unexercisable; (iv) the Break-Up Fee is revoked or waived by both American Bankers and the AIG Defendants or otherwise invalidated; and (v) the Board affords Cendant and Season Acquisition equal treatment to AIG under the Rights Plan, the Charter and the Act. E. Enjoin, temporarily, preliminarily and permanently, any steps to adopt, carry out, implement or effectuate any extension of the term of the Rights Plan, any distribution of the Rights or any action that could make the Rights become exercisable or non-redeemable. F. Declare and decree that the Lock-Up Option is unlawful, void and was entered into in breach of the fiduciary duties of American Bankers and its directors; G. Enjoin, temporarily, preliminarily and permanently, exercise of the Lock-Up Option, any payment pursuant to the terms of the Lock-Up Option, or the voting or sale of any shares obtained by AIG upon any exercise of the Lock-Up. 55 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 56 Case No. 98-0159-CIV-MOORE H. Declare and decree that the No-Shop Provision is unlawful, void and was entered into in breach of the fiduciary duties of American Bankers and the Board; I. Enjoin, temporarily, preliminarily and permanently, the No-Shop Provision; J. Declare and decree that the Termination Provision is unlawful, void and was entered into in breach of the fiduciary duties of American Bankers and the Board; K. Declare and decree that the Break-Up Fee is unlawful, void and was entered into in breach of the fiduciary duties of American Bankers and the Board; L. Enjoin, temporarily, preliminarily and permanently, payment of the Break-Up Fee; M. Declare and decree that the refusal of American Bankers and its directors to fully and fairly consider the Season Tender Offer constitutes a breach of their fiduciary duties. N. Require American Bankers and its directors to take all steps necessary to provide Cendant and Season Acquisition a fair and equal opportunity to acquire American Bankers, including furnishing to them the same information and access to information that was provided to AIG; 56 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 57 Case No. 98-0159-CIV-MOORE O. Award plaintiffs the costs and disbursements of this action, including reasonable attorneys fees; and P. Grant such other and further relief as this Court may deem just and proper. Dated: February 2, 1998 Miami, Florida SHUTTS & BOWEN LLP 1500 Miami Center 201 South Biscayne Boulevard Miami, Florida 33131 Telephone: 305-353-6300 Facsimile: 305-381-9982 By: /s/ Robert T. Wright,Jr ------------------------- Robert T. Wright,Jr Florida Bar No. 185525 John C. Shawde Florida Bar No. 449784 Attorneys for Plaintiffs Cendant Corporation and Season Acquisition Corp. Of Counsel: Jonathan J. Lerner Samuel Kadet Seth M. Schwartz SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 Third Avenue New York; New York 10022 Telephone: 212-735-3000 Facsimile: 212-735-2000 57 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 58 Case No. 98-0159-CIV-MOORE CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Amended Complaint has been served this 2nd day of February, 1998, upon the following: Via Hand-delivery to: Via Facsimile (w/o exhibits), U.S. Lewis F. Murphy, Esq. Mail and Federal Express to: Steel, Hector & Davis LLP Richard H. Klapper, Esq. Co-Counsel for AIG and AIGF SULLIVAN & CROMWELL 200 South Bisacayne Boulevard Co-Counsel for AIG and AIGF First Union Financial Center, 125 Broad Street Suite 40008 New York, New York 10004-2498 Miami, Florida 33131-2398 Facsimile: (212) 558-4000 Via Hand-delivery to: Via Facsimile (w/o exhibits), U.S. Franklin G. Burt, Esq. Mail and Federal Express to: Jorden Burt Berenson & Johnson LLP Robert C. Meyers, Esq. Co-Counsel for American Bankers Dewey Ballantine LLP and Individual Director Co-Counsel for American Bankers Defendants and Individual Director Defendants 777 Brickell Avenue 1301 Avenue of the Americas 5th Floor New York, New York 10019-6092 Miami, Florida 33131 Facsimile: (212) 259-6333 By: /s/ Robert T. Wright,Jr ------------------------- 58 SHUTTS & BOWEN LLP/1500 MIAMI CENTER/201 SOUTH BISCAYNE BOULEVARD/MIAMI, FLORIDA 33131/(305)358-6300 59 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA 98-0168 JOEL L. LOPATE and KAY LOPATE, CIV-MORENO individually and on behalf of all others similarly situated, Case No. [ILLEGIBLE] Plaintiffs, CLASS ACTION - v.- COMPLAINT R. KIRK LANDON, GERALD N. GASTON, NICHOLAS A. BUONICONTI, ARMANDO M. MAGISTRATE JUDGE CODINA, PETER DOLARA, BERNARD P. GARBER KNOTH, JAMES F. JORDEN, DARYL L. JONES, EUGENE M. MATALENE, JR., FILED BY ___ D.C. ALBERT H. NAHMAD, NICHOLAS J. ST. 98 JAN 28 AM 10:07 GEORGE, ROBERT C. STRAUSS, GEORGE CARLOS JUENKE E. WILLIAMSON, II, AMERICAN BANKERS CLERK U.S. DIST. CT. INSURANCE GROUP INC., AMERICAN S.D. OF FLA.-MIAMI INTERNATIONAL GROUP, INC. and AIGF, INC., Defendants. Plaintiffs allege, upon information and belief except as to paragraph 1, which is alleged on knowledge, as follows: THE PARTIES 1. Plaintiffs Joel L. Lopate and Kay Lopate were at all times relevant hereto the owners of shares of common stock of American Bankers Insurance Group, Inc. ("American Bankers" or the "Company"). 2. American Bankers is a Florida corporation with its principal executive offices located in Miami, Florida. American Bankers shares are traded on the New York Stock Exchange under the symbol "ABI". As of December 31, 1997, there were approximately 20.8 million shares of 60 American Bankers common stock outstanding held by approximately 1,532 shareholders of record. 3. Defendant R. Kirk Landon ("Landon") has been Chairman of the Board of the Company since 1980, and was formerly the Chief Executive Officer of the Company. 4. Defendant Gerald N. Gaston ("Gaston") is Vice Chairman of the Board of the Company. Gaston has been President of the Company since 1980 and Chief Executive Officer since 1996. 5. Defendants Nicholas A. Buoniconti, Armando M. Codina, Peter Dolara, Bernard P. Knoth, James F. Jorden, Daryl L. Jones, Eugene M. Matalene, Jr., Albert H. Nahmad, Nicholas J. St. George, Robert C. Strauss, and George E. Williamson, II are directors of the Company (collectively with Landon and Gaston said Defendants will be referred to as the "Individual Defendants"). 6. Defendant American International Group, Inc. ("AIG") is a Delaware corporation with its principal executive offices in New York, New York. AIG is a holding company engaged primarily in the general and life insurance businesses both in the United States and abroad. AIG is controlled by its Chairman, Maurice R. Greenberg, a material fact that AIG has wrongfully failed to disclose in violation of Section 13(d) of the Exchange Act. 7. Defendant AIGF, Inc. ("AIGF") is a Florida corporation wholly owned by AIG. Pursuant to a merger - 2 - 61 agreement signed by American Bankers, AIG and AIGF in December 1997 (the "AIG Merger Agreement"), AIG is to acquire American Bankers through a merger of American Bankers into AIGF, with AIGF to be the surviving corporation in the merger. JURISDICTION AND VENUE 8. The claims asserted herein arise under Section 13(d) of the Exchange Act, 15 U.S.C. ss. 78m(d), and the rules and regulation promulgated thereunder by the Securities and Exchange Commission (the "SEC"), and the laws of the State of Florida. This court has jurisdiction over this action pursuant to Section 27 of the Exchange Act, 15 U.S.C. ss. 78aa; 28 U.S.C. ss. 1331 (federal question); and 28 U.S.C. ss. 1367 (supplemental jurisdiction). 9. This Court has jurisdiction over this action because American Bankers is located and does business in Florida. 10. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28 U.S.C. ss. 1391(b). The claims asserted herein arose in this District, and the acts and transactions complained of have occurred, are occurring, and unless enjoined, will continue to occur in this District. CLASS REPRESENTATION ALLEGATIONS 11. Plaintiffs bring this action pursuant to Rule 23(a) and Rule 23(b)(3) of the Federal Rules of Civil - 3 - 62 Procedure on their own behalf, and on behalf of all other class members similarly situated in the United States of America. Excluded from the Class are Defendants, and any person or other entity related to or affiliated with Defendants. 12. The Class satisfies the requirements of Rule 23(a) -- numerosity, commonality, typicality, and adequacy -- and Rule 23(b)(3) -- predominance and superiority -- for the reasons set forth below. 13. This action is properly maintainable as a class action for the following reasons: (a) The Class is so numerous that joinder of all members is impracticable. As of December 31, 1997, there were approximately 1,532 holders of record of American Bankers common stock, which stock trades on the New York Stock Exchange. (b) Members of the Class are scattered throughout the United Status and are so numerous that it is impracticable to bring them all before this Court. (c) There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual class member. The common questions include, inter alia, the following: (i) Whether defendants have engaged and are continuing to engage in a plan and scheme to benefit themselves at the expense of the members of the Class; - 4 - 63 (ii) Whether defendants violated the federal securities laws; (iii) Whether the Individual Defendants, as officers and/or directors of the Company have fulfilled, and are capable of fulfilling, their fiduciary duties to plaintiffs and the other members of the Class, including their duties of, loyalty, due care, and candor; (iv) Whether the defendants have disclosed all material facts in connection with the challenged transaction; and (v) Whether plaintiffs and the other members of the Class would be irreparably damaged were defendants not enjoined from the conduct described herein; (d) The claims of plaintiffs are typical of the claims of the other members of the Class in that all members of the Class will be damaged by defendants' actions. (e) Plaintiffs are committed to prosecuting this action and have retained competent counsel experienced in litigation of this nature. Plaintiffs are adequate representatives of the Class. (f) A class action is superior to any other method available for the fair and efficient adjudication of this controversy since it would be impractical and undesirable for each of the members of the Class, who has suffered or will suffer damages, to bring separate actions. 14. Moreover, defendants have acted and will - 5 - 64 continue to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS 15. American Bankers is a specialty insurer providing primarily credit-related insurance products in the U.S. and Canada as well as in Latin America, the Caribbean and the United Kingdom. The majority of the Company's gross collected premiums are derived from credit-related insurance products sold through financial institutions and other entities which provide consumer financing as a regular part of their businesses. 16. On December 22, 1997, American Bankers and AIG jointly announced that American Bankers was to be purchased by AIG for $2.2 billion in stock and cash, equivalent to $47 a share ("the AIG Merger Agreement") with AIGF to be the surviving corporation in the merger. 17. This offer represented a 6.2% premium over American Bankers' share price the prior trading day. 18. As part of the AIG Merger Agreement, American Bankers shareholders would receive cash only in certain circumstances and cash would be paid only to those shareholders requesting it. 19. Also as part of the AIG Merger Agreement, the Individual Defendants agreed to be barred from talking to - 6 - 65 other bidders for 120 days after the agreement (the "120-day provision"). 20. Undisclosed in the AIG Merger Agreement was the fact that American Bankers had received repeated overtures over the past several years from Cendant Corporation, formerly known as CUC International ("Cendant"). 21. John H. Fullmer, Cedant's executive Vice President and Chief Marketing Officer, and representatives of the Company, including Gerald N. Gaston, the Company's Vice Chairman, President and Chief Executive Officer, met on various occasions to discuss possible strategic marketing alliances. 22. At a meeting held on May 1997, Mr. Fullmer and Mr. Gaston met and discussed Cendant's interest in acquiring the Company and the existence of certain financial issues relating to a possible combination. 23. In the summer of 1997, a merger was pending between CUC and HFS, now Cendant. Representatives of HFS separately identified the Company as a possible acquisition candidate. 24. During the course of planning for the then-pending merger of CUC and HFS, their mutual interest in the company was identified and scheduled to be pursued following completion of that merger. - 7 - 66 25. On December 3, 1997, a significant shareholder of the Company indicated to a Senior Vice president of what is now Cendant that it believed American Bankers was considering a sale transaction. This information was conveyed to Mr. Fullmer, who attempted on several occasions to contact Mr. Gaston to inquire as to its validity. 26. Mr. Fullmer ultimately spoke with Mr. Gaston in mid-December 1997 and described the merger of CUC and HFS which created Cendant and emphasized that the resulting size and scale of Cendant had eliminated the financial issues relating to an acquisition of the Company which they had previously discussed. Mr. Fullmer inquired whether the company was actively engaged in discussions relating to an acquisition, and indicated that, if the Company was so engaged, representatives of his company would like to meet immediately with the Company's representatives to discuss its strong interest in exploring such a transaction. 27. In response to Mr. Gaston's assurances that the Company was not actively engaged in acquisition discussions, Mr. Fullmer agreed to forward to Mr. Gaston information regarding Cendant and to contact Mr. Gaston to schedule a meeting in early January 1998 to discuss a possible acquisition transaction. 28. On December 22, 1997, the Company and AIG announced that they had entered into the AIG Merger - 8 - 67 Agreement and that certain stockholders of the Company had entered into the Voting Agreement with AIG. 29. In connection with the execution of the AIG Merger Agreement, the Company and AIG entered into an option agreement (the "AIG Lockup Option Agreement") pursuant to which the Company granted to AIG an option (the "AIG Lockup Option"), exercisable in certain events, to purchase up to approximately 8,265,626 common shares (which represented 19.9% of the outstanding number of common shares at the time the AIG Lockup Option Agreement was entered into) at an exercise price of $47.00 per common share, subject to adjustment as set forth therein. The AIG Lockup Option may not be exercised prior to AIG's receipt of applicable regulatory approvals, including insurance regulatory approvals. 30. Also as part of the AIG Merger Agreement, the Company has agreed to a provision which provides that the Company and its subsidiaries, officers, directors, employees, agents and representatives will not, directly or indirectly, (i) 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% or more of the assets or any equity securities of, the Company or any of its subsidiaries (an "Acquisition Proposal"), or (ii) engage in any negotiations - 9 - 68 concerning, provide any confidential information or data to, or have any discussions with, any person relating to an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal, until after 120 days have elapsed since the date of the AIG Merger Agreement (the "120-day provision"). 31. The AIG Merger Agreement provides that under certain circumstances in which the AIG Merger Agreement is terminated, the Company will have an obligation to pay a cash fee of $66 million to AIG (the "AIG Termination Fee"). However, pursuant to the terms of the AIG Lockup Option Agreement, AIG's total profit under the AIG Lockup Option Agreement (including the amount of the AIG Termination Fee) is limited to $66 million. 32. In connection with the execution of the AIG Merger Agreement, AIG entered into a Voting Agreement (the "AIG Voting Agreement") with R. Kirk Landon, Chairman of the Board of the Company, and Gerald N. Gaston, Vice Chairman, President and Chief Executive Officer of the Company, pursuant to which Messrs. Landon and Gaston agreed (i) to vote the approximately 8.25% of the outstanding Company shares beneficially owned by them (A) in favor of adopting the AIG Merger Agreement and approving the proposed AIG Merger and (b) against any action or proposal that would compete with or could serve to materially interfere with, delay, discourage, adverse affect or inhibit the timely - 10 - 69 consummation of the proposed AIG Merger, and (ii) upon request, to grant to AIG an irrevocable proxy with respect to such common shares. 33. On January 27, 1998, Cendant Corporation commenced a tender offer of $2.41 billion for American Bankers or $58 a share as compared to the AIG offer of $47 a share. 34. Cendant said it was making the tender offer because the AIG Merger Agreement entered by defendants barred defendants from talking to other bidders for 120 days after the agreement. 35. Cendant indicated that the "120 days" provision raised questions about whether the AIG Merger Agreement was in the best interests of American Bankers shareholder. 36. The Cendant proposal represents a premium of $11 (in excess of 23%) over the value of American International Group's offer, and is demonstrably superior to the AIG proposed transaction. 37. In response to whether Cendant might raise its offer, Henry Silverman, Chief Executive Officer of Cendant, responded that Cendant's offer is "flexible." 38. Defendants have not disclosed the reasons for the preferential treatment afforded AIG, nor why they failed to continue their discussions with Cendant. - 11 - 70 FIRST CLAIM FOR RELIEF (Breach of Fiduciary Duty) 39. Plaintiffs repeat and reallege paragraphs 1 through 38 as if fully set forth herein. 40. Having decided to seek a transaction in which all of American Bankers shares would be acquired, the director defendants' fiduciary responsibilities required them to take all steps reasonably calculated to achieve the highest value obtainable for American Bankers shares. 41. By failing to continue discussions with Cendant, by negotiating solely with AIG, and entering the AIG Merger Agreement, Lock-up Option, the 120-day provision, the Termination Fee, and the Voting Agreement, defendants' breached their fiduciary obligations and violated their duty to maximize shareholder value. SECOND CLAIM FOR RELIEF (Breach of Fiduciary Duty of Candor) 42. Plaintiffs repeat and reallege paragraphs 1 through 41 as if fully set forth herein. 43. Defendants have failed to disclose the reason for failing to consider, solicit, and/or entertain Cendant's offer. Instead, knowing full well of Cendant's interest, American Bankers and the Individual Defendants entered the AIG Merger Agreement, the Lockup Option, the 120-day provision, the Termination Fee, and the Voting Agreement without explanation. - 12 - 71 44. Defendants' aforesaid conduct and their failure to disclose the existence of another potential acquiror is a breach of their fiduciary duties as such information is material and/or necessary for Class members to have in order to make an informed decision Merger Agreement. 45. By reason of their positions, Defendants were in possession of material inside information not disclosed to the investing public concerning American Bankers, and the process by which Cendant was spurned and AIG welcomed, which facts were misrepresented in violation of defendants' fiduciary obligations. 46. As a result of the foregoing, the defendants have breached and/or aided and abetted breaches of fiduciary duties owed to American Bankers and its stockholders. THIRD CLAIM FOR RELIEF (For Violations of Section 13(d) of the Exchange Act and the Rules and Regulations Promulgated Thereunder Against AIG) 47. Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein. 48. Section 13(d) of the Exchange Act and Rule 13d-1 thereunder provide that any person who acquires, directly or indirectly, beneficial ownership of more than 5 percent of any class of equity security of an issuer registered under Section 12 of the Exchange Act, shall, within 10 days after such acquisition, send to the issuer - 13 - 72 and file with the SEC and any exchange where the security is traded, a Schedule 13D pursuant to the SEC's Rule 13d-1 setting forth, among other things, the identity of the person who beneficially owns more than 5 percent of the issuer's stock and, in the event such person is a corporation, the identity of each person controlling such corporation. 49. The purpose of Section 13(d) is, among other things, to permit companies, their shareholders and the investing public generally to (i) be aware of accumulations of blocks of stock in excess of 5 percent of the outstanding shares of any equity security, and (ii) ascertain the background of, and other pertinent information relating to, the holders of such blocks -- and the persons who control such holders -- with respect to the particular issuer in question, all with a view toward enabling shareholders and the public to make informed investment decisions based upon full disclosure of all relevant and material information concerning issuers and those in a position to assert control over them. 50. On January 16, 1998, defendant AIG filed a Schedule 13D with the SEC disclosing that it is the beneficial owner of 8.3 percent of the outstanding common shares of American Bankers common stock -- the shares that are subject to the Voting Agreement. - 14 - 73 51. The Schedule 13D is materially false and misleading in that AIG has failed to disclose, as it must under Section 13(d) of the Exchange Act, that AIG's Chairman of the Board, Maurice R. Greenberg, is a person "controlling" AIG, i.e., a person who has "possession, direct or indirect, of power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise." 17 C.F.R. P.240.12b-2. 52. Greenberg exercises control over AIG through, among other things, control of approximately 30 percent of the outstanding shares of common stock of AIG, a portion of which is held directly -- and nominally -- by Starr International Company, Inc. ("Starr International"), The Starr Foundation ("Starr Foundation") and C.V. Starr & Co., Inc. ("C.V. Starr") -- private companies that Greenberg controls, and by other AIG officers and directors, whom Greenberg also controls. 53. Greenberg's position is Chairman and Chief Executive Officer of AIG and his control over almost one-third of that corporation's stock gives him the power, directly and indirectly, to direct or cause the direction of the management and policies of AIG. These material facts, which are legally required to be disclosed, have been illegally omitted from AIG's Schedule 13D. As a result, the shareholders of American Bankers remain unaware that - 15 - 74 Greenberg controls AIG, and that he would effectively control American Bankers in the event it is merged with AIG. 54. Plaintiffs have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: 1. Declaring this to be a proper class action and; 2. Ordering defendants to carry out their fiduciary duties to plaintiffs and the other members of the Class, including the duties of care, loyalty, and candor by among other things: (i) ordering defendants to conduct a market check and (ii) consider all bona fide third party offers. 3. Granting preliminary and permanent injunctive relief against the consummation of the transaction as described herein; 4. In the event the transaction is consummated, rescinding the transaction effected by defendants and awarding rescissionary damages; 5. Ordering defendants, jointly and severally, to pay to plaintiffs and to other members of the Class all damages suffered and to be suffered by them as the result of the acts and transactions alleged herein; - 16 - 75 6. declaring null and void the AIG Merger Agreement, the 120-day provision, the Lockup Option, the Termination Fee and the AIG Voting Agreement each as described herein; 7. compelling defendants to make full disclosure of all material information; 8. awarding plaintiffs the costs and disbursements of the action, including a reasonable allowance for plaintiffs' attorney's fees and experts' fees; and 9. granting such other and further relief as this Court may deem to be just and proper. JURY DEMAND Plaintiffs demand a trial by jury on all issues so triable as a matter of right. Dated: January 28, 1998 Respectfully submitted, Counsel for Plaintiffs GOODKIND LABATON RUDOFF & SUCHAROW LLP 200 South Biscayne Blvd. Suite 2100 Miami, Florida 33133 Telephone: (305) 579-1260 Facsimile: (305) 579-1229 By: /s/ Peter H. Rachman ---------------------------- Emily C. Komlossy Florida Bar No. 007714 Peter H. Rachman Florida Bar No. 977756 - 17 - 76 PLAINTIFF'S CERTIFICATION OF SECURITIES FRAUD CLASS ACTION COMPLAINT KAY LOPATE ("Plaintiff"), hereby certify that: 1. Plaintiff has reviewed the complaint filed herewith in the captioned action (the "Complaint"), and have authorized the filing thereof. 2. Plaintiff is willing to serve as a representative parties on behalf of the class (the "Class") as defined in the Complaint, including providing testimony at deposition and trial, if necessary. 3. During the proposed Class Period described in the Complaint, plaintiff Kay Lopate purchased the following shares of American Bankers Insurance Group:
Date No. of Shares Purchase price Per Share - ---- ------------- ------------------------ 6-19-96 200 41 5/8
4. I have not sold the foregoing shares. 5. Plaintiff did not purchase these securities at the direction of counsel, or in order to participate in any private action arising under the Securities Exchange Act of 1934. 6. During the three year period preceding the date of this Certification, Plaintiff has not sought to serve as a representative plaintiff in actions arising under the federal securities laws. 7. Plaintiff will not accept any payment for serving as a representative party on behalf of the Class beyond a pro 77 rata of any possible recovery, except for an award, as ordered or approved by the court, for reasonable costs and expenses (including lost wages) directly relating to the representation of the Class. Signed under the penalties of perjury this 28th day of January, 1998. /s/ Kay Lopate ----------------------- KAY LOPATE - 2 - 78 IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR DADE COUNTY, FLORIDA CASE NO.: [ILLEGIBLE] - - - - - - - - - - - - - - - - - - - X ANN GOODMAN, on behalf of herself : and others similarly situated, : : Plaintiff, : : -against- : : AMERICAN BANKERS INSURANCE GROUP, : -------------- INC., GERALD N. GASTON, DARYL L., : ORIGINAL JONES, BERNARD P. KNOTH, ALBERT H. : FILER NAHMAD, GEORGE E. WILLIAMSON, : [ILLEGIBLE] NICHOLAS A. BUONICONTI, ARMANDO M. : -------------- CODINA, PETER J. DOLARA, EUGENE M. : MATALENE, JR., NICHOLAS J. ST. : GEORGE, WILLIAM H. ALLEN, JACK F. : KEMP, JAMES F. JORDEN, R. KIRK : LANDON, ROBERT C. STRAUSS, and : AMERICAN INTERNATIONAL GROUP, INC. : : Defendants : : : - - - - - - - - - - - - - - - - - - - X CLASS ACTION COMPLAINT Plaintiff, by her attorneys, alleges upon information and belief, except as to paragraph 1 which is alleged upon knowledge, as follows: THE PARTIES 1. Plaintiff is the owner of shares of common stock of defendant American Bankers Insurance Group Inc. ("ABI" or the "Company") and has been the owner continuously of such shares since prior to the wrongs complained of herein. LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 79 2. Defendant ABI is a corporation duly existing and organized under the laws of the State of Florida, with its principal offices located at 11222 Quail Roost Drive, Miami, Florida 33157. Its stock is traded on the New York Stock Exchange under the symbol "ABI." The Company is a holding company with subsidiaries which market credit life, credit property, unemployment, accident and health, homeowners, physical damage, livestock, individual and group life insurance products. As of November 3, 1997, there were over 41.5 million shares of the Company's common stock outstanding held by over 1500 shareholders of record. 3. Defendant American International Group Inc. ("AIG") is a corporation duly existing and organized under the laws of the State of Delaware, with its principal offices located at 70 Pine Street, New York, New York 10270. AIG is a holding company with subsidiaries which, among other things, provide a broad line of property and casualty insurance, individual and group life, annuity and accident and health insurance and specialty insurance. 4. Defendants Gerald N. Gaston, Daryl L. Jones, Bernard P. Knoth, Albert H. Nahmad, George E. Williamson. Nicholas A. Buoniconti, Armando M. Codina, Peter J. Dolara, Eugene M. Matalene, Jr., Nicholas J. St. George, William H. Allen, Jack F. Kemp, James F. Jorden, R. Kirk Landon, and Robert C. Strauss are, and at all times relevant hereto have been, directors of the Company. 2 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 80 5. The defendants referred to in paragraphs 4 are collectively referred to herein as the "Individual Defendants." 6. By reason of the above Individual Defendants' positions with the Company as officers and/or directors, said individuals are in a fiduciary relationship with plaintiff and the other public stockholders of ABI, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full, candid and adequate disclosure. CLASS ACTION ALLEGATIONS 7. Plaintiff brings this action on her own behalf and as a class action, pursuant to Rule 1.220 of the Florida Rules of Civil Procedure, on behalf of herself and all ABI securities holders or their successors in interest, similarly situated (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants. 8. This action is properly maintainable as a class action. 9. The Class is so numerous that joinder of all members is impracticable. As of November 3, 1997, there were over 41.5 million shares of ABI common stock outstanding held by over 1500 shareholders of record. 3 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 81 10. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class members. The common questions include, inter alia, the following: (a) whether defendants have engaged in conduct constituting unfair dealing to the detriment of the Class; (b) whether the proposed merger is grossly unfair to the Class; (c) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated; and (d) whether defendants have breached, or aided and abetted the breach of fiduciary and other common law duties owed by them to plaintiff and the other members of the Class. 11. The plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. The claims of plaintiff are typical of the claims of the other members of the class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. 12. Plaintiff anticipates that there will be no difficulty in the management of this litigation. 4 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 82 13. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS 14. This action seeks to enjoin the consummation of, or in the alternative, damages resulting from, a merger of ABI and AIG. On or about December 22, 1997, AIG and ABI announced that they had entered into a definitive merger agreement whereby AIG would acquire 100 percent of the outstanding stock of ABI. Under the terms of the merger agreement, ABI stockholders would receive AIG stock equal to $47 for each share of ABI common stock, with a total cash value of approximately 52.2 billion. Under certain circumstances, ABI stockholders may elect to receive $47 in cash. 15. The proposed transaction has already been approved by the boards of directors of both ABI and AIG and the parties have announced that they expect the deal to close early in 1998. According to a press release issued on December 22, 1997, ABI has given to AIG an option to purchase up to 19.9% of its common stock in the event that another bidder emerges and certain officers and directors of ABI who hold approximately 9% of ABI's outstanding common stock have agreed to vote in favor of the merger. 5 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 83 16. According to am 8-K filed on January 20, 1999 by ABI, if ABI fails to get shareholder approval of the AIG transaction or if ABI accepts a superior third party bid, ABI must pay AIG a $66 million termination fee. The agreement between AIG and ABI also prohibits any discussions with other interested bidders until 120 days following the date of the agreement. 17. On January 27, 1998, it was announced that Cendant Corp. ("Cendant") offered to buy ABI for $58 per share in cash and stock, in a deal valued at approximately $2.7 billion on a fully-diluted basis. Cendant is one of the world's largest providers of consumer and business services, operating in three principal segments: membership, travel and real estate services. In a company press release, Cendant stated that its offer was 23% higher than the $47 per share offer made by AIG. Cendant's offer contemplates a cash tender offer to purchase of 23.5 ABI shares for $58 per share in cash and an exchange of the remaining shares on a tax-free basis for common shares of Cendant with a fixed value of $58 per share. 18. According to its press release and its letter to the board of directors of ABI, Cendant would have preferred to discuss the offer with ABI but was unable to present its offer to ABI's board given the restrictive conditions contained in the AIG-ABI agreement. Cendant stated that one of its executives had approached ABI's 6 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 84 president, defendant Gaston, several months ago to express Cendant's interest in acquiring ABI but was told, as recently as December, that ABI was not interested in pursuing any acquisition transaction and suggested that they meet again in January to discuss the matter further. 19. According to Cendant's letter to the board of directors of ABI, Cendant expects that the management of ABI would continue with the Company, that ABI will maintain its headquarters in Miami and that there would not be significant employee reductions. The Cendant offer is not conditioned upon financing or due diligence. Cendant also reported that it has begun making the requisite filings with several state insurance commissions in order to acquire ABI on a timely basis. 20. The Individual Defendants have thus far failed to announce any active auction or open bidding procedures best calculated to maximize shareholder value. Thus, ABI's stockholders will have no effective option other than to accept the unfair terms proposed in the merger agreement. Defendants have not considered adequately or encouraged other possible purchases of and offers for the assets of ABI or its stock in a manner designed to obtain the highest possible price for ABI's public stockholders. The 120-day provision contained in the merger agreement is preventing the Individual Defendants from carrying out their fiduciary duties to plaintiff and the Class. If the merger 7 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 85 between AIG and ABI closes before the 120-day period expires, the Individual Defendants will be precluded from even considering Cendant's higher offer. 21. Defendants, aided and abetted by AIG, have breached their fiduciary duties to the Company's shareholders. Cendant has clearly made a superior proposal for ABI since it has offered $58 per ABI share in contrast to AIG's $47 per ABI share. However, ABI and the Individual Defendants have failed to act on the superior proposal and are breaching their fiduciary duties to shareholders by not taking the proper actions to maximize shareholder value since: o They have failed to withdraw or modify its approval or recommendation of the merger agreement; and o They have failed to consider, approve or recommend the Cendant superior proposal; 22. In light of the foregoing, the Individual Defendants must, as their fiduciary obligations require: o undertake an appropriate evaluation of ABI's worth as a merger/acquisition candidate; o take all appropriate steps to enhance the ABI's value and attractiveness as a merger/acquisition candidate; o take all appropriate steps to effectively expose ABI to the marketplace in an effort to create an active auction for the ABI, including but not limited to engaging in serious negotiations with Cendant representatives; 8 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 86 o act independently so that the interests of ABI's public stockholders will be protected; and o adequately ensure that no conflicts of interest exist between defendants' own interests and their fiduciary obligation to maximize stockholder value or, if such conflicts exist, to ensure that all conflicts be resolved in the best interests of ABI's public stockholders. 23. As a result of defendants' failure to take such steps, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive their proportionate share of the value of the Company's assets and business, and have been and will be prevented from obtaining a fair price for their common stock. 24. By reason of the foregoing, the Individual Defendants, aided and abetted by ABI and AIG, have violated their fiduciary duties to ABI and the public stockholders of ABI in that they have failed to maximize shareholder value (including failing to actively pursue the acquisition of ABI by other companies, failing to conduct an adequate market check and failing to consider Cendant's higher offer) and have otherwise failed to take other steps to protect the interests of the class. 25. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class, by failing to take the steps set forth above, by excluding the Class from 9 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 87 its fair proportionate share of ABI's valuable assets and businesses, all to the irreparable harm of the Class. 26. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: a. Ordering that this action may be maintained as a class action and certifying plaintiff as Class representatives; b. Declaring that defendants breached their fiduciary and other duties to plaintiff and the other members of the Class; c. Entering an order requiring defendants to take the steps set forth hereinabove; d. Awarding compensatory damages against defendants individually and severally in an amount to be determined upon the proof submitted to this Court; e. Awarding costs and disbursements, including plaintiff's counsel's fees and experts' fees; and 10 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 88 f. Granting such other and further relief as to the Court may seem just and proper. Dated: January 27. 1998. Respectfully Submitted, LEESFIELD LEIGHTON RUBIO & MAHFOOD, P.A. By: /s/ George G. Mahfood ---------------------- George G. Mahfood Florida Bar # 77356 2350 South Dixie Highway Miami, Florid 33133 (305) 854-4900 OF COUNSEL: ABBEY, GARDY & SQUITIERI, LLP 212 East 39th Street New York, New York 10016 Telephone: (212) 889-3700 11 LEESFIELD LEIGHTON RUBIO MAHFOOD 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 89 UNITED STATE DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION FILED BY ____________ 98 JAN 28 PM 2:48 CARLOS [ILLEGIBLE] CLERK U.S. DIST. CT. S.D. OF FLA MIAMI - - - - - - - - - - - - - - - - - - - X : ANN GOODMAN, on behalf of herself : and others similarly situated, : : Case No.: 98-0175 Plaintiff, : CIV-MORENO : MAGISTRATE JUDGE -against- : BROWN : : : AMERICAN BANKERS INSURANCE GROUP, : INDIVIDUAL AND CLASS INC., GERALD N. GASTON, DARYL L. : ACTION COMPLAINT JONES, BERNARD P. KNOTH, ALBERT H. : NAHMAD, GEORGE E. WILLIAMSON, : NICHOLAS A. BUONICONTI, ARMANDO M. : CODINA, PETER J. DOLARA, EUGENE H. : MATALENE, JR., NICHOLAS J. ST. : GEORGE, WILLIAM H. ALLEN, JACK F. : KEMP, JAMES F. JORDEN, R. KIRK : LANDON, ROBERT C. STRAUSS, and : AMERICAN INTERNATIONAL GROUP, INC. : : Defendants : : - - - - - - - - - - - - - - - - - - - X Plaintiff, by her attorneys, alleges upon information and belief, except as to P.3 which is alleged upon knowledge, as follows: JURISDICTION AND VENUE 1. The claims asserted herein arise under Section l3(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. ss. 78m(d), and the rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC"), and the laws of the State of Florida. This Court has jurisdiction over this action pursuant to Section 27 of the 90 Exchange Act. 15 U.S.C. ss. 78aa; 28 U.S.C. ss. 1331 (federal question); and 28 U.S.C. ss. 1367 (supplemental jurisdiction). 2. Venue is properly found within this Judicial District under 28 U.S.C. ss. 1391. Many of the acts and transactions giving rise to the violations of law complained of herein occurred in this Judicial District. In addition, ABI maintains its principal executive offices within this Judicial District. THE PARTIES 3. Plaintiff is the owner of shares of common stock of defendant American Bankers Insurance Group Inc. ("ABI" or the "Company") and has been the owner continuously of such shares since prior to the wrongs complained of herein. 4. Defendant ABI is a corporation duly existing and organized under the laws of the State of Florida, with its principal offices located at 11222 Quail Roost Drive, Miami, Florida 33157. Its stock is traded on the New York Stock Exchange under the symbol "ABI." The Company is a holding company with subsidiaries which market credit life, credit property, unemployment, accident and health, homeowners, physical damage, livestock, individual and group life insurance products. As of November 3, 1997, there were over 41.5 million shares of the Company's common stock outstanding held by over 1500 shareholders of record. 5. Defendant American International Group Inc. ("AIG") is a corporation duly existing and organized under the 2 91 laws of the State of Delaware, with its principal offices located at 70 Pine Street, New York, New York 10270. AIG is a holding company with subsidiaries which, among other things, provide a broad line of property and casualty insurance, individual and group life, annuity and accident and health insurance and specialty insurance. AIG is controlled by its chairman, Maurice R. Greenberg ("Greenberg"). 6. Defendants Gerald N. Gaston, Daryl L. Jones, Bernard P. Knoth, Albert H. Nahmad. George E. Williamson, Nicholas A. Buoniconti, Armando M. Codina, Peter J. Dolara, Eugene M. Matalene, Jr., Nicholas J. St. George, William H. Allen, Jack F. Kemp, James F. Jorden, R. Kirk Landon, and Robert C. Strauss are, and at all times relevant hereto have been, directors of the Company. 7. The defendants referred to in paragraph 6 are collectively referred to herein as the "Individual Defendants." 8. By reason of the above Individual Defendants' positions with the Company as officers and/or directors, said individuals are in a fiduciary relationship with plaintiff and the other public stockholders of ABI, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full, candid and adequate disclosure. SUBSTANTIVE ALLEGATIONS 9. This action seeks to enjoin the consummation of, or in the alternative, damages resulting from, a merger of ABI 3 92 and AIG. Defendants have taken a series of unlawful steps in violation of the federal securities laws and Florida State law to ensure the success of AIG's acquisition proposal for ABI and to deter any competing bids for ABI. The AIG/ABI Transaction 10. On or about December 22, 1997, AIG and ABI announced that they had entered into a definitive merger agreement whereby AIG would acquire 100 percent of the outstanding stock of ABI. Under the terms of the merger agreement, ABI stockholders would receive AIG stock equal to $47 for each share of ABI common stock, with a total cash value of approximately $2.2 billion. Under certain circumstances, ABI stockholders may elect to receive $47 in cash. 11. The proposed transaction has already been approved by the boards of directors of both ABI and AIG and the parties have announced that they expect the deal to close early in 1998. According to a press release issued on December 22, 1997, ABI has given to AIG an option to purchase up to 19.9% of its common stock in the event that another bidder emerges (the "Lock-Up Option"). The Lock-Up Option would provide AIG with sufficient voting power to attempt to ensure the success of the AIG proposal by blocking any competing bid. Moreover, certain officers and directors of ABI who hold approximately 9% of ABI's outstanding common stock have agreed to vote in favor of the merger pursuant to the terms of a Voting Agreement entered into by defendants Gaston and Landon. 4 93 12. According to an 8-K filed on January 20, 1998 by ABI, if ABI fails to get shareholder approval of the AIG transaction or if ABI accepts a superior third party bid, ABI must pay AIG a $66 million termination fee. The agreement between AIG and ABI also (1) prohibits any discussions with other interested bidders until 120 days following the date of the agreement; (2) prohibits ABI from terminating the AIG merger agreement for 180 days except under extremely limited conditions; and (3) exempts AIG from ABI's "poison pill" rights plan and extends the life of the rights plan in order to deter bids other than AIG's. The Cendant Offer 13. On January 27, 1998, it was announced that Cendant Corp. ("Cendant") offered to buy ABI for $58 per share in cash and stock, in a deal valued at approximately $2.7 billion on a fully-diluted basis. Cendant is one of the world's largest providers of consumer and business services, operating in three principal segments: membership, travel and real estate services. In a company press release, Cendant stated that its offer was 23% higher than the $47 per share offer made by AIG. Cendant's offer contemplates a cash tender offer to purchase 23.5 ABI shares for $58 per share in cash and an exchange of the remaining shares on a tax-free basis for common shares of Cendant with a fixed value of $58 per share. 14. According to its press release and its letter to the board of directors of ABI, Cendant would have preferred to 5 94 discuss the offer with ABI but was unable to present its offer to ABI's board given the restrictive conditions contained in the AIG-ABI agreement. Cendant stated that one of its executives had approached ABI's president, defendant Gaston, several months ago to express Cendant's interest in acquiring ABI but was told, as recently as December, that ABI was not interested in pursuing any acquisition transaction and suggested that they meet again in January to discuss the matter further. 15. According to Cendant's letter to the board of directors of ABI, Cendant expects that the management of ABI would continue with the Company, that ABI will maintain its headquarters in Miami and that there would not be significant employee reductions. The Cendant offer is not conditioned upon financing or due diligence. Cendant also reported that it has begun making the requisite filings with several state insurance commissions in order to acquire ABI on a timely basis. AIG's False and Misleading 13D 16. On January 16, 1998, AIG filed a Schedule 13D with the SEC disclosing its beneficial ownership of the ABI shares subject to the Voting Agreement. The Schedule 13D failed to disclose that Greenberg, AIG's Chairman of the Board, exercises control over AIG through, among other things, control of approximately 30% of the outstanding shares of common stock of AIG, a portion of which is held directly and nominally by three private companies that Greenberg controls and by other AIG officers and directors, whom Greenberg also controls. 6 95 17. Greenberg's position as Chairman and Chief Executive Officer of AIG and his control over almost one-third of AIG's stock gives him the power, directly and indirectly, to direct or cause the direction of the management and policies of AIG. These material facts were required to be disclosed in AIG's Schedule 13D but were omitted therefrom. As a result, plaintiff was unaware that Greenberg controls AIG and that he would effectively control ABI in the event that the proposed transaction with AIG is consummated. FIRST CLAIM FOR RELIEF (Individually For Violations Of Section 13(d) Of The Exchange Act And The Rules And Regulations Promulgated Thereunder Against AIG) 18. Plaintiff repeats and realleges the preceding paragraphs as if fully set forth herein. 19. Section 13(d) of the Exchange Act and Rule 13d-1 promulgated thereunder provide that any person who acquires, directly or indirectly, beneficial ownership of more than 5% of any class of equity security of an issuer registered under Section 12 of the Exchange Act, shall, within 10 days after such acquisition, send to the issuer and file with the SEC and any exchange where the security is traded, a Schedule 13(d) pursuant to Rule 13d-1 setting forth, among other things, the identity of the person who beneficially owns more than 5% of the issuer's stock and in the event that such person is a corporation, the identity of each person controlling such corporation. 7 96 20. On January 16, 1998, defendant AIG filed a Schedule 13D with the SEC disclosing that it is the beneficial owner of 8.3% of the outstanding common shares of ABI pursuant to the Voting Agreement. The Schedule 13D does not disclose that Maurice R. Greenberg is a person controlling AIG. This non-disclosure constitutes a violation of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder by the SEC. Plaintiff has therefore been deprived of material information that she was entitled to receive. 21. Unless enjoined by the Court, AIG will deny material information to plaintiff to which she is entitled under the federal securities laws and which is essential to informed decision making with respect to purchasing, selling or voting her ABI stock. 22. Plaintiff has no adequate remedy at law. SECOND CLAIM FOR RELIEF (As A Class Action For Breach Of Fiduciary Duty Against All Defendants) 23. Plaintiff repeats and realleges the preceding paragraphs as if fully set forth herein. 24. Plaintiff brings this count on her own behalf and as a class action, pursuant to Rules 23(a) and 23(b)(2) and (b)(3) of the Federal Rules of Civil Procedure, on behalf of herself and all ABI securities holders or their successors in interest, similarly situated (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, 8 97 corporation, or other entity related to or affiliated with any of the defendants. 25. This count is properly maintainable as a class action. 26. The Class is so numerous that joinder of all members is impracticable. As of November 3, 1997, there were over 41.5 million shares of ABI common stock outstanding held by over 1500 shareholders of record. 27. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class members. The common questions include, inter alia, the following: (a) whether defendants have engaged in conduct constituting unfair dealing to the detriment of the Class; (b) whether the proposed merger is grossly unfair to the Class; (c) whether plaintiff and the other members of the Class would be irreparably damaged were the transaction complained of herein consummated; and (d) whether defendants have breached, or aided and abetted the breach of fiduciary and other common law duties owed by them to plaintiff and the other members of the Class. 28. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. The claims of plaintiff are typical of the claims of the other members of the class and plaintiff has the same 9 98 interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. 29. Plaintiff anticipates that there will be no difficulty in the management of this litigation. 30. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. 31. The Individual Defendants have thus far failed to announce any active auction or open bidding procedures best calculated to maximize shareholder value. Thus, ABI's stockholders will have no effective option other than to accept the unfair terms proposed in the merger agreement. Defendants have not considered adequately or encouraged other possible purchases of and offers for the assets of ABI or its stock in a manner designed to obtain the highest possible price for ABI's public stockholders. 32. The 120-day provision contained in the merger agreement is preventing the Individual Defendants from carrying out their fiduciary duties to plaintiff and the Class. If the merger between AIG and ABI closes before the 120-day period expires, the Individual Defendants will be precluded from even considering Cendant's higher offer. ABI's other defensive measures, approved by the Individual Defendants, are designed to prevent ABI's shareholders from obtaining the best possible 10 99 transaction and are intended to prevent a fair auction process and a fair test of what the market is willing to pay for ABI. 33. Defendants, aided and abetted by AIG, have breached their fiduciary duties to the Company's shareholders. Cendant has clearly made a superior proposal for ABI since it has offered $58 per ABI share in contrast to AIG's $47 per ABI share. However, ABI and the Individual Defendants have failed to act on the superior proposal and are breaching their fiduciary duties to shareholders by not taking the proper actions to maximize shareholder value since: o They have failed to withdraw or modify their approval or recommendation of the merger agreement; and o They have failed to consider, approve or recommend the Cendant superior proposal. 34. In light of the foregoing, the Individual Defendants must, as their fiduciary obligations require: o undertake an appropriate evaluation of ABI's worth as a merger/acquisition candidate; o take all appropriate steps to enhance the ABI's value and attractiveness as a merger/acquisition candidate; o take all appropriate steps to effectively expose ABI to the marketplace in an effort to create an active auction for the ABI, including but not limited to engaging in serious negotiations with Cendant representatives and dismantling their takeover defenses; o act independently so that the interests of ABI's public stockholders will be protected; and o adequately ensure that no conflicts of interest exist between defendants' own 12 100 interests and their fiduciary obligation to maximize stockholder value or, if such conflicts exist, to ensure that all conflicts be resolved in the best interests of ABI's public stockholders. 35. As a result of defendants' failure to take such steps, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive their proportionate share of the value of the Company's assets and business, and have been and will be prevented from obtaining a fair price for their common stock. 36. By reason of the foregoing, defendants, aided and abetted by AIG, have violated their fiduciary duties to ABI and the public stockholders of ABI in that they have failed to maximize shareholder value (including failing to actively pursue the acquisition of ABI by other companies, failing to conduct an adequate market check and failing to consider Cendant's higher offer) and have otherwise failed to take other steps to protect the interests of the class. 37. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class, by failing to take the steps set forth above, by excluding the Class from its fair proportionate share of ABI's valuable assets and businesses, all to the irreparable harm of the Class. 38. Plaintiff and the other members of the Class have no adequate remedy at law. 12 101 WHEREFORE, plaintiff demands judgment as follows: (1) Ordering that plaintiff's second claim for relief may be maintained as a class action and certifying plaintiff as Class representative; a. Declaring that defendants breached their fiduciary and other duties to plaintiff and the other members of the Class by entering into the merger agreement between AIG and ABI; b. Entering an order requiring defendants to take the steps set forth hereinabove; c. Entering and order requiring AIG to file a full and complete Schedule 13D; d. Preliminarily and permanently enjoining the defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from proceeding with, consummating or closing, the proposed transaction between ABI and AIG; e. In the event that the proposed merger is consummated, rescinding it and setting it aside; f. Awarding compensatory damages against defendants individually and severally in an amount to be determined upon the proof submitted to this Court; g. Awarding costs and disbursements, including plaintiff's counsel's fees and experts' fees; h. A jury trial on all issues so triable; and 13 102 i. Granting such other and further relief as to the Court may seem just and proper. Dated: January 25, 1998 Attorneys for Plaintiff LEESFIELD LEIGHTON RUBIO & MAHFOOD, P.A. By: /s/ George G. Mahfood ------------------------------ George G. Mahfood Florida Bar # 77356 2350 South Dixie Highway Miami, Florida 33133 (305) 854-4900 OF COUNSEL: ABBEY, GARDY & SQUITIERI, LLP 212 East 39th Street New York, New York 10016 Telephone: (212) 889-3700 14 103 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION CENDANT CORPORATION and SEASON ACQUISITION CORP., Plaintiffs, Case No. 98-0159-CIV-MOORE V. Magistrate Judge Johnson AMERICAN BANKERS INSURANCE GROUP, INC., GERALD N. GASTON, R. KIRK LANDON, EUGENE H. MATALENE, JR., ARMANDO CODINA, PETER J. DOLARA, JAMES F. JORDEN, BERNARD P. KNOTH, ALBERT H. NAHMAD, NICHOLAS J. ST. GEORGE, ROBERT C. STRAUSS, GEORGE E. WILLIAMSON II, DARYL L. JONES, NICHO LAS A. BUONICONTI, JACK F. KEMP, AMERICAN INTERNATIONAL GROUP, INC. and AIGF, INC., Defendants. - -----------------------------------------/ AGREED ORDER ON PLAINTIFFS' MOTION FOR EXPEDITED DISCOVERY THIS CAUSE came on before the Court upon Plaintiff's Motion for Expedited Discovery. Upon consideration of plaintiffs' motion, the agreement of counsel and other matters of record, it is hereby: ORDERED AND ADJUDGED that Plaintiffs' Motion for Expedited Discovery is GRANTED in the following respects. Defendants shall serve their written responses and 104 objections, if any, to Plaintiffs' Request for Production of Documents and their initial production of responsive documents by hand and/or overnight delivery service on February 3, 1998. Defendants shall complete their production of responsive documents not subject to unresolved objections by hand and/or overnight delivery on February 6, 1998. Defendants shall apprise plaintiffs of any objections with respect to the volume of production upon identification of such circumstance, and in any event prior to February 3, 1998, and shall attempt to resolve such volume issues through immediate negotiations. It is further ORDERED AND ADJUDGED that the deposition discovery proposed by plaintiffs in Exhibit "A" to Plaintiffs' Motion for Expedited Discovery will commence on February 9, 1998 and be completed by February 19, 1998, at mutually convenient times and places subject to the availability of the witnesses and any Court order limiting discovery for good cause shown. Defendants will serve any objections to witnesses designated by plaintiffs for deposition on February 3, 1998. It is further ORDERED AND ADJUDGED that the parties shall negotiate and submit an appropriate Confidentiality Stipulation and Order on February 3, 1998. It is further ORDERED AND ADJUDGED that discovery shall proceed on an expedited basis, including, without limitation, subpoenas on third party witnesses. It is further ORDERED AND ADJUDGED that the parties will continue their good faith negotiations with respect to expedited discovery issues and attempt to resolve any disputes prior to seeking a judicial determination. DONE AND ORDERED in Chambers in Miami, Florida, this 29th day of January, 1998. 2 105 Case No. 98-0159-CIV-MOORE /s/ K. Mitchell Moore ------------------------------------ K. Mitchell Moore, Judge United States District Court Copies provided to: All Counsel of Record 3 106 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION - --------------------------------------- Case No. 98-0212 BERND BILDSTEIN, IRA, individually, and on behalf of a class of others similarly situated, INDIVIDUAL AND CLASS ACTION COMPLAINT Plaintiff, AMERICAN BANKERS INSURANCE GROUP, INC., MAGISTRATE JUDGE GERALD N. GASTON, R. KIRK LANDON, BROWN EUGENE M. MATALENE JR., ARMANDO M. CODINA, PETER J. DOLARA, JAMES F. JORDEN, BERNARD P. KNOTH, ALBERT H. NAHMAD, WILLIAM M. ALLEN, NICHOLAS J. ST. GEORGE, ROBERT C. STRAUSS, GEORGE E. WILLIAMSON II, DARYL L. JONES, NICHOLAS A. BUONICONTI, JACK F. KEMP, and AMERICAN INTERNATIONAL GROUP, INC., Defendants. - ---------------------------------------- Plaintiff, by the undersigned attorneys, for his complaint against defendants, alleges upon information and belief, except as to those allegations which pertain to the named plaintiff and his counsel (which are based upon knowledge), as follows: JURISDICTION AND VENUE 1. The claims asserted herein arise under Section 13(d) of the Securities Exchange Act (the "Exchange Act"), 15 U.S.C. Section 78m(d) and the rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and the laws of the State of Florida. This Court has jurisdiction over this action pursuant to Section 27 of the Exchange Act, 15 U.S.C. Section 78aa, and 28 U.S.C. Sections 1331 107 Exchange Act, 15 U.S.C. Section 78aa and 28 U.S.C. Sections (federal question), 28 U.S.C. Section 1367 (supplemental jurisdiction). 2. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28 U.S.C. Section 1391(b). Defendant American Bankers Insurance Group, Inc. ("American Bankers" or the "Company") is headquartered in this District. Further, the claims asserted herein arose in this District, and the acts and transactions complained of have occurred, are occurring, and unless enjoined, will continue to occur in this District. THE PARTIES 3. Plaintiff Bernd Bildstein, through his Individual Retirement Account, is the owner of shares of common stock of American Bankers and has been the owner of such shares continuously since prior to the wrongs complained of herein. 4. Defendant American Bankers is a corporation duly existing and organized under the laws of the State of Florida, with its principal offices located at 11222 Quail Roost Drive, Miami, Florida 33157. The Company's stock is traded on the New York Stock Exchange under the symbol "ABI" The Company is a holding company with subsidiaries which market credit life, credit property, unemployment, accident and health, homeowners, physical damage, livestock, individual and group life insurance products. As of November 3, 1997, there were over 41.5 million shares of the Company's common stock outstanding held by over 1500 shareholders of record. 2 108 5. Defendant American International Group Inc ("AlG") is a corporation duly existing and organized under the laws of the State of Delaware, with its principal offices located at 70 Pine Street, New York, New York 10270. AIG is a holding company with subsidiaries which, among other things, provide a broad line of property and casualty insurance, individual and group life, annuity and accident and health insurance and specialty insurance, AIG is controlled by its Chairman, Maurice R. Greenberg ("Greenberg"). 6. Defendants Gerald N. Gaston, Daryl L. Jones, Bernard P. Knoth, Albert H. Nahmad, George E. Williamson, II, Nicholas A. Buoniconti, Armando M. Codina, Peter J. Dolara, Eugene M. Matalene, Jr., Nicholas J. St. George, William H. Allen, Jack F. Kemp, James F. Jorden, R. Kirk Landon, and Robert C. Strauss are, and at all times relevant hereto have been, directors of American Bankers. 7. The defendants referred to in paragraph 6 are collectively referred to herein as the "Individual Defendants." 8. By reason of the above Individual Defendants' positions with the Company as officers and/or directors, said individuals are in a fiduciary relationship with plaintiff and the other public stockholders of American Bankers, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full, candid and adequate disclosure. 3 109 PLAINTIFF'S CLASS ACTION ALLEGATIONS 9. Plaintiff brings certain claims in this action as a class action pursuant to Federal Rule of Civil Procedure 23 (a) and 23 (b) (3) on behalf of himself and on behalf of a class (the "Class") of persons who own American Bankers common stock and were damaged thereby. Excluded from the Class are the defendants herein; Members of the immediate family of each of the Individual Defendants; the directors and officers of American Bankers; any corporation, firm, partnership, trust or other person affiliated with any of the foregoing; and the legal representatives, agents, heirs, successors-in-interest or assigns of any excluded person. 10. The members all the Class are so numerous that joinder of all members is impracticable. As of November 3, 1997, American Bankers had approximately 41.5 million shares outstanding. The precise number of class members is unknown to plaintiffs at this time but class members are believed to number in the thousands. 11. Plaintiff will fairly and adequately represent the interests of the members of the Class. Plaintiff has retained competent counsel experienced in complex securities class action litigation to further ensure such protection and plaintiff intends to prosecute this action vigorously. 12. Plaintiff's class action claims are typical of the claims of other members of the Class because the plaintiff and all the Class members' damages arise from and were caused by the same series of wrongful acts complained of herein. Plaintiff 4 110 does not have interests antagonistic to, or in conflict with, the members of the Class. 13. A class action is superior to other available methods for the fair and efficient adjudication of certain claims in this controversy. As the damages suffered by the individual Class members may be relatively small, the expense and burden of individual litigation make it virtually impossible for most class members individually to seek redress for the wrongful conduct alleged. Plaintiff knows of no difficulty that will be encountered in the management of this litigation that would preclude its maintenance as a class action. 14. Common questions of law and fact exist as to all members of the Class and predominate over any questions affecting solely individual members of the Class. Among the common questions of law and fact common to the Class are: (a) whether state law was violated by defendants' acts as alleged herein; (b) whether defendants participated directly or indirectly in the concerted action or common course of conduct complained of herein; (c) whether the Individual Defendants breached their fiduciary duties to the class; (d) the extent of injuries sustained by members of the Class and the appropriate measure of damages. 15. The names and addresses of the record owners of the shares of American Bankers common stock is available from the 5 111 Company and/or its transfer agent. Notice can be provided to such record owners by a combination of published notice and first class mail using techniques and forms of notice similar to those customarily used in class actions arising under the federal securities laws. SUBSTANTIVE ALLEGATIONS THE AIG/AMERICAN BANKERS TRANSACTION 16. On or about December 22, 1997, AIG and American Bankers announced that they had entered into a definitive merger agreement whereby AIG would acquire 100 percent of the outstanding stock of American Bankers (the "AIG Merger Proposal"). Under the terms of the AIG Merger Proposal, American Bankers stockholders would receive AIG stock equal to $47 for each share of American Bankers common stock, with a total cash value of approximately $2.2 billion. The price offered pursuant to the AIG merger proposal represented a mere $2.75 per share -- or 6% -- premium above the previous day's closing price of American Bankers common stock on the New York Stock Exchange. 17. The December 22, 1997 announcement also revealed that, in connection with the AIG Merger Proposal, American Bankers had issued an option to AIG to purchase up to 19.9% of American Bankers common stock (the "Lock Up Option") - -- the sole purpose of which is to improperly skew any American Bankers shareholder vote in favor of AIG's economically inferior proposal. In this same vein officers and directors of American Bankers who together 6 112 held approximately 9% of American Bankers common stock were said to have already agreed to vote in favor of AIG's a merger proposal (the "Voting Agreement"). AMERICAN BANKERS' DEFENSIVE ARSENAL CONSTITUTES A BREACH OF THE DIRECTORS' DUTIES 18. Rather than use the AIG merger proposal as a market test to verify that a fair value was being paid by AIG or to attract the highest available bid, as their fiduciary duties require, the directors of American Bankers have unlawfully attempted to end bidding for the Company before it could begin. Without investigating or exploring, much less procuring, higher bids, the Individual Defendants, who will be given continuing positions on the board of directors of the merged AIG/American Bankers entity, have -- in violation of their fiduciary duties of loyalty and care -- approved and effected an astonishing array of patent defensive devices in the AIG merger proposal designed to prematurely "lock up" the merger with AIG and deter any third parties from consummating any transaction, even if offering higher value to the Company's shareholders. To that illicit end, the American Bankers Board of Directors has approved, among other things! * a Lock-Up Option granting AIG the right to purchase 19.9% of the outstanding American Bankers shares in the event of a competing acquisition proposal; 7 113 * a Voting Rights Agreement whereby certain Of the Individual Defendants have agreed to vote approximately 9% of American Bankers common stock in favor of the AIG merger proposal; * a "No-Shop" provision which purports to prohibit the Board from even considering any other bids -- no matter how high the price -- for a period of 120 days; * an agreement that American Bankers may not terminate the AIG merger agreement for 180 days, except under extremely limited circumstances; * a "Break-Up", fee of at least $66 million to be paid to AIG if the AIG merger proposal is not consummated; and, * an undertaking to exempt the AIG merger proposal from the American Bankers "poison pill" Rights Plan and an agreement to extend the life of the Rights, currently scheduled to expire an March 10, 1998, thus deterring any acquisition proposals not approved by the Board. AIG'S FILING OF A MATERIALLY FALSE AND MISLEADING SCHEDULE 13D 19. On January 16, 1988, fifteen days after it was legally obligated to do so, AIG belatedly filed a Schedule 13D with the SEC disclosing its beneficial ownership of American Bankers shares subject to the Voting Agreement, i.e., 8.2% of the shares outstanding. 8 114 20. The Schedule 13D is materially false and misleading in that AIG has failed to disclose, as it must under Section 13(d) of the Exchange Act, that AIG's Chairman of the Board, Maurice. R. Greenberg, is a person "controlling" AIG, i.e., a person who has "Possession, direct or indirect, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of the voting securities, by contract or otherwise." 17 C.F.R. 240.12b-2. Greenberg exercises control over AIG through, among other things, control of approximately 30 percent of the outstanding shares of AIG common stock, a portion of which is held directly -- and nominally -- by Starr International Company, Inc. ("Starr International"), The Starr Foundation ("Starr Foundation") and C.V. Starr & Co., Inc. ("C.V. Starr") -- private companies that Greenberg Controls, and by other AIG officers and directors, whom Greenberg also controls. More specifically: * Greenberg controls Starr International, which owns 16.1% of the outstanding shares of AIG. Although not yet revealed in the Schedule 13D, Greenberg is the owner of 9.09% of the voting stock of Starr International and is the Chairman of Starr International's Board, which is comprised entirely of AIG's officers and employees or AIG's affiliates who have been handpicked and are controlled by Greenberg, on whom they depend for their continuing positions at AIG, and who collectively hold approximately 64% of the voting stock of Starr International. 9 115 Accordingly, Greenberg and his underlings effectively control Starr International and its 16.1% stake in AIG. * Greenberg also controls C.V. Starr, which owns 2.4% of AIG common stock. Although not revealed in the Schedule 13D, Greenberg is the owner of 24.39% of the common stock of C.V. Starr and the President, Chief Executive Officer and a member of C.V. Starr's Board, which is comprised entirely of AIG's officers and employees or AIG's affiliates who have been hand-picked and are controlled by Greenberg, on whom they depend for their continuing positions at AIG, and who collectively hold approximately 70% of the voting stock of C.V. Starr. Accordingly, Greenberg and his underlings effectively control C.V. Starr and its 2.4% stake in AIG. * Greenberg also controls Starr Foundation, which owns 3.6% of AIG common stock. Although not revealed in the Schedule 13D, Greenberg is the Chairman of Starr Foundation and he controls its Board of Directors, most (if not all) of which is comprised of AIG's officers and employees or AIG's affiliates who have been hand-picked and are controlled by Greenberg, on whom they depend for their continuing positions at AIG. Accordingly, Greenberg and his underlings effectively control Starr Foundation and its 3.6% stake in AIG. * Approximately 4.6% of the outstanding shares of AIG are owned by officers and directors who are appointed, and therefore controlled by, Greenberg. 10 116 Greenberg is the Chairman and Chief Executive Officer of AIG; he has admitted in various public filings to direct ownership of 2.28% of the outstanding shares of AIG. 21. Greenberg's position as Chairman and Chief Executive Officer of AIG and his control over almost one-third of that corporation's stock gives him the power, directly and indirectly, to direct or cause the direction of the management and policies of AIG. These material facts, which are legally required to be disclosed, have been illegally omitted from AIG's Schedule 13D. As a result, the Class remains unaware that Greenberg controls AIG and that he would effectively control American Bankers in the event it was merged with AIG. THE CENDANT BID 22. In December 1997, John H. Fullmer, Executive Vice President and Chief Marketing Officer of Cendant Corporation ("Cendant") , spoke with defendant Gaston and asked him whether American Bankers was actively engaged in discussions related to an acquisition, noting that if it was, Cendant would like to meet immediately with representatives of American Bankers to discuss Cendant's interest in acquiring American Bankers. Gaston assured Fullmer that American Bankers was not pursuing any such transactions and did not pursue the matter further with Mr. Fullmer. In truth and in fact, as described more fully above, defendant Gaston and his fellow directors were actively negotiating a sale of American Bankers to AIG. The Individual Defendants had identified AIG as the preferred bidder for 11 117 American Bankers without adequately evaluating alternative transactions that could maximize the value of American Bankers shares to be received by all of the Company's shareholders, 23. On January 27, 1998, it was announced that Cendant Corp. ("Cendant") offered to buy, through a tender offer, Americas Bankers for $58 per share in cash and stock, in a deal valued at approximately $2.7 billion on a fully-diluted basis. Cendant is one of the world's largest providers of consumer and business services, operating in three principal segments: membership, travel and real estate services. In a company press release, Cendant stated that its offer was 23% higher than the $47 per share offer made by AIG. Cendant's offer contemplates a cash tender offer to purchase 51% or 23.5 million American Bankers shares for $58 per share in cash and an exchange of the remaining shares on a tax-free basis for common shares of Cendant with a fixed value of $58 per share. 24. According to its press release and its letter to the board of directors of American Bankers, Cendant would have preferred to discuss the offer with American Bankers but was unable to present its offer to American Bankers' board given the restrictive conditions contained in the AIG merger agreement. 25. According to Cendant's letter to the board of directors of American Bankers, Cendant expects that the management of American Bankers would continue with the merged Cendant/American Bankers entity, that American Bankers will maintain its headquarters in Miami and that there would not be significant 12 118 employee reductions. The Cendant offer is not conditioned upon financing or due diligence. Cendant also reported that it has begun making the requisite filings with several state insurance commissions in order to acquire American Bankers on a timely basis. FIRST CLAIM FOR RELIEF (Individually For Injunctive Relief for Violations Of. Section 13(d)Of The Exchange Act And The Rules And Regulations Promulgated Thereunder Against AIG) 26. Plaintiff repeats and realleges the preceding paragraphs as if fully set forth herein. 27. Section 13(d) of the Exchange Act and Rule 13d-1 thereunder provide that any person who acquires, directly or indirectly. beneficial ownership of More than 5 percent of any class of equity security of an issuer registered under Section 12 of the Exchange Act, shall, within 10 days after such acquisition, send to the issuer and file with the SEC and any exchange where the security is traded, a Schedule 13D pursuant to the SEC's Rule 13d-1 setting forth, among other things, the identity of the person who beneficially owns more than 5 percent of the issuer's stock and, in the event such person is a corporation, the identity of each person controlling such corporation. 28. The purpose of Section 13(d) is, among other things, to permit companies, their shareholders and the investing public generally to (i) be aware of accumulations of blocks of stock in excess of 5 percent of the outstanding shares of any equity 13 119 security, and (ii) ascertain the background of, and other pertinent information relating to, the holders of such blocks -- and the persons who control such holders -- with respect to the particular issuer in question, all with a view toward enabling shareholders and the public to make informed investment decisions based on full disclosure of all relevant and material information concerning issuers and those in a position to assert control over them. 29. On January 16, 1998, defendant AIG filed a Schedule 13D with the SEC disclosing that it is the beneficial owner of 8.3 percent of the outstanding common shares of American Bankers common stock -- the shares that are subject to the Voting Agreement. The Schedule 13D does not disclose, however, that Maurice R. Greenberg is a person controlling AIG -- an omission that constitutes a violation of Section 13(d). of the Exchange Act and the rules and regulations promulgated by the SEC thereunder. AIG has thus deprived the shareholders of American Bankers and the investing public of the material information that they are entitled to receive. 30. Plaintiff has no adequate remedy at law and accordingly injunctive relief is appropriate for the violations of Section 13(d) of the Exchange Act. SECOND CLAIM FOR RELIEF (As A Class Action For Breach Of Fiduciary Duty Against All Defendants) 31. Plaintiff repeats and realleges the preceding paragraphs as if fully set forth herein. 14 120 32. Plaintiff brings this count on his own behalf and as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of himself and the Class, as described above. 33. The Individual Defendants have thus far failed to announce any active auction or open bidding procedures best calculated to maximize shareholder value. Thus, American Barkers' stockholders will have no effective option other than to accept the unfair terms proposed in the AIG merger agreement. Defendants have not considered adequately or encouraged other possible purchases of and offers for the assets of American Bankers or its stock in a manner designed to obtain the highest possible price for American Bankers' public stockholders. 34. The 120-day provision preventing the Board from considering other bona fide offers contained in the AIG merger agreement is preventing the Individual Defendants from carrying out their fiduciary duties to plaintiff and the Class. If the merger between AIG and American Bankers closes before the 120-day period expires, the Individual Defendants will be precluded from even, considering Cendant's higher offer. American Bankers' other defensive measures set forth above, approved by the Individual Defendants, are designed to prevent American Bankers' shareholders from obtaining the best possible transaction and are intended to prevent 9 fair auction process and a fair test of what the market is willing to pay for American Bankers. 15 121 35. Defendants, aided and abetted by AIG, have breached their fiduciary duties to the Company's shareholders, Cendant has clearly made a superior proposal for American Bankers since it has offered $58 per American Bankers share in contrast to AIG's $47 per ABI share. However, American Bankers and the Individual Defendants have failed to act on the superior proposal and are breaching their fiduciary duties to shareholders by not taking the proper actions to maximize shareholder value since; - They have failed to withdraw or modify American Bankers' approval or recommendation of the merger agreement; and - They have failed to consider, approve or recommend the Cendant superior proposal; 36. In light of the foregoing, the Individual Defendants must, as their fiduciary obligations require: - undertake an appropriate evaluation of American Banker's worth as a merger/acquisition candidate; - take all appropriate steps to enhance the American Banker's value and attractiveness as a merger/acquisition candidate; - take all appropriate steps to effectively expose American Bankers to the marketplace in an effort to create an active auction for the American Bankers, including but not limited to engaging in serious negotiations with Cendant representatives and dismantling their takeover defenses; - act independently so that the interests of American Bankers' public stockholders will be protected; and - adequately ensure that no conflicts of interest exist between defendants' own interests and their fiduciary obligation to maximize stockholder value or, if such conflicts exist, to ensure that all conflicts 16 122 be resolved in the best interests Of American Bankers, public stockholders. 37. As a result of defendants' failure to take such steps, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive their proportionate share of the value of the Company's assets and business, and have been. and will be prevented from obtaining a fair price for their common stock. 38. By reason of the foregoing, defendants, aided and abetted by AIG, have violated their fiduciary duties to American Bankers and the public stockholders of American Bankers in that they have failed to maximize shareholder value (including failing to actively Pursue the acquisition of American Bankers by other companies, failing to conduct an adequate market check and failing to consider Cendant's higher offer) and have otherwise failed to take other steps to protect the interests of the class. 39. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class, by failing to take the steps set forth above, by excluding the Class from its fair proportionate share of American Bankers' valuable assets and businesses, all to the irreparable harm of the Class. 40. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: a. Ordering that plaintiff's second claim for 17 123 relief may be maintained as a class action and certifying plaintiff as Class representative and his counsel as Class counsel; b. Declaring that defendants breached their fiduciary and other duties to plaintiff and the other members of the Class by entering into the merger agreement between AIG and American Bankers; c. Entering an order requiring defendants to take the steps set forth hereinabove; d. Entering an order requiring AIG to file a full and complete Schedule 13D; e. Preliminarily and permanently enjoining the defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from proceeding with, consummating or closing the proposed transaction between American Bankers and AIG; f. In the event that the proposed merger is consummated, rescinding it and setting it aside; g. Awarding compensatory damages under plaintiff's second claim for relief against defendants individually and severally in an amount to be determined upon the proof submitted to this Court; h. Awarding costs and disbursements, including plaintiff's counsel's fees and experts fees; and 18 124 i. Granting such other and further relief as to the Court may seem just and proper. Dated: February 2, 1998 BURT & PUCILLO, LLP By: /s/ Michael J. Pucillo ----------------------------------- Michael J. Pucillo Florida Bar No. 261033 Wendy Zoberman Florida Bar No. 434670 222 Lakeview Avenue Suite 300 East West Palm Beach, FL 33401 (561) 835-9400 (561) 835-0322 - Fax Jules Brady STULL, STULL & BRODY 6 East 45th Street Suite 500 New York, NY 10017 (212) 687-7230 (212) 490-2022 - Fax Robert C. Susser ROBERT C. SUSSER, P.C. 6 East 43rd Street Suite 1900 New York, NY 10017-4609 (212) 808-0298 (212) 949-0639 - Fax 19 EX-99.13 10 AMENDED RIGHTS AGREEMENT 1 Exhibit 13 AMENDMENT NUMBER TWO TO THE RIGHTS AGREEMENT Amendment Number Two dated as of February 5, 1998 ("Amendment Number Two"), by and between American Bankers Insurance Group, Inc., a Florida corporation (the "Company") and ChaseMellon Shareholder Services, L.L.C. (as successor to Manufacturers Hanover Trust Company ("Manufacturers Hanover"), a New York banking corporation, the "Rights Agent"), to the Rights Agreement (as hereinafter defined). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Rights Agreement. RECITALS WHEREAS, the Company and Manufacturers Hanover entered into and executed the Rights Agreement dated as of February 24, 1988, as Amended and Restated as of November 14, 1990, and as further amended as of December 19, 1997 (the "Rights Agreement"); and WHEREAS, the Company and the Rights Agent have agreed to and hereby desire to supplement and amend the Rights Agreement in the manner set forth herein; and WHEREAS, except as otherwise stated herein, the Rights Agreement remains in full force and effect; 2 NOW THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the Company and the Rights Agent hereby agree to amend and supplement the Rights Agreement as follows: SECTION 3(a) OF THE RIGHTS AGREEMENT IS AMENDED TO READ, IN ITS ENTIRETY, AS FOLLOWS: (a) Until the Close of Business on the day (or such later date as may be determined by action of the Board of Directors, upon approval by a majority of the Continuing Directors) which is the earlier of (i) the tenth (10th) day after the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such (or, if the tenth (10th) day after such date occurs before the Record Date, the Record Date), or (ii) the tenth (10th) Business Day after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding (the earlier of such dates being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferrable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). As soon as practicable after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11(p) hereof, at the time of distribution of the Right Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is 3 paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by the Rights Certificates. This Amendment Number Two may be executed in any number of counterparts with the same effect as if the signatures thereunto and hereto were upon the same instrument. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment Number Two to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first written above. ATTEST: AMERICAN BANKERS INSURANCE GROUP, INC. By: /s/ Ann Kasay By: /s/ Gerald N. Gaston -------------------------------- -------------------------------- Name: Ann Kasay Name: Gerald N. Gaston Title: Admin. Asst. Title: C.E.O. ATTEST: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By: /s/ Leslie B. Kahle By: /s/ James M. Balson -------------------------------- ------------------------------- Name: Leslie B. Kahle Name: James M. Balson Title: Vice President Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----