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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 10, 1999
CONNING CORPORATION
(Exact name of registrant as specified in its charter)
Missouri
(State or other jurisdiction of incorporation)
0-23183 43-1719355
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(Commission File Number) (I.R.S. Employer Identification No.)
700 Market Street, St. Louis, Missouri 63101
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(Address of principal executive offices) (zip code)
(314) 444-0498
(Registrant's telephone number, including area code)
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ITEM 1. CHANGES IN CONTROL
A description of the arrangement that may result in a change in
control of GenAmerica Corporation ("GenAmerica"), the beneficial owner
of approximately 61% of the shares of outstanding common stock of
Conning Corporation (the "Company"), is set forth in Item 3 below, which
description is incorporated herein by reference.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Item 3(b) of Form 8-K requires a registrant to disclose certain
information if an order confirming a plan of reorganization is entered
by a court having supervision or jurisdiction over the business of the
registrant's parent. General American Mutual Holding Company ("GAMHC")
is the ultimate beneficial owner of approximately 61% of the shares of
outstanding common stock of the Company. GAMHC is a Missouri mutual
insurance holding company and is the parent of GenAmerica. General
American Life Insurance Company ("General American Life") (a subsidiary
of GenAmerica) is a Missouri life insurance company and a major client
of the Company.
As previously reported by the Company in its Current Report
on Form 8-K dated August 10, 1999 (filed August 18, 1999) (File No.
0-23183), incorporated herein by reference, on August 10, 1999, General
American Life became subject to an order of administrative supervision
("Order of Supervision") from the Missouri Department of Insurance (the
"Department"), which remains in effect. As previously reported by the
Company in its Current Report on Form 8-K dated August 26, 1999 (filed
September 10, 1999) (File No. 0-23183), incorporated herein by
reference, on August 26, 1999, GenAmerica announced that GAMHC had
entered into a Stock Purchase Agreement with Metropolitan Life Insurance
Company ("MetLife"), whereby MetLife will acquire GenAmerica, including
GenAmerica's beneficial ownership of a majority of the outstanding
shares of common stock of the Company. On September 16, 1999, GAMHC and
MetLife executed an amendment to the Stock Purchase Agreement, which
deleted the provisions requiring an escrow agreement and account, and
clarified and corrected several other provisions. As previously
reported by the Company in its Current Report on Form 8-K dated
September 17, 1999 (filed September 30, 1999) (File No. 0-23183), on
September 17, 1999, the Circuit Court of Cole County, Missouri (the
"Court"), entered an order (the "Order of Rehabilitation") placing GAMHC
into rehabilitation and approving notice of a hearing to approve a Plan
of Reorganization ("Plan"). The purpose of the Order of Rehabilitation
is to facilitate the sale of all of the issued and outstanding shares of
capital stock of GenAmerica to MetLife in accordance with the terms of
the Stock Purchase Agreement, as amended. The Order of Rehabilitation
also appoints the Director of the Department as "Rehabilitator" of
GAMHC. The Company is not supervised or regulated by the Department
and is not subject to the Order of Supervision or the Order of
Rehabilitation.
On November 10, 1999, the Court held a hearing in connection with
the Rehabilitator's Application for Approval of the Plan, and after
reviewing the Plan, as amended, entered a Judgment Confirming Plan of
Reorganization ("Judgment"). A copy of the Judgment entered by the
Court is filed as Exhibit 2.1 and incorporated herein by reference. The
Plan, as amended, is filed herewith as an exhibit to the Judgment and
(i) provides for MetLife to participate in the rehabilitation of GAMHC
by acquiring all of the issued and outstanding shares of capital stock
of GenAmerica from GAMHC in exchange for $1.2 billion in cash, (ii)
approves the distribution of the $1.2 billion sale proceeds to pay
expenses of the rehabilitation, taxes, MetLife if certain indemnification
rights apply, creditors (if any) of GAMHC, and as to any residual, to the
members of GAMHC in accordance with their membership interests, and (iii)
provides for the eventual liquidation of GAMHC.
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As a mutual insurance holding company, GAMHC does not have
common stock or any form of shares authorized, issued or outstanding.
GenAmerica has 1,000 shares issued and outstanding, none of which are
reserved for future issuance under the Plan. No specific information
relating to the assets and liabilities of GAMHC was presented to the
Court. However, as of September 30, 1999, GAMHC had assets of $22.6
billion, liabilities of $21.6 billion, and policyholders' surplus of
$1.0 billion.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibit is filed as part of this report
on Form 8-K.
Exhibit 2.1 Judgment Confirming Plan of Reorganization
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(which includes as exhibits the Plan of Reorganization and Stock
Purchase Agreement dated August 26, 1999, between General American
Mutual Holding Company and Metropolitan Life Insurance Company, as
amended).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 23, 1999 CONNING CORPORATION
By: /s/ Fred M. Schpero
Name: Fred M. Schpero
Title: Senior Vice President
and Chief Financial Officer
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IN THE CIRCUIT COURT OF COLE COUNTY
STATE OF MISSOURI
KEITH WENZEL, Director, Department of )
Insurance, State of Missouri, )
)
Plaintiff, )
) Case No. CV 99 323050
v. )
)
GENERAL AMERICAN MUTUAL )
HOLDING COMPANY, a Missouri )
mutual holding company, )
)
Defendant. )
JUDGMENT CONFIRMING PLAN OF REORGANIZATION
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This matter comes before the Court on the Rehabilitator's
Application for Approval of Reorganization Plan (the "Application") in
connection with the rehabilitation of General American Mutual Holding
Company, a Missouri mutual holding company ("GAMHC"). The Court, having
reviewed the Application, the Declarations submitted in support thereof
and the record of this proceeding, finds and concludes as follows:
A. Plaintiff Keith Wenzel, Director of the Department of
Insurance for the State of Missouri (the "Rehabilitator"), was appointed
rehabilitator for GAMHC pursuant to that certain Verified Petition for
Rehabilitation filed by the Rehabilitator on September 17, 1999 (the
"Verified Petition"), and that certain Order (1) Placing General
American Mutual Holding Company into Rehabilitation; and (2) Approving
notice of the Hearing to Approve Plan of Reorganization (the
"Rehabilitation Order") entered by this Court on September 17, 1999.
B. Concurrent with the filing of the application to commence
this case, the Rehabilitator filed his proposed plan of reorganization
(the "Plan") for GAMHC pursuant to Mo.
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Rev. Stat. Section 375.l168.<F1> GAMHC consented to the commencement of
this rehabilitation proceeding and to the Plan.
C. The Court has jurisdiction over this proceeding pursuant to
Mo. Rev. Stat. Sections 375.1150 to 375.1246, and, over the Application
in particular, pursuant to Mo. Rev. Stat. Section 375.l168.
D. The purpose of the rehabilitation proceeding -- and of the
Plan -- is to facilitate the sale of the stock of GAMHC's wholly-owned
subsidiary, GenAmerica Corporation ("GAC") to Metropolitan Life
Insurance Company, a New York mutual life insurance company ("MetLife")
pursuant to that certain Stock Purchase Agreement entered into by and
between GAMHC and MetLife dated as of August 26, 1999, as amended (the
"Stock Purchase Agreement"). The principal asset of GAC is the stock of
General American Life Insurance Company ("GALIC").
E. Prior to the commencement -- but in anticipation -- of this
rehabilitation proceeding, GAMHC entered into the Stock Purchase
Agreement, which provides for the sale of the stock of GAC to MetLife,
subject to appropriate approvals, including from this Court. GAC owns
100% of the stock of GALIC and various other subsidiaries, and owns,
indirectly, the majority of the stock of certain other subsidiaries. The
sale of the stock of GAC will be consummated concurrently with the
consummation of the Plan.
F. The Plan provides for the sale of GAMHC's principal asset,
its stock in GAC, to MetLife pursuant to the Stock Purchase Agreement.
The Purchase Price proceeds will be held by
November 10, 1999 2
[FN]
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<F1> A copy of the Plan is on file with the Court. Otherwise undefined
capitalized terms used in this Judgment have the meaning ascribed to
them in the Plan.
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GAMHC for the expenses of the administration of GAMHC's rehabilitation
proceeding, for payment of taxes owed by GAMHC, for distribution to
MetLife on account of any indemnity claims under the Stock Purchase
Agreement, for payment to any creditors of GAMHC, and, as to any
residual, to GAMHC's members. In addition, MetLife's indemnity claims
will be secured by a perfected, first priority lien on the Purchase
Price proceeds, subject to the terms of the Plan.
G. The Rehabilitator has determined that the reorganization of
GAMHC through the Plan is appropriate and is fair and equitable to all
parties concerned, and that failure to implement the Plan would
substantially increase the risk of loss to GAMHC's members, to any
creditors, and to GALIC's policyholders.
H. Full and fair notice of the hearing on the Plan was
provided, in accordance with the Rehabilitation Order, through (i)
mailed notices to all of GAMHC's members and to all policyholders of
GALIC, and (ii) through publication of notices in USA Today, in the
national edition of the Wall Street Journal and in newspapers of general
circulation in St. Louis and Kansas City. Accordingly, full and fair
notice of the hearing was provided to all interested parties, and all
interested parties had a full and fair opportunity to present objections
pertaining to the Plan. In addition, both the mailed notice and the
published notice provided notice that the Stock Purchase Agreement with
MetLife was subject to overbid. Accordingly, full and fair notice of the
opportunity to make overbids was provided. The Court has received no
objections to the Plan, and no overbids were delivered to the
Rehabilitator, GALIC and MetLife in accordance with the Court's Order
Approving Certain Matters as to the Acquisition of GenAmerica
Corporation by Metropolitan Life Insurance Company entered September 17,
1999, or filed with or otherwise received by the Court.
November 10, 1999 3
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I. The Stock Purchase Agreement is the result of good faith,
arms length negotiations between the parties thereto. The consideration
paid by MetLife for the Shares is fair.
J. Based on the financial condition of GAMHC and, in
particular, the restrictions placed on it as a mutual holding company
under Missouri law, the alternatives to the Plan could be a liquidation
of GAMHC and GALIC, which would more than likely result in a
significantly reduced recovery for both members of GAMHC and
policyholders of GALIC from the recovery under the Plan.
K. Mo. Rev. Stat. Sections 375.1168 and 376.1322 provide the
Rehabilitator with the authority to reorganize, convert, consolidate or
transform an insurer or, under the circumstances present here, its
holding company, through a plan of rehabilitation. The Plan and the
Rehabilitator's proposal to sell the stock in GAC to MetLife fall within
these statutes. The Plan is not in conflict with the requirement that,
outside a proceeding of the kind specified in Rev. Mo. Stat. Sections
375.1 150 to 375.1246, a mutual holding company such as GAMHC own,
directly or through an intermediate holding company, a majority of the
voting shares of a life insurance company. This is because, from and
after the effectiveness of the Plan and the reorganization of GAMHC,
GAMHC will no longer be a mutual holding company, and rights of
individuals who were formerly members will be solely to receive their
ratable share of the Purchase Price proceeds in accordance with the
Plan.
L. The Plan is fair and equitable to all parties concerned and
is consistent with the Missouri statutes regarding the rehabilitation of
insurance companies.
November 10, 1999 4
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WHEREFORE, it is ADJUDGED and DECREED as follows:
1. The Plan is hereby confirmed and approved and made effective as of
this date, subject to the terms of this Judgment.
2. The Stock Purchase Agreement is hereby approved in all
respects, and the Rehabilitator is authorized to consummate the Stock
Purchase Agreement in accordance with its terms.
3. The sale of the Shares pursuant to the Stock Purchase
Agreement is free and clear of any and all liens, Claims and
encumbrances, all as set forth in, and subject to the terms of, the
Plan, with all such liens, Claims and encumbrances to attach to the
Purchase Price proceeds, subject to the prior lien thereon in favor of
MetLife. All persons having or asserting a Claim, lien or encumbrance on
or against the Shares are hereby permanently enjoined from asserting
such lien, Claim or encumbrance on or against the Shares or in any other
manner except as expressly permitted under the Plan. From and after the
transfer of the Shares to MetLife at the Closing under and pursuant to
the Stock Purchase Agreement, title to the Shares shall vest in MetLife
free and clear of all liens, Claims and encumbrances, without any
further order, notice or other act or requirement.
4. The terms of the Plan and of the Stock Purchase Agreement,
and the transactions contemplated thereby, are fully enforceable.
5. No "closed block" will be required for any policyholders of
GALIC in connection with the sale of the Shares or the transfer of GALIC
to the control of MetLife.
6. MetLife shall be entitled to enforce those provisions of the
Plan which grant it rights, benefits or protections.
November 10, 1999 5
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7. The perfection, priority and validity of the perfected,
first priority lien on and perfected, first priority security interest
in the Purchase Price proceeds and other items described as the
Collateral in Article 11 of the Plan in favor of MetLife to secure the
Indemnification Obligations are hereby granted and confirmed in
accordance with the terms of the Plan, and such lien shall be effective
without any further action by MetLife or any other party.
8. That certain Administrative Services Agreement dated as of
November 10, 1999 between GAMHC and GALIC is hereby approved. (A copy of
the Agreement as executed will be lodged with the Court.) Except as
otherwise provided in the Plan, MetLife and MetLife's affiliates and
their respective directors, officers, employees, agents,
representatives, professionals, attorneys, accountants and financial
advisors (acting in such capacity) shall be afforded the immunity
specified in Mo. Rev. Stat. Section 375.1166.4 when acting pursuant to
the Administrative Services Agreement.
9. To the fullest extent permitted by Mo. Rev. Stat. Sections
375.1150 to 375.1246, all of GAMHC's liabilities existing prior to the
date hereof are hereby discharged and replaced with the rights afforded
under the Plan.
10. The parties are authorized to modify, amend or supplement,
by agreement of MetLife and the Rehabilitator, the Stock Purchase
Agreement and any related document, subject to the approval of the
Court.
11. Clause (iii) of Section 11.6 of the Plan is hereby deleted
and replaced in its entirety with the following: "such other investments
as (w) are proposed by the Rehabilitator and approved by the
Rehabilitation Court after notice to MetLife, (x) are of a kind as might
be made by a trustee exercising the power to invest trust assets in
accordance with Mo. Rev. Stat.
November 10, 1999 6
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Section 456.902, (y) are of a kind that could be made subject to the
MetLife Lien, and (z) are made in such a manner as to be subject to the
MetLife Lien."
12. This Judgment is not an order of liquidation for GAMHC. The
Rehabilitator may subsequently seek an order to liquidate GAMHC at such
time as the Rehabilitator deems that liquidation would be advisable.
13. This Court shall retain jurisdiction of the Rehabilitation
Proceedings and all related proceedings for all purposes including,
without limitation, with respect to any petition pursuant to Mo. Rev.
Stat. Section 375.1155, to supervise the implementation of the Plan and
Stock Purchase Agreement, to resolve disputes in the manner provided in
the Plan, or in connection with the sale of GAMHC's stock in GAC.
14. All prior injunctions and orders of this Court, except to
the extent expressly modified hereby, are reaffirmed and remain in full
force and effect. All powers and authority granted to the Rehabilitator
by this Judgment are in addition to and not in limitation of the powers
of the Rehabilitator under applicable law.
So ordered this 10th day of November, 1999 at Jefferson City, Missouri.
November 10, 1999 7
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GENERAL AMERICAN MUTUAL HOLDING COMPANY
PLAN OF REORGANIZATION
This Plan of Reorganization dated as of September 17, 1999 (the
"Reorganization Plan"), is submitted for review and approval,
disapproval or modification by the Rehabilitation Court (as defined
below) in accordance with Section 375.1168.4 of the Insurance Code by
Keith Wenzel, Director of Insurance of the State of Missouri (the
"Director"), unless otherwise specifically indicated, acting solely in
his capacity as the statutory rehabilitator ("Rehabilitator") of General
American Mutual holding Company, a Missouri mutual insurance holding
company ("GAMHC"), as agreed to by GAMHC and Metropolitan Life Insurance
Company ("MetLife"), a New York mutual life insurance company.
RECITALS
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A. Whereas, on August 10, 1999, the Director placed General
American Life Insurance Company, a Missouri stock life insurance company
("GALIC") in supervision proceedings (the "Supervision Proceedings").
GALIC is a wholly-owned subsidiary of GenAmerica Corporation, a Missouri
corporation ("GAC") which, in turn, is a wholly-owned subsidiary of
GAMHC. Concurrent with the filing of this Reorganization Plan, pursuant
to Section 375.1166 of the Insurance Code, an order of rehabilitation
(as the same may, from time to time be amended, the "Rehabilitation
Order") was entered with respect to GAMHC by the Circuit Court of Cole
County, State of Missouri in an action styled Keith Wenzel, Director,
Department of Insurance. State of Missouri v. General American Mutual
Holding Company, upon the petition of the Director, and with the consent
of the Board of Directors of GAMHC. The Director was appointed as the
Rehabilitator of GAMHC. The court proceedings pursuant to the petition
and Rehabilitation Order shall be referred to herein as the
"Rehabilitation Proceedings" and the Court handling the Rehabilitation
Proceedings shall be referred to as the "Rehabilitation Court."
B. Whereas, the Rehabilitator, having determined it to be in
the best interests of the members and creditors of GAMHC, and in the
best interests of the policyholders of GALIC and of its insurance
company subsidiaries, has approved (I) MetLife's participation in the
rehabilitation of GAMHC, through the sale of all the issued and
outstanding shares of common stock of GAC by GAMHC to MetLife, (ii) the
reorganization of GAMHC, and (iii) the distribution of the proceeds of
such sale (x) to certain creditors of GAMHC, (y) to MetLife on account
of certain indemnification rights, and (z) as to any residual, to the
Members of GAMHC in accordance with their Membership Interests.
C. Whereas, the Rehabilitator has proposed, and GAMHC and
MetLife have agreed to support, this Reorganization Plan to facilitate,
effectuate and cause the rehabilitation and reorganization of GAMHC as
set forth in this Reorganization Plan and the schedules and exhibits
hereto.
D. Whereas, pursuant to the Stock Purchase Agreement, MetLife
will (I) acquire 100% of the issued and outstanding stock of GAC from
GAMIIC, and (ii) contribute up to $120
1
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million as capital to GALIC under the terms contemplated by Section 6.20
of the Stock Purchase Agreement.
E. Whereas, the Director has committed to process expeditiously
the applications of MetLife for approval of the change of control for
GALIC contemplated by the Stock Purchase Agreement.
F. Whereas, the Rehabilitator may seek an order of liquidation
of GAMHC as authorized by Section 375.1175 of the Insurance Code and may
seek to create a liquidating trust or other entity to implement such
liquidation and the distribution of the proceeds of the sale of the
Shares on account of the Indemnification Obligations, the Excluded
Claims and the Membership Interests in GAMHC (the "GAMHC Liquidating
Trust").
G. Whereas, the Rehabilitator has determined that this
Reorganization Plan and the Stock Purchase Agreement, assuming the
procedures set forth in the Reorganization Plan and the Rehabilitation
Order are followed, are fair and equitable to all parties concerned.
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. In this Reorganization Plan, unless
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otherwise specifically provided or the context so requires, the
following terms shall have the meanings ascribed to them below:
"Account" has the meaning set forth in Section 11.3 hereof.
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"Account Fund" has the meaning set forth in Section 11.3 hereof.
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"Affiliate" means, with respect to any Person, any other Person
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who directly or indirectly controls, or is controlled by or is under
common control with such Person. "Control," for purposes of this
definition, means the power to direct or cause the direction of
management or policies of the controlled Person.
"Approvals" means the consents and approvals of any governmental
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authority, as defined in the Stock Purchase Agreement, whose consent or
approval is necessary or advisable for the consummation of the
transactions contemplated by the Stock Purchase Agreement or this
Reorganization Plan.
"Claim" means a right to payment, whether or not such right is
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reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, and includes a right to an equitable remedy for breach of
performance if such right gives rise to a right to payment.
"Closing" has the meaning set forth in Section 3.1 of the Stock
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Purchase Agreement.
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"Closing Date" means the date of the Closing.
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"Conning" means Conning Corporation, a Missouri corporation.
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"Conning Subsidiaries" means the Persons listed on Schedule
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1.1(c) of the Stock Purchase Agreement.
"Director" has the meaning specified in the first paragraph
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hereof.
"Excluded Claims" has the meaning set forth in Section 6.1
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hereof.
"Excluded Claims Channeling Order" has the meaning set forth in
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Section 6.3 hereof.
"Final Indemnity Amount" has the meaning set forth in Section
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11.4(c)(iii) hereof.
"Final Indemnity Estimates" has the meaning set forth in Section
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11.5.4(c)(iii) hereof.
"Final Plan Confirmation Judgment" means the Plan Confirmation
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Judgment (I) after such Plan Confirmation Judgment has become final and
non-appealable, or (ii) the period for appealing such Plan Confirmation
Judgment shall have passed, one or more appeals of such Plan
Confirmation Judgment shall have been timely taken and not withdrawn,
such Plan Confirmation Judgment shall not have been stayed or reversed
as of the Closing, and MetLife has determined, in its sole discretion,
exercised in good faith, that such appeals are unlikely to invalidate
MetLife's title to the Shares.
"GAC" has the meaning set forth in Recital A hereof.
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"GALIC" has the meaning set forth in Recital A hereof.
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"GAMHC" has the meaning set forth in the first paragraph hereof,
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or a successor in interest.
"GAMHC Bar Date" has the meaning set forth in Section 6.4 hereof.
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"GAMHC Liquidating Trust" has the meaning set forth in Recital F
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hereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
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of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indemnification Obligations" means any obligation of GAMHC to
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indemnify MetLife under and in accordance with the Stock Purchase
Agreement.
"Indemnity Amount" has the meaning set forth in Section 11.4(a)
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hereof.
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"Indemnity Claim" has the meaning set forth in Section 11.4(a)
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hereof.
"Indemnity Estimates" has the meaning set forth in Section
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11.5.4(a) hereof.
"Insurance Code" means title XXIV of the Revised Missouri
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Statutes, Chapter 374 et seq., as amended from time to time to the
extent such amendment is made applicable to the Rehabilitation
Proceedings.
"Interim Agreements" means the agreements entered into by and
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between Seller and MetLife pursuant to Article VII of the Stock Purchase
Agreement.
"Member" means, as of any date specified herein or fixed by the
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Rehabilitator or the Rehabilitation Court, as the case may be, any
Person determined to be a member of GAMHC or entitled to the benefits of
membership of GAMHC on the basis of GALIC's records as of such date and
Article VI of GAMHC's Articles of Incorporation or such other or
additional methods or procedures as are specified by the Rehabilitator
and approved by the Rehabilitation Court; provided, however, that no
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Person shall become a member solely by acquiring a policy or contract
issued by GALIC on or after the Closing Date.
"Membership Interests" means the membership interests of the
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Members as determined in accordance with this Reorganization Plan and as
evidenced in the Membership Schedule.
"Membership Schedule" has the meaning set forth in Section 4.2
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hereof.
"MetLife" means Metropolitan Life Insurance Company, a New York
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mutual life insurance company, and any wholly-owned subsidiary to which
it may assign its rights under the Stock Purchase Agreement.
"Notice of Resolution" has the meaning set forth in Section
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11.5.5(a) hereof.
"Notification Package" has the meaning set forth in Section 4.1
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hereof.
"Overbid" has the meaning set forth in the Sale Procedures Order.
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"Person" means any individual, corporation, partnership, firm, joint
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venture, association, joint-stock company, trust, unincorporated
organization, public, governmental, judicial or regulatory authority or
body or other entity.
"Plan Confirmation Judgment" means a written judgment of the
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Rehabilitation Court approving the Reorganization Plan and Stock
Purchase Agreement and containing the terms set forth in Section 8.2
hereof.
"Plan Confirmation Hearing" is the hearing at which the
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Rehabilitation Court considers the Rehabilitator's request that the
Rehabilitation Court approve this Reorganization Plan.
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"Purchase Price" means $1,200,000,000 subject to Overbid, and
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subject to any adjustment in accordance with Section 2.2 of the Stock
Purchase Agreement.
"Recalculated Indemnity Amount" has the meaning set forth in
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Section 11.4(c)(I) hereof.
"Recalculated Indemnity Estimates" has the meaning set forth in
--------------------------------
Section 11.5.4(c)(I) hereof.
"Rehabilitation Court" has the meaning set forth in Recital A
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hereof.
"Rehabilitation Order" means that certain Order (1) Placing
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General American Mutual Holding Company into Rehabilitation; and (2)
Approving Notice of the Hearing to Approve Plan of Reorganization
entered September 17,1999, as such order may from time to be time be
modified, amended or supplemented.
"Rehabilitation Proceedings" has the meaning set forth in Recital
--------------------------
A of this Reorganization Plan.
"Rehabilitator" has the meaning set forth in the first paragraph
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of this Reorganization Plan.
"Reorganization Plan" means this Plan of Reorganization, the
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Stock Purchase Agreement, the Ancillary Agreements (as such term is used
in the Stock Purchase Agreement), any motions and supporting documents
filed by the Rehabilitator with respect to the Reorganization Plan and
the Plan Confirmation Judgment.
"RGA" means Reinsurance Group of America, Incorporated, a Missouri
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corporation.
"RGA Subsidiaries" means the entities listed on Schedule 1.1(d)
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of the Stock Purchase Agreement.
"Sale Procedures Order" means that certain Order Approving
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Certain Matters as to the Acquisition of GenAmerica Corporation by
Metropolitan Life Insurance Company entered by the Rehabilitation Court
on or about September 17, 1999.
"Shares" means the 1,000 shares of the common stock of GAC, which
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shares constitute all of the issued and outstanding shares of GAC's
capital stock.
"Special Master" has the meaning set forth in Section 11.4(c)(iii) hereof.
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"Stable Value Business" means funding agreements and guaranteed
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investment contracts issued by GALIC.
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"Stock Purchase Agreement" means that certain agreement dated as
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of August 26, 1999, together with all exhibits and schedules thereto and
as amended from time to time, pursuant to which MetLife is purchasing,
and GAMHC is selling, the Shares, a true and correct copy of which is
attached hereto as Exhibit "A."
"Subsidiaries" means the entities listed on Schedule 1.1(b) of
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the Stock Purchase Agreement.
"Supervision Proceedings" has the meaning set forth in Recital A
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hereof.
"Three Year Indemnity Claims" has the meaning set forth in
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Section 11.5.4(a) hereof.
"Total Indemnity Cost" has the meaning set forth in Section
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11.5.5(a) hereof.
"Two Year Indemnity Claims" has the meaning set forth in Section
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11.5.3 hereof.
"Value" has the meaning set forth in Section 11.5.6 hereof.
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Section 1.2 Rules of Interpretation. For purposes of this
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Reorganization Plan: (a) whenever it appears appropriate from the
context, each term, whether stated in the singular or the plural, shall
include both the singular and the plural; (b) any reference in this
Reorganization Plan to a contract, instrument, release or other
agreement or document being in a particular form or on particular terms
and conditions means that such document shall be substantially in such
form or substantially on such terms and conditions; provided, however,
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that any change to such form, terms, or conditions which is material to
a party to such document shall not be modified without such party's
consent; (c) any reference in this Reorganization Plan to an existing
document or exhibit filed or to be filed means such document or exhibit,
as it may have been or may be amended, modified or supplemented; (d)
unless otherwise specified in a particular reference, all references in
this Reorganization Plan to paragraphs, Articles and Exhibits are
references to paragraphs, Articles and Exhibits of or to this
Reorganization Plan; (e) the words "herein," "hereof," "hereto,"
"hereunder" and others of similar import refer to this Reorganization
Plan in its entirety rather than to only a particular portion of this
Reorganization Plan; and (f) captions and headings to Articles and
paragraphs are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of this
Reorganization Plan.
ARTICLE 2
AUTHORITY TO ACT
Section 2.1 Valid Appointment. The Rehabilitator has been duly
-----------------
and validly appointed to be the Rehabilitator of GAMHC as that term is
used in Section 375.1166 of the Insurance Code.
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Section 2.2 Authorization: Enforceable Obligations. The
--------------------------------------
Rehabilitator has all requisite power, authority and legal right
necessary to apply for court approval of this Reorganization Plan and
the Stock Purchase Agreement, and subject to the entry of a Final Plan
Confirmation Judgment and approval of the Rehabilitation Court, to
perform and carry out the transactions contemplated by this
Reorganization Plan and the Stock Purchase Agreement upon the terms and
subject to the conditions of this Reorganization Plan and the Stock
Purchase Agreement.
ARTICLE 3
CORPORATE AUTHORITY
Section 3.1 Re-Capitalization of GALIC. Following the Closing,
--------------------------
MetLife shall make a capital contribution of up to $120 million to GALIC
(or to cause one of its subsidiaries to make such a contribution to
GALIC) in accordance with, and to the extent contemplated by, Section
6.20 of the Stock Purchase Agreement.
Section 3.2 Director Best Efforts. The Rehabilitator, in his
---------------------
capacity as Director, shall use his best reasonable efforts to (a)
process the request for approval of the change of control for GALIC, RGA
and any Missouri-domiciled Subsidiaries within forty-five (45) days of
the submission by MetLife of complete applications for such a change of
ownership, and; (b) provide reasonable assistance to MetLife in
coordinating with other states with respect to expeditiously processing
requests by MetLife for Approvals in any other state in which GALIC or
the affected Subsidiary currently does business; and (c) expeditiously
process any other requests for Approvals submitted to the Director. In
addition, the Rehabilitator will seek an order of the Rehabilitation
Court providing that, if the Missouri Department of Insurance approves
the change of control application of MetLife prior to the Plan
Confirmation Hearing, any appeal thereof will be heard by the
Rehabilitation Court in connection with the Plan Confirmation Hearing.
ARTICLE 4
NOTICES TO MEMBERS; POLICYHOLDERS;
AND HOLDERS OF EXCLUDED CLAIMS
Section 4.1 Delivery of Notification Package. The Rehabilitator
--------------------------------
shall mail to each Member as of August 31, 1999 at the last known
address of such Member as shown on GAMHC's records and to each
policyholder of GALIC, (x) general information concerning this
Reorganization Plan and the Stock Purchase Agreement, including the last
date to file an objection to its approval by the Rehabilitation Court
and the form and manner of any such objection and the date, time and
place of the hearing to consider the approval of the Reorganization
Plan; and (y) any other material reasonably deemed necessary or
advisable by the Rehabilitator, to assist Members of GAMHC or
policyholders of GALIC in understanding the transaction contemplated by
this Reorganization Plan and the Stock Purchase Agreement (such
information and material hereinafter referred to as the "Notification
Package"). MetLife shall have the opportunity to review the Notification
Package prior to its mailing, and shall cooperate
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with the Rehabilitator in preparing the Notification Package. The
Rehabilitator will provide MetLife with a copy of any notice proposed to
be sent to Members generally, and an opportunity to comment thereon
before sending such notice.
Section 4.2 Distributions to Members. The Rehabilitator shall
------------------------
formulate a schedule of the Members and the Membership Interests (the
"Membership Schedule") based upon the books and records of GAMHC and
after consultation with actuaries and other appropriate consultants.
Such formulation shall, in the judgment of the Rehabilitator, be fair
and equitable to the Members. When the Membership Schedule is complete,
the Rehabilitator shall give notice to each Member of the basis for
determining the amount of Members' Membership Interests. The
Rehabilitator shall apply to the Rehabilitation Court for procedures to
give the Members notice of the basis for determining the amount of their
Membership Interest and an opportunity to object thereto. In the
absence of an objection, or after resolution of any objection, the
Membership Schedule shall be final and shall be used to allocate any
assets to be distributed to Members under this Reorganization Plan. Any
distributions made to Members on account of their Membership Interests
prior to senior Claims being paid or reserved for in full shall be
subject to approval by the Rehabilitation Court. Distributions to
Members shall be made as ordered by the Court.
Section 4.3 Holders of Excluded Claims. The Rehabilitator shall
--------------------------
give notice to all Members, and any holder of an Excluded Claim known to
the Rehabilitator (after due consultation with GAMHC and a review of the
books and records of GAMHC), and shall provide publication notice in
such fashion as the Rehabilitation Court shall approve so as to provide
notice reasonably calculated to advise any and all holders of Excluded
Claims of the last date by which Excluded Claims must be filed, and of
the consequences of the failure to so file.
ARTICLE 5
TRANSFERRED ASSETS; ACCESS TO BOOKS AND RECORDS
Section 5.1 Transfer of Assets by Rehabilitator on Behalf of
------------------------------------------------
GAMHC. Subject to the terms and conditions herein, at the Closing, the
- -----
Rehabilitator shall cause GAMHC to, and GAMHC shall, convey to MetLife
all of the Rehabilitator's and GAMHC's right, title and interest to the
Shares, free and clear of all liens, Claims and encumbrances existing as
at the Closing Date, including, without limitation, Claims against or
relating to GAMHC, the assets of GAMHC or the interests of the Members
in GAMHC or the value thereof.
Section 5.2 Access to Books and Records. The Rehabilitator shall
---------------------------
retain the corporate books and records of GAMHC; provided, however,
-------- -------
that he shall provide MetLife access to such books and records for
reasonable business purposes and the right to copy same upon reasonable
notice. MetLife, GAC, GALIC and the Subsidiaries shall provide the
Rehabilitator access to the books, files and other data and materials
transferred pursuant to the Stock Purchase Agreement for reasonable
business purposes and the right to copy same upon reasonable notice.
8
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ARTICLE 6
EXCLUDED CLAIMS AND ASSUMED CONTRACTS
Section 6.1 Excluded Claims. An "Excluded Claim" is any Claim
---------------
(I) which is asserted by a Person other than MetLife, (ii) for which
MetLife has the right to be indemnified under the Stock Purchase
Agreement, and (iii) which is asserted or assertable against GAMHC or
MetLife.
Section 6.2 Failure to File Excluded Claims: Consequences. The
---------------------------------------------
failure to file an Excluded Claim in the manner and by the date required
by the Rehabilitation Court shall result in that Claim being forever
barred from being asserted against GAMHC, the GAMHC Liquidating Trust,
or MetLife; it being the express intention that any and all such Claims
are to be asserted against GAMHC or its successor, the GAMHC Liquidating
Trust, by the date required by the Rehabilitation Court; provided,
--------
however, that the foregoing prohibition shall not prevent any payment
- -------
from the proceeds of any policy of insurance that covers the liability
associated with such Excluded Claim.
Section 6.3 Order in Aid of Channeling Excluded Claims. In
------------------------------------------
addition to the channeling of Claims provided by the Plan Confirmation
Judgment, the Rehabilitator shall seek an order from the Rehabilitation
Court pursuant to Section 375.1155 of the Insurance Code forever
enjoining the assertion of Excluded Claims except as provided for in
this Plan (the "Excluded Claims Channeling Order").
Section 6.4 Bar Date for Claims Against GAMHC. The Rehabilitator
---------------------------------
shall seek an order of the Rehabilitation Court fixing the last date by
which Claims must be filed against GAMHC (the "GAMHC Bar Date") , and
approving the form and manner of notice thereof. The Rehabilitator
shall provide notice of the GAMHC Bar Date in accordance with the
Rehabilitation Court's order. Failure to file a Claim by the GAMHC Bar
Date in accordance with the procedures specified by the Rehabilitation
Court will result in such Claim being forever barred from being asserted
against GAMHC, its assets or its successors.
ARTICLE 7
LIQUIDATION OF GAMHC
Section 7.1 Order of Liquidation. The Rehabilitator may,
--------------------
consistent with his existing contractual and other obligations, at such
time as he deems appropriate after the Closing, apply to the
Rehabilitation Court for an order to de-mutualize, liquidate and/or
dissolve GAMHC. The Rehabilitator shall provide prior written notice to
MetLife of the filing of an application to the Rehabilitation Court for
an order to de-mutualize, liquidate and/or dissolve GAMHC. Any such
order shall not adversely affect MetLife's rights under the Stock
Purchase Agreement or this Reorganization Plan.
Section 7.2 Liquidating Trust. The Rehabilitator may, at his
-----------------
sole option, but consistent with his existing contractual and other
obligations, apply to the Rehabilitation Court for an order transferring
GAMHC's remaining assets, following the consummation of the transactions
9
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contemplated by this Reorganization Plan and Stock Purchase Agreement,
including the Purchase Price proceeds and the Account, to the GAMHC
Liquidating Trust; provided, however, that the GAMHC Liquidating Trust
-------- -------
shall assume all obligations of GAMHC under this Reorganization Plan and
the Stock Purchase Agreement (specifically including, without
limitation, the Indemnification Obligations, and the satisfaction of
such obligations shall receive the highest statutorily- permitted
priority). Any such order shall not adversely affect MetLife's rights
under the Stock Purchase Agreement or this Reorganization Plan.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING; TERMINATION
Conditions Precedent to Closing. Except as otherwise expressly
-------------------------------
provided herein, the Closing shall not occur unless, prior to or at the
Closing, each of the following conditions precedent and the conditions
precedent set forth in the Stock Purchase Agreement, is satisfied or, if
waivable, waived:
Section 8.1 Final Plan Confirmation Judgment. There shall be a
--------------------------------
Final Plan Confirmation Judgment.
Section 8.2 Terms of the Final Plan Confirmation Judgment. The
---------------------------------------------
Final Plan Confirmation Judgment shall be reasonably satisfactory to the
Rehabilitator and MetLife and shall contain the following provisions:
(I) that the terms and conditions of this Reorganization Plan and the
Stock Purchase Agreement and the transactions contemplated hereby and
thereby are fully enforceable; (ii) finding that the consideration
received is fair; (iii) holding that the sale of the Shares is free and
clear of liens, Claims and encumbrances in accordance with the terms
hereof; (iv) finding that this Reorganization Plan and the Stock
Purchase Agreement are fair and equitable to all parties concerned; (v)
approving the Stock Purchase Agreement; (vi) holding that no closed
block will be required to be established for any policyholders of GALIC;
(vii) providing that MetLife shall be entitled to enforce the terms of
this Reorganization Plan which grant it rights, benefits or protections;
(viii) granting a judicial lien in favor of MetLife on the Account and
the Account Fund to secure the Indemnification Obligations pursuant to
Article 11 hereof; and (ix) containing such other matters relating to
this Reorganization Plan or the Stock Purchase Agreement and the
transactions contemplated hereby and thereby as the Rehabilitator shall
deem necessary or desirable.
Section 8.3 Orders. The Rehabilitator shall have obtained from
------
the Rehabilitation Court any further orders as are necessary or
appropriate to the implementation of this Reorganization Plan, the Stock
Purchase Agreement, and the transactions contemplated hereby and
thereby.
Section 8.4 Notification Package. The Notification Package shall
--------------------
have been sent to each Member and policyholder in accordance with
Section 4.1.
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Section 8.5 No Prohibition. No temporary restraining order,
--------------
preliminary or permanent injunction or other order, issued by a court of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this
Reorganization Plan shall be in effect. Further, all Approvals of
Governmental Authorities (as such term is defined in the Stock Purchase
Agreement) required to consummate the transactions contemplated hereby
shall have been obtained and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have expired.
ARTICLE 9
ADDITIONAL COVENANTS OF THE REHABILITATOR
Section 9.1 Final Plan Confirmation Judgment. The Rehabilitator
--------------------------------
shall take all reasonable actions to make the Final Plan Confirmation
Judgment and Excluded Claims Channeling Order binding on all interested
parties and subject to full faith and credit in all state and Federal
courts and any other applicable jurisdictions.
Section 9.2 Rehabilitator to Use Best Efforts to Obtain Final
-------------------------------------------------
Plan Confirmation Judgment. The Rehabilitator shall use his best
- --------------------------
efforts to obtain the Final Plan Confirmation Judgment with respect to
this Reorganization Plan and the Stock Purchase Agreement as promptly as
possible.
Section 9.3 Cooperation to Obtain Orders and Judgments. The
------------------------------------------
Rehabilitator and MetLife shall cooperate with and assist each other in
securing such orders and judgments from the Rehabilitation Court as are
reasonably deemed necessary or desirable in order to carry out the
provisions of this Reorganization Plan and the Stock Purchase Agreement.
Section 9.4 Delivery of Motion, Notice, etc. Copies of any
-------------------------------
motion or notice filed with the Rehabilitation Court or with any other
Person by the Rehabilitator as contemplated by this Reorganization Plan
and of any order issued by the Rehabilitation Court to the Rehabilitator
shall be provided to MetLife and its counsel by the Rehabilitator. The
Rehabilitator shall make his best effort to provide copies of motions or
notices to MetLife prior to filing them with the Rehabilitation Court.
Section 9.5 Operation of GAMHC. GAMHC shall operate its business
------------------
consistent with the terms and conditions of this Reorganization Plan and
the Stock Purchase Agreement from the date of this Reorganization Plan
through the Closing Date. The parties acknowledge that the
Rehabilitation Proceedings may impose restrictions on the operation of
the business of GAMHC and the Supervision Proceedings may impose
restrictions on GALIC.
Section 9.6 Orderly Transition. Prior to Closing, the
------------------
Rehabilitator and the Director, as administrative supervisor of GALIC,
shall permit MetLife and its employees, agents and consultants to assist
the Rehabilitator in the management and operation of GALIC in order to
facilitate an effective and orderly transition of the GALIC business.
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ARTICLE 10
CLOSING
Section 10.1 Closing. The Closing shall take place as provided
-------
in Article 3 of the Stock Purchase Agreement.
ARTICLE 11
ADMINISTRATION OF PURCHASE PRICE PROCEEDS
Section 11.1 Receipt of Purchase Price. The Purchase Price
-------------------------
proceeds shall be immediately paid into the Account (as defined below)
by or at the direction of the Rehabilitator, to be held and administered
pursuant to this Article.
Section 11.2 Liens. Title to the Purchase Price proceeds shall
-----
vest in the Rehabilitator pursuant to Section 375.1166.1 of the
Insurance Code, subject to a perfected, first priority judicial lien
upon such Purchase Price proceeds, the Account (as defined below), all
assets comprising the Account Fund (as defined below), all additions to,
and proceeds, renewals, investments, reinvestments and substitutions of
the foregoing, and all instruments, receipts and certificates evidencing
any of the foregoing (collectively, the "Collateral") in favor of
MetLife, which lien shall be created or confirmed by the Plan
Confirmation Judgment. In addition, effective upon the occurrence of
the Closing and the payment of the Purchase Price in accordance with the
terms of this Reorganization Plan, the Rehabilitator hereby grants a
perfected, first priority security interest in favor of MetLife in the
Collateral. The foregoing security interest shall be created or
confirmed as a perfected, first priority security interest by the Plan
Confirmation Judgment. The foregoing perfected, first priority judicial
lien and perfected, first priority security interest are collectively
referred to as the MetLife Lien. The MetLife Lien shall secure the
Indemnification Obligations in accordance with the terms of this Article
11. MetLife shall not be permitted to exercise the remedies of a secured
creditor in respect of the MetLife Lien without permission from the
Rehabilitation Court. Notwithstanding the foregoing, the MetLife Lien
shall be deemed released, without any additional act or requirement,
from that portion of the Collateral disbursed from the Account in
accordance with Sections 11.5, 11.8 or 11.9 hereof, such release to take
effect at the time of such disbursement.
Section 11.3 Securities Account. The Purchase Price proceeds
------------------
shall at all times be maintained in a securities account ("the
Account"), which shall be administered as set forth in this Article.
The Account shall be established in the name of General American Mutual
Holding Company In Rehabilitation at such Missouri commercial banking
institution as the Rehabilitation Court shall designate. The Purchase
Price proceeds, as invested and as increased by the earnings thereon and
reduced by any distributions pursuant to this Article shall be referred
to as the "Account Fund." Only the Account Fund shall be kept in the
Account.
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Section 11.4 Distributions from the Account Fund to MetLife.
----------------------------------------------
(a) From time to time MetLife (on its own behalf or on
behalf of any of MetLife's directors, officers, employees or Affiliates,
or any successor or assign of any of them) may deliver to the
Rehabilitator a notice that MetLife is making an indemnity claim under
Section 8.1 or Section 10.2 of the Stock Purchase Agreement in
accordance with the terms set forth in Article VIII and Article X
thereof (an "Indemnity Claim"), which notice shall set forth the amount
of the Indemnity Claim as determined by MetLife in good faith (the
"Indemnity Amount"), and shall include information in reasonable detail
showing the basis of the Indemnity Claim and the calculation of the
Indemnity Amount.
(b) Within thirty days after receipt of notice of an
Indemnity Claim, the Rehabilitator shall notify MetLife in writing
whether the Rehabilitator agrees or disagrees with the Indemnity Claim
or Indemnity Amount. In the event that the Rehabilitator agrees with
the Indemnity Claim and Indemnity Amount, the Rehabilitator shall
promptly request approval of the Rehabilitation Court to distribute the
Indemnity Amount to MetLife. Within five business days after receiving
the approval (and the exhaustion of any appeal rights), the
Rehabilitator shall pay out of the Account Fund (by wire transfer of
immediately available funds) the Indemnity Amount to MetLife.
(c) In the event that the Rehabilitator disagrees with the
Indemnity Claim or Indemnity Amount:
(i) The Rehabilitator's notice to MetLife of such
disagreement shall specify the nature of such disagreement, the reason
therefor and the amount, if any, of the Indemnity Claim as determined by
the Rehabilitator in good faith (the "Recalculated Indemnity Amount"),
and shall include information in reasonable detail showing the
calculation of the Recalculated Indemnity Amount. The Rehabilitator's
notice shall also include the names of three people with reputations for
expertise in the area relating to the Indemnity Claim.
(ii) Within ten days after receipt of the
Rehabilitator's notice of disagreement, MetLife shall send a notice to
the Rehabilitator setting forth the names of three people with
reputations for expertise in the area relating to the Indemnity Claim.
(iii) Within five days after receipt of MetLife's
notice of names, MetLife and the Rehabilitator shall present to the
Rehabilitation Court the names of up to four people, up to two of whom
shall be selected by the Rehabilitator from MetLife's list and up to two
of whom shall be selected by MetLife from the Rehabilitator's list. The
Rehabilitation Court may either hear the dispute itself or it may select
one of such people, or another person, to serve as the special master
(the "Special Master") to evaluate the Claim and to deliver to MetLife
and the Rehabilitator its determination of the amount of the Indemnity
Claim (the "Final Indemnity Amount"); provided, however, that the
-------- -------
Final Indemnity Amount shall not be higher or lower than
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the range determined by the Indemnity Amount and the Recalculated
Indemnity Amount of such Indemnity Claim. Subject to any appeal to the
Rehabilitation Court within five days after the Special Master's
determination, and the Rehabilitation Court's review and approval or
redetermination, and subject to any further appeals to which the parties
are entitled, the determination of the Final Indemnity Amount shall be
final and binding upon the Rehabilitator and MetLife. Within five
business days after the receipt of the determination of the Final
Indemnity Amount or the later approval or redetermination of the
Rehabilitation Court and the exhaustion of any further appeal rights,
the Rehabilitator shall pay out of the Account Fund (by wire transfer of
immediately available funds) the Final Indemnity Amount or the
redetermined Final Indemnity Amount to MetLife.
Section 11.5 Distributions from the Account Fund to the
------------------------------------------
Rehabilitator.
- -------------
Section 11.5.1 Expenses and Taxes. From time to time the
------------------
Rehabilitator may deliver to MetLife a request for disbursement from the
Account Fund of the reasonable out-of-pocket costs and expenses incurred
by the Rehabilitator and GAMHC in rehabilitation in connection with the
Rehabilitation Proceedings, reasonable out-of-pocket expenses incurred
in the ordinary course of business by the Rehabilitator and GAMHC in
rehabilitation, the valid statutory and contractual obligations of GAMHC
in rehabilitation and any and all Taxes (as such term is defined in the
Stock Purchase Agreement) which become due and payable and for which the
Rehabilitator or GAMHC becomes obligated. Within thirty days after
receipt of the Rehabilitator's request, MetLife shall notify the
Rehabilitator in writing whether MetLife agrees or disagrees with the
request. In the event that MetLife agrees with the request, it shall
provide a notice to the Rehabilitator so stating and the Rehabilitator
may withdraw the requested amount from the Account Fund and deposit it
in the Rehabilitator's general account free and clear of the MetLife
Lien and of the Indemnification Obligations. In the event that MetLife
disagrees with the request, the disagreement shall be submitted to the
Rehabilitation Court for review and determination of the amount to be
released pursuant to this Section 11.5.1. In the event that the
procedures set forth in this section do not permit the Rehabilitator to
pay in a timely manner the reasonable, out-of-pocket expenses incurred
by the Rehabilitator or by GAMHC in rehabilitation in connection with
the Rehabilitation Proceedings, and the reasonable, out-of-pocket
expenses incurred in the ordinary course of business of GAMHC in
rehabilitation, the Rehabilitator may petition the Rehabilitation Court
for such changes in such procedures as will allow the Rehabilitator to
make such payments in a timely manner.
Section 11.5.2 Initial Distribution. On a date that is 60 days
--------------------
after the Closing Date, and subject to the receipt of all necessary
Rehabilitation Court and regulatory approvals therefor, which shall be
certified to the Rehabilitation Court by the Rehabilitator, the
Rehabilitator may withdraw from the Account and deposit in the
Rehabilitator's general account, free and clear of the MetLife Lien and
of the Indemnification Obligations, an amount equal to 20% of the
Account Fund on such date.
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Section 11.5.3 Two Year Distribution. Not later than the
---------------------
fifth business day following the second anniversary of the Closing Date,
MetLife shall deliver to the Rehabilitator a summary analysis of the
Indemnity Claims pending on or actually threatened as of such date (the
"Two Year Indemnity Claims"), which analysis shall include MetLife's
estimate of the aggregate Value of all Two Year Indemnity Claims. Based
upon such summary analysis, in the sole discretion of MetLife, MetLife
may determine to release the MetLife Lien and Indemnification
Obligations with respect to a portion of the Account Fund.
Section 11.5.4 Three Year Distribution.
-----------------------
(a) Not later than the fifth business day following the
third anniversary of the Closing Date, MetLife shall deliver to the
Rehabilitator a list of Indemnity Claims pending on or actually
threatened as of such date (the "Three Year Indemnity Claims") and an
estimate of the Value of each such Three Year Indemnity Claim as
determined by MetLife in good faith (collectively, the "Indemnity
Estimates"), along with information in reasonable detail showing the
basis of the Three Year Indemnity Claims and the calculation of the
Indemnity Estimates.
(b) Within thirty days after receipt of the Indemnity
Estimates, the Rehabilitator shall notify MetLife in writing whether the
Rehabilitator agrees with all of the Indemnity Estimates or disagrees
with any of the Indemnity Estimates. In the event that Rehabilitator
agrees with all of the Indemnity Estimates, the Rehabilitator shall so
notify MetLife and the Rehabilitator may then withdraw from the Account
and deposit in the Rehabilitator's general account free and clear of the
MetLife Lien and of the Indemnification Obligations, the difference
between the Account Fund on such date and the Indemnity Estimates.
(c) In the event that the Rehabilitator disagrees with any
of the Indemnity Estimates:
(i) The Rehabilitator's notice to MetLife of such
disagreement shall specify the particular Three Year Claims the
Indemnity Estimates with respect to which the Rehabilitator disagrees,
the nature of such disagreements, the reasons therefor and an estimate
of the Value, if any, of each such Three Year Claim as determined by the
Rehabilitator in good faith (collectively, the "Recalculated Indemnity
Estimates"), and shall include information in reasonable detail showing
the calculation of the Recalculated Indemnity Estimates. The
Rehabilitator's notice shall also include the names of three people with
reputations for expertise in each of the areas relating to the Three
Year Indemnity Claims in dispute. Upon so notifying MetLife, the
Rehabilitator may withdraw from the Account and deposit in the
Rehabilitator's general account free and clear of the MetLife Lien and
of the Indemnification Obligations, the difference between the Account
Fund on such date and the Indemnity Estimates.
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(ii) Within ten days after receipt of the
Rehabilitator's notice of disagreement, MetLife shall send a notice to
the Rehabilitator setting forth the names of three people with
reputations for expertise in each of the areas relating to the Three
Year Indemnity Claims in dispute.
(iii) MetLife and the Rehabilitator shall present to
the Rehabilitation Court the names of up to four people for each of the
areas relating to the Three Year Indemnity Claims in dispute, up to two
of whom shall be selected by the Rehabilitator from MetLife's list and
up to two of whom shall be selected by MetLife from the Rehabilitator's
list. The Rehabilitation Court may either hear the dispute itself or it
may select one of such people, or another person, to serve as the
Special Master to evaluate the Three Year Indemnity Claims in dispute in
his or her area of expertise. The Special Master shall deliver to
MetLife, the Rehabilitator and the Rehabilitation Court its
determination of the estimate of the Value of each such Three Year
Indemnity Claim (the "Final Indemnity Estimates"); provided,
---------
however, that the Final Estimate for each such Three Year Indemnity
- -------
Claim shall not be higher or lower than the range determined by the
Indemnity Estimate and the Recalculated Indemnity Estimate of such Three
Year Indemnity Claim. Subject to any appeal to the Rehabilitation Court
within five days after the Special Master's determination, and the
Rehabilitation Court's review and approval or redetermination, and
subject to any further appeals to which the parties are entitled, the
determination of the Final Indemnity Estimates shall be final and
binding upon the Rehabilitator and MetLife. After the receipt of the
Rehabilitation Court's approval of the determination of the Final
Indemnity Estimates or the later redetermination of the Rehabilitation
Court and the exhaustion of any further appeal rights, the Rehabilitator
may withdraw from the Account and deposit in the Rehabilitator's general
account free and clear of the MetLife Lien and of the Indemnification
Obligations, the difference between MetLife's Indemnity Estimates for
the Three Year Indemnity Claims in dispute and the Final Indemnity
Estimates for such Three Year Indemnity Claims or the redetermination of
such difference.
Section 11.5.5 Releases Upon Resolution of Three Year Indemnity
------------------------------------------------
Claims.
- ------
(a) Within five days after the final and non-appealable
resolution of each Three Year Indemnity Claim and the distribution by
the Rehabilitator of all Indemnity Amounts and Final Indemnity Amounts
in respect of such Three Year Indemnity Claim to MetLife (collectively,
the "Total Indemnity Cost"), MetLife shall notify the Rehabilitator in
writing of the resolution, the Total Indemnity Cost, and the Final
Indemnity Estimate or the Indemnity Estimate (as the case may be) of
such Three Year Indemnity Claim ("Notice of Resolution").
(b) If the Total Indemnity Cost is less than the Final Indemnity
Estimate or the Estimate (as the case may be) of such Three Year
Indemnity Claim, the Rehabilitator may withdraw from the Account Fund
and deposit in the Rehabilitator's general account free and clear of the
MetLife Lien and of the Indemnification Obligations, the difference
between the Total Indemnity Cost and the Final Indemnity Estimate or the
Indemnity Estimate (as the case may be) of such Three Year Indemnity
Claim.
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Section 11.5.6 Definition of Value. For purposes of this
-------------------
Article 11, "Value" means a reasonable worst case total cost of the
relevant Three Year Indemnity Claim or Claims upon the final, non-
appealable resolution thereof.
Section 11.6 Investment. The Account Fund shall be invested in
----------
one or more of the following: (i) marketable direct obligations of, or
obligations the principal and interest on which are unconditionally
guaranteed by, the United States of America or any agency or
instrumentality thereof; (ii) commercial paper rated at the time of
purchase in the single highest classification by not less than two
standard rating services and maturing not more than 270 days after the
date of purchase; and (iii) such other investments (x) which constitute
investment property of the type specified in clauses (i), (ii) or (iii)
of the definition of investment property set forth in Article 9 of the
Missouri Uniform Commercial Code, (y) are subject to the MetLife Lien,
and (z) as are recommended by the Rehabilitator, reasonably agreed to by
MetLife, and approved by the Rehabilitation Court.
Section 11.7 Information. The Rehabilitator shall furnish to
-----------
MetLife any information regarding the Account Fund which MetLife may
reasonably request.
Section 11.8 Fees and Expenses of the Depository Bank. All
----------------------------------------
expenses incurred by the Rehabilitator to maintain and administer the
Account, including the fees and expenses of the depository bank, shall
be payable out of the Account Fund, subject to approval of the
Rehabilitation Court, free and clear of the MetLife Lien and of the
Indemnification Obligations.
Section 11.9 Fees and Expenses of Special Masters. The fees and
------------------------------------
expenses of any special master appointed pursuant to this Article 11
shall be payable out of the Account Fund, subject to the approval of the
Rehabilitation Court, free and clear of the MetLife Lien and of the
Indemnification Obligations.
Section 11.10 Further Assurances. The Rehabilitator shall
------------------
provide reasonable assistance to MetLife to implement and to give effect
to the provisions of this Article, including without limitation
executing, acknowledging, delivering, filing and recording such other
documents or instruments as MetLife may reasonably request to further
evidence and to give further notice of the MetLife Lien; provided,
---------
however, that such acts shall expressly not include executing or
- -------
permitting the execution of a control agreement with respect to the
Account or any other document or instrument of similar import or which
expands MetLife's rights beyond those intended to be granted hereby.
ARTICLE 12
GENERAL PROVISIONS
Section 12.1 Entire Document. This Reorganization Plan and the
---------------
Stock Purchase Agreement (including the exhibits and schedules attached
hereto and thereto, and any Ancillary Agreements or Interim Agreements
entered into pursuant to the Stock Purchase Agreement)
17
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constitute the entire agreements among the parties with respect to the
subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written,
of the parties. There are no representations, promises, warranties,
covenants or undertakings, other than those expressly set forth or
referred to in this Reorganization Plan or the Stock Purchase Agreement.
Section 12.2 No Assignment. None of the rights or obligations
-------------
of any person under this Reorganization Plan may be assigned or
transferred to or assumed by any other person, except as expressly
provided herein or in the Stock Purchase Agreement.
Section 12.3 Governing Law. This Reorganization Plan shall be
-------------
governed and construed in accordance with the laws of the State of
Missouri, including the Insurance Code, applicable to agreements made
and to be performed entirely within the State of Missouri, without
giving effect to the principles of conflicts of law thereof, and
jurisdiction and venue for any action arising under this Reorganization
Plan shall be in the Rehabilitation Court.
Section 12.4 No Benefits to Others. Any representations,
---------------------
warranties, covenants and agreements contained in this Reorganization
Plan, and in the certificate appended hereto, are for the sole benefit
of the Rehabilitator, GAMHC, and MetLife and their permitted successors
and assigns, and they shall not be construed as conferring any rights on
any other Person.
Section 12.5 Notices. Any notice, request, demand, waiver,
-------
consent, approval or other communication required or permitted to be
made hereunder shall be in writing and shall be deemed given only if
delivered by hand, or mailed by certified or registered mail with
postage prepaid and return receipt requested, or sent by facsimile
transmission, as follows:
(a) If to the Director, the Rehabilitator or GAMHC, to:
General American Mutual Holding Company
700 Market Street
St. Louis, MO 63101
Att'n: Robert Banstetter, Esq.
with concurrent copies to:
Missouri Department of Insurance
Harry S Truman State Office Building, Room 630
301 West High Street
Jefferson City, MO 65102
Attention: Eric A. Martin, Esq., General Counsel
18
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<PAGE>
Sidley & Austin
One First National Plaza
55th Floor
Chicago, IL 60603
Attention: Richard G. Clemens,Esq.
James R. Stinson, Esq.
Sidley & Austin
555 West Fifth Street
40th Floor
Los Angeles, CA. 90013
Attention: Thomas E. Patterson, Esq.
LeBoeuf, Lamb, Greene & MacRae, LLP
1875 Connecticut Ave. N.W.
Washington, D.C. 20009
Att'n: Cecilia Kempler, Esq.
Carson & Coil, P.C.
515 E. High Street
P.O. Box 28
Jefferson City, MO 65102
Att'n: Dana L. Frese
(b) If to MetLife, to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, N.Y. 10010-3690
Att'n: Robert Einstein
with concurrent copies to
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, N.Y. 10019
Att'n: Jonathan L. Freedman, Esq.
Jeff S. Liebmann, Esq.
Polsinelli, White, Vardeman & Shalton
127 E. High Street
P.O. Box 275
Jefferson City, MO 65101
Att'n: Lewis E. Melahn
19
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<PAGE>
or to such other address as may be designated by a person by written
notice to the other persons set forth in this notice provision. Such
notice, request, demand, waiver, consent, approval or other
communication will be deemed to have been given as of the date so
delivered, sent by facsimile (with confirmation of receipt) or mailed.
Section 12.6 Severability. If any provision of this
------------
Reorganization Plan is held by a court of competent jurisdiction to be
invalid, illegal or unenforceable, the remainder of the provisions of
this Reorganization Plan shall remain in full force and effect. The
parties shall endeavor in good faith negotiations to replace any
invalid, illegal or unenforceable provision with a valid, legal and
enforceable provision, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provision.
Section 12.7 Counterparts. This Reorganization Plan may be
------------
executed in any number of counterparts, each of which executed and
delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same
instrument. It shall not be necessary that any one counterpart be signed
by all of the parties hereto as long as each of the parties hereto has
signed at least one counterpart.
Section 12.8 Liability of the Rehabilitator. The Rehabilitator
------------------------------
proposes this Reorganization Plan only in his representative capacity as
Rehabilitator of GAMHC and not individually, and the parties hereto
agree and acknowledge that the Rehabilitator shall not have any personal
liability in any capacity for any matters or obligations hereunder, and
further that the State of Missouri and shall have no liability with
respect hereto.
Section 12.9 Modification of the Reorganization Plan. In the
---------------------------------------
event there is a Qualifying Competing Proposal (as such term is defined
in the Sale Procedures Order) which is approved by the Rehabilitation
Court, this Reorganization Plan may be amended to the extent necessary
to give effect and to implement such Qualifying Competing Proposal
without further notice. The Plan may also be modified to cure an
ambiguity or inconsistency, to correct any mistake, or to correct a
manifest omission without further notice.
IN WITNESS WHEREOF, the parties hereto have executed this
Reorganization Plan as of the day and year first above written.
KEITH WENZEL, Director of Insurance, State of Missouri,
in his capacity as Rehabilitator and not in his
individual capacity
By: /s/ Keith Wenzel
----------------
Title:
20
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GENERAL AMERICAN MUTUAL HOLDING COMPANY
by Keith Wenzel, in his capacity as Rehabilitator and not in
his individual capacity
By: /s/ Keith Wenzel
----------------
21
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CERTIFICATE OF METROPOLITAN LIFE INSURANCE COMPANY
--------------------------------------------------
1. This Certificate is made as of September 17, 1999 by
Metropolitan Life Insurance Company. (Otherwise undefined capitalized
terms have the meaning ascribed to them in the Plan of Reorganization to
which this Certificate is appended.) MetLife hereby certifies (i) that,
upon entry of the Final Plan Confirmation Judgment, the General American
Mutual Holding Company Plan of Reorganization to which this Certificate
is appended satisfies the condition specified in Section 9.3(e) of the
Stock Purchase Agreement and any other condition or covenant of GAMHC to
the extent it concerns the Reorganization Proceeding or a Reorganization
Plan contained in the Stock Purchase Agreement, (ii) that the entry of
the Final Plan Confirmation Judgment will satisfy any condition or
covenant pertaining to Missouri judicial approvals required with respect
to the Reorganization Proceeding or the Reorganization Plan, and (iii)
hereby makes, as of August 26, 1999, to the Rehabilitator the
representations and warranties made by MetLife to Seller in the Stock
Purchase Agreement as though fully set forth in this Certificate.
2. MetLife covenants to take the following actions: (i) to act
in mutual cooperation with the Rehabilitator and provide to the
Rehabilitator all reasonable assistance in furtherance of the
implementation and effectuation of this Reorganization Plan and the
Stock Purchase Agreement; (ii) to use commercially reasonable efforts to
obtain all necessary approvals of this Reorganization Plan and the Stock
Purchase Agreement and to satisfy the conditions to closing set forth in
the Stock Purchase Agreement; and (iii) to perform all acts in
accordance with Section 6.7 of the Stock Purchase Agreement.
3. Subject only to the terms of Article 11 of the
Reorganization Plan, so long as the Rehabilitation Court has
jurisdiction over the Rehabilitation Proceedings, MetLife agrees, to the
maximum extent permitted by law, to submit to the exclusive jurisdiction
of and venue in the Rehabilitation Court with respect to any disputes
arising out of or relating to the Reorganization Plan or the Stock
Purchase Agreement, that is (i) between MetLife and the Rehabilitator,
or (ii) among (x) the Rehabilitator or MetLife, on the one hand, and)
any creditors, shareholders, Members or policyholders of GAMHC or the
Subsidiaries, on the other hand (other than a proceeding in which, of
the foregoing entities, only MetLife and one or more Subsidiaries, RGA,
any RGA Subsidiary, Conning or any Conning Subsidiary, are parties,
except to the extent the Claims in such action give rise to an
Indemnification Obligation).
4. MetLife covenants, following the Closing Date, as follows:
(i) all guaranteed benefits under policies of GALIC shall remain general
obligations of GALIC in accordance with the terms of such policies; (ii)
policyholder obligations will remain the obligation of GALIC or
22
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<PAGE>
the applicable insurance company subsidiary; and (iii) premiums,
benefits, guarantees, interest crediting rates, values, dividend rights
or other terms of insurance policies or contracts will not be changed as
a direct result of the sale to MetLife.
METROPOLITAN LIFE INSURANCE COMPANY
a New York mutual life insurance company
By: /s/ Terence I. Lennon
---------------------
Name:Terence I. Lennon
Title: Executive Vice President
23
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<PAGE>
=====================================================================
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
GENERAL AMERICAN MUTUAL HOLDING COMPANY
AND
METROPOLITAN LIFE INSURANCE COMPANY
DATED AS OF AUGUST 26, 1999
=====================================================================
<PAGE>
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS
Section 1.1 Definitions 1
ARTICLE II
PURCHASE OF SHARES
Section 2.1 Purchase of Shares 11
Section 2.2 Adjustment of Purchase Price 11
ARTICLE III
THE CLOSING
Section 3.1 Closing 12
Section 3.2 Closing Deliveries 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Organization and Related Matters 13
Section 4.2 Subsidiaries 14
Section 4.3 Authority; No Violation 15
Section 4.4 Consents and Approvals 15
Section 4.5 Stock Ownership 16
Section 4.6 Financial Statements 17
Section 4.7 No Other Broker 19
Section 4.8 Legal Proceedings 19
Section 4.9 Undisclosed Liabilities 20
Section 4.10 Compliance with Applicable Law;
Insurance Operations 20
Section 4.11 Absence of Certain Changes 21
Section 4.12 Technology and Intellectual Property 23
Section 4.13 Employee Benefit Plans; ERISA 24
Section 4.14 Taxes 25
Section 4.15 Contracts 26
Section 4.16 Portfolio Investments 26
Section 4.17 Liabilities and Reserves 26
Section 4.18 Title to Assets 28
Section 4.19 Transactions with Certain Persons 28
Section 4.20 Reinsurance and Retrocessions 28
Section 4.21 Environmental Laws 29
Section 4.22 Insurance Coverage 30
Section 4.23 Year 2000 30
Section 4.24 RGA and Conning 30
Section 4.25 State Takeover Statutes and Shareholder
Rights Plans 30
Section 4.26 Insurance Issued 31
Section 4.27 Real Property 33
<PAGE>
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<S> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.1 Organization and Related Matters 33
Section 5.2 Authority; No Violation 33
Section 5.3 Consents and Approvals 34
Section 5.4 Legal Proceedings 34
Section 5.5 Investment Intent of Buyer 35
Section 5.6 No Other Broker 35
Section 5.7 Financing 35
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business 35
Section 6.2 Public Announcements 36
Section 6.3 Expenses 36
Section 6.4 Access; Certain Communications 36
Section 6.5 Reorganization Plan 38
Section 6.6 Regulatory Matters; Third Party
Consents 38
Section 6.7 Further Assurances 40
Section 6.8 Notification of Certain Matters 40
Section 6.9 Maintenance of Records 41
Section 6.10 Service Under Employee Plans 41
Section 6.11 Benefits Under Employee Plans 42
Section 6.12 Company Confidentiality Agreements 42
Section 6.13 No Solicitations 42
Section 6.14 Policy Credits and Dividends in Respect
of Tax-Qualified Retirement Contracts 44
Section 6.15 Alternative Structure 44
Section 6.16 Employment 44
Section 6.17 Headquarters; Local Activities 44
Section 6.18 Dividends 44
Section 6.19 Investment Advisory Agreements 45
Section 6.20 Capital Contribution 45
Section 6.21 Change of Control Agreements 45
ARTICLE VII
INTERIM ARRANGEMENT
Section 7.1 Interim Agreements 45
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ARTICLE VIII
TAX MATTERS
Section 8.1 Indemnity 46
Section 8.2 Tax Allocation Agreement Payments 48
Section 8.3 Returns and Payments 49
Section 8.4 Refunds 50
Section 8.5 Contests 50
Section 8.6 Section 338(h)(10) Election 50
Section 8.7 Time of Payment 52
Section 8.8 Cooperation and Exchange of Information 53
Section 8.9 Conveyance Taxes 53
Section 8.10 Miscellaneous 54
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Conditions to Buyer's Obligations 54
Section 9.2 Conditions to Seller's Obligations 55
Section 9.3 Mutual Conditions 56
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 10.1 Survival 57
Section 10.2 Obligation of Seller to Indemnify 57
Section 10.3 Obligation of Buyer to Indemnify 58
Section 10.4 Notice and Opportunity to Defend Against
Third Party Claims 58
Section 10.5 Net Indemnity 59
Section 10.6 Tax Indemnification 59
Section 10.7 Limits on Indemnification 59
ARTICLE XI
TERMINATION
Section 11.1 Termination 60
Section 11.2 Obligations upon Termination 62
Section 11.3 Termination Fee 62
ARTICLE XII
MISCELLANEOUS
Section 12.1 Amendments 62
Section 12.2 Entire Agreement 62
Section 12.3 Interpretation 63
<PAGE>
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Section 12.4 Severability 63
Section 12.5 Notices 63
Section 12.6 Binding Effect; Persons Benefitting; No
Assignment 64
Section 12.7 Counterparts 64
Section 12.8 No Prejudice 65
Section 12.9 Governing Law 65
Section 12.10 Specific Performance 65
</TABLE>
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<PAGE>
SCHEDULES
Schedule 1.1(a) Life Insurance Subsidiaries
Schedule 1.1(b) Subsidiaries
Schedule 1.1(c) Conning Subsidiaries
Schedule 1.1(d) RGA Subsidiaries
Schedule 1.1(e) Tax Allocation Agreements
Schedule 3.2(b) Good Standing Certificates
Schedule 4.2 Subsidiary Information
Schedule 4.3(b) No Violation, Conflicts or Breaches
Schedule 4.4 Consents and Approvals
Schedule 4.5 Stock Ownership
Schedule 4.8 Legal Proceedings
Schedule 4.9 Undisclosed Liabilities
Schedule 4.10 Compliance with Applicable Law;
Insurance Operations
Schedule 4.11 Absence of Certain Changes
Schedule 4.12 Technology and Intellectual Property
Schedule 4.13 Employee Benefit Plans; ERISA
Schedule 4.14 Taxes
Schedule 4.15 Contracts
Schedule 4.17(a) Liabilities
Schedule 4.17(b) Reserves
Schedule 4.18 Title to Assets
Schedule 4.19 Transactions with Certain Persons
Schedule 4.20 Reinsurance and Retrocessions
Schedule 4.21 Environmental Laws
Schedule 4.23 Year 2000
Schedule 4.24 SEC Agreements
Schedule 4.26 Insurance Issued
Schedule 4.27 Real Property
Schedule 5.3 Buyer's Consents and Approvals
Schedule 6.10 Service Under Employee Plans
EXHIBITS
Exhibit A Certain Terms of Plan of Reorganization
Exhibit B Form of Escrow Agreement
<PAGE>
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 26, 1999, by
and between GENERAL AMERICAN MUTUAL HOLDING COMPANY, a Missouri mutual
insurance holding company ("Seller"), and METROPOLITAN LIFE INSURANCE
COMPANY, a New York mutual life insurance company ("Buyer").
RECITALS
WHEREAS, Seller is the owner of 1,000 shares (the "Shares")
of the common stock, no par value, of GenAmerica Corporation, a Missouri
corporation (the "Company"), which Shares constitute all of the issued
and outstanding shares of the Company's capital stock; and
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, the Shares, upon the terms and subject to the conditions set
forth herein and pursuant to a plan of reorganization containing the
terms specified in Exhibit A and such other terms as are reasonably
acceptable to Buyer and Seller (as amended from time to time, the
"Reorganization Plan") to be implemented through a proceeding (the
"Reorganization Proceeding") proposed to be commenced under the Missouri
Insurance Code.
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be bound hereby, the
parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this
-----------
Agreement, the following terms shall have the respective meanings set
forth in this Section 1.1 (such definitions to be equally applicable to
both the singular and plural forms of the terms herein defined):
"Action" means any legal, administrative, arbitration or
other similar proceeding, claim, action or governmental or regulatory
investigation of any nature.
"Actual Section 338(h)(10) Tax Liability" has the meaning
set forth in Section 8.6(c).
<PAGE>
<PAGE>
"Affiliate" means, with respect to any Person, any other
Person who directly or indirectly controls, is controlled by or is under
common control with such Person. The term "control", for the purposes
of this definition, means the power to direct or cause the direction of
the management or policies of the controlled Person.
"Agreement" means this Stock Purchase Agreement, including
the Schedules and Exhibits hereto, as it may hereafter be amended from
time to time.
"Allocation" has the meaning set forth in Section 8.6(b).
"Alternative Transaction" has the meaning set forth in
Section 6.13(b).
"Ancillary Agreements" means the Escrow Agreement, and any
other agreements entered into by Buyer and Seller in connection with the
interim arrangements described in Article VII.
"Applicable Insurance Laws" has the meaning set forth in
Section 4.17(b).
"Applicable Law" means any federal, state, local or foreign
law (including common law), statute, ordinance, rule, regulation,
permit, regulatory agreement with a Governmental Authority, order, writ,
injunction, judgment or decree applicable to a Person or any such
Person's subsidiaries, properties, assets, officers, directors,
employees or agents.
"Asserted Liability" has the meaning set forth in Section
10.4(a).
"Audit" has the meaning set forth in Section 4.14(e).
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banks in St. Louis, Missouri or New York, New York are
required to be closed for regular banking business.
"Buyer" has the meaning set forth in the first paragraph of
this Agreement.
"Claims Notice" has the meaning set forth in Section 10.4(a).
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" means the date of the Closing.
2
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"COBRA" means Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
"Company" has the meaning set forth in the Recitals of this
Agreement.
"Company Confidentiality Agreements" means those certain
agreements between Seller and the potential bidders for the Shares with
respect to the confidentiality of information about Seller, the Company
and their respective Affiliates and other related Persons that were
provided to such potential bidders by or at the request of Seller or the
Company, as such agreements may be amended from time to time.
"Company Employees" means those current or former employees
of the Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or
any RGA Subsidiary, each of whom, on the Closing Date, is either:
(a) actively employed by the Company, any Subsidiary,
Conning, any Conning Subsidiary, RGA or any RGA Subsidiary,
including an employee who, on the Closing Date, is absent from
employment due to illness, vacation, injury, military service or
other authorized absence (including an employee who is "disabled"
within the meaning of either the short-term or the long-term
disability plan currently applicable to such employee
(collectively, the "Disability Plans") or who is on approved leave
under the Family Medical and Leave Act);
(b) a former employee who, on the Closing Date, is
receiving long-term disability benefits under the Disability
Plans;
(c) a former employee who, on the Closing Date, has
previously satisfied the requirements for retiree medical and/or
life insurance coverage under the retiree medical and/or life
insurance plans currently applicable to the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA
Subsidiary;
(d) a former employee who, on the Closing Date, is
receiving COBRA benefits or who is in an election period following
a COBRA qualifying event under the terms of the plans currently
applicable to the Company, any Subsidiary, Conning, any Conning
Subsidiary, RGA or any RGA Subsidiary; or
(e) a former employee who, on the Closing Date, has
previously satisfied the requirements for benefits under the
3
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<PAGE>
terms of the retirement plan and profit sharing/401(k) plan
currently applicable to the Company, any Subsidiary, Conning, any
Conning Subsidiary, RGA or any RGA Subsidiary; but does not mean
(i) other former employees and (ii) Persons not otherwise actively
employed by the Company, any Subsidiary, Conning, any Conning
Subsidiary, RGA or any RGA Subsidiary (other than any employee
specifically included above).
"Company GAAP Financial Statements" has the meaning set
forth in Section 4.6(a).
"Confidentiality Agreement" means that certain agreement
dated August 13, 1999, between Buyer and Seller with respect to the
confidentiality of information about Seller, the Company and their
respective Affiliates and other related Persons which was provided to
Buyer by or at the request of Seller or the Company, as such agreement
may be amended from time to time.
"Conning" means Conning Corporation, a Missouri corporation.
"Conning GAAP Financial Statements" has the meaning set
forth in Section 4.6(c).
"Conning Interim Financial Statements" has the meaning set
forth in Section 4.6(c).
"Conning Subsidiary" means the Persons listed on Schedule
1.1(c).
"Consolidated Return" has the meaning set forth in Section
8.3(a).
"Contacts" has the meaning set forth in Section 6.1(a).
"Contest" has the meaning set forth in Section 8.5(a).
"Control Transaction" has the meaning set forth in Section
6.13(b).
"Contracts" has the meaning set forth in Section 4.15(a).
"Department" means the Missouri Department of Insurance.
"Director" means the Director of the Department.
"Disability Plans" has the meaning set forth in the
definition of "Company Employees."
"Election" has the meaning set forth in Section 8.6(a).
4
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"Encumbrance" means any lien, pledge, security interest,
claim, easement, limitation, restriction or encumbrance of any kind or
nature whatsoever, or any agreement to give any of the foregoing;
provided, however, that this definition of "Encumbrance" shall not
- -------- -------
include: (a) with respect to all property other than the Shares,(i) the
Supervision Order, (ii) liens for current Taxes and assessments not yet
due and payable, including, without limitation, liens for nondelinquent
ad valorem Taxes and nondelinquent statutory liens arising other than by
reason of any default on the part of Seller, the Company or any
Subsidiary for which appropriate reserves have been established and are
reflected on the relevant financial statements, (iii) such liens, minor
imperfections of title or easements on real property, leasehold estates
or personalty as do not detract from the value thereof in a material
respect and do not interfere in a material respect with the present use
of the property subject thereto, and (iv) materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other
like liens arising in the ordinary course of business or relating to any
construction, rebuilding or repair of any property leased pursuant to
any lease agreement, so long as any such lien does not materially impair
the value of such leased property; and (b) with respect to the Shares
only, (i) any such lien, pledge, security interest, claim, easement,
limitation, restriction or encumbrance arising solely as a result of any
action taken by Buyer or any of its Affiliates, and (ii) any limitation
or restriction imposed upon the transfer of the Shares by any
registration provision of the Securities Act of 1933, as amended, or any
applicable state securities or insurance law regulating the disposition
of the Shares.
"Environmental Laws" means any Applicable Law that relates
to or otherwise imposes liability or standards of conduct concerning the
environment (including ambient air, surface water, groundwater, land and
subsurface strata), natural resources or human health and safety, each
with respect to the discharges, emissions, releases, or threatened
releases, presence, manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of
Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Toxic Substances Control Act, as amended,
the Federal Water Pollution Control Act, as amended, the Clean Water
Act, as amended, the Clean Air Act, as amended, any so-called
"Superlien" law, and any other similar federal, state or local law
currently in effect.
"Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under
any Environmental Law.
5
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"ERISA Affiliate" as to any Person means any entity required
to be aggregated with such Person pursuant to Section 414(b) or (c) of
the Code and/or Section 4001(b) of ERISA.
"Escrow" means the escrow account created pursuant to and
intended to operate in accordance with the terms of the Escrow
Agreement.
"Escrow Agent" means the Escrow Agent identified in the
Escrow Agreement, which Escrow Agent shall be a commercial banking
institution with capital equal to at least $100 million and mutually
agreed to by Buyer and Seller prior to the Closing.
"Escrow Agreement" means an Escrow Agreement substantially
in the form of Exhibit B hereto.
"GAAP" means generally accepted accounting principles as
used in the United States of America as in effect at the time any
applicable financial statements were prepared or any act requiring the
application of GAAP was performed.
"GALIC" means General American Life Insurance Company, a
Missouri insurance company.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Hazardous Material" means any (i) hazardous substance,
toxic substance, chemical substance, hazardous waste, hazardous
material, contaminant, toxic pollutant, extremely hazardous substance,
chemical or pollutant (as such terms are defined by or within the
meaning of any Environmental Law), (ii) any other substance (including
any product), in relevant quantity or concentration, regulated as
harmful or potentially harmful to human health or the environment, (iii)
petroleum, petroleum products, by-products or additives, crude oil or
fraction thereof, (iv) asbestos and asbestos-containing material, (v)
polychlorinated biphenyls, (vi) lead-based paint, or (vii) radioactive
material.
"Hypothetical Stock Sales Tax Liability" has the meaning set
forth in Section 8.6(c).
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"Indemnified Litigation" has the meaning set forth in
Section 10.2.
"Indemnifying Party" has the meaning set forth in Section
10.4(a).
"Indemnitee" has the meaning set forth in Section 10.4(a).
"Independent Accounting Firm" has the meaning set forth in
Section 8.6(b).
"Intellectual Property Right" has the meaning set forth in
Section 4.12(a).
"Interim Financial Statements" has the meaning set forth in
Section 4.6(a).
"IRS" means the Internal Revenue Service.
"Leased Real Property" means the real property leased by the
Company or any Subsidiary, as tenant, together with, to the extent
leased by the Company or any Subsidiary, all buildings and other
structures, facilities or improvements currently located thereon.
"Life Insurance Subsidiaries" means the Persons listed on
Schedule 1.1(a).
"Loss" means any and all claims, losses, liabilities,
damages, costs and expenses (including attorney's, accountant's,
consultant's and expert's fees and expenses) that are imposed upon or
otherwise incurred or suffered by the relevant party.
"Material Adverse Effect" means a material adverse effect on
the financial condition or results of operations of the Company, the
Subsidiaries, Conning, the Conning Subsidiaries, RGA and the RGA
Subsidiaries, taken as a whole; provided, however, to the extent such
-------- -------
effect results from any of the following, such effect shall not be
considered a Material Adverse Effect: (i) general conditions applicable
to the economy of the United States or elsewhere, including changes in
interest rates and changes in the stock or other financial markets; (ii)
conditions generally affecting the life insurance, life reinsurance or
securities industries; or (iii) conditions or effects resulting from or
relating to the announcement or the existence or terms of this Agreement
or the consummation of the transactions contemplated hereby (including,
without limitation, any indication by any rating agency that the claims
paying ability rating of the Company or any Subsidiary will be adversely
affected as result of the consummation of the transactions contemplated
hereby); and provided, further, none of the following shall be
--------
considered a Material Adverse Effect: (a) the
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inability or any limit on the ability of any of the Life Insurance
Subsidiaries or RGA or any RGA Subsidiary to write new or renewal
insurance or reinsurance business, provided that any such limit imposed
--------
by a state insurance department is reasonably likely to be removed prior
to 60 days after the Closing Date (it being understood that Buyer will
use all commercially reasonable efforts to have any such limit removed);
(b) any changes prior to the date hereof in the value of the investment
portfolios of the Company, any Life Insurance Subsidiary, RGA, any RGA
Subsidiary, Conning or any Conning Subsidiary; (c) the Supervision Order
and the Reorganization Proceeding including any rehabilitation
proceeding involving GALIC; (d) any alleged breaches of contracts
relating to the Stable Value Business and the direct consequences
thereof; (e) any alleged default in connection with 8.525% Capital
Securities issued by a wholly owned trust of the Company or the 7.625%
Surplus Notes issued by GALIC and the direct consequences thereof; or
(f) any downgrade of the financial strength or claims paying rating of
the Company, any Subsidiary, RGA, any RGA Subsidiary, Conning or any
Conning Subsidiary.
"MEC" has the meaning set forth in Section 4.26(iv).
"Missouri Insurance Code" means title XXIV of the Revised
Statutes of Missouri, section 374 et seq., as amended from time to time.
"Owned Real Property" means the real property owned by the
Company or any Subsidiary, together with all buildings and other
structures, facilities or improvements currently located thereon, and
all fixtures, systems, equipment of the Company or any Subsidiary
attached or appurtenant thereto.
"Permits" has the meaning set forth in Section 4.10(a).
"Person" means any individual, corporation, company,
partnership (limited or general), joint venture, limited liability
company, association, trust or other entity.
"Proposal" has the meaning set forth in Section 6.13(b).
"Purchase Price" has the meaning set forth in Section 2.1.
"Records" means all records and other documents which are
used by the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA or any RGA Subsidiary, to administer, reflect, monitor, evidence or
record information relating to such Person's business or conduct and all
such records and other documents, including all such records maintained
on electronic or magnetic media, or in any electronic database system of
the Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or any
RGA Subsidiary, or necessary to comply with any Applicable Law with
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respect to the business of the Company, any Subsidiary, Conning, any
Conning Subsidiary, RGA or any RGA Subsidiary.
"Reorganization Plan" has the meaning set forth in the
Recitals of this Agreement.
"Reorganization Proceeding" has the meaning set forth in the
Recitals of this Agreement.
"Representative" has the meaning set forth in Section
6.13(a).
"RGA" means Reinsurance Group of America, Incorporated, a
Missouri corporation.
"RGA GAAP Financial Statements" has the meaning set forth in
Section 4.6(b).
"RGA Interim Financial Statements" has the meaning set forth
in Section 4.6(b).
"RGA Subsidiaries" means the Persons listed on
Schedule 1.1(d).
"Rights" means the rights issued pursuant to the Rights
Agreement.
"Rights Agreement" means the Rights Agreement, dated as of
May 4, 1993, between RGA and Chase Mellon Shareholder Services, L.L.C.
(as successor to Boatman's Trust Company), as amended.
"SAP Financial Statements" has the meaning set forth in
Section 4.6(d).
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 4.24.
"Seller" has the meaning set forth in the first paragraph of
this Agreement.
"Seller Plans" has the meaning set forth in Section 4.13(a).
"Shares" has the meaning set forth in the Recitals of this
Agreement.
"Stable Value Business" means funding agreements and
guaranteed investment contracts issued by GALIC.
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"Subsidiaries" means the Persons listed on Schedule 1.1(b).
"Supervision Order" means that order entered on August 10,
1999 placing GALIC under the Department's supervision, as such order may
from time to time be modified, amended, supplemented or replaced.
"Supplemental Schedules" has the meaning set forth in
Section 6.8(b).
"Tax" means all taxes, charges, fees and levies based upon
gross or net income, gross receipts, franchises, premiums, profits,
sales, use, value added, transfer, employment or payroll, including,
without limitation, any ad valorem, environmental, excise, license,
occupation, property, severance, stamp, withholding, or windfall profit
tax, any custom duty or other tax, together with any interest credit or
charge, penalty, addition to tax or additional amount imposed by or
payable to any Taxing Authority.
"Tax Allocation Agreements" means the tax allocation
agreements of which the Company, the Subsidiaries, RGA, the RGA
Subsidiaries, Conning or the Conning Subsidiaries are parties, which are
noted on Schedule 1.1(e), true and correct copies of which were
previously provided to Buyer.
"Tax Election Amount" has the meaning set forth in Section
8.6(c).
"Tax-Qualified Retirement Contract" means any insurance
policy or annuity that is held as part of or in connection with a tax-
qualified retirement plan described in section 401(a), section 403(a) or
section 403(b) of the Code or as part of or in connection with any
individual retirement annuity described in section 408(b) of the Code.
"Tax Return" means with respect to any corporation or group
of corporations, all reports, estimates, extension requests, information
statements and returns relating to, or required to be filed in
connection with, any payment of any Tax.
"Taxing Authority" means the Internal Revenue Service and
any other domestic or foreign Governmental Authority responsible for the
administration of any Tax.
"Undisputed Amount" has the meaning set forth in Section
8.6(d).
"Wire Transfer" means a payment in immediately available
funds by wire transfer in lawful money of the United States of America
to such account or accounts as shall have been designated by notice to
the paying party.
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ARTICLE II
PURCHASE OF SHARES
Section 2.1 Purchase of Shares. Upon the terms and subject
------------------
to the conditions set forth in this Agreement, at the Closing Seller
shall sell to Buyer, and Buyer shall purchase from Seller, the Shares
for a purchase price of One Billion Two Hundred Million Dollars
($1,200,000,000), subject to adjustment in accordance with Section 2.2
(as so adjusted, the "Purchase Price"). The Purchase Price shall be
deposited into the Escrow.
Section 2.2 Adjustment of Purchase Price. The Purchase
----------------------------
Price shall be adjusted as follows:
(a) In the event that all approvals required from
Governmental Authorities (other than the Department or the court before
which the Reorganization Proceeding is brought) have been obtained and
in the event that the Closing Date is a date 120 or more but less than
180 calendar days after the date of this Agreement, the Purchase Price
shall be reduced by One Million Dollars ($1,000,000) for each calendar
day in the period commencing on the later of the date that the last
approval from a Governmental Authority (other than the Department or the
court before which the Reorganization Proceeding is brought) has been
obtained or the 120th day after the date of this Agreement and ending on
the Closing Date (inclusive).
(b) In the event that all approvals required from
Governmental Authorities (other than the Department or the court before
which the Reorganization Proceeding is brought) have been obtained, and
in the event that the Closing Date is a date 180 or more calendar days
after the date of this Agreement, the Purchase Price shall be reduced by
One Million Dollars ($1,000,000) for each calendar day in the period
commencing on the 120th day and ending on the 179th day after the date
of this Agreement (inclusive), and Two Million Dollars ($2,000,000) for
each calendar day in the period commencing on the 180th day after the
date of this Agreement and ending on the Closing Date (inclusive);
provided, however, that any reductions in the Purchase Price pursuant
- -------- -------
to this Section 2.2(b) shall not commence until the date that the last
approval from a Governmental Authority (other than the Department or the
court before which the Reorganization Proceeding is brought) has been
obtained if so obtained after the 120th day after the date of this
Agreement.
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ARTICLE III
THE CLOSING
Section 3.1 Closing. Upon the terms and subject to the
-------
conditions of this Agreement, the closing of the purchase and sale of
the Shares (the "Closing") shall be at 10:00 A.M. local time at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street,
New York, New York 10019, on the second Business Day following the date
on which all of the conditions set forth in Article IX (other than those
conditions designating instruments, certificates or other documents to
be delivered at the Closing) shall have been satisfied or waived, or
such other location, date and time as Buyer and Seller shall agree upon
in writing.
Section 3.2 Closing Deliveries. At the Closing, the
------------------
parties hereto shall take the following actions:
(a) Seller shall deliver to Buyer one or more certificates
representing all of the Shares, duly executed in blank or
accompanied by stock powers duly executed in blank, in proper form
for transfer, with all appropriate stock transfer tax stamps
affixed, such Shares being free and clear of all Encumbrances;
(b) Except as set forth on Schedule 3.2(b), Seller shall
deliver to Buyer certificates as to the good standing of the
Company and the Subsidiaries in the respective jurisdictions of
their incorporation, together with a copy of the Certificate of
Incorporation of the Company certified by the Secretary of State
of the State of Missouri;
(c) Seller shall deliver to Buyer a copy of any approvals
required in connection with the Reorganization Proceeding;
(d) Seller shall deliver to Buyer resolutions of the board
of directors of Seller, certified by the Secretary or Assistant
Secretary of Seller, approving and authorizing the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby;
(e) Seller shall deliver a certificate of the Secretary or
Assistant Secretary of Seller as to the incumbency of the officers
executing this Agreement and the Ancillary Agreements and the
genuineness of their signatures;
(f) Seller shall deliver the minute books, stock ledgers,
corporate seal and all other corporate books and records of the
Company;
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(g) Buyer shall deliver to the Escrow Agent the Purchase
Price by Wire Transfer;
(h) Buyer shall deliver to Seller a receipt evidencing
receipt by Buyer of the Shares;
(i) Buyer shall deliver to Seller resolutions of the board
of directors of Buyer, certified by the Secretary or Assistant
Secretary of Buyer, approving and authorizing the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby;
(j) Seller shall deliver to Buyer resolutions of the board
of directors of RGA, certified by the Secretary or Assistant
Secretary of RGA, approving and authorizing the indirect
acquisition by Buyer of RGA Common Shares for purposes of
Section 351.459 of the Missouri Revised Statutes, making the
Rights Agreement inapplicable to the transactions contemplated
hereby and by the Ancillary Agreements and taking such actions as
are necessary to provide that Section 351.407 of the Missouri
Revised Statutes does not apply to the transactions contemplated
hereby and by the Ancillary Agreements; and
(k) Seller shall deliver to Buyer resolutions of the board
of directors of Conning, certified by the Secretary or Assistant
Secretary of Conning, approving and authorizing the indirect
acquisition by Buyer of Conning common shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 4.1 Organization and Related Matters. (a) The
--------------------------------
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Missouri and has the corporate
power and authority to carry on its business as it is now being
conducted and to own, lease or operate all of its properties and assets,
and is duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the nature of the business conducted by it
or the character of the assets owned by it makes such qualification or
licensing necessary, except where the failure to be so qualified or
licensed would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Seller is a mutual insurance holding company duly
incorporated, validly existing and in good standing under the laws of
the State of Missouri.
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Section 4.2 Subsidiaries. (a) Except as set forth on
------------
Schedule 4.2, all of the outstanding shares of capital stock of the
Subsidiaries, Conning, the Conning Subsidiaries, RGA and the RGA
Subsidiaries are owned beneficially and of record, directly or
indirectly, by the Company, free and clear of any Encumbrances. Except
as set forth on Schedule 4.2, each Subsidiary, Conning, each Conning
Subsidiary, RGA and each RGA Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation, and has the corporate power and authority to carry on
its business as now being conducted and to own, lease and operate all of
its properties and assets. Each Subsidiary, Conning, each Conning
Subsidiary, RGA and each RGA Subsidiary is duly licensed or qualified to
do business and is in good standing and has all insurance licenses in
each jurisdiction in which the nature of the business conducted by it or
the character of the assets owned by it makes such qualification or
licensing necessary, except where the failure to be so qualified or
licensed would not, individually or in the aggregate, have a Material
Adverse Effect. Each insurance license of the Subsidiaries, including
but not limited to each authorization to transact reinsurance, is in
full force and effect without amendment, limitation or restriction other
than as described in Schedule 4.2, and, except for the Supervision Order
and the Reorganization Proceeding (including any rehabilitation
proceeding involving GALIC), Seller does not have knowledge of any
event, inquiry or proceeding which could reasonably be expected to lead
to the revocation, amendment, failure to renew, limitation, suspension
or restriction of any such insurance license, except, in each case, such
failures to be in full force and effect and such revocations,
amendments, failures to renew, limitations, suspensions and restrictions
that would not, individually or in the aggregate, have a Material
Adverse Effect. Other than Conning, the Conning Subsidiaries, RGA and
the RGA Subsidiaries, the Company has no direct or indirect subsidiaries
except as set forth on Schedule 1.1(b). Conning has no direct or
indirect subsidiaries except the Conning Subsidiaries. RGA has no
direct or indirect subsidiaries except the RGA Subsidiaries.
(b) Except as set forth on Schedule 4.2, and except for
the stock of the Subsidiaries, Conning, each Conning Subsidiary, RGA and
each RGA Subsidiary and portfolio investments made in the ordinary
course of business (consistent with past practice), there are no
corporations, partnerships or other entities in which the Company owns,
of record or beneficially, any direct or indirect equity interest or any
right (contingent or otherwise) to acquire the same.
Section 4.3 Authority; No Violation. (a) Seller has full
-----------------------
corporate power and authority to execute and deliver this Agreement and,
assuming the approval of the Director required by the Supervision Order
and the Reorganization
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Proceeding (including any rehabilitation proceeding involving GALIC), to
consummate the transactions contemplated hereby, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by all requisite
corporate action on the part of Seller, and no other corporate
proceedings on the part of Seller are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Seller and
(assuming (i) the approval of the Director required by the Supervision
Order, (ii) any approvals required in connection with the Reorganization
Proceeding and (iii) the due authorization, execution and delivery of
this Agreement by Buyer) constitute valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms.
(b) Except as set forth on Schedule 4.3(b) and assuming
that the consents and approvals referred to in Section 4.4 are duly
obtained, neither the execution and delivery of this Agreement by
Seller, nor the consummation by Seller of the transactions contemplated
hereby to be performed by it, nor compliance by Seller with any of the
terms or provisions hereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of Seller, the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA and any RGA Subsidiary,
or (ii) (A) violate in any respect any Applicable Law with respect to
Seller, the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA and any RGA Subsidiary, or any of their respective properties or
assets, (B) result in the creation of any Encumbrance upon any of the
Shares or upon any of the assets or properties of the Seller, the
Company, any Subsidiary, Conning, any Conning Subsidiary, RGA and any
RGA Subsidiary, or (C) violate, conflict with, result in a breach of any
provision of, or constitute a default under, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument
or obligation to which Seller, the Company, any Subsidiary, Conning, any
Conning Subsidiary, RGA and any RGA Subsidiary, is a party, or by which
Seller, the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA and any RGA Subsidiary, or any of their respective properties or
assets, may be bound or affected, except for such violations,
Encumbrances, conflicts, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.4 Consents and Approvals. Except for (i) the
----------------------
approval of the Director required by the Supervision Order, (ii) any
approvals or orders required in connection with the Reorganization
Proceeding, (iii) approvals or consents of Governmental Authorities
under the insurance holding company laws of Missouri, California, New
York, Illinois, and Texas, (iv) consents or approvals required under the
Investment Company Act of 1940, as amended, the Investment Advisers Act
of 1940, as amended, or the Securities Exchange Act of 1934, as amended,
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(v) the applicable filings under the HSR Act, (vi) the matters set forth
on Schedule 4.4, and (vii) such other filings, notifications,
authorizations, consents or approvals the failure to make or obtain
which would not, individually or in the aggregate, have a Material
Adverse Effect, no consents or approvals of or filings or registrations
with any Governmental Authority or third party are necessary in
connection with the execution and delivery by Seller of this Agreement,
and the consummation by Seller of the transactions contemplated hereby.
Seller is not aware of any consents specified in the preceding sentence
that it believes it is not reasonably likely to obtain. Seller has
delivered to Buyer a true and correct copy of the Supervision Order.
Section 4.5 Stock Ownership. Seller owns beneficially and
---------------
of record all of the Shares, free and clear of all Encumbrances. Upon
consummation of the transactions contemplated hereby, Buyer will own all
of the issued and outstanding capital stock of the Company free and
clear of all Encumbrances. Upon approval of the Director required by
the Supervision Order and any approvals required in connection with the
Reorganization Proceeding, Seller shall have the full and unrestricted
power to sell, assign, transfer and deliver the Shares to Buyer upon the
terms and subject to the conditions of this Agreement free and clear of
Encumbrances. There are no shares of capital stock of the Company
issued or outstanding other than the Shares. All of the Shares are duly
authorized, validly issued, fully paid, nonassessable and free of any
preemptive rights. There is no outstanding option, warrant, right,
subscription, call, unsatisfied preemptive right, convertible or
exchangeable security, or other agreement or right of any kind to
purchase or otherwise acquire any capital stock of the Company. Except
as set forth on Schedule 4.5, all of the issued and outstanding shares
of capital stock of the Subsidiaries, RGA, the RGA Subsidiaries, Conning
and the Conning Subsidiaries are duly authorized, validly issued, fully
paid, nonassessable and free of any preemptive rights, and are owned
beneficially and of record by the Company or another of the
Subsidiaries, free and clear of all Encumbrances. Except as set forth
on Schedule 4.5, there is no outstanding option, warrant, right,
subscription, call, unsatisfied preemptive right, convertible or
exchangeable security, or other agreement or right of any kind to
purchase or otherwise acquire, in each case from the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA Subsidiary,
any capital stock of any Subsidiary, Conning, any Conning Subsidiary,
RGA or any RGA Subsidiary. Except as set forth on Schedule 4.5, there
is no outstanding security of any kind convertible into or exchangeable
for the capital
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stock of any Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA
Subsidiary and there is no outstanding contract or other agreement of
Seller, the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA or any RGA Subsidiary to purchase, redeem or otherwise acquire any
outstanding shares of capital stock or any other equity security of the
Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA
Subsidiary.
Section 4.6 Financial Statements. (a) Seller has
--------------------
previously furnished Buyer with true and correct copies of audited
consolidated financial statements for the Company and the Subsidiaries
as of and for the years ended December 31, 1998, 1997 and 1996
(collectively, the "Company GAAP Financial Statements") and interim
unaudited consolidated financial statements for the Company and the
Subsidiaries as of and for the quarterly periods ended March 31, 1999,
and June 30, 1999 (collectively, the "Interim Financial Statements").
Seller has also previously furnished Buyer with a summary of adjustments
proposed to be made to certain future financial statements. Subject to
the adjustments referred to in the second sentence of this Section 4.6,
each of the balance sheets included in the Company GAAP Financial
Statements fairly presents in all material respects the financial
position of the Company and the Subsidiaries as of its date and each of
the statements of operations and cash flow statements included in the
Company GAAP Financial Statements fairly presents in all material
respects the results of operations and cash flows of the Company and the
Subsidiaries for the period therein set forth, in each case in
accordance with GAAP applied on a consistent basis (except as may be
disclosed in the notes thereto). Subject to the adjustments referred to
in the second sentence of this Section 4.6, the Interim Financial
Statements were prepared in a manner consistent with that employed in
the Company GAAP Financial Statements. The Interim Financial Statements
do not contain footnote disclosures and are subject to normal recurring
year-end adjustments, but otherwise fairly present in all material
respects the financial position and results of operations of the Company
and the Subsidiaries for the periods and as of the dates therein set
forth.
(b) Seller has previously furnished Buyer with true and
correct copies of audited consolidated financial statements for RGA and
the RGA Subsidiaries as of and for the years ended December 31, 1998,
1997 and 1996 (collectively, the "RGA GAAP Financial Statements") and
interim unaudited consolidated financial statements for RGA and the RGA
Subsidiaries as of and for the quarterly periods ended March 31, 1999,
and June 30, 1999 (collectively, the "RGA Interim Financial
Statements"). Each of the balance sheets included in the RGA GAAP
Financial Statements fairly presents in all material respects the
financial position of RGA and the RGA Subsidiaries as of its date and
each of the statements of operations and cash flow statements included
in the RGA GAAP Financial Statements fairly presents in all material
respects the results of operations and cash flows of RGA and the RGA
Subsidiaries for the period therein set forth, in each case in
accordance with GAAP applied on a consistent basis (except as may be
disclosed in the notes thereto). The RGA Interim
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Financial Statements were prepared in a manner consistent with that
employed in the RGA GAAP Financial Statements. The RGA Interim
Financial Statements do not contain footnote disclosures and are subject
to normal recurring year-end adjustments, but otherwise fairly present
in all material respects the financial position and results of
operations of RGA and the RGA Subsidiaries for the periods and as of the
dates therein set forth.
(c) Seller has previously furnished Buyer with true and
correct copies of audited consolidated financial statements for Conning
and the Conning Subsidiaries as of and for the years ended December 31,
1998, 1997 and 1996 (collectively, the "Conning GAAP Financial
Statements") and interim unaudited consolidated financial statements for
Conning and the Conning Subsidiaries as of and for the quarterly periods
ended March 31, 1999, and June 30, 1999 (collectively, the "Conning
Interim Financial Statements"). Each of the balance sheets included in
the Conning GAAP Financial Statements fairly presents in all material
respects the financial position of Conning and the Conning Subsidiaries
as of its date and each of the statements of operations and cash flow
statements included in the Conning GAAP Financial Statements fairly
presents in all material respects the results of operations and cash
flows of Conning and the Conning Subsidiaries for the period therein set
forth, in each case in accordance with GAAP applied on a consistent
basis (except as may be disclosed in the notes thereto). The Conning
Interim Financial Statements were prepared in a manner consistent with
that employed in the Conning GAAP Financial Statements. The Conning
Interim Financial Statements do not contain footnote disclosures and are
subject to normal recurring year-end adjustments, but otherwise fairly
present in all material respects the financial position and results of
operations of Conning and the Conning Subsidiaries for the periods and
as of the dates therein set forth.
(d) Seller has previously furnished Buyer with copies of
audited statutory financial statements of each Life Insurance Subsidiary
and each RGA Subsidiary as of and for the years ended December 31, 1998,
1997 and 1996, and unaudited statutory financial statements of each Life
Insurance Subsidiary and each RGA Subsidiary as of and for the period
ended June 30, 1999, prepared in conformity with accounting practices
prescribed or permitted by their respective jurisdictions of domicile
(collectively, the "SAP Financial Statements"). Each of the balance
sheets included in the SAP Financial Statements fairly presents in all
material respects the financial position of the reporting Person as of
its date and each of the statements of operations and cash flows
included in the SAP Financial Statements fairly presents in all material
respects the results of operations and cash flows of the reporting
Person for the period therein set forth, in each case in accordance with
statutory accounting practices prescribed or permitted by the
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applicable jurisdiction on a consistent basis. No material deficiencies
have been asserted by any Governmental Authority with respect to the SAP
Financial Statements, and the SAP Financial Statements comply in all
material respects with all Applicable Law.
(e) The books of account and other financial records of
the Company and each material Subsidiary: (i) reflect all material
items of income and expense and all material assets and liabilities
required to be reflected therein in accordance with GAAP or statutory
accounting principles, as applicable, (ii) are in all material respects
complete and correct, and (iii) have been maintained in accordance with
what the Company or such Subsidiary believes to be good business,
accounting and actuarial practices, as applicable.
Section 4.7 No Other Broker. Other than Morgan Stanley &
---------------
Co. Incorporated and Goldman, Sachs & Co., the fees and expenses of
which will be paid by Seller, no broker, finder or similar intermediary
has acted for or on behalf of Seller or the Company or the Subsidiaries,
or is entitled to any broker's, finder's or similar fee or other
commission from Seller, the Company or the Subsidiaries in connection
with this Agreement or the transactions contemplated hereby.
Section 4.8 Legal Proceedings. Except (i) as set forth on
-----------------
Schedule 4.8, (ii) for the Supervision Order, (iii) for the
Reorganization Proceeding, including any rehabilitation proceeding
involving GALIC, and (iv) for Actions arising in the ordinary course of
business consistent with past practice from or related to the
obligations of any Life Insurance Subsidiary, RGA or any RGA Subsidiary
under any insurance policy or similar instrument written, assumed or
reinsured by such Life Insurance Subsidiary, RGA or RGA Subsidiary,
neither the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA nor any RGA Subsidiary is a party to any, and there are no pending
or, to the knowledge of Seller, threatened, Actions against or otherwise
affecting the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA or any RGA Subsidiary, or any of their respective properties or
assets, or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Ancillary Agreements which, if
adversely determined, would have, individually or in the aggregate, a
Material Adverse Effect, and there is no injunction, order, judgment,
decree or regulatory restriction imposed upon the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA Subsidiary,
or any of their respective properties, or assets which has had or would
have, individually or in the aggregate, a Material Adverse Effect.
Section 4.9 Undisclosed Liabilities. Except for (i) those
-----------------------
liabilities or items set forth on Schedule 4.9 or any other Schedule to
this Agreement, (ii) those liabilities that may
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result from any alleged breaches of any contracts constituting Stable
Value Business, (iii) those liabilities that may result from any alleged
default in connection with the 8.525% Capital Securities issued by a
wholly owned trust of the Company or the 7.625% Surplus Notes issued by
GALIC, (iv) those liabilities that are reflected or reserved against on
the Interim Financial Statements as of June 30, 1999, and
(vi) liabilities incurred in the ordinary course of business consistent
with past practice since June 30, 1999, no liabilities have been
incurred by the Company or the Subsidiaries other than those that would
not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.10 Compliance with Applicable Law; Insurance
-----------------------------------------
Operations. (a) Except as set forth on Schedule 4.10, each of the
- ----------
Company and the Subsidiaries holds in full force and effect all
licenses, franchises, permits and authorizations, other than
Environmental Permits (which are addressed solely in Section 4.21)
("Permits"), necessary for the lawful ownership and use of their
respective properties and assets and the conduct of their respective
businesses under and pursuant to Applicable Laws relating to the Company
and the Subsidiaries, and there has been no violation of any Permit nor
has the Seller, the Company or any Subsidiary received written notice
asserting any such violation, except for such failures to be in full
force and effect and for such violations, if any, which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth on Schedule 4.10, each of the
Company and the Subsidiaries is in compliance with each Applicable Law
relating to it or any of its assets, properties or operations, except
where noncompliance with any such Applicable Law would not, individually
or in the aggregate, have a Material Adverse Effect.
(c) Each Subsidiary which is either a broker-dealer or an
investment advisor is duly registered as such with all applicable
Governmental Authorities, including without limitation the SEC and state
securities or "blue sky" authorities (with such registrations being in
full force and effect), and is in good standing, except for failures to
be so registered or in good standing as would not, individually or in
the aggregate, have a Material Adverse Effect.
(d) ERISA Compliance. Except as set forth on Schedule
----------------
4.10 with respect to any actions of the Company or any of its
Subsidiaries or Affiliates, or agents, directors, officers or employees
of such entities, where such entities or parties have acted or could be
deemed to have acted as an ERISA fiduciary (within the meaning of
Section 3(21)(A) of ERISA) or have performed services as a result of
which any such person was a party in interest (within the meaning of
Section 3(14) of ERISA) or a disqualified person (within the meaning of
Section 4975(e)(2) of the Code), such actions have been in compliance
20
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with ERISA's and the Code's fiduciary and prohibited transaction
requirements (to the extent applicable), except for such violations as
would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 4.11 Absence of Certain Changes. Except
--------------------------
(i) as set forth on Schedule 4.11, (ii) with respect only to clause (x)
and subclauses (a), (k) and (l) (insofar as (l) applies to (a) and (k))
of clause (y), as a result of the Supervision Order and the
Reorganization Proceeding, including any rehabilitation proceeding
involving GALIC, (iii) with respect only to clause (x) and subclauses
(a), (k) and (l)(insofar as (l) applies to (a) and (k)) of clause (y) as
a result of any alleged breaches of Stable Value Business, (iv) with
respect only to clauses (x) and subclauses (a), (k) and (l) (insofar as
(l) applies to (a) and (k)) of clause (y) as a result of any alleged
default in connection with the 8.525% Capital Securities issued by a
wholly owned trust of the Company or the 7.625% Surplus Notes issued by
GALIC, (v) with respect only to clauses (x) and subclauses (a), (k) and
(l) (insofar as (l) applies to (a) and (k)) of clause (y),as a result of
any downgrade of the financial strength and claims paying ability
ratings of the Company, any Subsidiary, RGA, any RGA Subsidiary, Conning
or any Conning Subsidiary, (vi) as reflected on the Company GAAP
Financial Statements, the Interim Financial Statements, the RGA GAAP
Financial Statements, the RGA Interim Financial Statements, the Conning
GAAP Financial Statements or the Conning Interim Financial Statements,
or (vii) as otherwise contemplated or permitted by this Agreement or the
Ancillary Agreements, since December 31, 1998, the Company and its
Subsidiaries, taken as a whole, (x) have conducted their business in the
ordinary course of business consistent with past practice and (y) have
not:
(a) made any change in its fiscal year, or, if a Life
Insurance Subsidiary, made any change in underwriting,
reinsurance, marketing, claim processing and payment, reserving,
financial or accounting practices or policies of any Life
Insurance Subsidiary, except as required by law, GAAP or statutory
accounting practices of its state of domicile or as would not,
individually or in the aggregate, have a Material Adverse Effect;
(b) issued, sold, pledged, encumbered or disposed of, any
of its capital stock, notes, bonds or other securities, or any
option, warrant or other right to acquire the same;
(c) split, combined or reclassified any shares of capital
stock, or redeemed, repurchased or otherwise acquired any of its
capital stock or declared, made or paid any dividends or
distributions (whether in cash, securities or other property) to
the holders of its capital stock;
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(d) merged with, entered into a consolidation with or
acquired an interest of 5% or more in any Person or acquired, in
one transaction of a series of transactions, a substantial portion
of the assets or business of any Person or any division or line of
business thereof, or otherwise acquired any assets or securities
(other than fixed maturity securities, cash and short-term
investments) with an aggregate value in excess of $10,000,000
other than in the ordinary course of the Company's business
consistent with past practice;
(e) made any capital expenditure or commitment for any
capital expenditure including, without limitation, capital lease
obligations, in excess of $5,000,000 in the aggregate;
(f) incurred indebtedness for money borrowed in excess of
$10,000,000 in the aggregate;
(g) made any loan to, guaranteed any indebtedness for
money borrowed of, or otherwise incurred such indebtedness on
behalf of, any Person in excess of $5,000,000 in the aggregate
other than investments made in the ordinary course of business;
(h) except as required by law, rule or regulation or any
collective bargaining agreement or involving increases in the
ordinary course of business consistent with past practice,
(i) granted any increase, or announced any increase, in the wages,
salaries, compensation, bonuses, incentives, pension or other
benefits payable to any of its senior officers who in the
preceding 12 months received compensation in excess of $200,000,
or any director including, without limitation, any increase or
change pursuant to any Seller Plan, or (ii) established or
promised to establish any plan or benefit program or increased or
promised to increase any benefits under any Seller Plan (including
any severance arrangement or employee retention arrangement);
(i) amended or restated its charter or Bylaws (or other
organizational documents);
(j) paid, discharged, settled or satisfied any claim,
liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) other than (i) for an amount
of $5,000,000 or less, (ii) an insurance claim arising in the
ordinary course of business consistent with past practice,
(iii) ordinary course repayment of indebtedness or payment of
contractual obligations when due and (iv) payments made to holders
of contracts relating to the Stable Value Business;
22
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(k) renewed, amended, modified or terminated any of its
contracts, agreements or arrangements, or otherwise waived,
released, cancelled or assigned any of its rights, claims or
benefits thereunder except renewals, amendments, modifications and
terminations as would not, individually or in the aggregate, have
a Material Adverse Effect; or
(l) agreed, whether in writing or otherwise, to take any
of the actions specified in this Section 4.11, except as expressly
contemplated by this Agreement.
Section 4.12 Technology and Intellectual Property.
------------------------------------
(a) Except as set forth on Schedule 4.12, the Company or a Subsidiary
owns or possesses, or has rights or licenses to use, the patents,
trademarks (including common law trademarks), service marks, copyrights
(including any registrations or applications relating to any of the
foregoing), trade names, technology, trade secrets, inventions, know-how
and computer programs which are reasonably necessary to carry on its
business as currently conducted (each, an "Intellectual Property
Right"), and neither the Company nor any Subsidiary has engaged in any
infringement of the intellectual property rights of others with respect
to any such Intellectual Property Right that, if such infringement is
determined to be unlawful, is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect. Except as set forth on
Schedule 4.12, the execution and delivery of this Agreement and the
Ancillary Agreements by Seller, and the consummation of the transactions
contemplated hereby and thereby, will neither cause the Company or any
Subsidiary to be in violation or default under any licenses, sublicenses
or other agreements to which the Company or any Subsidiary is a party
and pursuant to which the Company or any Subsidiary is authorized to use
any Intellectual Property Right, nor entitle any other party to any such
license, sublicense or agreement to terminate such license, sublicense
or agreement, except where any such violation, default, termination or
modification would not, individually or in the aggregate, have a
Material Adverse Effect. Schedule 4.12 sets forth a complete and
correct list, as of the date hereof, of the trademarks that are material
to the business as currently conducted by the Company or any Subsidiary
and all registrations and applications for registration of any
Intellectual Property Rights. Except as set forth on Schedule 4.12,
Seller has no knowledge of any infringement by third parties of the
Intellectual Property Rights.
(b) Except as set forth on Exhibit 4.12, the use of any
Intellectual Property Right in the business as currently conducted by
the Company or any Subsidiary does not breach, violate or infringe any
intellectual property rights of any third party or (except for the
payment of computer software or other licensing fees) does not require
any payment for the use of any patent, trade name, service mark, trade
secret, trademark,
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copyright or other intellectual property right or technology owned by
any third party except where any such breaches, violations,
infringements, or payments, would not, individually or in the aggregate,
have a Material Adverse Effect.
Section 4.13 Employee Benefit Plans; ERISA. (a) Each
-----------------------------
"employee benefit plan" (as such term is defined in Section 3(3) of
ERISA) or other employment or compensation plan, agreement or
arrangement (whether or not subject to ERISA) under which any Company
Employees, or any current or former director or independent contractor
of the Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or
any RGA Subsidiary, in their capacity as such, shall have any benefit
entitlements as of the Closing Date or in which any of such Persons
otherwise participates (collectively, the "Seller Plans") for which
Seller will have no liability or responsibility after the Closing Date
is listed on Schedule 4.13, other than any Seller Plan which does not
have an aggregate lifetime present value liability in excess of
$500,000.
(b) Except as set forth on Schedule 4.13 each Seller Plan
has been maintained and administered at all times in compliance with its
terms and Applicable Law including, in the case of any Seller Plan
intended to be qualified under Code Section 401(a), the provisions of
Code Section 401(a), there is no audit, investigation or proceeding
pending or threatened involving any Seller Plan before the IRS,
Department of Labor or any other Governmental Authority, there has not
occurred with respect to any Seller Plan (and no person or entity is
contractually bound to enter into) any transaction constituting a non-
exempt "prohibited transaction" within the meaning of Section 4975 of
the Code or Section 406 of ERISA, and a determination letter has been
received from the IRS as to each Seller Plan that is intended to be
qualified under Code Section 401(a), and neither Seller nor Company is
aware of any circumstances likely to result in the revocation of any
such determination letter except where any such non-compliance,
prohibited transaction or failure to have a determination letter would
not, individually or in the aggregate, have a Material Adverse Effect.
(c) None of Seller, RGA or Conning nor any ERISA Affiliate
thereof has incurred or expects to incur any liability under Title IV of
ERISA (other than for payment of Pension Guaranty Corporation insurance
premiums) or Section 412 of the Code which would have, individually or
in the aggregate, a Material Adverse Effect. None of such entities has
any obligation to contribute to, or any liability under, any
multiemployer plan (as defined in ERISA Section 4001(a)(3)). Based on
the most recent actuarial valuations, the accrued liabilities of the
Seller Plans subject to Title IV of ERISA do not exceed such Seller
Plans' assets.
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Section 4.14 Taxes. Except as set forth on
-----
Schedule 4.14:
(a) Each of Seller, the Company (and any affiliated group
of which the Company is a member) and the Subsidiaries has timely
filed with the appropriate taxing authorities all Tax Returns
required to be filed (taking into account all valid extensions)
and all such Tax Returns are complete and accurate;
(b) All Taxes shown in the Tax Returns referred to in
Section 4.14(a) that are due and payable by the Company and the
Subsidiaries before the date hereof have been timely paid;
(c) There are no Encumbrances on any of the assets of the
Company or any Subsidiary that arose in connection with any
failure (or alleged failure) to pay any Taxes (other than Taxes
that are not due as of the date hereof);
(d) The Company and the Subsidiaries have withheld and
paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party;
(e) No federal, state, local or foreign audit or other
administrative proceeding or court proceeding (each an "Audit")
exists or has been initiated with regard to Taxes or Tax Returns
of the Company or any Subsidiary, and neither the Company nor any
Subsidiary has received any notice that any such Audit is pending
or threatened with respect to any Taxes due from or with respect
to the Company or any Subsidiary or any Tax Return filed by or
with respect to the Company or any Subsidiary;
(f) Neither the Company nor any Subsidiary has requested
an extension of time within which to file any Tax Return in
respect of any taxable year which has subsequently not been filed
and no outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any
Taxes or Tax Returns has been given by or on behalf of the Company
or any Subsidiary;
(g) No power of attorney has been granted by or with
respect to the Company or any Subsidiary with respect to any
matter relating to Taxes; and
(h) Any representation or warranty with respect to Taxes
contained in this Section 4.14 shall be deemed to be accurate
unless an inaccuracy contained therein would have, individually or
in the aggregate, a Material Adverse Effect.
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Section 4.15 Contracts. (a) Schedule 4.15 sets forth
---------
a complete and accurate list, as of the date hereof, of (i) all
contracts to which the Company or any Subsidiary is a party (excluding
policies of insurance or reinsurance in the ordinary course of business)
or by which any of their respective assets are bound which contain
obligations of the Company or any Subsidiary in excess of $5,000,000,
and (ii) all contracts and agreements that limit or purport to limit the
Company, GALIC, Conning or RGA to compete in any line of business or
with any Person or in any geographic area (collectively, the
"Contracts"). Neither Seller, the Company, nor any Subsidiary has
received written notice of a cancellation of or an intent to cancel any
Contract whose cancellation would have, individually or in the
aggregate, a Material Adverse Effect.
(b) Except as set forth on Schedule 4.15, assuming the due
authorization, execution and delivery by the other parties thereto, each
Contract is legal, valid, binding, enforceable against the other parties
thereto and in full force and effect, and will not cease to be in full
force and effect on terms identical to those currently in effect as a
result of the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements, nor will the consummation of the
transactions contemplated by this Agreement constitute a breach or
default under such Contract, except such failures to be enforceable or
to be in full force and effect or such breaches or defaults as would not
have, individually or in the aggregate, a Material Adverse Effect.
(c) Except as set forth on Schedule 4.15, assuming the due
authorization, execution and delivery by the other parties thereto,
neither the Company nor any Subsidiary is in breach of, or default
under, any Contract and, to the knowledge of Seller, no other party to
any Contract is in beach thereof or default thereunder, except for such
breaches or defaults as would not have, individually or in the
aggregate, a Material Adverse Effect.
Section 4.16 Portfolio Investments. Seller has
---------------------
previously delivered to Buyer true and complete lists of all assets held
in the investment portfolios of the Life Insurance Subsidiaries as of
August 11, 1999.
Section 4.17 Liabilities and Reserves. (a) The
------------------------
consolidated balance sheets as of December 31, 1998 and June 30, 1999
included as part of the Company GAAP Financial Statements and the
Interim Financial Statements, respectively, reflect adequate provision
for all obligations and liabilities of the Company and the Subsidiaries,
Conning and the Conning Subsidiaries and RGA and the RGA Subsidiaries,
at such date for which provision is required under the accounting
principles specified in Section 4.6 pursuant to which such balance
sheets were prepared, and except to the extent specifically disclosed,
26
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<PAGE>
reflected or reserved against in such balance sheets and the notes
thereto, none of the Company and the Subsidiaries, Conning and the
Conning Subsidiaries and RGA and the RGA Subsidiaries, has any material
obligations or liabilities of any nature (whether accrued, absolute,
contingent or otherwise, and whether or not due, or arising out of
transactions entered into, or any state of facts existing, prior to such
date) required under such accounting principles to be set forth on a
consolidated balance sheet of any of the Company and the Subsidiaries or
in the notes thereto, except (x) liabilities incurred since December 31,
1998, in the ordinary course of business consistent with past practice
and (y) as disclosed in Schedule 4.17(a).
(b) Each reserve and other liability amount in respect of
the insurance business, including without limitation reserve and other
liability amounts in respect of insurance policies, annuity contracts or
guaranteed investment or reinsurance, coinsurance or other similar
insurance contracts, whether direct or assumed by reinsurance,
established or reflected in the respective Annual Statements for the
year ended December 31, 1998, and the Quarterly Statements for the
period ended June 30, 1999 of each of the Life Insurance Subsidiaries
was determined in accordance with generally accepted actuarial standards
consistently applied, was based on actuarial assumptions that were in
accordance with or stronger than those called for in relevant policy and
contract provisions, is fairly stated in accordance with sound actuarial
principles and is in compliance with the requirements of the insurance
laws, rules and regulations of their respective jurisdictions of
domicile as well as those of any other applicable jurisdictions
(collectively, "Applicable Insurance Laws"). Except as set forth on
Schedule 4.17(b), such reserves and liability amounts with respect to
each Life Insurance Subsidiary were adequate to cover the total amount
of all matured and unmatured liabilities and obligations of such Life
Insurance Subsidiary under all its outstanding insurance policies,
funding agreements and annuity, guaranteed interest, reinsurance,
coinsurance and other similar contracts as of December 31, 1998 or June
30, 1999, as appropriate. Such investment assumptions were reasonable
as of December 31, 1998 or June 30, 1999, as appropriate. Each Life
Insurance Subsidiary owns assets that qualify as admitted assets under
Applicable Insurance Laws in an amount at least equal to the sum of all
such reserves and liability amounts and its minimum statutory capital
and surplus as required by Applicable Insurance Laws.
(c) Except for regular periodic assessments in the
ordinary course of business and except as set forth in Schedule 4.8, no
claim or assessment is pending nor, to the knowledge of the Seller,
threatened against any Life Insurance Subsidiary by any State insurance
guaranty association in connection with such association's fund relating
to insolvent insurers.
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Section 4.18 Title to Assets. Except as set forth in
---------------
Schedule 4.18, and subject to the Supervision Order and the approval of
the Reorganization Plan, the Company and the Subsidiaries have good and
marketable title to, or valid and subsisting leasehold interests in, all
real and personal property and other assets on their books and reflected
on the Company's balance sheet at December 31, 1998 and June 30, 1999
included as part of the Company GAAP Financial Statements and the
Interim Financial Statements, respectively, or acquired in the ordinary
course of business consistent with past practice since December 31, 1998
or June 30, 1999, as appropriate, which would have been required to be
reflected on such balance sheet if acquired on or prior to such date,
other than assets which have been disposed of in the ordinary course of
business and those assets the failure of which to have good title to, or
valid and subsisting leasehold interests in, would not, individually or
in the aggregate, have a Material Adverse Effect. None of such property
and other assets is subject to any Encumbrance, except for Encumbrances
set forth on Schedule 4.18 or reflected in the financial statements of
the Company as of December 31, 1998. Except as set forth on Schedule
4.18 and as would not, individually or in the aggregate, have a Material
Adverse Effect, the Company and the Subsidiaries have the right to quiet
enjoyment of all property leased by any of them for the full term of
each such lease or sublease or similar agreement (or any renewal option)
relating thereto and such leased property is not subject to any failure
to have the right to quiet enjoyment.
Section 4.19 Transactions with Certain Persons. Except
---------------------------------
as set forth on Schedule 4.19, neither any officer, director or
employee of Seller, the Company or any Subsidiary, nor any member of any
such Person's immediate family, is now a party to any material
transaction with the Company or any Subsidiary, including any contract
or other binding arrangement (i) providing for the furnishing of
material services by such Person (except in such Person's capacity as an
officer, director, employee or consultant), (ii) providing for the
rental of material real or personal property from such Person, or (iii)
otherwise requiring material payments (whether pursuant to indebtedness
or otherwise) to such Person (other than for services as an officer,
director, employee or consultant of Seller, the Company or any
Subsidiary).
Section 4.20 Reinsurance and Retrocessions. Schedule 4.20 sets
-----------------------------
forth a true and complete list of all reinsurance and retrocession treaties
and agreements in force as of the date of this Agreement to which any Life
Insurance Subsidiary is a ceding party, any terminated or expired treaty or
agreement under which there remains any outstanding liability from one
reinsurer in excess of $15,000,000 and any treaty or agreement with any
Affiliate of the Company or any Life Insurance Subsidiary, the effective
date of each such treaty or agreement, and the termination date of any treaty
or agreement which has a
28
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definite termination date. Except as set forth on Schedule 4.20, (i) no
Life Insurance Subsidiary is in default in any respect as to any
provision of any reinsurance or retrocession treaty or agreement or has
failed to meet the underwriting standards required for any business
reinsurance thereunder and (ii) no reinsurer or retrocessionaire is in
default to any Life Insurance Subsidiary pursuant to any reinsurance or
retrocession treaty or agreement, except for defaults which would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.21 Environmental Laws. (a) To the knowledge of
------------------
Seller, except as set forth on Schedule 4.21 and as would not, individually
or in the aggregate, have a Material Adverse Effect: (i) the Company and
each Subsidiary have been and are in compliance with all applicable
Environmental Laws, and have possessed, possess, have been, and are in
compliance with all Environmental Permits required under such laws for the
conduct of its business operations and ownership of its Owned Real Property,
(ii) there are no past, present or future events (including, without
limitation, the sale of any Owned Real Property), conditions or legal
requirements that would prevent, or substantially increase the cost to the
Company or any Subsidiary of complying with Environmental Laws or of their
obtaining, renewing or complying with all Environmental Permits required
under such laws for the conduct of its business and operations and ownership
of its Owned Real Property or that would give rise to any liability arising
under any Environmental Law, and (iii) there are no liabilities or obligations
of the Company or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, direct or indirect, determined,
determinable or otherwise, arising under or relating to any
Environmental Law, (iv) there are and have been no conditions relating
to the release or threatened release of Hazardous Materials at any
property owned, operated or otherwise used by the Company or any
Subsidiary now or in the past that would give rise to liability of the
Company or any Subsidiary under any Environmental Law and (v) no written
notice, notification, demand, request for information, citation,
summons, complaint, order, or notice of investigation has been received
by the Company or any of its Subsidiaries from, and no action, claim,
suit, proceeding or review is pending or threatened by, any Governmental
Authority or Person against, the Company or any of its Subsidiaries,
with respect to any Environmental Law.
(b) Notwithstanding anything herein to the contrary, the
representations and warranties contained in this Section 4.21 do not
address any liability or obligation of the Company or any Subsidiary
arising specifically from any obligation the Company or any Subsidiary
may have to defend or indemnify an insured, pursuant to a contract of
insurance or reinsurance, with respect to any claim relating to
Hazardous Materials or under any Environmental Law.
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Section 4.22 Insurance Coverage. The Company has
------------------
furnished to Buyer a true and correct list, as of the date hereof, of
all policies of insurance maintained by the Company or any Subsidiary
relating to the assets, properties, business, operations, employees,
officers or directors of the Company or any Subsidiary. The Company
maintains insurance relating to such assets, properties, business,
operations, employees, officers and directors which is reasonable for a
company of its size engaged in the life and health insurance business.
Section 4.23 Year 2000. Except as set forth on
---------
Schedule 4.23 and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, each hardware,
software and firmware product (including embedded microcontrollers in
computer equipment which are owned or licensed and used by the Company
or any Subsidiary and which are involved in electronic data interchange
and integration with third parties) owned or licensed and used by the
Company or any of its Subsidiaries (including without limitation all
software sold or licensed by NaviSys Incorporated and its subsidiaries)
will, when required to do so, correctly differentiate between the years
in different centuries and will accurately process date/time data
(including, but not limited to, calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries,
including leap year calculations.
Section 4.24 RGA and Conning. Each of RGA and Conning
---------------
has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since January 1, 1996
(collectively, the "SEC Documents"). Except as set forth on
Schedule 4.24, each of the SEC Documents has been duly and timely filed,
and when filed was in material compliance with the requirements
(including accounting requirements) of any applicable federal securities
law and the applicable rules and regulations of the SEC thereunder, and
no event has occurred requiring the filing of any amendment of any of
the SEC Documents which amendment has not been duly and timely filed.
Each of such SEC Documents was complete and correct in all material
respects as of its date and, as of its date, did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Complete and correct copies of such SEC Documents have been made
available by the Company to the Buyer prior to the date of this
Agreement or, in the case of those not yet due and filed, will be so
made available promptly after filing.
Section 4.25 State Takeover Statutes and Shareholder Rights
----------------------------------------------
Plans. Except for the provisions of Article III of RGA's Articles of
- -----
Incorporation, Seller has caused to be taken all actions necessary such
that no "fair price," "moratorium," "control share acquisition,"
"business combination" or other form
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of antitakeover statute, regulation or provision of the Articles of
Incorporation of RGA or Conning is applicable to any of the transactions
contemplated hereby or by the Ancillary Agreements, including without
limitation Sections 351.407 and 351.459 of the Missouri Revised
Statutes. Seller has caused to be taken all actions necessary such
that, for all purposes under the Rights Agreement, neither Buyer nor any
of its Affiliates shall be deemed an Acquiring Person (as defined in the
Rights Agreement), the Distribution Date (as defined in the Rights
Agreement) shall not be deemed to occur, and the Rights will not
separate from the common stock of RGA, in each case as a result of
Buyer's entering into this Agreement and the Ancillary Agreements or
consummating the transactions contemplated hereby or thereby, and the
Rights Agreement and the Rights are inapplicable to such transactions.
There is no rights agreement, rights plan or other similar agreement,
plan or arrangement with respect to Conning applicable to the
transactions contemplated hereby or by the Ancillary Agreements.
Section 4.26 Insurance Issued. Except as set forth on
----------------
Schedule 4.26 or as disclosed to Buyer in a letter from Seller to Buyer
dated August 26, 1999 and except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
with respect to all insurance issued by any Life Insurance Subsidiary:
(i) All insurance policy and annuity contract benefits
payable by any Life Insurance Subsidiary and, to the knowledge of
the Seller, by any other Person that is a party to or bound by any
reinsurance, coinsurance or other similar agreement with any Life
Insurance Subsidiary, have been paid in accordance with the terms
of the insurance policies, annuity contracts and other contracts
under which they arose, except for such benefits for which there
is a reasonable basis to contest payment.
(ii) Except as set forth on Schedule 4.26, all advertising,
promotional and sales materials and other marketing practices used
by any Life Insurance Subsidiary or any agent of any Life
Insurance Subsidiary have complied and are currently in compliance
with Applicable Laws.
(iii) Each insurance agent, at the time such agent wrote,
sold or produced business for any Life Insurance Subsidiary since
January 1, 1994, was duly licensed as an insurance agent (for the
type of business written, sold or produced by such insurance
agent) in the particular jurisdiction in which such agent wrote,
sold or produced such business.
(iv) The Tax treatment under the Code of all insurance or
annuity policies, plans or contracts; all financial products,
employee benefit plans, individual retirement
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accounts or annuities; or any similar or related policy, contract,
plan, or product, whether individual, group, or otherwise, if any,
issued or sold by any Life Insurance Subsidiary is and at all
times has been the same or not less favorable to the purchaser,
policyholder or intended beneficiaries thereof as the Tax
treatment under the Code for which such contracts qualified or
purported to qualify at the time of their issuance or purchase,
except for changes resulting from changes to the Code which do not
apply to such issuance or purchase due to their effective date.
For purposes of this Section 4.26, the provisions of the Code
relating to the Tax treatment of such contracts shall include, but
not be limited to, Sections 72, 79, 101, 104, 105, 106, 125, 130,
401, 402, 403, 404, 408, 412, 415, 419, 419A, 457, 501, 505, 817,
818, 7702 and 7702A. In addition, except as disclosed to Buyer in
a letter from Seller to Buyer dated August 26, 1999, each annuity
contract issued by any Life Insurance Subsidiary qualified as an
annuity contract under Section 72 of the Code. Each life
insurance policy issued by any Life Insurance Subsidiary qualified
as a life insurance contract for federal income tax purposes when
issued and any such policy which is a modified endowment contract
under Section 7702A of the Code, (each, a "MEC") has been marketed
as such at all relevant times or the policyholder otherwise has
consented to such MEC status. Each of the employee benefit plans
issued or sold by the Company qualifies under Section 401(a),
403(b) or 457, as applicable, of the Code.
(v) The underwriting standards utilized and ratings applied
by each Life Insurance Subsidiary with respect to insurance
policies, annuity contracts or guaranteed investment contracts
outstanding as of the date hereof have been provided to Buyer and,
with respect to any such policy or contract reinsured in whole or
in part, conform in all material respects to the standards and
ratings required pursuant to the terms of the related reinsurance,
coinsurance or other similar contracts and Seller has provided
Buyer with copies of all underwriting policies and procedures for
each Life Insurance Subsidiary.
(iv) No insurance agent or broker at the time such agent or
broker wrote, sold or produced business for any Life Insurance
Subsidiary, violated (or with notice or lapse of time or both
would have violated) any term or provision of any law or order
applicable to any aspect (including, but not limited to, the
writing, sale or production) of the business of any Life Insurance
Subsidiary.
Section 4.27 Real Property. (a) Schedule 4.27 lists
-------------
all Owned Real Property.
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(b) Schedule 4.27 lists all leases with respect to Leased
Real Property requiring the payment of more than $1,000,000 per annum.
(c) The Seller has, or has caused to be, delivered to the
Buyer true and complete copies of all leases listed on Schedule 4.27.
Each such lease is legal, valid, binding, enforceable and in full force
and effect with respect to the Company or the Subsidiary, as applicable,
and, to the knowledge of Seller, each such lease is legal, valid,
binding, enforceable and in full force and effect with respect to the
lessor thereof, except when the failure to be legal, valid, binding,
enforceable and in full force and effect would not have a Material
Adverse Effect.
(d) To the knowledge of Seller, there are no condemnation
proceedings or eminent domain proceedings of any kind pending or
threatened against the Owned Real Property or Leased Real Property.
(e) Except as set forth on Schedule 4.27, the rental set
forth in each lease of the Leased Real Property is the actual rental
being paid, and there are no separate agreements or understandings with
respect to the same, except as would not, individually or in the
aggregate, be a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 5.1 Organization and Related Matters. Buyer is a
--------------------------------
mutual life insurance company duly organized, validly existing and in
good standing under the laws of the State of New York.
Section 5.2 Authority; No Violation. (a) Buyer has full
-----------------------
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by all requisite
action on the part of Buyer, and no other proceedings on the part of
Buyer are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Buyer and (assuming the due
authorization, execution and delivery of this Agreement by Seller)
constitutes the valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
33
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(b) Neither the execution and delivery of this Agreement
by Buyer, nor the consummation by Buyer of the transactions contemplated
hereby to be performed by it, nor compliance by Buyer with any of the
terms or provisions hereof, will (i) violate any provision of the
Charter or Bylaws of Buyer, or (ii) assuming that the consents and
approvals referred to in Section 5.3 are duly obtained, (A) violate in
any material respect any Applicable Law with respect to Buyer, or any of
its properties or assets or (B) violate, conflict with, result in a
breach of any provision of, or constitute a default under any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Buyer is a party, or by which
Buyer or any of its properties or assets may be bound or affected,
except for such violations, conflicts, breaches or defaults which would
not, individually or in the aggregate, prevent or materially delay the
performance by Buyer of any of its obligations hereunder.
Section 5.3 Consents and Approvals. Except for (i) the
----------------------
approval of the Director required by the Supervision Order, (ii) any
approvals or orders required in connection with the Reorganization
Proceeding (iii) approvals or consents of Governmental Authorities under
the insurance holding company laws of Missouri, California, New York,
Illinois, and Texas, (iv) applicable filings under the HSR Act, (v) the
matters set forth on Schedule 5.3, and (vi) such other filings,
authorizations, consents or approvals the failure to make or obtain
which would not, individually or in the aggregate, prevent or materially
delay the performance by Buyer of any of its obligations pursuant to
this Agreement, no consents or approvals of or filings or registrations
with any Governmental Authority or any third party are necessary in
connection with the execution and delivery by Buyer of this Agreement
and the consummation by Buyer of the transactions contemplated hereby.
Buyer is not aware of any consents specified in the preceding sentence
which it believes it is not reasonably likely to obtain.
Section 5.4 Legal Proceedings. Buyer is not a party to
-----------------
any, and there are no pending or, to Buyer's knowledge, threatened,
Actions against or otherwise affecting Buyer or its properties or assets
or challenging the validity or propriety of the transactions
contemplated by this Agreement which, if adversely determined, would,
individually or in the aggregate, prevent or materially delay the
performance by Buyer of any of its obligations pursuant to this
Agreement, and there is no injunction, order, judgment, decree or
regulatory restriction imposed upon Buyer or its properties or assets
which would, individually or in the aggregate, prevent or materially
delay the performance by Buyer of any of its obligations pursuant to
this Agreement.
Section 5.5 Investment Intent of Buyer. The Shares to be
--------------------------
acquired under this Agreement will be acquired by Buyer for
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its own account and not for the purpose of a distribution. Buyer will
refrain from transferring or otherwise disposing of any of the Shares
acquired by it, or any interest therein, in such manner as to violate
any registration provision of the Securities Act of 1933, as amended, or
any applicable state securities law regulating the disposition thereof.
Buyer agrees that the certificates representing the Shares may bear
legends to the effect that the Shares have not been registered under the
Securities Act of 1933, as amended, or such other state securities laws,
and that no interest therein may be transferred or otherwise disposed of
in violation of the provisions thereof.
Section 5.6 No Other Broker. Other than Credit Suisse
---------------
First Boston Corporation, the fees and expenses of which will be paid by
Buyer, no broker, finder or similar intermediary has acted for or on
behalf of Buyer or any Affiliate of Buyer, or is entitled to any
broker's, finder's or similar fee or other commission from Buyer, or any
Affiliate of Buyer, in connection with this Agreement or the
transactions contemplated hereby.
Section 5.7 Financing. Buyer has, and at the Closing will
---------
have, sufficient cash to consummate the transactions contemplated hereby
and to pay all related fees and expenses.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business. Prior to the Closing Date
-------------------
or the termination of this Agreement pursuant to the terms hereof, (a)
except the events described in clauses (ii), (iii) and (iv) of Section
4.11, or any order of the Director of the Department or from the
Reorganization Proceeding, Seller shall cause each of the Company, the
Subsidiaries, RGA, the RGA Subsidiaries, Conning and the Conning
Subsidiaries to use commercially reasonable efforts to (iii) preserve
intact its present organization, business and franchise; (iv) maintain
in effect all material licenses, approvals, qualifications,
registrations and authorizations necessary to carry on its business as
currently conducted; (v) preserve material existing relationships with
its employees and agents, other distribution sources, customers,
lenders, suppliers, regulators, rating agencies and others having
material business relationships with it (referred to herein as
"Contacts"); (vi) continue its advertising and promotional activities,
pricing and purchasing policies, operations and business plan
implementation consistent with past practice; (vii) continue in full
force and effect without material modification all existing policies or
binders of insurance currently maintained in respect of its assets,
properties, business, operations, employees, officers or directors
except as required by applicable law; (viii) in the case only of the
Company and the Subsidiaries, not undertake any
35
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<PAGE>
material new business initiatives; and (ix) cooperate with Buyer to
present the change of ownership contemplated by this Agreement in a
positive manner to its Contacts, including without limitation furnishing
such introductions and facilitating such continuing access to such
Contacts as Buyer may reasonably request; and
(b) without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, Seller will not, and will
not permit the Company or the Subsidiaries to, except as required
pursuant to any order of the Director or the Department or issued
pursuant to the Reorganization Proceeding, (x) take or omit to take any
action that would be reasonably likely to cause any of the
representations and warranties made by Seller in this Agreement to
become untrue; (xi) take any action that would prevent or materially
impair the ability of Seller to consummate the transactions contemplated
by this Agreement, including without limitation actions that would be
reasonably likely to prevent or materially impair the receipt of any
consent, registration, approval, permit or authorization, that is
necessary in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby;
or (iii) sell or otherwise transfer or dispose of the shares of the
capital stock of RGA or Conning held by the Company.
Section 6.2 Public Announcements. Buyer and Seller shall
--------------------
consult with each other and the Department before issuing, and provide
each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated
by this Agreement, and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be
required by the Department, by Applicable Law or court process or by
obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.3 Expenses. Regardless of whether any or all of
--------
the transactions contemplated by this Agreement are consummated, and
except as otherwise expressly provided herein, Buyer and Seller shall
each bear their respective direct and indirect expenses incurred in
connection with the negotiation and preparation of this Agreement, the
Ancillary Agreements and the consummation of the transactions
contemplated hereby or thereby.
Section 6.4 Access; Certain Communications. Between the
------------------------------
date of this Agreement and the Closing Date, subject to Applicable Laws
relating to the exchange of information and to any order of the Director
of the Department or issued pursuant to the Reorganization Proceeding:
(a) Seller shall (and shall cause the Company and each
Subsidiary to) afford to Buyer and its authorized agents and
36
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<PAGE>
representatives access, upon reasonable notice and during normal
business hours, to all contracts and other documents and other
information (except immaterial contracts, documents and information
subject to confidentiality agreements) of or relating to the assets,
liabilities, business, operations and other aspects of the business of
the Company and the Subsidiaries and shall use commercially reasonable
efforts to cause RGA, the RGA Subsidiaries, Conning and the Conning
Subsidiaries to afford such access to Buyer and its authorized agents
and representatives. Seller shall cause the Company Employees and the
employees of any Subsidiary and each of the Company's and their
respective attorneys, financial advisors, auditors, actuarial advisors
and other representatives to provide reasonable assistance to Buyer in
Buyer's investigation of matters relating to the purchase of the Shares;
provided, however, that Buyer's investigation shall be conducted in a
- -------- -------
manner which does not materially interfere with the normal operations,
customers and employee relations of the Company, its Subsidiaries, RGA,
the RGA Subsidiaries, Conning or the Conning Subsidiaries. Without
limiting any of the terms thereof, the terms of the Confidentiality
Agreement shall govern Buyer's and its agents' and representatives'
obligations with respect to all confidential information with respect to
the Company, the Subsidiaries, RGA, the RGA Subsidiaries, Conning and
the Conning Subsidiaries, which has been provided or made available to
them at any time, including during the period between the date of this
Agreement and the Closing Date;
(b) except as required pursuant to any order of the
Director of the Department or issued pursuant to the Reorganization
Proceeding, Seller shall give prompt notice to Buyer of (i) any material
communication received from or given to any Governmental Authority in
connection with any of the transactions contemplated hereby, (xii) any
notice or other communication from or on behalf of any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement; and (iii) any actions,
suits, claims or investigations commenced or to Seller's knowledge
threatened against Seller, the Company and the Subsidiaries, and, if
known, RGA, the RGA Subsidiaries, Conning and the Conning Subsidiaries,
that, if pending on the date of this Agreement, would have been required
to have been disclosed, or relate to the consummation of the
transactions contemplated by this Agreement; provided, however, that
-------- -------
the delivery of any notice pursuant to this Section 6.4(b) shall not
limit or otherwise affect the remedies available hereunder to Buyer; and
(c) Seller shall, and shall cause any other Person
receiving access thereto to, keep strictly confidential any and all non-
public information it or they may receive from or concerning Buyer and
its Affiliates, including, without limitation, any information received
pursuant to Section 6.6.
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Section 6.5 Reorganization Plan. As soon as practicable
-------------------
after execution of this Agreement, Seller shall make reasonable efforts
to cause the Department to commence a Reorganization Proceeding and to
submit the Reorganization Plan incorporating the material terms of this
Agreement.
Section 6.6 Regulatory Matters; Third Party Consents. (a)
----------------------------------------
Buyer and Seller shall cooperate with each other and (i) shall use their
commercially reasonable efforts promptly to prepare and to file all
necessary documentation, and to effect all applications, notices,
petitions and filings, with each Governmental Authority which are
necessary or advisable to consummate the transactions contemplated by
this Agreement, and (ii) shall use their commercially reasonable efforts
to obtain as promptly as practicable any permit, consent, approval,
waiver or authorization of such Governmental Authority which is
necessary or advisable to consummate the transactions contemplated by
this Agreement.
(b) Buyer and Seller shall cooperate with each other and
(i) shall use their commercially reasonable efforts promptly to prepare
and to file all necessary documentation, and to effect all applications,
notices, petitions and filings, with each third party (other than a
Governmental Authority) which are necessary or advisable to consummate
the transactions contemplated by this Agreement, and (ii) shall use
their commercially reasonable efforts to obtain as promptly as
practicable any permit, consent, approval, waiver or authorization of
such third party which is necessary or advisable to consummate the
transactions contemplated by this Agreement.
(c) Buyer and Seller shall have the right to review in
advance, and shall consult with the other party on, in each case subject
to Applicable Laws relating to the exchange of information, all the
information relating to Seller, the Company and the Subsidiaries or
Buyer, as the case may be, and any of their respective Affiliates, which
appear in any filing made with, or written materials submitted to, any
Governmental Authority or any other third party in connection with the
transactions contemplated by this Agreement. The parties hereto agree
that they will consult with each other with respect to the obtaining of
any permit, consent, approval or authorization of a Governmental
Authority or other third party necessary or advisable to consummate the
transactions contemplated by this Agreement and each party shall keep
the other apprised of the status of obtaining any such permit, consent,
approval or authorization. The party responsible for any such filing
shall promptly deliver to the other party evidence of the filing of all
applications, filings, registrations and notifications relating thereto,
and any supplement, amendment or item of additional information in
connection therewith. The party responsible for a filing shall also
promptly deliver to the other party a copy of each notice, order,
opinion and other item of correspondence
38
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<PAGE>
received from or sent to any Governmental Authority by such filing party
in respect of any such application. In exercising the foregoing rights
and obligations, Buyer and Seller shall act reasonably and promptly.
(d) Without limiting the generality of the foregoing, as
promptly as practical and, in any event within 21 calendar days after
the date hereof, Buyer shall make Form A filings, which shall include
all required exhibits thereto, with the insurance departments of the
States of Missouri, California, New York, Illinois and Texas with
respect to the transactions contemplated hereby and, as promptly as
practical, Buyer shall make all required foreign filings with respect to
the transactions contemplated hereby. Buyer shall as promptly as
practicable make any and all other filings and submissions of
information with such insurance departments which are required or
requested by such insurance departments in order to obtain the approvals
required by such insurance departments to consummate the transactions
contemplated hereby. If any such insurance department, including
without limitation the insurance department of the States of Missouri,
California, New York, Illinois and Texas, requires that a hearing be
held in connection with any such approval, Buyer shall use its
commercially reasonable efforts to arrange for such hearing to be held
as promptly as practicable after the notice that such hearing is
required has been received by Buyer. Seller agrees to furnish Buyer
with such necessary information and reasonable assistance as Buyer may
reasonably request in connection with its preparation of such Form A
filings and other filings or submissions. Buyer shall keep Seller fully
apprised of its actions with respect to all such filings, submissions
and scheduled hearings and shall provide Seller with copies of such Form
A filings and other filings or submissions (except to the extent that
such information would be, or relates to information that would be,
filed under a claim of confidentiality).
(e) Buyer and Seller shall, upon request, furnish each
other with all information concerning themselves, their subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary in connection with any statement, filing, notice or
application made by or on behalf of Buyer, the Company or any of their
respective Affiliates to any Governmental Authority in connection with
the transactions contemplated by this Agreement or the Ancillary
Agreements (except to the extent that such information would be, or
relates to information that would be, filed under a claim of
confidentiality).
(f) Buyer and Seller shall promptly advise each other upon
receiving any communication from any Governmental Authority whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that
there is a reasonable likelihood that any
39
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requisite regulatory approval will not be obtained or that the receipt
of any such approval will be materially delayed.
Section 6.7 Further Assurances. (a) Each of the parties
------------------
hereto shall execute such documents and other papers and perform such
further acts as may be reasonably required to carry out the provisions
hereof and the transactions contemplated hereby. Each such party shall,
on or prior to the Closing Date, use its commercially reasonable efforts
to fulfill or obtain the fulfillment of the conditions precedent to the
consummation of the transactions contemplated hereby, including the
execution and delivery of any documents, certificates, instruments or
other papers that are reasonably required for the consummation of the
transactions contemplated hereby.
(b) Seller shall, and shall cause the Subsidiaries, and
shall use reasonable best efforts to cause RGA and the RGA Subsidiaries,
Conning and the Conning Subsidiaries, and their respective officers,
directors, employees and agents (including attorneys, auditors and
financial advisors) to provide such information (including, without
limitation, financial information) and assistance as Buyer shall
reasonably request in connection with the preparation of Buyer's
Registration Statement on Form S-1 and policyholder information booklet
and with respect to the Buyer's planned demutualization and initial
public offering, including, without limitation, participating in due
diligence discussions and meetings during normal business hours with
Buyer's underwriters and providing such financial statements and audit
reports thereon and consents with respect thereto as are reasonably
necessary.
Section 6.8 Notification of Certain Matters. (a) Each
-------------------------------
party shall give prompt notice to the other party of (i) the occurrence,
or failure to occur, of any event or the existence of any condition that
has caused or could reasonably be expected to cause any of its
representations or warranties contained in this Agreement to be breached
at any time after the date of this Agreement, up to and including the
Closing Date (except to the extent such representations and warranties
are given as of a particular date or period and relate solely to such
particular date or period) and (ii) any failure on its part to comply
with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
(b) Within twenty-eight days following the date of the
execution of this Agreement and in any event no less than twenty-eight
days prior to the Closing, Seller may provide to Buyer schedules
permitted to be delivered in accordance with this Agreement on or prior
to the date hereof which were not so delivered (such schedules being the
"Supplemental Schedules"). Each of such Supplemental Schedules when
delivered shall be certified to be a complete schedule being delivered
in
40
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satisfaction of this covenant. Within fourteen days following the
delivery of the last Supplemental Schedule to be delivered in accordance
with this Section 6.8, Buyer may elect to terminate this Agreement by
notice, as provided in Section 11.1 hereof, if any items disclosed in
one or more of the Supplemental Schedules, either individually or in the
aggregate, could reasonably be expected to constitute a Material Adverse
Effect. Regardless of whether any such items individually or in the
aggregate could reasonably be expected to constitute a Material Adverse
Effect, if the Closing occurs, Seller shall indemnify Purchaser for any
Losses arising from any item disclosed in such Supplemental Schedules in
accordance with Article X hereof, as if such items were not disclosed
and, for the purposes of such Article X hereof, such items do not
constitute exceptions to the representations, warranties and covenants
contained in this Agreement.
Section 6.9 Maintenance of Records. Through the Closing
----------------------
Date, the Company shall maintain the Records in all material respects in
the same manner and with the same care that the Records have been
maintained prior to the execution of this Agreement. From and after the
Closing Date, each of the parties shall permit the other party
reasonable access to any applicable Records in its possession, and the
right to duplicate such Records, to the extent that the requesting party
has a reasonable business purpose for requesting such access or
duplication. Notwithstanding any other provision of this Section 6.9,
access to any Records may be denied to the requesting party if the other
party is required under Applicable Law to deny such access.
Section 6.10 Service Under Employee Plans. (a)
----------------------------
Service by the Company Employees with the Company, Seller or any of
their Affiliates prior to the Closing Date shall be recognized under
each benefit plan, program or arrangement established, maintained or
contributed to by Buyer, the Company or any of their Affiliates after
the Closing Date for the benefit of any Company Employee to the same
extent recognized for comparable purposes under the Seller Plans
providing comparable benefits, except that in no event shall Buyer be
required to take such service prior to the Closing Date into account in
determining the accrual of benefits under any retirement benefit plan;
provided, however, that this provision shall have no effect on any
service credit that existed under any Seller Plan on the Closing Date.
Neither Buyer nor any Affiliate shall amend, in any manner adverse to
any participant whose employment is terminated within 12 months after
the Closing Date so that such person is no longer employed by Buyer or
any entity that is then an Affiliate thereof, the provisions of any of
the plans or programs listed in Schedule 6.10 hereto dealing
specifically with additional benefits or rights of participants in the
event of termination of employment on account of job elimination or
divestiture.
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(b) Buyer shall, or shall cause the applicable entity to,
(i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Company Employees under any welfare benefit plan in
which such Company Employees may be eligible to participate after the
Closing Date, other than limitations or waiting periods that are already
in effect with respect to such Company Employees and that have not been
satisfied as of the Closing Date under any welfare plan maintained for
the Company Employees immediately prior to the Closing Date, and (ii)
provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that
such Company Employees are eligible to participate in after the Closing
Date.
Section 6.11 Benefits Under Employee Plans. All benefits
-----------------------------
accrued and/or incurred by Company Employees and their qualified
beneficiaries prior to the Closing Date under the Seller Plans shall
be a liability of the Seller Plans to the extent payable under the
terms of the Seller Plans. After the Closing Date, Buyer may amend
the Seller Plans in accordance with their respective terms; provided,
--------
however, that Buyer will not take any action to use the assets of the
- -------
trust under the General American Life Insurance Company and Affiliated
Companies Executive Deferred Compensation Plans (the "Rabbi Trust") for
any purposes other than those permitted under the Rabbi Trust agreement
as in effect on the date hereof.
Section 6.12 Company Confidentiality Agreements. Buyer and
----------------------------------
Seller acknowledge and agree that on or prior to the Closing, Seller
will assign to Buyer its rights under the Company Confidentiality
Agreements, except to the extent that any such assignment is directly or
indirectly prohibited or impaired by the terms of any of such Company
Confidentiality Agreements or applicable law, in which case the parties
hereto shall cooperate to provide Buyer, to the fullest extent
practicable, the benefits thereof.
Section 6.13 No Solicitations. (a) From and after the
----------------
date hereof, Seller shall not, and shall direct and use commercially
reasonable efforts to cause the Subsidiaries, Conning, the Conning
Subsidiaries, RGA and the RGA Subsidiaries, and each of their respective
officers, directors, employees, agents, advisors or other representatives
(each, a "Representative") not to, directly or indirectly, (i) solicit,
initiate or knowingly encourage the submission of any Proposal (as defined
below), (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any non-public information with respect to, any
Proposal or Alternative Transaction (as defined below), other than with
Buyer; provided, however, that to the extent required by the fiduciary
-------- -------
obligations of Seller's Board of Directors, as determined in good faith by
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Seller's Board of Directors following consultation with outside counsel,
or at the direction of the Department or the Reorganization Proceeding,
if Seller receives an unsolicited proposal with respect to a Control
Transaction (as defined below), Seller may participate in such
discussions or negotiations or furnish (pursuant to a confidentiality
agreement in customary form) such information in response to such
Proposal or, subject to Section 11.3, authorize, engage in or enter into
any agreement with respect to such Control Transaction. Seller will
advise Buyer of, and communicate to Buyer the terms of, any Proposal
that Seller, the Company, any of the Subsidiaries or any of their
respective Representatives, or, if known by the Company, RGA, any of the
RGA Subsidiaries, Conning or any of the Conning Subsidiaries, may
receive unless the terms of such Proposal prohibit such disclosure, or
otherwise directed by the Director.
(b) For purposes of this Agreement: (i) "Proposal" means
any written proposal or offer from any Person relating to an Alternative
Transaction; (ii) "Alternative Transaction" means any (A) direct or
indirect acquisition or purchase of any equity securities of, or other
equity interest in, the Company or any of the Subsidiaries that if
consummated would result in any Person beneficially owning (or having
the right to acquire) 10% or more of any class of equity securities of,
or the equity interest in the Company or any of the Subsidiaries or
which would require approval under any federal, state or local law,
rule, regulation or order governing or relating to the current or
contemplated operations of the Company or any of the Subsidiaries, (B)
merger, consolidation, business combination, sale of a material portion
of the assets (including, without limitation, by means of any
reinsurance or renewal rights transaction), liquidation, dissolution or
similar transaction involving the Company or any of the Subsidiaries or
(C) other transaction the consummation of which would reasonably be
expected to impede, interfere with, prevent or materially delay the
transactions with Buyer contemplated by this Agreement or which would
reasonably be expected to dilute the benefits of such transactions to
Buyer; and (iii) "Control Transaction" means any transaction that
involves a (A) merger or consolidation or similar business combination
involving the Company or a significant Subsidiary of the Company, (B)
sale of all or substantially all of the assets of the Company or (C)
sale or issuance of the Shares or other equity securities of the Company
to a Person which, following the completion of such sale or issuance,
will beneficially own the Shares or other equity securities of the
Company representing a majority of the voting power with respect to the
election of the directors of the Company.
Section 6.14 Policy Credits and Dividends in Respect of
------------------------------------------
Tax-Qualified Retirement Contracts. Subject to the applicable
- ----------------------------------
requirements of ERISA and the Code, Buyer agrees to cause the Life
Insurance Subsidiaries or their successors to accept at any time after
the Closing Date any distribution by Seller in respect
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of any Tax-Qualified Retirement Contract and to post a policy credit or
dividend to such contract with respect to such distribution as soon as
practicable. Buyer and Seller shall cooperate in all matters with
respect to any such distribution to best assure the ongoing
qualification of any related tax-qualified retirement plan.
Section 6.15 Alternative Structure. In the event that
---------------------
the Closing fails to occur because Buyer has not made the determination
referred to in Section 9.1(f)(ii), the termination date referred to
in Section 11.1(a)(v) shall be October 26, 2000 and Buyer and Seller
shall use their best efforts to negotiate and implement an alternative
structure that will permit the Closing to occur as promptly as
practicable; provided, however, that nothing contained in this
-------- -------
Section 6.15 will require Buyer or Seller to agree to alter the Purchase
Price or any of the other fundamental economic terms of the purchase of
Shares pursuant to this Agreement.
Section 6.16 Employment. For a period of one year after
----------
the Closing Date, Buyer shall maintain the number of employees
employed by the Company, its Subsidiaries, RGA, the RGA Subsidiaries,
Conning and the Conning Subsidiaries at no less than 90% of the
aggregate number of such employees employed by such entities as of
the Closing Date; provided, however, that when calculating such
-------- -------
percentage the number of employees employed as of the date hereof may be
adjusted to reflect businesses divested by the Company after the date
hereof. No provision contained in this Section 6.16 shall be deemed to
constitute an employment contract between Buyer and any individual, or a
waiver of Buyer's right to discharge any employee at any time, with or
without cause.
Section 6.17 Headquarters; Local Activities. For the
------------------------------
reasonably foreseeable future after the Closing, the corporate
headquarters and principal executive offices of the Company, Conning and
RGA shall be located in metropolitan St. Louis, Missouri. For the
reasonably foreseeable future after the Closing, Buyer shall cause the
Company, and the Company shall provide, charitable contributions and
community support within the St. Louis, Missouri area substantially
comparable to the historical levels of charitable contributions and
community support provided by the Company prior to the Closing.
Section 6.18 Dividends. Holders of participating
---------
policies of the Life Insurance Subsidiaries and GALIC in effect on the
Closing Date shall continue to have the right to receive dividends as
provided in the participating policies, if any.
Section 6.19 Investment Advisory Agreements. Seller
------------------------------
agrees to use commercially reasonable efforts to obtain all required
shareholder, board and customer consents as required in connection with
any investment advisory agreements as a result of
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the transactions contemplated by this Agreement so as to assure that
such agreements are not terminated.
Section 6.20 Capital Contribution. In the event that
--------------------
Buyer and Seller implement the exchange program contemplated by Section
7.1(c)(i) hereof, following the Closing upon termination of the exchange
contracts, Buyer will make a capital contribution of $120,000,000 to
GALIC.
Section 6.21 Change of Control Agreements. Buyer and,
----------------------------
prior to the Closing Date, Seller shall use their respective
commercially reasonable efforts to prevent to the greatest extent
possible the occurrence of a "change of control" or similar triggering
event under a Seller Plan or other contract or arrangement for the
benefit of any Company Employee (or any non-employee director or
independent contractor of Seller, the Company, any Subsidiary, RGA, any
RGA Subsidiary, Conning or any Conning Subsidiary).
ARTICLE VII
INTERIM ARRANGEMENT
Section 7.1 Interim Agreements. (a) Buyer will develop
------------------
with Seller as soon as practicable a program of coinsurance support for
the period from the date of this Agreement through the Closing Date for
new and existing business to be issued by GALIC, and similar
arrangements as may be required by COVA and RGA.
(b) Buyer will develop with Seller as soon as practicable
a program of policy conversion to support GALIC's in force business for
the period from the date of this Agreement through the Closing Date.
(c) (xiii) To address the funding agreement business,
Buyer and Seller will as soon as practicable implement a stabilization
program. Such program will consist of an exchange or other program
agreed to by Buyer and Seller and approved by the Department. Under an
exchange program Buyer will offer to each holder of a funding agreement
contract an exchange contract in consideration for the transfer by GALIC
to Buyer of assets as determined below with market value (at the
business day prior to the date of transfer) equal to the market value of
the liabilities under the funding agreement contracts at the business
day prior to the date of transfer (determined using Buyer's credit
rating) plus a risk premium of $120 million. The $120 million would be
payable by Wire Transfer in three $40 million installments; at inception
of the exchange, ninety days following such inception and one-hundred
eighty days following such inception.
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(xiv) Under an exchange program, five business days prior
to the date of asset transfer, Buyer will submit to a mutually agreed
upon third party (to be selected from Merrill Lynch, Bear Stearns, Lehman
Brothers or Salomon Smith Barney (the "third party") a schedule of
fixed-income assets from the GALIC portfolio (the "105% Portfolio")
having (in Buyer's reasonable opinion) a market value of 105% of the
market value of the funding agreement contract liabilities being
exchanged. On the business day prior to the transfer, the third party
will determine the market value of each asset in the 105% Portfolio.
Assets having a market value equal to 100% of the market value of the
funding agreement contract liabilities will be selected by Buyer, in its
sole discretion, from such 105% Portfolio and transferred to, and
accepted by, Buyer as payment for its exchange of the funding agreement
contract liabilities. For purposes of this provision, the term "market
value of the funding agreement contract liabilities" shall mean the
amount mutually agreed to by Buyer and GALIC on the business day prior
to the date of transfer. In selecting the 105% Portfolio, Buyer's
primary concern is liquidity, but it will also take into account the
following:
(a) GALIC's capital and surplus;
(b) the tax effect on GALIC of the asset transfer;
(c) the effect of the asset transfer upon the investment
yield, asset quality and maturity structure of the
assets remaining at GALIC after such transfer; and
(d) the relationship between the book yield on the
transferred portfolio and the interest crediting rate of
the funding agreement contract liabilities.
ARTICLE VIII
TAX MATTERS
Section 8.1 Indemnity. (a) Subject to the terms of
---------
Section 8.1(c) excluding payments to Seller pursuant to Section 8.2,
Seller agrees to indemnify and hold harmless Buyer, the Company and each
Subsidiary against the following Taxes (except to the extent of the
reserve for Taxes (not including any deferred Tax amounts) on the June
30, 1999 Interim Financial Statement and except to the extent that any
such Tax is attributable to an audit adjustment that results in an
increase in the taxable income of the Company or its Subsidiaries for
any such period and a correlative decrease in such taxable income in
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a later taxable period beginning on or after the Closing Date, in which
case the amount of the indemnity shall be reduced by the discounted
present value of the resulting reasonably estimated future benefit),
and, except as otherwise provided in Section 8.9, against any loss,
damage, liability or expense, including reasonable fees for attorneys
and other outside consultants, incurred in contesting or otherwise in
connection with any such Taxes: (i) Taxes imposed on the Company or any
Subsidiary with respect to taxable periods ending on or before the
Closing Date; (ii) Taxes imposed on any member of any consolidated,
combined or unitary group with which any of the Company and the
Subsidiaries file or have filed a Tax Return on a consolidated, combined
or unitary basis for a taxable period ending on or before the Closing
date; and (iii) with respect to taxable periods beginning before the
Closing Date and ending after the Closing Date, Taxes imposed on the
Company or any Subsidiary which are allocable, pursuant to
Section 8.1(b), to the portion of such Tax period ending on the Closing
Date.
(b) In the case of Taxes that are payable with respect to
a taxable period that begins before the Closing Date and ends after the
Closing Date the portion of any such Tax that is allocable to the
portion of the period ending on the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or
related to income or receipts, or (B) imposed in connection
with any sale or other transfer or assignment of property
(real or personal, tangible or intangible) (other than
conveyances pursuant to this Agreement, as provided under
Section 8.9), deemed equal to the amount which would be
payable if the taxable period ended with the Closing Date;
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of the Company or any Subsidiary, or
otherwise measured by the level of any item, deemed to be the
amount of such Taxes for the entire period (or, in the case of
such Taxes determined on an arrears basis, the amount of such
Taxes for the immediately preceding period), multiplied by a
fraction the numerator of which is the number of calendar days
in the period ending on the Closing Date and the denominator
of which is the number of calendar days in the entire period;
and
(iii) in the case of any premium tax, the amount which
would be payable with respect to the direct premiums written
during the period that ends on the Closing Date (taking into
account the rates and credits allocable to the pre-Closing
period that would be available if such period were treated as
a separate year for premium tax purposes).
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(c) Notwithstanding any provision in this Agreement to the
contrary, Seller shall only be obligated to Buyer pursuant to the
provisions of Section 8.1(a) for Taxes for which (i) Buyer, the Company
or any Subsidiary, as the case may be, has received a notice of proposed
adjustment in writing from a Taxing Authority (e.g., receipt of Form
5701 "Notice of Proposed Adjustments" for U.S. federal tax purposes),
and (ii) Buyer has thereafter made a valid claim with respect thereto
against the Escrow Account pursuant to the terms of the Escrow Agreement
on or prior to the third anniversary of the Closing Date.
(d) Buyer hereby agrees to indemnify and hold harmless
Seller for all Taxes and associated expenses not allocated to Seller
pursuant to the provisions of this Section 8.1(a).
(e) Neither Buyer, the Company, nor any Subsidiaries shall
take or allow to be taken any action the effect of which would be to
accelerate the making of any claim, the commencement or completion of
any audit or other inquiry by a Taxing Authority or the payment of (or
increase in the amount of) any Tax liability for which Seller has an
obligation to indemnify Buyer pursuant to the terms of Section 8.1. If
Buyer, the Company, any Subsidiary, or any employee or agent of any of
them takes or causes to be taken any such action, the indemnity provided
in Section 8.1 hereof shall be void to the extent of any associated
payment or increase in Tax liability. Seller shall not take or permit
to be taken any action the effect of which would be to delay the making
of any claim, the commencement or completion of any audit or other
inquiry by a Taxing Authority or the payment of (or increase in the
amount of) the payment or increase the amount of any Tax liability for
which Seller has an obligation to indemnify Buyer pursuant to the terms
of Section 8.1.
(f) Seller's obligations pursuant to this Section 8.1
shall be satisfied solely with payments made by the Escrow Agent from
the Escrow Account, and Buyer shall have no other recourse against
Seller with respect to any such obligations.
Section 8.2 Tax Allocation Agreement Payments. After the
---------------------------------
Closing Date, in accordance with the Tax Allocation Agreements and past
intercompany accounting practices of the Company and the Subsidiaries,
the Company and the Subsidiaries shall make further payments of Tax to
the Seller or an appropriate Taxing Authority to the extent that their
share of current Taxes attributable to taxable periods or portions
thereof ending on or before the Closing Date exceeds their previously
paid share of estimated Taxes; provided, however, that no payment shall
be due for any period covered on the June 30, 1999 Interim Financial
Statement, except to the extent that provision for such Tax has been
made therein; and, provided, further, that no such payment shall include
any amount of Tax attributable directly or indirectly to the sale of the
Shares pursuant to this Agreement except as set forth in Section 8.6.
Any payment under this
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Section 8.2 which is to be made to the Seller shall be due not earlier
than five (5) Business Days before the due date of the corresponding
payment to the appropriate Taxing Authority. Except as otherwise
provided in this Section 8.2, this Agreement terminates, as of the
Closing Date, the Tax Allocation Agreements and any and all other
similar agreements with respect to Taxes between or among Seller and
Company and the Subsidiaries.
Section 8.3 Returns and Payments. (a) Seller shall
--------------------
prepare and file or otherwise furnish in proper form to the appropriate
Taxing Authority (or cause to be prepared and filed or so furnished) in
a timely manner all (i) consolidated, combined and unitary Tax Returns
(each a "Consolidated Return") that include Seller and (ii) Tax Returns
relating to the Company and the Subsidiaries that are attributable to
periods ending on or before the Closing Date (and Buyer shall do the
same with respect to any non-Consolidated Return for the Company or the
Subsidiaries attributable to periods ending after the Closing Date).
Tax Returns of the Company and the Subsidiaries not yet filed for any
taxable period that begins before the Closing Date shall be prepared in
a manner consistent with past practices employed with respect to the
Company and the Subsidiaries (except to the extent counsel for Seller or
the Company renders a legal opinion that it is less likely than not that
such practices would be sustained by the courts if challenged or
determines that a Tax Return cannot be so prepared and filed without
being subject to penalties). With respect to any non-Consolidated
Return required to be filed by Buyer or Seller with respect to the
Company and the Subsidiaries and as to which an amount of Tax is
allocable to the other party under Section 8.1(b), the filing party
shall provide the other party and its authorized representatives with a
copy of such completed Tax Return and a statement certifying the amount
of Tax shown on such Tax Return that is allocable to such other party
pursuant to Section 8.1(b), together with appropriate supporting
information and schedules at least forty-five (45) days prior to the due
date (including any extension thereof) for the filing of such Tax
Return, and such other party and its authorized representatives shall
have the right to review and comment on such Tax Return and statement
prior to the filing of such Tax Return.
(b) After the Closing Date, Seller shall pay when due and
payable all Taxes with respect to the Company and the Subsidiaries that
are unpaid as of the Closing Date and are allocable to Seller pursuant
to Sections 8.1(a) and 8.1(b) (either directly to the appropriate Taxing
Authority or as appropriate to Buyer, the Company or any Subsidiary as
the case may be).
(c) Buyer shall or shall cause the Company or the
Subsidiaries to pay all Taxes that are allocable to Buyer pursuant to
Section 8.1(d)(either directly to the appropriate Taxing Authority or to
Seller).
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Section 8.4 Refunds. Any Tax refund (including any
-------
interest with respect thereto) relating to the Company or any Subsidiary
for Taxes paid for any taxable period or portion thereof ending on or
prior to the Closing Date shall be the property of Seller, and if
received by Buyer or the Company or any Subsidiary shall be paid over
promptly to Seller.
Section 8.5 Contests. (a) After the Closing, Buyer shall
--------
promptly notify Seller in writing of any written notice of a proposed
assessment, audit or claim with respect to any inquiry, assessment,
contest, proceeding or litigation (a "Contest") of Buyer or Seller or of
any of the Company and the Subsidiaries which, if determined adversely
to the taxpayer, would be grounds for indemnification under this Article
VIII.
(b) For all Contests for which the Seller alone has an
indemnification obligation under Section 8.1, Seller shall control all
such Contests in connection therewith. Prior to the Closing Date,
Seller shall control all Contests relating to the Company and the
Subsidiaries. After the Closing Date, in the case of a Contest that
relates to a non-Consolidated Return (or any item relating thereto or
reported thereon) for a taxable period ending on or before, or that
includes, the Closing Date, Seller shall have the right at its expense
to participate in and control the conduct of such Contest, and for all
taxable periods thereafter, Buyer shall control such Contests. If
Seller does not assume the defense of any such Contest for a taxable
period ending on or before the Closing Date, Buyer may defend the same
in such manner as it may deem appropriate, including, but not limited
to, settling such Contest after giving 30 days' prior written notice to
Seller setting forth the terms and conditions of settlement. In the
event of a Contest covered by the second sentence of this paragraph,
that involves issues relating to a potential adjustment for which Seller
has liability that are required to be dealt with in a proceeding that
also involves separate issues relating to a potential adjustment for
which Buyer would be liable, Buyer shall have the right, at its expense,
to control the Contest but only with respect to the latter issues.
(c) Buyer and Seller agree to cooperate, and Buyer agrees
to cause the Company and the Subsidiaries to cooperate, in the defense
against or compromise of any claim in any Contest.
Section 8.6 Section 338(h)(10) Election. (a) At Buyer's
---------------------------
written request, which shall be given to Seller not later than 60 days
before the last date an election under Section 338(h)(10) of the Code
("Election") with respect to the purchase of the Shares hereunder would
be permitted to be filed, Buyer and Seller shall (i) cooperate in the
preparation for the Election and (ii) unless Buyer thereafter shall
notify Seller in writing prior to the date that the Election would be
required to be filed
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that such Election shall not be made, jointly file such Election with
the appropriate Taxing Authority on a timely basis and comply with the
rules and regulations applicable to such Election. In the event an
Election is made hereunder, unless directed otherwise by Buyer, Seller
and Buyer shall, when possible, omit or elect out of any such Election
under applicable state or local law.
(b) For purposes of making such Election and determining
the Tax Election Amount under Section 8.6(c), Buyer shall determine the
value of the tangible and intangible assets of the affected entities and
shall timely provide Seller with an allocation of Buyer's "adjusted
grossed-up basis" in the Shares (within the meaning of the Treasury
Regulations under Section 338 of the Code) to such assets (the
"Allocation"). The Allocation shall be binding upon Buyer and Seller
for purposes of allocating the "deemed selling price" (within the
meaning of the Treasury Regulations) among the assets of the affected
entities; provided, however, that if Seller believes that all or a
-------- -------
portion of the Allocation is materially incorrect, an independent
accounting firm of national reputation (the "Independent Accounting
Firm") shall be selected by Seller's and Buyer's accounting firms,
subject to the approval of both the Seller and Buyer, to determine
whether the Allocation is materially incorrect and the determination of
such Independent Accounting Firm shall be final. If the Independent
Accounting Firm determines that the Allocation is not materially
incorrect, Seller and Buyer shall be bound by the Allocation. If the
Independent Accounting Firm determines that the Allocation (or any
portion thereof) is materially incorrect, Seller and Buyer shall be
bound by the Allocation as adjusted by such Independent Accounting Firm.
(c) If Buyer decides to make the Election, Buyer shall pay
to Seller as additional Purchase Price an amount (the "Tax Election
Amount") net of tax at an assumed rate of 40%, equal to the excess of
(i) the amount of federal, state and local income and franchise Taxes
due as a result of the deemed sale of the assets of the affected
entities pursuant to the Election, taking into account any available
federal, state or local losses, credits and loss or credit carryovers,
and any available election out of, omission of an election under, or
unavailability of an election under Section 338(h)(10) (or any analogous
provision) for state or local tax purposes, and disregarding any
additional amount of Purchase Price that may be payable by Buyer under
this subsection (the "Actual Section 338(h)(10) Tax Liability"), over
(ii) the amount of federal, state and local income and franchise taxes
that would have been incurred by Seller solely as a result of a
transaction in which all the Shares were sold without making an election
under Section 338(h)(10) of the Code (the "Hypothetical Stock Sale Tax
Liability"). Notwithstanding any other provision of this Agreement,
Buyer shall not be entitled to an indemnity for any Tax that is imposed
with respect to a Tax period ending on or before, or that includes, the
Closing Date
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and that relates to the adjustment by a Taxing Authority of any federal,
state or local losses, credits and loss or credit carryovers that have
been taken into account in computing the Actual Section 338(h)(10) Tax
Liability.)
(d) The Tax Election Amount shall be determined by Seller
and its accounting firm with the full cooperation of Buyer and its
accounting firm; provided, however, that the Tax Election Amount
-------- -------
shall be subject to the right of review by Buyer and Buyer's
accountants. Seller shall provide to Buyer the calculation of the Tax
Election Amount no later than the twenty-fifth day following the
effective date of Buyer's initial request. In the event Buyer or
Buyer's accountants disagree with such calculation, Buyer shall give
Seller written notice thereof within 15 days of the date Seller
furnishes such calculation. Buyer shall pay to Seller the portion of
the Tax Election Amount that Buyer does not dispute (the "Undisputed
Amount") at least three Business Days prior to the due date of Seller's
Return for the Tax period that includes the Closing Date. If Seller and
Buyer are unable to settle or compromise such dispute within 15 Business
Days after Buyer's notice, the Independent Accounting Firm shall
determine the Tax Election Amount and such determination shall be final.
In the event it is determined that Buyer owes Seller any portion of the
disputed amount, Buyer shall bear the portion of the costs of the
Independent Accounting Firm determined by multiplying such costs by a
fraction, the numerator of which is the additional amount that the
Independent Accounting Firm determines Buyer owes Seller and the
denominator of which is the disputed amount, and Buyer shall pay to
Seller such additional amount plus interest thereon at the "overpayment
rate" as defined in Section 6621(a) of the Code from the due date of
Seller's Return to the date of payment. Seller shall bear all costs of
the Independent Accounting Firm which are not paid by Buyer pursuant to
the immediately preceding sentence.
Section 8.7 Time of Payment. Except as provided in
---------------
Section 8.2 hereof, payment of any amounts due under this Article VIII
in respect of Taxes shall be made (i) at least three Business Days
before the due date of the applicable Tax Return required to be filed by
either Buyer or Seller, as the case may be, that shows Taxes due for
which the other party is responsible under Sections 8.1(a) and 8.1(b),
or (ii) within three Business Days following an agreement between Seller
and Buyer that an indemnity amount is payable, an assessment of a Tax by
a Taxing Authority, or a "determination" having been made as such term
is defined in Section 1313(a) of the Code. If liability under this
Article VIII is in respect of costs or expenses other than Taxes,
payment of any amounts due under this Article VIII shall be made within
five Business Days after the date when the relevant entity has been
notified that such entity has a liability for a determinable amount
under this Article VIII and is provided with calculations or other
materials supporting such liability.
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Section 8.8 Cooperation and Exchange of Information. Upon
---------------------------------------
the terms set forth in Section 6.4 of this Agreement, Seller and Buyer
will provide each other with such cooperation and information as either
of them reasonably may request of the other in filing any Tax Return,
amended Tax Return or claim for refund, determining a liability for
Taxes or a right to a refund of Taxes, participating in or conducting
any Contest in respect of Taxes or making representations to or
furnishing information to parties subsequently desiring to purchase any
of the Company or the Subsidiaries or any part of the business from
Buyer. Such cooperation and information shall include providing copies
of relevant Tax Returns or portions thereof, together with accompanying
schedules, related work papers and documents relating to rulings or
other determinations by Taxing Authorities. Seller shall make its
employees available on a basis mutually convenient to both parties to
provide explanations of any documents or information provided hereunder
as is reasonably practicable. Each of Seller and Buyer shall retain all
Tax Returns, schedules and work papers, records and other documents in
its possession relating to Tax matters of the Company and the
Subsidiaries for each taxable period first ending after the Closing Date
and for all prior taxable periods until the later of (i) the expiration
of the statute of limitations of the taxable periods to which such Tax
Returns, schedules and work papers, records and other documents relate,
without regard to extensions except to the extent notified in writing of
such extensions for the respective Tax periods, or (ii) three years
following the due date (without extension) for such Tax Returns,
provided, however, that the Seller may satisfy its obligations
- -------- -------
hereunder by delivering all such Tax Returns, schedules and work papers,
records and other documents to the Buyer. Any information obtained
under this Section 8.8 shall be kept confidential in accordance with
Section 6.4 except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting a Contest.
Section 8.9 Conveyance Taxes. Buyer shall be liable for
----------------
and shall hold Seller harmless against any real property transfer or
gains, sales, use, transfer, value added, stock transfer, and stamp
taxes, any transfer, recording, registration, and other fees, and any
similar Taxes which become payable in connection with the transactions
contemplated by this Agreement, and shall file such applications and
documents as shall permit any such Tax to be assessed and paid on or
prior to the Closing Date in accordance with any available pre-sale
filing procedure. Buyer or Seller, as appropriate, shall execute and
deliver all instruments and certificates necessary to enable the other
to comply with any filing requirements relating to any such Taxes.
Section 8.10 Miscellaneous. (a) Seller and Buyer agree
-------------
to treat all payments made by either of them to or for the benefit of
the other (including any payments to the Company or any Subsidiary)
under this Article VIII, under other indemnity
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provisions of this Agreement as adjustments to the Purchase Price.
(b) Notwithstanding any other provision in this Agreement
to the contrary, Seller's obligation to indemnify Buyer, the Company,
and its Subsidiaries with respect to Taxes shall not extend to any Taxes
attributable to the deduction for the risk premium payment made pursuant
to Article VII hereof.
(c) Seller will use its best efforts before the Closing
Date to pursue the submission to the Internal Revenue Service as
disclosed to Buyer in a letter from Seller to Buyer dated August 26,
1999.
(d) The representations and warranties contained in
Sections 4.14 and 4.26(a)(iv) shall terminate as of the Closing Date.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Conditions to Buyer's Obligations. In
---------------------------------
addition to the conditions set forth in Section 9.3, the obligations of
Buyer to effect the Closing shall be subject to the following
conditions, any one or more of which may be waived in writing by Buyer:
(a) The representations and warranties of Seller set forth in
this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except that any such
representation and warranty that is given as of a particular date
or period and relates solely to such particular date or period
shall be true and correct only as of such date or period);
provided, however, that with respect to any representation or
-------- -------
warranty or portion thereof that is qualified by Material Adverse
Effect, materiality or similar qualifier, such representation or
warranty or portion thereof shall be true and correct in all
respects;
(b) Seller shall have performed and complied with in all
material respects all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied
with by Seller on or prior to the Closing Date;
(c) Seller shall have caused to be delivered to Buyer a
certificate executed by a duly authorized officer of Seller
certifying that the conditions set forth in this Section 9.1 have
all been satisfied;
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(d) The Company shall not have commenced a voluntary case or
proceeding under any bankruptcy law and, if an involuntary case
shall have been commenced against the Company under any bankruptcy
law, such case shall have been dismissed within 60 days after its
commencement;
(e) The transactions contemplated by the proxy statement of RGA
dated July 23, 1999 shall have been consummated in all material
respects on the terms set forth in such proxy statement, including,
without limitation, the reclassification of RGA's Non-Voting Common
Stock into Common Stock at the exchange rate set forth in such
proxy statement;
(f) Any approvals or orders required in connection with the
Reorganization Proceeding in order to permit the consummation of
the transactions contemplated by this Agreement shall have been
obtained, and (i) such approvals or orders shall have become final
and nonappealable, or (ii) the period for appealing any such
approvals or orders shall have passed, one or more appeals of such
approvals or orders shall have been timely taken and not withdrawn,
any such approvals or orders shall not have been stayed or reversed
prior to the Closing, and Buyer shall have determined, in its sole
discretion, exercised in good faith, that any such appeals are
unlikely to invalidate Buyer's title to the Shares; and
(g) GALIC shall not be subject to a then pending rehabilitation
proceeding under Section 375.1165 of the Missouri Insurance Code.
Section 9.2 Conditions to Seller's Obligations. In addition
----------------------------------
to the conditions set forth in Section 9.3, the obligations of Seller
to effect the Closing shall be subject to the following conditions,
any one or more of which may be waived in writing by Seller:
(a) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except that any such
representation and warranty that is given as of a particular date
or period and relates solely to such particular date or period
shall be true and correct only as of such date or period);
provided, however, that with respect to any representation or
-------- -------
warranty or portion thereof that is qualified by Material Adverse
Effect, materiality or similar qualifier, such representation or
warranty or portion thereof shall be true and correct in all
respects;
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(b) Buyer shall have performed and complied with in all material
respects all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by
Buyer on or prior to the Closing Date;
(c) Buyer shall have caused to be delivered to Seller a
certificate executed by a duly authorized officer of Buyer
certifying that the conditions set forth in this Section 9.2 have
all been satisfied; and
(d) Any approvals or orders required in connection with the
Reorganization Proceeding in order to permit the transactions
contemplated by this Agreement shall have been obtained, and such
approvals or orders shall not have been stayed or reversed prior to
the Closing.
Section 9.3 Mutual Conditions. The obligations of each of
-----------------
Buyer and Seller to effect the Closing shall be subject to the following
conditions, any one or more of which may be waived in writing, as to
itself, by either party:
(a) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement
shall be in effect;
(b) All approvals of Governmental Authorities required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired;
(c) In respect of the notifications of Buyer and Seller pursuant
to the HSR Act, the applicable waiting period and any extensions
thereof shall have expired or been terminated;
(d) Buyer, Seller and Escrow Agent shall have duly executed and
delivered the Escrow Agreement;
(e) The Reorganization Plan as approved in the Reorganization
Proceeding shall contain substantially the terms specified in
Exhibit A and such other terms as are reasonably acceptable to
Buyer and Seller.
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ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 10.1 Survival. (a) The representations and
--------
warranties of the parties set forth in this Agreement shall terminate
on the date that is two years after the Closing Date. Notice with
respect to any claim in respect of any inaccuracy in or breach of any
representation or warranty shall be in writing and shall be given to
the party against which such claim is asserted on or before the date
on which such representation or warranty terminates.
(b) All covenants and agreements made by the parties to
this Agreement which contemplate performance following the Closing Date
shall survive the Closing Date. All other covenants and agreements
shall not survive the Closing Date and shall terminate as of the
Closing; provided, however, that if any such covenant or agreement
-------- -------
is breached on or prior to the Closing Date, the non-breaching party
shall retain all rights and remedies with respect to such breach
following the Closing Date.
Section 10.2 Obligation of Seller to Indemnify. Subject
---------------------------------
to the limitations set forth in Sections 10.1, 10.5, 10.6 and 10.7,
Seller shall indemnify, reimburse, defend and hold harmless Buyer and
its directors, officers, employees, Affiliates, and their respective
successors and assigns from and against any Loss incurred by any of them
based upon, arising out of or otherwise in respect of (i) any inaccuracy
in or any breach of any representation or warranty of Seller without
taking into account, in determining whether any such inaccuracy or
breach exists or has occurred, any qualifier in any representation or
warranty or portion thereof as to Material Adverse Effect, materiality
or similar qualifier;(ii) the nonfulfillment on the part of Seller of
any unwaived covenant or agreement set forth in this Agreement;
(iii) any direct or derivative Action brought or threatened within three
years after the Closing Date by any Person of any kind or nature
whatsoever and based on any legal theory whatsoever (a) (other than non-
derivative claims of Seller) seeking relief as a result of Buyer's
acquisition of the Shares, (b) resulting from alleged breaches occurring
on or after July 15, 1999 of contracts relating to the Stable Value
Business or (c) arising out of the financial distress of GALIC relating
to the Stable Value Business (the "Indemnified Litigation"); (iv) any
and all indemnification claims by officers, directors or employees of
Seller, the Company, GALIC, any Subsidiary, RGA, any RGA Subsidiary,
Conning or any Conning Subsidiary or payments made by the Company, any
Subsidiary, RGA, any RGA Subsidiary, Conning or any Conning Subsidiary
with respect to the items set forth in clause (iii) above, including
without limitation, any indemnification of any employee, officer or
director (other than a director of RGA or Conning who is not, and has
never been, an
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officer or employee of Seller, the Company, GALIC, any subsidiary, RGA,
any RGA Subsidiary, Conning or any Conning Subsidiary) of any such
Persons; (v) all liabilities relating to any Seller Plan not listed in
Schedule 4.13 (other than a Seller Plan that does not have an aggregate
lifetime present value liability in excess of $500,000); and (vi) all
liabilities relating to any additional or accelerated compensation,
benefits or other rights under a Seller Plan or other contract or
arrangement for the benefit of any Company Employee (or any non-employee
director or independent contractor of the Company, any Subsidiary, RGA,
any RGA Subsidiary, Conning or any Conning Subsidiary) resulting from
the transactions contemplated by this Agreement being considered to
constitute a "change in control" or similar triggering event.
Section 10.3 Obligation of Buyer to Indemnify. Subject
--------------------------------
to the limitations set forth in Sections 10.1, 10.5 and 10.7, Buyer
shall indemnify, defend and hold harmless Seller and its directors,
officers, employees, Affiliates, and their respective successors and
assigns from and against any Loss incurred by any of them based upon,
arising out of or otherwise in respect of (i) any inaccuracy in or
breach of any representation or warranty of Buyer (after taking into
account the exceptions to such representations and warranties which are
set forth on the Schedules related to such representations and
warranties), and (ii) the nonfulfillment on the part of Buyer of any
unwaived covenant or agreement set forth in this Agreement which
survives the Closing Date in accordance with Section 10.1.
Section 10.4 Notice and Opportunity to Defend Against Third
----------------------------------------------
Party Claims. (a) Promptly after receipt from any third party by
- ------------
either party hereto (the "Indemnitee") of a notice of any demand, claim
or circumstance that, immediately or with the lapse of time, would give
rise to a claim or the commencement (or threatened commencement) of any
action, proceeding or investigation (an "Asserted Liability") that may
result in a Loss for which indemnification may be sought hereunder, the
Indemnitee shall give written notice thereof (the "Claims Notice") to
the party obligated to provide indemnification pursuant to Section 10.2
or 10.3 (the "Indemnifying Party"); provided, however, that a failure
-------- -------
to give such notice shall not prejudice the Indemnitee's right to
indemnification hereunder except to the extent that the Indemnifying
Party is actually prejudiced thereby. The Claims Notice shall describe
the Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary) of the Loss that has been or may be
suffered by the Indemnitee.
(b) The Indemnifying Party may elect to compromise or
defend, at its own expense and by its own counsel, any Asserted
Liability. If the Indemnifying Party elects to compromise or defend
such Asserted Liability, it shall, within 20 Business Days following its
receipt of the Claims Notice (or sooner, if the
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nature of the Asserted Liability so requires) notify the Indemnitee of
its intent to do so, and the Indemnitee shall cooperate, at the expense
of the Indemnifying Party, in the compromise of, or defense against,
such Asserted Liability. If the Indemnifying Party elects not to
compromise or defend the Asserted Liability, fails to notify the
Indemnitee of its election as herein provided or contests its obligation
to provide indemnification under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle
or compromise any Asserted Liability without the consent of the other
party; provided, however, that such consent to settlement or compromise
shall not be unreasonably withheld. In any event, the Indemnitee and
the Indemnifying Party may participate, at their own expense, in the
defense of such Asserted Liability. If the Indemnifying Party chooses
to defend any Asserted Liability, the Indemnitee shall make available to
the Indemnifying Party any books, records or other documents within its
control that are necessary or appropriate for such defense.
Section 10.5 Net Indemnity. The amount of any Loss from and
-------------
against which either party is liable to indemnify, reimburse, defend
and hold harmless the other party or any other Person pursuant to
Section 10.2 or Section 10.3 shall be reduced by any insurance or other
recoveries or any Tax benefit that such Indemnitee actually realizes as
a result of or in connection with such Loss and increased by any Taxes
such Indemnitee actually realizes in respect of indemnification for such
Loss.
Section 10.6 Tax Indemnification. Notwithstanding any
-------------------
provision of this Article X or any other provision of this Agreement,
any issue or matter relating to Taxes (including all representations and
warranties contained in Section 4.14 and 4.26(iv)) shall be governed
solely by Article VIII.
Section 10.7 Limits on Indemnification. (a) No party shall
-------------------------
have any right to seek indemnification under this Agreement (i) as to
any individual item or series of related items of Loss, to the extent
such Loss is less than $25,000, (ii) with respect to Losses contemplated
by Section 10.2(i) which would otherwise be indemnifiable hereunder
incurred by such party (including Losses incurred by all other
Indemnitees affiliated with or related to such party) until such Losses
exceed $15 million in the aggregate, after insurance or other recoveries
and on an after-tax basis, as provided in Section 10.5, and such party
(including such affiliated or related Persons) shall only be entitled to
be indemnified for Losses in excess of such aggregate amount, (iii) for
punitive, special or consequential damages (other than in connection
with Indemnified Litigation or litigation not disclosed to Buyer in
breach of Section 4.8), or (iv) in respect of Losses to the extent such
Losses result from or arise out of actions taken by such party or an
Affiliate,
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employee, representative or agent thereof after the Closing not
contemplated by this Agreement and not required by Applicable Law.
After the Closing, the remedies provided by this Article X shall be the
sole and exclusive remedy for the parties to this Agreement with respect
to any dispute arising from, or related to, this Agreement, except in
the case of fraud and except that specific performance shall continue to
be available.
(b) Notwithstanding any provision of this Article X, the
liability of Seller under this Article X shall be limited to the
Purchase Price paid to the Escrow Agent pursuant to the terms of this
Agreement and Buyer agrees that its sole recourse shall be limited to
the funds paid by Seller to the Escrow Agent.
ARTICLE XI
TERMINATION
Section 11.1 Termination. (a) This Agreement may be
-----------
terminated on or prior to the Closing Date only as follows:
(i) by mutual written consent of Buyer and Seller;
(ii) by either Buyer or Seller if a condition to its
obligation to perform becomes incapable of fulfillment, provided,
however, that the right to terminate this Agreement pursuant to
this Section 11.1(a)(ii) shall not be available to any party if its
condition to perform became incapable of fulfillment due to its
failure to fulfill any obligation under this Agreement;
(iii) by Buyer if Seller (A) breaches or fails in any
material respect to perform or comply with any of its material
covenants or agreements contained herein, or (B) breaches any
representation or warranty that is qualified as to Material Adverse
Effect, or breaches any other representation or warranty which
breach would have a Material Adverse Effect, and such breach is not
cured to the reasonable satisfaction of Buyer within 30 Business
Days after Buyer has provided written notice thereof to Seller;
(iv) by Seller if Buyer (A) breaches or fails in any material
respect to perform or comply with any of its material covenants or
agreements contained herein, or (B) breaches any representation or
warranty in any material respect and such breach is not cured to
the reasonable satisfaction of Seller within 30 Business Days after
Seller has provided written notice thereof to Buyer;
(v) subject to Section 6.15, by either Buyer or Seller upon
written notice to the other if the Closing Date shall not have
occurred by August 26, 2000; provided, however,
-------- -------
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that the right to terminate this Agreement pursuant to this clause
(v) shall not be available to any party whose failure to fulfill
any of its obligations under this Agreement resulted in the Closing
not occurring by such date;
(vi) Subject to Section 11.3, by Seller, upon five days' prior
notice to Buyer, if, as a result of a Proposal with respect to a
Control Transaction by a party other than Buyer or any of its
affiliates, (A) the Board of Directors of Seller determines in good
faith following consultation with outside counsel and financial
advisors that acceptance of such Proposal is necessary for the
Board of Directors to act consistent with its fiduciary duties
under applicable law or (B) the Director of the Department directs
that Seller terminate this Agreement;
(vii) by Buyer if GALIC or any material Life Insurance Subsidiary
is placed in delinquency proceedings or reorganization proceedings
unless agreed to by Buyer; provided, however, that Buyer shall not
-------- -------
have the right to terminate this Agreement under this clause (vii)
as a result of a rehabilitation proceeding with respect to GALIC
which is instituted in order to effectuate the transactions
contemplated by this Agreement and such proceeding is completed
within 21 days or such longer period determined by Buyer in its
sole discretion as will not result in a material diminution of the
value of GALIC;
(viii) by Buyer if an order approving the Reorganization
Proceeding or this Agreement shall have been appealed and stayed
and such stay shall not have been lifted within 15 days after it
was issued; and
(ix) by Buyer if, after the date hereof, there shall have
occurred a change that fundamentally impairs in a manner that
cannot be remedied within a reasonable period of time the core
business operations of the Company and its Subsidiaries, taken as a
whole and is not attributable to (1) general conditions applicable
to the economy of the United States or elsewhere, including changes
in interest rates and in the stock or other financial markets,
(2) conditions generally affecting the life insurance, life
reinsurance or securities industries or (3) conditions or effects
resulting from or relating to the announcement or the existence or
terms of this Agreement or the consummation of the transactions
contemplated hereby.
(b) The termination of this Agreement shall be effectuated
by the delivery of a written notice of such termination from the party
terminating this Agreement to the other party.
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Section 11.2 Obligations upon Termination. In the event
----------------------------
that this Agreement shall be terminated pursuant to Section 11.1, all
obligations of the parties hereto under this Agreement shall terminate
and there shall be no liability of any party hereto to any other party
except (i) as set forth in Section 6.2, Section 6.3, Section 6.4(c),
Section 7.1(c) and Section 11.3 and (ii) that nothing herein will
relieve any party from liability for any breach of this Agreement.
Section 11.3 Termination Fee. Seller shall pay Buyer a
---------------
fee of $50,000,000, which amount shall be payable by Wire Transfer,
within one business day following any termination of this Agreement by
Seller pursuant to Section 11.1(a)(vi). The Company acknowledges that
the agreements contained in this Section 11.3 are an integral part of
the transactions contemplated in this Agreement, and that, without these
agreements, Buyer would not enter into this Agreement; accordingly, if
Seller fails to promptly pay the amount due pursuant to this Section
11.3, and, in order to obtain such payment, Buyer commences a suit which
results in a judgment against Seller for the full amount of the fee set
forth in this Section 11.3, Seller shall pay to Buyer its costs and
expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the rate of 12% per
annum from the date such fee was required to be paid. No termination of
this Agreement by Seller pursuant to Section 11.1(a)(vi) shall be
effective until receipt by Buyer of the amounts contemplated by the
first sentence of this Section 11.3.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Amendments. This Agreement may not be amended,
----------
altered or modified except by written instrument executed by Buyer and
Seller and approved by the Department.
Section 12.2 Entire Agreement. (a) This Agreement, the
----------------
Ancillary Agreements and the Confidentiality Agreement constitute the
entire understanding of the parties hereto with respect to the
transactions contemplated hereby, and supersede all prior agreements and
understandings, written and oral, among the parties with respect to the
subject matter hereof.
(b) Buyer acknowledges that neither Seller or any of its
Affiliates, nor any representative or advisor of any of them, has made
any representation or warranty to Buyer except as specifically made in
this Agreement. In particular, no such Person has made any
representation or warranty to Buyer with respect to: (i) any information
or materials distributed by Morgan Stanley & Co. Incorporated or
Goldman, Sachs & Co. in
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connection with the proposed sale of the Company and the Subsidiaries,
or (ii) any financial projection or forecast relating to the Company or
the Subsidiaries. With respect to any such projection or forecast
delivered by or on behalf of Seller to Buyer, Buyer acknowledges that:
(A) there are uncertainties inherent in attempting to make such
projections and forecasts, (B) it is familiar with such uncertainties,
(C) it is taking full responsibility for making its own evaluation of
the adequacy and accuracy of all such projections and forecasts so
furnished to it and (D) it shall have no claim against any such Person
with respect to any such projection or forecast.
Section 12.3 Interpretation. When reference is made in this
--------------
Agreement to any Section, Exhibit or Schedule, such reference is to
a Section, Exhibit or Schedule of this Agreement unless otherwise
indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The
phrases "the date of this Agreement," "the date hereof" and terms of
similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement.
The words "hereof", "herein", "hereby" and other words of similar import
refer to this Agreement as a whole unless otherwise indicated. The
phrase "to the knowledge of Seller" or any similar phrase shall be
deemed to refer to the actual knowledge of any of the executive officers
of the Company, GALIC, RGA and Conning after due inquiry. Whenever the
singular is used herein, the same shall include the plural, and whenever
the plural is used herein, the same shall include the singular, where
appropriate.
Section 12.4 Severability. Any term or provision of this
------------
Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, that provision shall be interpreted
to be only so broad as is enforceable.
Section 12.5 Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed given and delivered
if they are: (a) delivered in person, (b) transmitted by facsimile
(with confirmation), (c) delivered certified or registered mail (return
receipt requested), or (d) delivered by an express courier (with
confirmation) to a party at its address listed below (or at such other
address as such party shall deliver to the other party by like notice):
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To Seller: General American Mutual
Holding Company
700 Market Street
St. Louis, MO 63101-1887
Facsimile: (314) 444-0510
Attention: Robert Banstetter
With a concurrent
copy to: LeBoeuf, Lamb, Greene & MacRae,
L.L.P.
125 West 55th Street
New York, NY 10019-4513
Facsimile: (212) 424-8500
Attention: Alexander M. Dye
To Buyer: Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10011-3690
Facsimile: (212) 679-4523
Attention: General Counsel
With a concurrent
copy to: Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092
Facsimile: (212) 259-6333
Attention: Jonathan L. Freedman
Jeff S. Liebmann
Section 12.6 Binding Effect; Persons Benefitting; No
---------------------------------------
Assignment. This Agreement shall inure to the benefit of and be
- ----------
binding upon the parties hereto and the respective successors and
permitted assigns of the parties and such Persons. Nothing in this
Agreement is intended or shall be construed to confer upon any entity or
person other than the parties hereto and their respective successors and
permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. This Agreement may not be assigned by
either party hereto without the prior written consent of the other
party, except that the Buyer may assign its rights hereunder to a wholly
owned subsidiary with the prior written consent of the Department, which
consent shall not be unreasonably withheld.
Section 12.7 Counterparts. This Agreement may be executed in
------------
two or more counterparts, each of which shall be deemed an original, but
all of which taken together shall
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constitute one and the same agreement, it being understood that all of
the parties need not sign the same counterpart.
Section 12.8 No Prejudice. This Agreement has been
------------
jointly prepared by the parties hereto and the terms hereof shall not be
construed in favor of or against any party on account of its
participation in such preparation.
Section 12.9 Governing Law. THIS AGREEMENT, THE LEGAL
-------------
RELATIONS BETWEEN THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT
THEREOF SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS OF THE STATE OF MISSOURI.
Section 12.10 Specific Performance. Each party hereto
--------------------
acknowledges and agrees that the other party hereto would be irreparably
damaged in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, each party hereto agrees that it shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement by the other party and to enforce
specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof
having subject matter jurisdiction, in addition to any other remedy to
which either party may be entitled, at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
GENERAL AMERICAN MUTUAL
HOLDING COMPANY
By: /s/ Richard A. Liddy
--------------------
Name: Richard A. Liddy
Title: Chairman, President
and Chief Executive
Officer
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Robert H. Benmosche
-----------------------
Name: Robert H. Benmosche
Title: Chairman and Chief
Executive Officer
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Exhibit A
Reorganization Plan Components
The Reorganization Plan shall include provisions which
1. Incorporate the Stock Purchase Agreement, as executed,
and the Escrow Agreement, in the form of Exhibit B to
the Stock Purchase Agreement, as integral parts of
Reorganization Plan binding upon (or to be binding
upon) Seller in Rehabilitation.
2. Provide for approval of sale of the company with the
determination (i) that the stock of the Company is
being transferred free and clear of all claims, liens
and encumbrances, including but not limited to claims
against or relating to Seller, the assets of Seller,
or the interests of the members of Seller in Seller or
the value thereof and (ii) that such sale is for fair
consideration. In connection with such sale, no
closed block shall be required to be established for
any policyholders of GALIC.
<PAGE>
<PAGE>
Schedule 1.1(a)
Life Insurance Subsidiaries
General American Life Insurance Company, a Missouri company
General Life Insurance Company, a Texas company
General Life Insurance Company of America, an Illinois company
GenAm Benefits Insurance Company, a Missouri company<F*>
Paragon Life Insurance Company, a Missouri company
RGA Reinsurance Company, a Missouri company
Security Equity Life Insurance Company, a New York company
Cova Financial Services Life Insurance Company, a Missouri company
Cova Financial Life Insurance Company, a California company
First Cova Life Insurance Company, a New York company
Foreign
- -------
Missouri Reinsurance (Barbados), Inc.
RGA Reinsurance Company (Barbados) Ltd.
RGA Reinsurance Company of Australia Limited
RGA Life Reinsurance Company of Canada
RGA Reinsurance Company Chile S.A.
Triad Re, Ltd.
[FN]
<F*>GenAm Benefits Insurance Company: This entity currently holds insurance
licenses but is a non-operational shell which does not qualify as an
insurance company for tax purposes.
Received Time Aug.27. 11:59AM
<PAGE>
<PAGE>
Schedule 1.1(b)
Subsidiaries
General American Life Insurance Company
GenAmerica Management Corporation
Walnut Street Securities, Inc
Walnut Street Advisers, Inc
WSS Insurance Agencies (Alabama, Massachusetts, Ohio, Texas), Inc.
Collaborative Strategies, Inc.
GenAmerica Capital I
Missouri Reinsurance (Barbados), Inc.
NaviSys Incorporated
NaviSys Enterprise Solutions, Inc.
NaviSys Illustration Solutions, Inc.
NaviSys Insurance Solutions, Inc.
GenAm Benefits Insurance Company
Cova Corporation
Cova Financial Services Life Insurance Company
First Cova Life Insurance Company
Cova Financial Life Insurance Company
Cova Life Management Company
Cova Investment Advisory Corporation
Cova Investment Allocation Corporation
Cova Life Sales Company
Cova Life Administration Services Company
General Life Insurance Company
General Life Insurance Company of America
Paragon Life Insurance Company
Equity Intermediary Company
Security Equity Life Insurance Company
NaviSys Asia Pacific Limited
NaviSys de Mexico, S.A. de C.V.
Genelco Software, S.A.
Cova Life Administration Services Company
Consultec, LLC
Red Oak Realty Company
GenMark Incorporated
Stan Mintz Associates, Inc.
GenMark Insurance Agencies (Alabama, Massachusetts, Ohio, and Texas)
VirtualFinances.Com, Inc.
White Oak Royalty Company
Received Time Aug.27. 11:59AM
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Schedule 1.1(c)
Conning Subsidiaries
Conning, Inc.
Conning & Company
Conning Asset Management Company
Received Time Aug.27 11:59AM
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Schedule 1.1(d)
RGA Subsidiaries
RGA Sudamerica S.A.
BHIF America Seguros de Vida S.A.
RGA Reinsurance Company Chile S.A.
General American Argentina Sequros de Vida S.A.
Reinsurance Company of Missouri, Incorporated
RGA Reinsurance Company
Fairfield Management Group, Inc.
Reinsurance Partners, Inc.
Great Rivers Reinsurance Management, Inc.
RGA (U.K.) Underwriting Agency Limited
RGA Reinsurance Company (Barbados) Ltd.
RGA/Swiss Financial Group, L.L.C.
Triad Re, Ltd.
RGA Americas Reinsurance Company, Ltd.
RGA International Ltd.
RGA Financial Products Limited
RGA Canada Management Company, Ltd.
RGA Life Reinsurance Company of Canada
RGA Holdings Limited
RGA Capital Limited
Benefit Resource Life Insurance Company (Bermuda) Ltd.
RGA Australian Holdings Pty Limited
RGA Reinsurance Company of Australia Limited
RGA South African Holdings (Pty) Ltd.
RGA Reinsurance Company of South Africa Limited
Received Time Aug.27. 11:59AM
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AMENDMENT TO STOCK
PURCHASE AGREEMENT
AMENDMENT TO STOCK PURCHASE AGREEMENT, dated as of September
16, 1999, by and between GENERAL AMERICAN MUTUAL HOLDING COMPANY, a
Missouri mutual insurance holding company ("Seller"), and METROPOLITAN
LIFE INSURANCE COMPANY, a New York mutual life insurance company
("Buyer").
RECITALS
WHEREAS, Buyer and Seller have previously entered into a Stock
Purchase Agreement, dated as of August 26, 1999 (the "Stock Purchase
Agreement") (capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Stock Purchase Agreement); and
WHEREAS, Buyer and Seller wish to amend the Stock Purchase Agreement
as provided herein;
NOW, THEREFORE, in connection with and in consideration of the
premises and the mutual agreements and covenants hereinafter set forth,
the Buyer and the Seller hereby agree as follows:
1. Section 3.2(g) of the Stock Purchase Agreement is hereby
amended to read in its entirety as follows:
"(g) The Purchase Price proceeds shall be paid (i) to the Seller if
the Seller is not the subject of a rehabilitation proceeding, and (ii)
into the Account (as defined in Article 11 of the Reorganization Plan) if
the Seller is the subject of a rehabilitation proceeding."
2. Section 9.3(d) of the Stock Purchase Agreement is hereby
deleted. Insofar as the Stock Purchase Agreement refers to the Escrow
Agreement, such references shall be deemed to be references to the
provisions of Article 11 of the Reorganization Plan. Insofar as the Stock
Purchase Agreement refers to the Escrow or the Escrow Account, such
references shall be deemed to be references to the Account (as defined in
Article 11 of the Reorganization Plan). Insofar as the Stock Purchase
Agreement refers to the Escrow Agent, such references shall be deemed to
be references to the Director of Insurance of the State of Missouri,
acting solely in his capacity as the statutory rehabilitator of Seller,
and further solely insofar as he holds any portion of the Account and is
authorized to act with respect thereto.
3. Buyer agrees and acknowledges that the overbid procedures set
forth in the "Order Approving Certain Matters as to the Acquisition of
GenAmerica Corporation by Metropolitan Life Insurance Company" proposed to
be issued on September 17, 1999 by the Missouri court supervising the
Reorganization Proceeding are in conformity with the covenants of Seller
set forth in Section 6.13 of the Stock Purchase Agreement.
4. The number "21" in the first sentence of Section 6.6(d) of the
Stock Purchase Agreement is hereby replaced with the number "28".
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5. There are hereby added to the Stock Purchase Agreement two new
subsections (h) and (i) of Section 9.1 (Conditions to Buyer's
---------------------
Obligations) to read in their entirety as follows:
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"(h) Seller shall have granted to Buyer a first priority perfected
security interest in or first priority perfected lien upon the Account and
the Account Fund (as those terms are defined in the Reorganization Plan)
and all assets comprising such Account Fund, to be evidenced by:
(i) filed financing statement(s) under the Uniform
Commercial Code as enacted in the relevant jurisdiction(s) (the
"UCC");
(ii) reports of lien and judgment searches of appropriate
records; and
(iii) the Final Plan Confirmation Judgment (as defined in the
Reorganization Plan);
provided, however, if there is a reasonable basis for Buyer concluding,
- --------- -------
under applicable law, that all or any of the foregoing are legally
insufficient to grant to Buyer a first priority perfected security
interest or first priority perfected lien, the parties shall cooperate in
good faith to find an alternative mechanism which has a legal effect
substantially identical to the first priority perfected security interest
or first priority perfected lien described above, which mechanism does not
adversely affect the rights of the respective parties; and
(i) Seller shall have obtained a signed agreement from the
financial institution at which the Account is required to be established
pursuant to the Reorganization Plan indicating that such institution (i)
has established the Account in accordance with the Reorganization Plan and
has acknowledged receipt of a copy of the Final Plan Confirmation Judgment
(as defined in the Reorganization Plan), (ii) has acknowledged that it is
a "securities intermediary" and that the Account and the assets comprising
the Account Fund are "investment property" and "financial assets" within
the meaning of the UCC, and are not deposit accounts, (iii) has agreed
that it will not enter into an agreement with any person that would give
such person "control" over the Account or the Account Fund within the
meaning of the UCC and (iv) has agreed that it will disburse assets
comprising the Account Fund only upon request of the Rehabilitator (as
defined in the Reorganization Plan) supported by either an order of the
Rehabilitation Court (as defined in the Reorganization Plan) or the
written consent of the Buyer."
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6. The word "and" following the semi-colon at the end of Section
9.1(f) of the Stock - Purchase Agreement is hereby deleted, and the period
at the end of Section 9.1(g) of the Stock Purchase Agreement is hereby
replaced with a semi-colon.
7. A new Section 12.11 is hereby added to the Stock Purchase
Agreement to read in its entirety as follows:
"Section 12.11 Security Interest. To secure Buyer's right to
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indemnity pursuant to Articles VIII and X of the Stock Purchase Agreement,
Seller hereby grants to Buyer a first priority perfected security interest
in all of Seller's right, title and interest in and to the proceeds of the
Seller's right to receive the Purchase Price described in the Stock
Purchase Agreement, as amended by this Amendment (including, without
limitation, all investments and reinvestments of, and substitutions for,
such proceeds). Such security interest shall not attach until the Closing
Date and, upon the Closing, shall for all purposes be deemed to be, and be
treated as, part of the MetLife Lien (as defined in the Reorganization
Plan). Notwithstanding the foregoing, the first priority perfected
security interest created by this Section 12.11 shall not in any way
impair any of the rights, or restrict the exercise of any of the remedies,
of the Seller under the Stock Purchase Agreement prior to the Closing.
Seller shall promptly execute and deliver to Buyer such further
instruments and documents, and take such further action (including,
without limitation, execution and delivery to Buyer of UCC financing
statements to be filed in such jurisdictions as Buyer may determine) as
Buyer may reasonably request for the purpose of perfecting, and otherwise
obtaining or preserving the full benefit to Buyer of; such first priority
perfected security interest."
8. Exhibit B to the Stock Purchase Agreement is hereby deleted.
9. A new Exhibit C to the Stock Purchase Agreement, in the form of
Appendix I attached hereto, is hereby added to the Stock Purchase
Agreement.
10. There is hereby added to the Stock Purchase Agreement a new
subsection (j) of Section 9.1 (Conditions to Buyer's Obligations) to
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read in its entirety as follows:
"(j) The Reorganization Plan as set forth in Exhibit C hereto shall
be approved by the Rehabilitation Court with only such modifications that
will not materially impair the rights or interests of Buyer under this
Agreement."
11. There is hereby added to the Stock Purchase Agreement a new
subsection (e) of Section 9.2 (Conditions to Seller's Obligations) to
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read in its entirety as follows:
"(e) The Reorganization Plan as set forth in Exhibit C hereto shall
be approved by the Rehabilitation Court with only such modifications that
will not materially impair the rights or interests of Seller under this
Agreement."
12. There is hereby added to the Stock Purchase Agreement a new
subsection (k) of Section 9.1 (Conditions to Buyer's Obligations) to
---------------------------------
read in its entirety as follows:
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"(k) GALIC shall not be in administrative supervision."
13. Section 6.20 of the Stock Purchase Agreement is hereby amended
to read in its entirety as follows:
"Section 6.20 Capital Contribution. In the event that Buyer
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and Seller implement the exchange program contemplated by Section 7.1(c)(i)
hereof and the Closing occurs, (x) Buyer will make a capital contribution
to GALIC not later than the fifteenth Business Day following the Closing
Date in the amount of one-half of the aggregate risk premium payments
theretofore made by GALIC to Buyer pursuant to Section 7.1(c)(i) hereof,
(y) Buyer will make a further capital contribution to GALIC equal to the
amount set forth in clause (x) above not later than the earlier of (i)
the 180th day following the Closing Date and (ii) the day following the
termination or cancellation of the last exchange contracts issued by
Buyer pursuant to Section 7.l(c)(i), and (z) Buyer will release GALIC from
all payment obligations required to be made after the Closing Date
pursuant to Section 7.l(c)(i)."
For purposes of this Amendment, "Reorganization Plan" shall mean the
Plan of Reorganization in the form of Appendix I hereto.
Except as provided herein, the Stock Purchase Agreement shall remain
unamended and in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above.
GENERAL AMERICAN MUTUAL HOLDING COMPANY
By: /s/ Robert J. Banstetter
--------------------------------------
Name: Robert J. Banstetter
Title: Vice President, General
Counsel & Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:
--------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above.
GENERAL AMERICAN MUTUAL HOLDING COMPANY
By:
--------------------------------------
Name:
Title:
METROPOLITAN LIFE INSURANCE
COMPANY
By: /s/Terence I. Lennon
--------------------------------------
Name: Terence I. Lennon
Title: Executive Vice President
