FIRST COLONY CORP, DEFS14A, 1996-10-28

FIRST COLONY CORP
DEFS14A, 1996-10-28
LIFE INSURANCE

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )

Check the appropriate box:

( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

FIRST COLONY CORPORATION
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

(X) No fee required

( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

( ) Fee paid previously with preliminary materials.

( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule, or Registration Statement No.:

3) Filing Party:

4) Date Filed:

<PAGE>

FIRST COLONY CORPORATION
RIVERFRONT PLAZA, WEST TOWER
SUITE 1350
901 EAST BYRD STREET
RICHMOND, VIRGINIA 23219

[LOGO]

SPECIAL MEETING OF SHAREHOLDERS
October 28, 1996
To the Shareholders:

We invite you to attend a Special Meeting of shareholders of First Colony
Corporation (the "Corporation") to be held at 700 Main Street, Lynchburg,
Virginia, on Monday, November 25, 1996, at 3:45 p.m., Eastern Standard Time (the
"Special Meeting"). A formal notice of the Special Meeting, together with a
proxy statement and proxy form, is enclosed with this letter.

At the Special Meeting, you will be asked to consider and vote on a
proposal to approve the Amended and Restated Agreement and Plan of Merger, dated
as of August 5, 1996 (the "Merger Agreement"), by and among the Corporation,
General Electric Capital Corporation ("GECC") and FCMS, Inc., a wholly-owned
subsidiary of GECC ("Merger Subsidiary"), and the related Plan of Merger (the
"Plan of Merger"). A copy of the Merger Agreement, together with the Plan of
Merger, is included as Annex I to the attached Proxy Statement. On the terms and
subject to the conditions of the Merger Agreement, Merger Subsidiary will be
merged with and into the Corporation (the "Merger") and the Corporation will
become an indirect subsidiary of GECC. Upon consummation of the Merger, each
outstanding share of the Corporation's common stock will be converted into the
right to receive $36.15 in cash. Holders of shares of preferred stock will
receive notice of the Special Meeting but under Virginia law are not entitled to
vote on the proposal to approve the Merger Agreement and the Plan of Merger. The
Corporation's preferred stock will not be affected by the Merger. It is
anticipated that all issued and outstanding shares of the Corporation's
preferred stock will be redeemed shortly after the Merger is consummated.

Approval of the Merger Agreement and the Plan of Merger requires the
affirmative vote of at least two-thirds of the outstanding shares of common
stock of the Corporation. Detailed information concerning the Merger is set
forth in the Proxy Statement, which we urge you to read carefully.

YOUR BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE PLAN OF MERGER AND DETERMINED THAT THE
MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE CORPORATION AND ITS
SHAREHOLDERS, AND RECOMMENDS THAT COMMON SHAREHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND THE PLAN OF MERGER.

Whether or not you plan to attend the Special Meeting in person and
regardless of the number of shares of common stock you own, please complete,
sign, date and return the enclosed proxy form promptly in the accompanying
prepaid envelope.

Sincerely yours,

/s/ Bruce C. Gottwald, Jr.

BRUCE C. GOTTWALD, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

<PAGE>

FIRST COLONY CORPORATION

RIVERFRONT PLAZA, WEST TOWER
SUITE 1350
901 EAST BYRD STREET
RICHMOND, VIRGINIA 23219

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that a Special Meeting of the holders of shares of
Common Stock, without par value, of First Colony Corporation (the "Common
Stock") will be held at 700 MAIN STREET, LYNCHBURG, VIRGINIA, ON MONDAY,
NOVEMBER 25, 1996, AT 3:45 P.M., EASTERN STANDARD TIME, FOR THE FOLLOWING
PURPOSES:

1. To approve the Amended and Restated Agreement and Plan of Merger, dated
as of August 5, 1996, by and among First Colony Corporation, General
Electric Capital Corporation and FCMS, Inc., and the related Plan of
Merger; and

2. To transact such other business as may properly come before the meeting.

Holders of shares of Common Stock of record at the close of business of The
New York Stock Exchange on October 7, 1996, are entitled to notice of and to
vote at the meeting.

Please complete, sign, date and return the enclosed proxy form promptly,
whether or not you expect to attend the meeting. A self-addressed, stamped
envelope is enclosed for your convenience.

If you are present at the meeting, you may vote in person even if you
already have returned your proxy.

By Order of the Board of Directors
PETER W. KARRAS, SECRETARY

October 28, 1996

SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.

<PAGE>
FIRST COLONY CORPORATION

PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS

NOVEMBER 25, 1996

APPROXIMATE DATE OF MAILING -- OCTOBER 28, 1996

Proxies in the form enclosed are solicited by the Board of Directors of
First Colony Corporation (the "Corporation") for the Special Meeting of
Shareholders (the "Special Meeting") to be held on Monday, November 25, 1996,
and any adjournments thereof. At the Special Meeting, holders of shares of the
common stock, without par value, of the Corporation (the "Common Stock") will be
asked to consider and vote upon the approval of the Amended and Restated
Agreement and Plan of Merger (the "Merger Agreement"), dated as of August 5,
1996, by and among the Corporation, General Electric Capital Corporation, a New
York corporation ("GECC"), and FCMS, Inc., a Delaware corporation and indirect
wholly-owned subsidiary of GECC ("Merger Subsidiary"), and the related Plan of
Merger (the "Plan of Merger"), providing for the merger of Merger Subsidiary
with and into the Corporation (the "Merger"), on the terms and subject to the
conditions set forth in the Merger Agreement. Upon the consummation of the
Merger, each outstanding share of Common Stock will be converted into the right
to receive $36.15 in cash (the "Merger Consideration"). Issued and outstanding
shares of the variable term cumulative preferred stock, series B and series C,
without par value, of the Corporation (the "Preferred Stock") will not be
affected by the Merger. It is anticipated that the Preferred Stock will be
redeemed shortly after the Merger is consummated. As a result of the Merger, the
Corporation will become an indirect subsidiary of GECC and present common
shareholders of the Corporation will cease to have any equity interest in, or
possess rights as common shareholders of, the Corporation. (With respect to the
period following the consummation of the Merger, the Corporation may be referred
to in this Proxy Statement as the "Surviving Corporation.")

A copy of the Merger Agreement, including the Plan of Merger, is attached
hereto as Annex I. The summaries of the portions of the Merger Agreement set
forth in this Proxy Statement do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the text of the Merger
Agreement.

THE CORPORATION'S BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE PLAN OF MERGER AND DETERMINED
THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE CORPORATION AND
ITS SHAREHOLDERS, AND RECOMMENDS THAT COMMON SHAREHOLDERS VOTE FOR APPROVAL OF
THE MERGER AGREEMENT AND THE PLAN OF MERGER. In reaching its determination, the
Board of Directors considered, among other things, the opinions, dated as of the
date of the Merger Agreement, of CS First Boston Corporation ("CS First Boston")
and Morgan Stanley & Co. ("Morgan Stanley"), the Corporation's financial
advisors, as to the fairness of the Merger Consideration from a financial point
of view. The opinions of CS First Boston and Morgan Stanley are included as
Annexes II-A and II-B hereto, respectively, and are incorporated herein by
reference. Shareholders are urged to read the opinions carefully in their
entirety for further information respecting the assumptions made, matters
considered and limitations on the review undertaken in connection with such
opinions. See "The Merger -- Reasons for the Merger; Recommendation of the Board
of Directors;" and " -- Opinions of Financial Advisors."

On October 7, 1996, the date for determining shareholders entitled to
notice of and to vote at the meeting, there were 49,304,481 shares of Common
Stock issued and outstanding. Each share of Common Stock is entitled to one
vote.

Any person giving a proxy may revoke it any time before it is voted by
voting in person at the meeting or delivering another proxy, or written notice
of revocation, to the Secretary of the Corporation. A proxy, if executed and not
properly revoked, will be voted, and, if it contains any specific instructions,
will be voted in accordance with such instructions.

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY......................................................................................................... 3
The Special Meeting........................................................................................... 3
The Merger.................................................................................................... 4
Anticipated Accounting Treatment.............................................................................. 6
Certain Tax Consequences of the Merger........................................................................ 6
Dissenters' Rights............................................................................................ 6
Stock Purchase Rights......................................................................................... 6
Government and Regulatory Approvals and Filings............................................................... 6
Market Prices................................................................................................. 7
Summary Financial Information Concerning the Corporation...................................................... 7

SPECIAL MEETING................................................................................................. 8
Place, Date and Time.......................................................................................... 8
Record Date; Solicitation of Proxies.......................................................................... 8
Vote Required................................................................................................. 8

THE MERGER...................................................................................................... 9
General....................................................................................................... 9
Background of Merger.......................................................................................... 10
Reasons for Merger; Recommendation of the Board of Directors.................................................. 12
Opinions of Financial Advisors................................................................................ 13
No Solicitation; Fiduciary Duties............................................................................. 19
Interests of Certain Persons in the Merger.................................................................... 19
Effective Time of the Merger.................................................................................. 21
Payment for Shares of Common Stock............................................................................ 21
Certain Other Effects of the Merger........................................................................... 21
Government and Regulatory Approvals and Filings............................................................... 21
Benefit Plans................................................................................................. 22
Terms of the Merger........................................................................................... 22
General.................................................................................................... 22
Amendment, Extension, Waiver............................................................................... 22
Conditions to the Merger................................................................................... 22
Conduct of Business Pending the Merger..................................................................... 23
Termination................................................................................................ 23
Anticipated Accounting Treatment.............................................................................. 24
Certain Tax Consequences of the Merger........................................................................ 24
Dissenters' Rights............................................................................................ 24
Stock Purchase Rights......................................................................................... 24

SECURITY OWNERSHIP.............................................................................................. 25
Security Ownership of Certain Beneficial Owners............................................................... 25
Security Ownership of Certain Management of the Corporation................................................... 26

MARKET PRICES................................................................................................... 26

SELECTED FINANCIAL INFORMATION CONCERNING THE CORPORATION....................................................... 27

ADDITIONAL INFORMATION.......................................................................................... 28
Independent Accountants....................................................................................... 28
Incorporation by Reference.................................................................................... 28

SHAREHOLDER PROPOSALS........................................................................................... 29

ANNEXES
Merger Agreement.............................................................................................. Annex I
CS First Boston Opinion....................................................................................... Annex II-A
Morgan Stanley Opinion........................................................................................ Annex II-B
</TABLE>

<PAGE>
SUMMARY

THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION FOUND ELSEWHERE IN
THIS PROXY STATEMENT. CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY ARE DEFINED
ELSEWHERE IN THIS PROXY STATEMENT. ALL STATEMENTS IN THE FOLLOWING SUMMARY ARE
QUALIFIED AND ARE MADE SUBJECT TO THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS PROXY STATEMENT AND THE ANNEXES ATTACHED HERETO, WHICH YOU ARE
URGED TO READ IN THEIR ENTIRETY.

THE SPECIAL MEETING

PLACE, DATE AND TIME

The Special Meeting of Shareholders of the Corporation will be held at 700
Main Street, Lynchburg, Virginia, on Monday, November 25, 1996, at 3:45 p.m.,
Eastern Standard Time.

RECORD DATE; SHARES OF COMMON STOCK ENTITLED TO VOTE

The Board of Directors has fixed the close of business of The New York
Stock Exchange (the "NYSE") on October 7, 1996, as the record date (the "Record
Date") for the determination of shareholders entitled to notice of, and to vote
at, the Special Meeting. See "Special Meeting -- Record Date; Solicitation of
Proxies."

PURPOSE OF THE SPECIAL MEETING

At the Special Meeting, holders of Common Stock will be asked to consider
and vote on the approval of the Merger Agreement and the Plan of Merger,
providing for the Merger of Merger Subsidiary, an indirect wholly-owned
subsidiary of GECC, with and into the Corporation, whereby the Surviving
Corporation will become a subsidiary of GECC.

VOTE REQUIRED; PROXIES

A majority of the outstanding shares of Common Stock entitled to vote,
represented in person or by proxy, is required for a quorum at the Special
Meeting. Approval of the Merger Agreement and the Plan of Merger requires the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Common Stock as of the Record Date. At the Record Date, 49,304,481 shares of
Common Stock were issued and outstanding and entitled to vote at the Special
Meeting. See "Special Meeting -- Record Date; Solicitation of Proxies."

Shares of Common Stock that are represented by properly executed proxies,
unless such proxies shall have previously been properly revoked, will be voted
in accordance with the instructions indicated in such proxies. If no contrary
instructions are indicated, such shares will be voted FOR approval of the Merger
Agreement and the Plan of Merger, and in the discretion of the persons named in
the proxy as proxy appointees, as to any other matter that may properly come
before the Special Meeting and of which the Corporation is not presently aware.
Under the rules of the NYSE, although brokers who hold shares in street name
have the authority to vote on certain items when they have not received
instructions from beneficial owners, brokers will not be entitled to vote on the
Merger Agreement and the Plan of Merger absent instructions. A broker non-vote
will have the effect of a negative vote on the approval of the Merger Agreement
and the Plan of Merger. Similarly, a failure to return a properly executed proxy
will have the effect of a negative vote on the approval of the Merger Agreement
and the Plan of Merger.

Holders of shares of the Preferred Stock will receive notice of the Special
Meeting but under the Virginia Stock Corporation Act (the "Virginia Act") are
not entitled to vote on the proposal to approve the Merger Agreement and the
Plan of Merger.

It is not expected that any matters other than those referred to in this
Proxy Statement will be brought before the Special Meeting. If other matters are
properly presented, however, the persons named as proxies will vote in
accordance with their best judgment on such matters. The grant of a proxy also
will confer discretionary authority on the persons named in the proxy to vote in
accordance with their best judgment on matters incident to the conduct of the
Special Meeting.

Any shareholder may revoke a proxy at any time before it is voted by filing
with the Corporate Secretary of the Corporation an instrument revoking the proxy
or by returning a duly executed proxy bearing a later date, or by attending the
Special Meeting and voting in person.

<PAGE>
facsimile transmission and other electronic communication methods or personal
interview. Corporate Investor Communications, Inc. ("CIC"), has been engaged to
assist in the solicitation of proxies from brokers, nominees, fiduciaries and
other custodians. The Corporation will pay CIC approximately $6,000 for its
services, plus reimbursement for out-of-pocket expenses. The Corporation will
reimburse banks, brokerage houses, custodians and other fiduciaries who hold
shares of Common Stock in their name or custody, or in the name of nominees for
others, for their out-of-pocket expenses incurred in forwarding copies of the
proxy materials to those persons for whom they hold such shares. The Corporation
will bear all other costs of the Special Meeting and of soliciting proxies
therefor, including the cost of printing and mailing this Proxy Statement and
related materials.

Certain members of the Gottwald family have agreed to vote certain of their
shares of Common Stock to approve the Merger and the Plan of Merger. See
"Special Meeting -- Vote Required."

THE MERGER

PARTIES TO THE MERGER AGREEMENT

The following entities are parties to the Merger Agreement:

THE CORPORATION. The Corporation is a holding company that owns all of the
outstanding shares of stock of First Colony Life Insurance Company ("First
Colony Life"), which, in turn, owns all of the outstanding shares of stock of
American Mayflower Life Insurance Company of New York ("American Mayflower").
First Colony Life and American Mayflower are engaged in the sale and
administration of structured settlement and retirement annuities and individual
life insurance. The address and telephone number of the Corporation's executive
offices are Riverfront Plaza, West Tower, Suite 1350, 901 East Byrd Street,
Richmond, Virginia 23219, and (804) 775-0300.

GECC. GECC primarily engages, directly or through its subsidiaries, in
distribution sales financing, consumer receivables, commercial leasing, asset
management, commercial and industrial financing, credit life, life, property and
casualty and accident and sickness insurance, annuities, property and casualty
reinsurance and real estate financing. The address and telephone number of
GECC's principal executive offices are 260 Long Ridge Road, Stamford,
Connecticut 06927, and (203) 357-3965.

MERGER SUBSIDIARY. Merger Subsidiary is a newly-formed Delaware corporation
created solely for the purpose of engaging in the transactions contemplated by
the Merger Agreement.

GENERAL

If the Merger Agreement and the Plan of Merger are approved by the
requisite vote, and all other conditions to the obligations of the parties are
satisfied or waived, Merger Subsidiary will merge with and into the Corporation.
Pursuant to the Merger, each share of Common Stock will be cancelled and
converted automatically into the right to receive the Merger Consideration,
other than shares owned by GECC, Merger Subsidiary or any of their respective
subsidiaries (which will be cancelled without any payment therefor). The Merger
will have no effect on the issued and outstanding shares of Preferred Stock. It
is anticipated that all issued and outstanding shares of Preferred Stock will be
redeemed shortly after the Effective Time.

RECOMMENDATION OF THE BOARD OF DIRECTORS AND REASONS FOR THE MERGER

The Board of Directors of the Corporation, at a special meeting on August
4, 1996, unanimously approved the Merger Agreement and the Plan of Merger and
directed that the Merger Agreement and the Plan of Merger be submitted to the
common shareholders of the Corporation for their approval. The Board of
Directors has determined that the Merger is fair to, and in the best interests
of, the Corporation and its shareholders and recommends that the common
shareholders vote FOR approval of the Merger Agreement and the Plan of Merger.
In reaching its decision to approve the Merger Agreement and the Plan of Merger,
the Corporation's Board of Directors considered a number of factors. For a
discussion of the factors considered by the Board in reaching its determination,
see "The Merger -- Reasons for the Merger; Recommendation of the Board of
Directors;" and " -- Opinions of Financial Advisors."

OPINIONS OF FINANCIAL ADVISORS

The Corporation's financial advisors, CS First Boston and Morgan Stanley,
have each rendered a written opinion to the Board of Directors of the
Corporation to the effect that, as of the date of such opinions and based upon
and subject to certain matters stated therein, the Merger Consideration to be
received by the shareholders of the Corporation in the Merger was fair to such
holders from a financial point of view. Copies of the written opinions of CS
First Boston and

<PAGE>
Morgan Stanley are attached hereto as Annexes II-A and II-B, respectively, and
should be read carefully in their entirety with respect to the assumptions made,
matters considered and limitations on the review undertaken in connection with
such opinions. The opinions of CS First Boston and Morgan Stanley are directed
only to the fairness of the Merger Consideration from a financial point of view,
do not address any other aspect of the proposed Merger or any related
transaction and do not constitute a recommendation to any shareholder as to how
such shareholder should vote at the Special Meeting. See "The Merger -- Opinions
of Financial Advisors."

NO SOLICITATION; FIDUCIARY DUTIES

Pursuant to the Merger Agreement, the Corporation may not, nor may it
authorize or permit any of its affiliates, officers, directors, employees,
representatives or agents to, solicit any Acquisition Proposal. The
Corporation's Board of Directors may not withdraw its recommendation of the
Merger or approve or recommend any Acquisition Proposal unless it determines in
its good faith judgment that it is required to do so in order to comply with its
fiduciary obligations to shareholders under applicable law. See "The
Merger -- No Solicitation; Fiduciary Duties."

EFFECTIVE TIME OF THE MERGER; PAYMENT FOR COMMON STOCK

On the closing date of the Merger (the "Closing Date") (or such other date
as the parties may agree), the Corporation and Merger Subsidiary shall file: (i)
Articles of Merger with the State Corporation Commission of the Commonwealth of
Virginia (the "Virginia Commission"); and (ii) a certificate of merger (the
"Delaware Certificate") with the Secretary of State of the State of Delaware
(the "Delaware Secretary of State"), each executed in accordance with the
relevant provisions of the Virginia Act and the Delaware General Corporation Law
(the "DGCL"), respectively. The Merger shall become effective upon the last to
occur of (i) the issuance of a Certificate of Merger by the Virginia Commission,
(ii) the filing of the Delaware Certificate with the Delaware Secretary of State
or (iii) such later time as is specified in the Plan of Merger (the "Effective
Time"). See "The Merger -- Terms of the Merger - Conditions to the Merger;" and
" -- Effective Time of the Merger."

Detailed instructions with regard to the surrender of certificates, to be
accompanied by a letter of transmittal, will be forwarded to holders of
certificates formerly evidencing shares of Common Stock as promptly as
practicable following the Effective Time by Harris Trust Company of New York
(the "Paying Agent"). Payment will be made to such former holders of shares of
Common Stock as promptly as practicable following receipt by the Paying Agent of
certificates for their shares of Common Stock and other required documents. No
interest will be paid or accrued on the cash payable upon the surrender of
certificates. See "The Merger -- Payment for Shares of Common Stock."

STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY FORM. IF THE
MERGER IS CONSUMMATED, SHAREHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR SHARES OF COMMON STOCK FOR THE MERGER CONSIDERATION.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In addition to (i) shares of Common Stock held by directors and executive
officers of the Corporation, for which they will receive the same consideration
as other common shareholders of the Corporation, and (ii) options to acquire
shares of Common Stock granted pursuant to certain Corporation compensation
plans, which will be treated as described below under "The Merger -- General,"
certain executive officers of the Corporation are parties to agreements with the
Corporation pursuant to which significant payments and other benefits may be
provided to such persons in the event the employment of such persons by the
Corporation or one of its subsidiaries is terminated under certain
circumstances.

The Merger Agreement contains certain provisions with respect to various
employee benefit plans of the Corporation. See "The Merger -- Benefit Plans."

In addition, GECC has agreed (i) to cause the Surviving Corporation to
indemnify each current and former officer, director and employee of the
Corporation or any subsidiary (collectively, the "Indemnified Parties" and
individually, an "Indemnified Party") to the fullest extent permitted under the
law, (ii) to cause the Surviving Corporation to keep in effect provisions in its
Articles of Incorporation and Bylaws providing for exculpation of directors and
officers and indemnification of the Indemnified Parties to the fullest extent
permitted under the Virginia Act for a period of not less than six years after
the Effective Time and (iii) subject to certain limitations, to cause to be
maintained for a period of three years after the Effective Time officers' and
directors' liability insurance that is no less advantageous than existing
policies maintained by the Corporation. See "The Merger -- Interests of Certain
Persons in the Merger."

<PAGE>
CONDITIONS TO THE MERGER

The obligations of GECC, Merger Subsidiary and the Corporation to
consummate the Merger are subject to waiver or satisfaction of certain
conditions, including obtaining requisite shareholder and regulatory approvals.
See "The Merger -- Terms of the Merger - Conditions to the Merger;" and
" -- Government and Regulatory Approvals and Filings."

TERMINATION; FEES AND EXPENSES

The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by mutual written consent of GECC and the Corporation; (ii) by GECC if
(A) the Merger Agreement and the Plan of Merger are not approved by the common
shareholders of the Corporation; (B) the Board of Directors of the Corporation
fails to call the Special Meeting or to recommend that the Corporation's
shareholders approve the Merger Agreement and the Plan of Merger or withdraws
such recommendation; or (C) the Corporation has determined to accept or
recommend a Superior Proposal (as hereinafter defined); (iii) by either the
Corporation or GECC if the Merger has not been consummated on or before March
31, 1997; (iv) by either the Corporation or GECC if a governmental authority
issues a final permanent order prohibiting the Merger; or (v) by either the
Corporation or GECC upon a material breach of a representation, warranty or
covenant by the other party and the lapse of a cure period.

If the Merger Agreement is terminated by GECC for reasons described in
subsections (ii) or (v) above and a Superior Proposal shall have been made prior
to termination and accepted within 12 months of termination, the Corporation
shall pay to GECC a fee equal to $52,500,000 plus all fees and expenses incurred
by GECC and its affiliates in connection with the Merger Agreement and the
transactions contemplated thereby up to a maximum of $10,000,000 (the
"Acquisition Expenses"). If the Merger Agreement is terminated by GECC for
reasons described in subsections (ii) or (v) above and no Superior Proposal
shall have been made, the Corporation shall pay to GECC the Acquisition
Expenses. See "The Merger -- Terms of the Merger - Termination."

ANTICIPATED ACCOUNTING TREATMENT

The Merger will be accounted for by GECC as a "purchase" for accounting and
financial reporting purposes. See "The Merger -- Anticipated Accounting
Treatment."

CERTAIN TAX CONSEQUENCES OF THE MERGER

The disposition of shares of Common Stock in the Merger will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign or other tax laws.
Shareholders are urged to consult their own tax advisors as to the particular
tax consequences of the Merger, including the applicability and effect of state,
local, foreign and other taxes. See "The Merger -- Terms of the Merger - Certain
Tax Consequences of the Merger."

DISSENTERS' RIGHTS

The shareholders of the Corporation, whether or not they vote in the
Special Meeting, will not be entitled to dissenters' rights and will be bound by
the terms and conditions of the Merger Agreement if the Merger is consummated.
See "The Merger -- Terms of the Merger - Dissenters' Rights."

STOCK PURCHASE RIGHTS

On or prior to the Closing Date, the Board of Directors of the Corporation
will take the steps necessary to redeem all rights (the "Stock Purchase Rights")
issued pursuant to the Rights Agreement, dated as of December 1, 1992, between
the Corporation and Harris Trust and Savings Bank. See "The Merger -- Terms of
the Merger - Stock Purchase Rights."

GOVERNMENT AND REGULATORY APPROVALS AND FILINGS

The consummation of the Merger will be subject to, among other approvals,
the prior approval of the Bureau of Insurance of the Commonwealth of Virginia
(the "Virginia Bureau") and the Department of Insurance of the State of New York
(the "New York Department") and to the expiration or early termination of the
relevant waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"). Definitive applications for approval were
submitted by GECC to the Virginia Bureau and the New York Department on
September 4, 1996. On

<PAGE>
October 15, 1996, the parties to the Merger Agreement were informed by the
Federal Trade Commission (the "FTC") that they had received early termination of
the relevant waiting period under the HSR Act with respect to the Merger. See
"The Merger -- Government and Regulatory Approvals and Filings."

MARKET PRICES

The Common Stock is listed and traded on the NYSE. As of August 2, 1996,
the date immediately preceding public announcement of the signing of the Merger
Agreement, high and low sales prices of the Common Stock on the NYSE Composite
Transactions Tape were $30 1/4 per share and $29 3/4 per share, respectively. On
October 23, 1996, the latest practicable trading day before the printing of this
Proxy Statement, the high and low sales prices of the Common Stock on the NYSE
Composite Transactions Tape were 35 3/4 per share and 35 5/8 per share,
respectively.

SUMMARY FINANCIAL INFORMATION CONCERNING THE CORPORATION

The summary historical consolidated financial data presented below for each
of the last five fiscal years and the six months ended June 30, 1996, and 1995,
have been derived from the Corporation's historical financial statements. This
data should be read in conjunction with the consolidated financial statements
and notes thereto of the Corporation included in the Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, and the Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, which are incorporated by reference
into this Proxy Statement. See "Additional Information -- Incorporation by
Reference."
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEARS
MONTHS ENDED ENDED
JUNE 30, (UNAUDITED) DECEMBER 31,
1996 1995 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
OPERATIONS DATA
Total revenue........................... $ 826.6 $ 798.2 $ 1,658.4 $ 1,375.8 $ 1,559.7 $ 1,282.5
Revenue excluding realized investment
gain.................................. 805.3 765.8 1,599.5 1,387.9 1,343.4 1,198.2
Net income.............................. 80.6 74.7 151.4 106.9 203.9 163.7(1)
After-tax operating income(2)........... 66.5 53.9 113.2 107.2 104.1 113.4
After-tax operating income per
share(2).............................. 1.31 1.06 2.23 2.11 2.10 2.30
Net income per share.................... 1.59 1.48 3.00 2.10 4.12 3.32

FINANCIAL CONDITION DATA
Total assets (including FAS 115)(3)..... $ 10,841.1 $ 10,085.0 $ 10,720.6 $ 9,092.2 $ 8,335.2 $ 7,370.7
Total assets (excluding FAS 115)(3)..... 10,819.6 9,956.3 10,400.2 9,269.0 8,335.2 7,370.7
Total long-term obligations and
redeemable securities................. 254.9 254.8 254.8 254.8 254.8 250.0
Shareholders' equity (including FAS
115)(3)............................... 1,345.9 1,298.7 1,484.4 1,014.6 1,094.6 819.8
Shareholders' equity (excluding FAS
115)(3)............................... 1,332.0 1,215.0 1,276.1 1,129.5 1,094.6 819.8
BOOK VALUE PER SHARE OF COMMON STOCK
(INCLUDING FAS 115)(3)................ $ 25.61 $ 28.44
CASH DIVIDENDS DECLARED AND PAID PER
SHARE OF COMMON STOCK................. $ 0.23 $ 0.40

<CAPTION>
1991
<S> <C>
OPERATIONS DATA
Total revenue........................... $ 1,033.5
Revenue excluding realized investment
gain.................................. 1,009.8
Net income.............................. 112.6
After-tax operating income(2)........... 96.6
After-tax operating income per
share(2).............................. 1.96
Net income per share.................... 2.28

FINANCIAL CONDITION DATA
Total assets (including FAS 115)(3)..... $ 6,365.3
Total assets (excluding FAS 115)(3)..... 6,365.3
Total long-term obligations and
redeemable securities.................
Shareholders' equity (including FAS
115)(3)............................... 909.9
Shareholders' equity (excluding FAS
115)(3)............................... 909.9
BOOK VALUE PER SHARE OF COMMON STOCK
(INCLUDING FAS 115)(3)................
CASH DIVIDENDS DECLARED AND PAID PER
SHARE OF COMMON STOCK.................
</TABLE>

(1)Reflects effect of accounting changes related to FAS 106 - Postretirement
Benefits and FAS 109 - Income Taxes.

(2)Operating income represents income before income taxes, excluding realized
gains on investments and the effect of related amortization. Excluding a
guaranty fund provision, pretax operating income for the year ended December
31, 1995, was $178.5 million and after-tax operating income for the year
ended December 31, 1995, was $115.8 million, or $2.28 per share.

(3)FAS 115 mark-to-market accounting requirements on the Corporation's
available-for-sale fixed maturity investment portfolio was adopted January 1,
1994.

<PAGE>
SPECIAL MEETING

PLACE, DATE AND TIME

The Special Meeting of Shareholders of the Corporation will be held at 700
Main Street, Lynchburg, Virginia, on Monday, November 25, 1996, at 3:45 p.m.,
Eastern Standard Time.

RECORD DATE; SOLICITATION OF PROXIES

The Board of Directors of the Corporation has fixed the close of business
of the NYSE on October 7, 1996, as the Record Date for the determination of
shareholders entitled to notice of and to vote at the Special Meeting. At the
Record Date, there were 49,304,481 shares of Common Stock issued and outstanding
and entitled to vote at the Special Meeting. Holders of Common Stock are
entitled to one vote at the Special Meeting for each share of Common Stock held
of record at the Record Date.

In addition to the solicitation of proxies by use of the mails, proxies
also may be solicited by the Corporation and its directors, officers and
employees (who will receive no additional compensation therefor) by telephone,
telegram, facsimile transmission and other electronic communication methods or
personal interview. The Corporation will reimburse banks, brokerage houses,
custodians and other fiduciaries who hold shares of Common Stock in their name
or custody, or in the name of nominees for others, for their out-of-pocket
expenses incurred in forwarding copies of the proxy materials to those persons
for whom they hold such shares. The Corporation will bear the costs of the
Special Meeting and of soliciting proxies therefor, including the cost of
printing and mailing this Proxy Statement and related materials. The Corporation
has retained CIC to assist in the solicitation of proxies. Pursuant to the
Corporation's agreement with that firm, it will assist in the solicitation of
proxies from brokers, nominees, fiduciaries and other custodians in connection
with the Special Meeting at a cost of approximately $6,000, plus reimbursement
for out-of-pocket expenses. Any questions or requests for assistance regarding
the Corporation's proxies and related materials may be directed in writing to
David H. McMahon, Esq., Assistant Secretary, First Colony Corporation, 700 Main
Street, Lynchburg, Virginia 24504, (804) 948-5334.

Holders of shares of the Preferred Stock will receive notice of the Special
Meeting but under the Virginia Act are not entitled to vote on the proposal to
approve the Merger Agreement and the Plan of Merger because those shares will
not be affected by the Merger.

VOTE REQUIRED

A majority of the outstanding Common Stock entitled to vote as of the
Record Date, represented in person or by proxy, is required for a quorum at the
Special Meeting. The affirmative vote of at least two-thirds of the outstanding
shares of Common Stock as of the Record Date is required for approval of the
Merger Agreement and the Plan of Merger. Abstentions may be specified with
respect to the approval of the Merger Agreement and the Plan of Merger and will
be counted as present for the purpose of determining the existence of a quorum
but will have the effect of a negative vote.

Under the rules of the NYSE, although brokers who hold shares in street
name have the authority to vote on certain items when they have not received
instructions from beneficial owners, brokers will not be entitled to vote on the
approval of the Merger Agreement and the Plan of Merger absent instructions.
Brokers who do not receive instructions but who are present, in person or by
proxy, at the Special Meeting will be counted as present for quorum purposes. A
broker non-vote will have the effect of a negative vote on the approval of the
Merger Agreement and the Plan of Merger. Similarly, a failure to return a
properly executed proxy will have the effect of a negative vote on the approval
of the Merger Agreement and the Plan of Merger.

It is not expected that any matters other than those referred to in this
Proxy Statement will be brought before the Special Meeting. If other matters are
properly presented, however, the persons named as proxy appointees will vote in
accordance with their best judgment on such matters. The grant of a proxy also
will confer discretionary authority on

<PAGE>
the persons named as proxy appointees to vote in accordance with their best
judgment on matters incident to the conduct of the Special Meeting.

Any common shareholder may revoke his, her or its proxy at any time before
it is voted by filing with the Corporate Secretary of the Corporation an
instrument revoking the proxy or by returning a duly executed proxy bearing a
later date, or by attending the Special Meeting and voting in person. Attendance
at the Special Meeting will not by itself constitute revocation of a proxy.

As of September 1, 1996, the current directors and executive officers of
the Corporation and their respective affiliates as a group beneficially owned
7,119,072 shares (approximately 14.23%) of the outstanding shares of Common
Stock, including 731,685 shares that such directors and executive officers have
the right to acquire through the exercise of presently exercisable Stock Options
(as hereinafter defined), but also including 2,801,757 shares as to which the
directors and executive officers either disclaimed beneficial ownership or did
not have sole dispositive and voting power. See "Security Ownership -- Security
Ownership of Certain Beneficial Owners of the Corporation;" and " -- Security
Ownership of Certain Management of the Corporation." In addition to (i) shares
of Common Stock held by directors and executive officers of the Corporation, for
which they will receive the same consideration as other shareholders of the
Corporation, and (ii) Stock Options and Phantom Stock Rights (as hereinafter
defined) granted pursuant to certain Corporation compensation plans, which will
be treated as described below under "The Merger -- General," certain executive
officers of the Corporation are parties to agreements with the Corporation
pursuant to which significant payments and other benefits may be provided to
such persons in the event their employment by the Corporation or one of its
subsidiaries is terminated under certain circumstances. Such directors and
executive officers of the Corporation have indicated that they intend to vote
the 4,317,315 shares as to which they presently have sole voting power
(approximately 8.63% of the outstanding shares of Common Stock entitled to vote
at the Special Meeting) FOR the approval of the Merger Agreement and the Plan of
Merger.

Certain members of the Gottwald family beneficially owning 6,868,496 shares
(approximately 13.90%) of the outstanding shares of Common Stock, including
114,669 shares that such persons have the right to acquire through the exercise
of presently exercisable Stock Options, have entered into an agreement with GECC
and Merger Subsidiary, pursuant to which such persons have agreed to vote their
shares of Common Stock (not to exceed an aggregate of 9.9% of the outstanding
shares of Common Stock) to approve the Merger Agreement and the Plan of Merger.
Such members of the Gottwald family have indicated that they intend to vote the
shares of Common Stock as to which they presently have sole voting power FOR the
approval of the Merger Agreement and the Plan of Merger.

SHAREHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION
PRESENTED IN THIS PROXY STATEMENT, AND SHAREHOLDERS ARE URGED TO COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID
ENVELOPE.

STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY CARD. IF THE
MERGER IS CONSUMMATED, SHAREHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR SHARES OF COMMON STOCK FOR THE MERGER CONSIDERATION.

THE MERGER

GENERAL

The following information with respect to the Merger is qualified in its
entirety by reference to the complete text of the Merger Agreement (including
the Plan of Merger), a copy of which is included in this Proxy Statement as
Annex I. The Merger Agreement sets forth the terms and conditions upon which the
Merger is to be effected. If the Merger Agreement and the Plan of Merger are
approved by the holders of at least two-thirds of the outstanding shares of
Common Stock at the Special Meeting, and all other conditions to the obligations
of the parties thereto are satisfied or waived, the Merger will be consummated
and Merger Subsidiary will merge with and into the Corporation at the Effective
Time. The Corporation will be the Surviving Corporation in the Merger.

Pursuant to the Merger, each share of Common Stock issued and outstanding
at the Effective Time will be cancelled and converted automatically into the
right to receive the Merger Consideration, other than shares owned by GECC,
Merger Subsidiary or any of their respective subsidiaries (which will be
cancelled without any payment therefor). The Merger will have no effect on the
issued and outstanding shares of Preferred Stock. It is anticipated that all
issued and outstanding shares of Preferred Stock will be redeemed shortly after
the Effective Time. As a result of the

<PAGE>
Merger, common shareholders of the Corporation will cease to have an equity
interest in, or possess any rights as shareholders of, the Surviving
Corporation.

Pursuant to the Merger Agreement, each exercisable Stock Option (as defined
below), and any rights thereunder, and each exercisable Phantom Stock Right (as
defined below), and any rights thereunder, outstanding and unexercised
immediately prior to the Effective Time shall be cancelled at the Effective Time
in exchange for the right to receive an amount in cash equal to the product of
(A) the number of shares of Common Stock underlying any unexercised portion of
such Stock Option or such Phantom Stock Right immediately prior to the Effective
Time and (B) the excess, if any, of (i) the Merger Consideration over (ii) the
per share exercise price of such Stock Option or such Phantom Stock Right,
subject to applicable withholding taxes. A "Stock Option" refers to an option,
warrant, stock appreciation right or right of any kind to purchase shares of
Common Stock other than a Phantom Stock Right. A "Phantom Stock Right" refers to
a phantom stock or similar right entitling the holder thereof to receive, upon
exercise, a cash amount based upon the value of the Common Stock.

At the Closing Date, Stock Options having a per share exercise price under
$36.15 will be outstanding and exercisable for an aggregate of 1,369,230 shares
of Common Stock, entitling the holders to an aggregate amount of cash equal to
$15,408,614.17 if no such Stock Options are exercised or lapse in accordance
with their terms prior to the Effective Time. All of such Stock Options will be
exercisable in full. At the Closing Date, 64,571 Phantom Stock Rights, all
having an appreciation base under $36.15 per share, will be outstanding,
entitling the holders to an aggregate amount of cash equal to $726,441.15 if not
exercised, settled or lapsed in accordance with their terms prior to the
Effective Time.

BACKGROUND OF MERGER

The terms and conditions of the Merger were determined through arms-length
negotiations between representatives of the Corporation and GECC. The following
is brief discussion of the history of the transaction.

At a Board of Directors meeting on January 19, 1996, the Chairman reported
that several companies had expressed an interest in discussing the possibility
of acquiring the Corporation but that no discussions had been engaged. The
Chairman then stated that he thought the Board of Directors should study the
possibility of a sale of the Corporation because of the potential advantages to
shareholders. He also recommended that other strategic alternatives be
evaluated, with the objective of determining whether an alternative existed that
was preferable to pursuing the current business plan. The Chairman also
discussed the trend toward consolidation in the insurance industry.

After extended discussion, the Board agreed to establish a Strategic
Alternatives Committee (referred to in this Section as the "Committee") to
evaluate strategic alternatives including a possible sale. The Committee
consisted of Ms. Julie S. Roberts, who later agreed to serve as the Committee
Chair, and Messrs. Robert E. Chappell, Jr., Robert D. Shapiro and Charles B.
Walker. The Board also approved management's recommendation to retain CS First
Boston and Morgan Stanley (hereinafter referred to collectively as the
"Financial Advisors") to assist with the consideration of strategic
alternatives.

During the next several months the Committee considered, with the
assistance of management and the Financial Advisors, various strategic
alternatives, including (i) modification of the Corporation's business plan;
(ii) injection of additional equity capital; (iii) increasing financial
leverage, including the payment of an extraordinary dividend or initiation of a
share repurchase program; (iv) modification of the Corporation's asset
management philosophy, including investment in higher yielding asset categories;
(v) increased aggressiveness in underwriting approaches; (vi) various
reinsurance alternatives; (vii) possible growth through acquisitions; and (viii)
the possible sale of one of the Corporation's business units. The Committee
generally met weekly either in person or by conference telephone call with
counsel and frequently with management and representatives of the Financial
Advisors in attendance. During that time period the five-year business plan was
updated and actuarial analyses of the Corporation's insurance in force and
future business were prepared. After consultation with members of the Gottwald
family in which the family expressed an interest in a sale but only at a
substantial premium over market, the Committee also considered the feasibility
of a sale of Common Stock owned by the Gottwalds to a third party as well as a
possible repurchase of their shares. The Committee concluded that neither option
would maximize value for shareholders and, accordingly, did not recommend
pursuing either alternative. In addition, the Committee recognized that the
importance of maintaining the Corporation's high ratings with the rating
agencies made some of the alternatives that were explored by the Committee
impractical.

<PAGE>
At a meeting on April 2, 1996, Ms. Roberts reported to the Board of
Directors on behalf of the Committee. She gave the Board an overview of the
Committee's work. She then reported that while the Committee had concluded that
the Corporation was in excellent financial condition with prospects for
sustained growth, the Committee believed that a sale at a substantial premium to
existing market value was possible and could be more beneficial to shareholders
than the other alternatives analyzed. She confirmed that the Committee had taken
into consideration that the Gottwald family was interested in exploring the
possibility of a sale only at a substantial premium. Ms. Roberts then reported
that the Committee recommended that the Corporation solicit indications of
interest from a small number of targeted companies under a tightly controlled
process designed to preserve confidentiality, which was considered important to
protect the Corporation's franchise.

After extended discussion, the Board of Directors authorized the Financial
Advisors to explore with a select group of companies whether such companies were
interested in acquiring the Corporation at a substantial premium over market.
The list of companies to be approached, the nature of each approach and the
information to be provided was reviewed with the Committee in advance. Initial
contacts were made with each of the potential acquirors during the week of April
23, 1996. All but two of the companies contacted expressed an interest in
exploring a possible transaction and entered into a confidentiality agreement
with the Corporation.

Thereafter, the Committee received periodic updates from the Financial
Advisors as to the progress of discussions with potential acquirors. June 6,
1996, was established as the date for the submission to the Corporation of
preliminary expressions of interest in a transaction. On June 4, 1996, an
article appeared in the Wall Street Journal suggesting that the Corporation was
exploring a possible sale. While the Corporation's Board of Directors had taken
special steps to preserve confidentiality because of the risk of damage to the
Corporation's franchise, the conclusion was reached that the Wall Street Journal
article was sufficiently specific that the Corporation could not simply decline
comment. Accordingly, on June 4, 1996, the Corporation announced that the Board
of Directors had authorized an exploration of strategic alternatives including a
possible sale of the Corporation.

On June 6, 1996, expressions of interest were received from five potential
acquirors, including GECC. On June 11, 1996, the Committee and the Corporation's
Board of Directors reviewed with the Financial Advisors the expressions of
interest that had been received. The Board on the recommendation of the
Committee agreed to continue discussions with four of the potential acquirors.
The Financial Advisors also informed the Board that unsolicited expressions of
interest had been received from two additional potential acquirors. The Board of
Directors authorized the Financial Advisors to explore the possibility of a
transaction with each of the new parties. Following further discussions, one
such party elected not to pursue a transaction and the other submitted a
proposal that was not considered sufficient to justify further discussions.

After June 11, 1996, discussions continued with each of the four potential
purchasers. In July, potential purchasers received a draft of a definitive
agreement. July 30, 1996, was established as the deadline for the submission of
proposals to acquire the Corporation. On that date, two of the four potential
acquirors advised that they had elected not to pursue a transaction with the
Corporation. GECC and one other potential acquiror submitted written proposals,
including written comments to the draft agreement. GECC proposed a cash merger
in which the holders of the shares of Common Stock would receive $34.00 per
share. GECC also indicated a willingness to have a modest portion of any
consideration in the form of a preferred security, but the Corporation's Board
concluded that a cash transaction was the most likely way to obtain the highest
price for shareholders. The other proposal also involved a cash merger in which
the holders of Common Stock would receive $34.25 per share. GECC's proposed
modifications to the draft purchase agreement were substantially less than those
proposed by the other potential purchaser. On August 2, 1996, counsel for the
Corporation distributed revised drafts of a purchase agreement to GECC and the
other potential acquiror, responding to the changes that each of them had
proposed to the Corporation's initial draft. Thereafter, each party was asked to
make its best offer with the understanding that the Corporation would pursue
contract negotiations only with the bidder making the most favorable offer. At a
telephonic meeting of the Board of Directors on Friday afternoon, August 2,
1996, the Board of Directors determined that the Corporation would continue
contract negotiations only with GECC with an offer price of $35.00 per share.

On Saturday morning, August 3, 1996, while negotiations on the definitive
agreement with GECC were continuing, counsel for the Corporation received an
unsolicited letter from the other potential acquiror offering a cash price of
$36.00 per share. At a noon telephonic meeting of the Corporation's Board of
Directors, the Board of Directors agreed to communicate to the other offer or
that the Corporation's Board would not be in a position to consider the latest

<PAGE>
proposal unless it was in the form of an executed purchase agreement
substantially in the form of the draft agreement delivered by the Corporation's
counsel on Friday, August 2, 1996.

At a telephonic meeting of the Board of Directors at 9:30 p.m. on Saturday
evening, counsel reported that an executed definitive agreement had been
received from the other potential acquiror that contained terms and conditions
substantially the same as the Corporation's latest draft and a cash purchase
price of $36.00 per share. Counsel also reported that the letter transmitting
the definitive agreement stated that the proposal remained open only until 5:00
p.m. on Sunday, August 4, 1996. After extensive discussions with counsel and the
Financial Advisors, the Corporation's Board of Directors agreed to meet again at
10:30 on Sunday morning.

On Sunday morning, August 4, 1996, in response to a request by GECC for a
counter-proposal and, after consultation with counsel and the Financial
Advisors, the Board agreed that the Corporation should offer to enter into a
cash merger with GECC at a purchase price of $37.00 per share. GECC did not
accept the offer but countered by offering to acquire the Corporation at a cash
price of $36.15 per share and indicated that this offer would be withdrawn if
not accepted promptly. The proposed terms and conditions of GECC's offer also
included restrictions on the Corporation's investment portfolio during the
period between the execution of a definitive agreement and closing of the
Merger. The Financial Advisors indicated to the Board that the other potential
acquiror had informed the Financial Advisors that it could not increase its
$36.00 per share offer without additional time. The Board of Directors then
discussed its concern over the fiduciary duty implications of some of the
proposed investment restrictions prior to closing. After further negotiations,
GECC agreed to reduce the restrictions on the investment portfolio. Shortly
thereafter the Corporation's Board received a written confirmation from GECC of
execution of a definitive agreement for a cash merger at $36.15 per share of
Common Stock. The Merger Agreement was executed, and public announcement of such
execution was made, on August 5, 1996.

REASONS FOR MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS

At its August 4, 1996, meeting, the Corporation's Board of Directors
determined that the Merger is fair to, and in the best interests of, the
Corporation and its shareholders. Accordingly, at such meeting, the Board of
Directors unanimously approved the Merger Agreement and the Plan of Merger and
directed that the Merger Agreement and the Plan of Merger be submitted to the
Corporation's common shareholders for approval.

THE BOARD OF DIRECTORS OF THE CORPORATION UNANIMOUSLY RECOMMENDS THAT THE
CORPORATION'S COMMON SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND
THE PLAN OF MERGER.

The determination of the Corporation's Board of Directors to approve the
Merger Agreement and the Plan of Merger was based upon consideration of a number
of factors. The following list includes material factors considered by the Board
of Directors in its evaluation of the Merger:

(i) The Board's familiarity with the business, operations, financial
condition, competitive position and prospects of the Corporation
and the nature of the industry in which the Corporation
participates, both on a historical and a prospective basis;

(ii) The Board's consideration of, among other things, information
with respect to the financial condition, results of operations
and business of the Corporation, on both a historical and a
prospective basis, and the influence of current industry,
economic and market conditions;

(iii) The Board's extensive study of strategic alternatives,
including a possible sale, that included actuarial analyses of
the Corporation's insurance in force and its future business
(none of the strategic alternatives considered appeared to be
as favorable to the holders of the shares of Common Stock);

(iv) The fact that the Board had publicly announced that it was
exploring strategic alternatives to maximize shareholder value,
including a possible sale of the Corporation;

(v) The fact that procedures to elicit proposals to acquire the
Corporation had been implemented and that negotiations had been
conducted with likely interested parties in the context of a
prolonged and comprehensive process to maximize value;

(vi) The Board's review of the historical and prospective market
prices of the Common Stock compared to the Merger Consideration;

<PAGE>
(vii) The Board's review of presentations by, and discussion of the
terms and conditions of the Merger with, senior executive
officers of the Corporation, representatives of its legal
counsel and representatives of CS First Boston and Morgan
Stanley;

(viii) The Board's receipt of the written opinions of CS First Boston
and Morgan Stanley to the effect that, as of the dates of such
opinions and based upon and subject to certain matters stated
therein, the Merger Consideration was fair to the holders of
shares of Common Stock from a financial point of view;

(ix) The Board's consideration of the terms of the Merger Agreement,
including the absence of a financing condition and the inclusion
of a fiduciary out in the event of a Superior Proposal (as
hereinafter defined); and

(x) The fact that GECC's offer was the highest offer received.

In view of the wide variety of material factors considered in connection
with its evaluation of the Merger, the Corporation's Board of Directors did not
find it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching its
determination.

The Board of Directors recognizes that upon consummation of the Merger
common shareholders of the Corporation will no longer have their equity
interests in the Corporation or any interest in any future growth of the
Corporation. The Board of Directors has determined, based upon consideration of
the material factors specified above, however, that the Merger is in the best
interests of shareholders and is consistent with maximizing shareholder value.

OPINIONS OF FINANCIAL ADVISORS

CS FIRST BOSTON. CS First Boston has acted as financial advisor to the
Corporation in connection with the Merger. CS First Boston was selected by the
Corporation based on CS First Boston's experience, expertise and familiarity
with the Corporation and its business. CS First Boston is an internationally
recognized investment banking firm and is regularly engaged in the valuation of
businesses and securities in connection with mergers and acquisitions, leveraged
buyouts, negotiated underwritings, competitive biddings, secondary distributions
of listed and unlisted securities, private placements and valuations for
corporate, estate and other purposes.

In connection with CS First Boston's engagement, the Corporation requested
that CS First Boston evaluate the fairness of the Merger Consideration from a
financial point of view. On August 4, 1996, at a special meeting of the Board of
Directors of the Corporation held to evaluate the proposed Merger, CS First
Boston rendered to the Corporation's Board of Directors an oral opinion
(subsequently confirmed by delivery of a written opinion dated August 5, 1996)
to the effect that, as of such date and based upon and subject to certain
matters stated in such opinion, the Merger Consideration to be received by the
holders of Common Stock in the Merger was fair to such shareholders from a
financial point of view.

THE FULL TEXT OF CS FIRST BOSTON'S WRITTEN OPINION TO THE BOARD OF
DIRECTORS OF THE CORPORATION DATED AUGUST 5, 1996, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN,
IS ATTACHED AS ANNEX II-A TO THIS PROXY STATEMENT (THE "CS FIRST BOSTON
OPINION") AND IS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS OF THE
CORPORATION ARE URGED TO READ THIS OPINION CAREFULLY IN ITS ENTIRETY. THE CS
FIRST BOSTON OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE MERGER
CONSIDERATION FROM A FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER ASPECT
OF THE PROPOSED MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE
SPECIAL MEETING. THE SUMMARY OF THE CS FIRST BOSTON OPINION SET FORTH IN THIS
PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
SUCH OPINION.

In arriving at its opinion, CS First Boston reviewed certain publicly
available business and financial information relating to the Corporation, as
well as the Merger Agreement. CS First Boston also reviewed certain other
information, including financial forecasts, provided to CS First Boston by the
Corporation and met with the management of the Corporation to discuss the
business and prospects of the Corporation. CS First Boston also reviewed certain
analyses prepared on behalf of the Corporation concerning certain actuarial
matters relating to the Corporation. CS First Boston also considered certain
financial and stock market data of the Corporation and compared that data with
similar data for other publicly held companies in businesses similar to those of
the Corporation and considered the financial terms of certain other business
combinations and other transactions recently effected. CS First Boston also
considered such

<PAGE>
other information, financial studies, analyses and investigations and financial,
economic and market criteria that CS First Boston deemed relevant.

In connection with its review, CS First Boston did not assume any
responsibility for independent verification of any of the information provided
to or otherwise reviewed by CS First Boston and relied upon such information
being complete and accurate in all material respects. With respect to the
financial forecasts, CS First Boston assumed that such forecasts were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management of the Corporation as to the future financial
performance of the Corporation. In addition, CS First Boston did not make an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of the Corporation, nor was CS First Boston furnished with any such
evaluations or appraisals other than the actuarial analyses prepared on behalf
of the Corporation. For purposes of its opinion, CS First Boston also relied
without independent verification on the actuarial analyses prepared on behalf of
the Corporation and assumed that such analyses were reasonably prepared on bases
reflecting the best currently available estimates and judgments as to the
Corporation's insurance in force and future business. The CS First Boston
Opinion was necessarily based on financial, stock market and other conditions as
they existed and could be evaluated on the date of its opinion. In connection
with its engagement, CS First Boston was requested to approach third parties to
solicit indications of interest in a possible acquisition of the Corporation and
held discussions with certain of these parties prior to the date of its opinion.
Although CS First Boston evaluated the Merger Consideration from a financial
point of view, CS First Boston was not requested to, and did not, recommend the
Merger Consideration, which was determined through negotiation between the
Corporation and GECC. No other limitations were imposed by the Corporation on CS
First Boston with respect to the investigations made or procedures followed by
CS First Boston in rendering its opinion.

In preparing its opinion to the Board of Directors of the Corporation, CS
First Boston performed a variety of financial and comparative analyses. The
summary of CS First Boston's analyses does not purport to be a complete
description of the analyses underlying the CS First Boston Opinion. The
preparation of a fairness opinion is a complex analytic process involving
various determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such opinion is not readily susceptible to summary
description. In arriving at its opinion, CS First Boston made qualitative
judgments as to the significance and relevance of each analysis and factor
considered by it. Accordingly, CS First Boston believes that its analyses must
be considered as a whole and that selecting portions of its analyses and
factors, without considering all analyses and factors, could create a misleading
or incomplete view of the processes underlying such analyses and its opinion. In
its analyses, CS First Boston made numerous assumptions with respect to the
Corporation, industry performance, regulatory, general business, economic,
market and financial considerations and other matters, many of which are beyond
the control of the Corporation. No company, transaction or business used in such
analyses as a comparison is identical to the Corporation or the Merger, nor is
an evaluation of the results of such analyses entirely mathematical; rather, it
involves complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
being analyzed. The estimates contained in such analyses and the ranges of
valuations resulting from any particular analysis are not necessarily indicative
of actual values or predictive of future results or values, which may be
significantly more or less favorable than those suggested by such analyses. In
addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. CS First Boston's opinion and
financial analyses were only one of many factors considered by the Board of
Directors of the Corporation in its evaluation of the Merger and should not be
viewed as determinative of the views of the Corporation's Board or management
with respect to the Merger Consideration or the proposed Merger.

The following is a summary of certain of the analyses performed by CS First
Boston in connection with the CS First Boston Opinion:

ACTUARIAL ANALYSIS. CS First Boston examined the actuarial analyses of the
Corporation's insurance in force and future business as of December 31,
1995, and December 31, 1996, and derived the implied per share equity
values for the Corporation as of such dates based on such analyses.
Utilizing discount rates of 10% to 14% and percentages of company action
level risk-based capital ("RBC") of 200% to 250%, this analysis resulted in
equity reference ranges for the Corporation of approximately $22.65 to
$38.41 per share as of December 31, 1995, and approximately $25.86 to
$43.39 per share as of December 31, 1996.

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DISCOUNTED FUTURE STOCK PRICE AND DIVIDEND ANALYSIS. Based on management's
five-year operating and financial projections, CS First Boston calculated a
range of implied Common Stock prices at June 30, 2001, assuming
management's projections were achieved. The range of estimated future
Common Stock prices at June 30, 2001 was computed as the prospective year's
net operating earnings multiplied by price/earnings ratios of 9.5x and
11.5x. This range of stock prices and intervening quarterly dividends,
assuming a payout ratio equivalent to the Corporation's current payout
ratio, were then discounted to June 30, 1996 using discount rates of 12% to
14%, resulting in a present value equity reference range for the
Corporation based on such analysis of approximately $28.15 to $36.67 per
share.

SELECTED PUBLIC COMPANY ANALYSIS. CS First Boston reviewed and compared
certain financial, operating and stock market information relating to the
Corporation with similar information relating to 14 selected publicly
traded life insurance and annuity companies, consisting of: AFLAC, Inc.,
American General Corporation, American National Insurance Co., The
Equitable Companies, Inc., Equitable of Iowa Companies, Jefferson-Pilot
Corporation, Liberty Corporation, Protective Life Corporation, Providian
Corporation, ReliaStar Financial Corp., SunAmerica, Inc., Torchmark
Corporation, USLIFE Corporation and Western National Corporation
(collectively, the "CS First Boston Selected Public Companies"). CS First
Boston compared market values as multiples of estimated fiscal 1996 and
fiscal 1997 net operating income and most recent reported book value
computed in accordance with generally accepted accounting principles
("GAAP"), excluding the effect of Statement of Financial Accounting
Standard No. 115 ("FAS 115"), and adjusted market values (equity market
value plus net debt) as a multiple of latest 12 months operating earnings
before interest and taxes ("EBIT"). The ranges of multiples of estimated
fiscal 1996 and fiscal 1997 net operating income, most recent reported GAAP
book value (excluding the effect of FAS 115) and latest 12 months operating
EBIT for the CS First Boston Selected Public Companies were as follows: (i)
estimated fiscal 1996 and fiscal 1997 net operating income: 8.9x to 14.4x
and 8.0x to 12.6x, respectively; (ii) most recent reported GAAP book value
(excluding the effect of FAS 115): 0.8x to 3.0x; and (iii) latest 12 months
operating EBIT: 3.6x to 17.3x. Based on a review of such multiples, CS
First Boston derived equity reference ranges for the Corporation based on
such analysis of approximately $24.00 to $28.00 per share (assuming no
control premium were applied) and approximately $31.00 to $36.00 per share
(assuming a control premium of 20% to 40% were applied). All multiples were
based on closing stock prices on July 30, 1996. Estimated financial
information was based on, in the case of CS First Boston Selected Public
Companies, estimates of research analysts as reported by First Call and, in
the case of the Corporation, internal estimates of the Corporation's
management.

SELECTED TRANSACTIONS ANALYSIS. Using publicly available information, CS
First Boston analyzed the purchase prices and implied transaction multiples
paid in 11 recent selected life insurance and annuity transactions,
consisting of (acquiror/target): GECC/GNA Corporation, GECC/United Pacific
Life Insurance Company, GECC/Harcourt General Insurance Company,
Torchmark/American Income Holding, Inc., American General
Corporation/Franklin Life Insurance Company, Conseco, Inc./CCP Insurance,
Inc., Zurich Insurance Company/Kemper Corporation, Jefferson-Pilot
Corporation/Alexander Hamilton Life Insurance Company of America, GECC/The
Life Insurance Company of Virginia, Conseco, Inc./Life Partners Group,
Inc., and Provident Companies, Inc./The Paul Revere Corporation (the "CS
First Boston Selected Transactions"). CS First Boston compared purchase
prices as multiples of latest 12 months net operating income and most
recent reported GAAP book value (excluding the effect of FAS 115), and
transaction values as a multiple of latest 12 months operating EBIT. The
ranges of multiples of last 12 months net operating income, most recent
reported GAAP book value (excluding the effect of FAS 115) and latest 12
months operating EBIT for the CS First Boston Selected Transactions were as
follows: (i) latest 12 months net operating income: 9.4x to 37.4x; (ii)
most recent reported GAAP book value (excluding the effect of FAS 115):
0.9x to 2.8x; and (iii) latest 12 months operating EBIT: 5.8x to 22.4x.
Based on a review of such multiples, CS First Boston derived an equity
reference range for the Corporation based on such analysis of approximately
$31.00 to $38.00 per share. All multiples for the CS First Boston Selected
Transactions were based on information available at the time of
announcement of such transaction.

PREMIUM ANALYSIS. CS First Boston analyzed the premiums paid in recent
selected merger and acquisition transactions of public companies relative
to prior public market trading prices for such companies four weeks prior
to public announcement of such transactions. The average premium paid in 16
selected transactions reviewed by CS First Boston involving insurance
companies was approximately 37.0% (with a median of approximately 29.3%).
The transactions reviewed by CS First Boston were (acquiror/target):
General Re Corporation/National Re Corporation, Provident Companies,
Inc./The Paul Revere Corporation, Conseco, Inc./Life Partners Group, Inc.,
American General Corporation/Independent Insurance Group, Inc., SCOR
S.A./SCOR U.S. Corporation, Berkshire

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Hathaway Inc./GEICO Corporation, Financial Security Assurance Holdings
Ltd./Capital Guaranty Corporation, Unitrin, Inc./Milwaukee Insurance Group,
Inc., American Annuity Group, Inc./Laurentian Capital Corporation, Zurich
Insurance Group/Kemper Corporation, Conseco, Inc./CCP Insurance, Inc.,
Zurich Reinsurance Centre Holdings, Inc./Re Capital Corporation, CNA
Financial Corporation/The Continental Corporation, Torchmark
Corporation/American Income Holding, Inc., The NWNL Companies, Inc./USLICO
Corporation, and Conseco Capital Partners II, L.P./The Statesman Group,
Inc. CS First Boston also reviewed the premiums paid in 125 selected
transactions involving companies in various industries having transaction
values of $500 million to $3.0 billion, which indicated an average premium
of approximately 38.8% (with a median of approximately 34.6%). The Merger
Consideration represents a premium to the closing stock price of the Common
Stock on June 3, 1996 (the trading day prior to public announcement of the
Corporation's intention to explore alternatives to maximize shareholder
value) of approximately 33.9%.

No company, transaction or business used in the "Selected Public Company
Analysis," the "Selected Transaction Analysis" or the "Premium Analysis" as
a comparison is identical to the Corporation or the Merger. Accordingly, an
analysis of the results of the foregoing is not entirely mathematical;
rather, it involves complex considerations and judgments concerning
differences in financial and operating characteristics and other factors
that could affect the acquisition, public trading or other values of the CS
First Boston Selected Public Companies, CS First Boston Selected
Transactions or the business segment, company or transaction to which they
are being compared.

Pursuant to the terms of CS First Boston's engagement, the Corporation has
agreed to pay CS First Boston for its services in connection with the Merger an
aggregate financial advisory fee of approximately $9.2 million. The Corporation
also has agreed to reimburse CS First Boston for out-of-pocket expenses incurred
by CS First Boston in performing its services, including the fees and expenses
of legal counsel and any other advisor retained by CS First Boston, and to
indemnify CS First Boston and certain related persons and entities against
certain liabilities, including liabilities under the federal securities laws,
arising out of CS First Boston's engagement.

CS First Boston has in the past performed certain investment banking
services for the Corporation and GECC and has received customary fees for such
services. In the ordinary course of business, CS First Boston and its affiliates
may actively trade the debt and equity securities of both the Corporation and
GECC for their own account and for accounts of customers and, accordingly, may
at any time hold a long or short position in such securities.

MORGAN STANLEY. The Corporation's Board of Directors retained Morgan
Stanley in connection with the Corporation's exploration of strategic
alternatives, including the possible sale of the Corporation, based upon Morgan
Stanley's qualifications, expertise and reputation. On August 4, 1996, at a
meeting of the Corporation's Board held to evaluate the Merger, Morgan Stanley
delivered its oral opinion to the Corporation's Board to the effect that, as of
such date and based upon and subject to certain considerations set forth in the
written opinion of Morgan Stanley dated August 5, 1996, the Merger Consideration
was fair from a financial point of view to holders of Common Stock. The oral
opinion of Morgan Stanley on August 4, 1996, was confirmed by the written
opinion of Morgan Stanley dated as of August 5, 1996, the date of the Merger
Agreement.

THE FULL TEXT OF MORGAN STANLEY'S WRITTEN OPINION DATED AUGUST 5, 1996,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX II-B TO THIS PROXY STATEMENT (THE
"MORGAN STANLEY OPINION") AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF
THE SHARES OF COMMON STOCK ARE URGED TO, AND SHOULD, READ THE MORGAN STANLEY
OPINION CAREFULLY AND IN ITS ENTIRETY. THE MORGAN STANLEY OPINION IS DIRECTED TO
THE CORPORATION'S BOARD OF DIRECTORS AND THE FAIRNESS OF THE MERGER
CONSIDERATION, FROM A FINANCIAL POINT OF VIEW, AND IT DOES NOT ADDRESS ANY OTHER
ASPECT OF THE MERGER NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF
COMMON STOCK AS TO HOW TO VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE MORGAN
STANLEY OPINION SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.

In arriving at its opinion, Morgan Stanley (i) reviewed certain publicly
available financial statements and other information of the Corporation, (ii)
reviewed certain internal financial statements and other financial and operating
data concerning the Corporation prepared by the management of the Corporation,
(iii) analyzed certain financial projections prepared by the management of the
Corporation, (iv) discussed the past and current operations and financial
condition and the prospects of the Corporation with senior executives of the
Corporation, (v) reviewed the reported prices and trading activity for the
Common Stock, (vi) compared the financial performance of the Corporation and the
prices and trading activity of the Common Stock with that of certain other
comparable publicly traded companies and their securities, (vii) reviewed the
financial terms, to the extent publicly available, of certain comparable
acquisition

<PAGE>
transactions, (viii) participated in discussions among representatives of the
Corporation and their financial and legal advisors, (ix) reviewed the Merger
Agreement, (x) reviewed the actuarial analyses prepared on behalf of the
Corporation and (xi) performed such other analyses and considered such other
factors as Morgan Stanley deemed appropriate.

In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by Morgan Stanley for the purposes of the Morgan Stanley Opinion. With
respect to the financial projections, Morgan Stanley assumed that such
projections were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Corporation. Morgan Stanley did not make any independent valuation or appraisal
of the assets or liabilities of the Corporation; however, Morgan Stanley relied
upon the actuarial analyses prepared on behalf of the Corporation, without
independent verification, for purposes of its opinion. The Morgan Stanley
Opinion is necessarily based upon economic, market and other conditions as in
effect on, and the information made available to Morgan Stanley as of, the date
of the Morgan Stanley Opinion. Although Morgan Stanley evaluated the Merger
Consideration from a financial point of view, Morgan Stanley was not requested
to, and did not, recommend the Merger Consideration. No other limitations were
imposed by the Corporation on Morgan Stanley with respect to the investigations
made or procedures followed by Morgan Stanley in rendering its opinion.

The following is a summary of certain analyses performed by Morgan Stanley
in connection with the Morgan Stanley Opinion:

COMMON STOCK PERFORMANCE. Morgan Stanley's analysis of Common Stock
performance consisted of a historical analysis of: closing prices and
trading volumes from August 2, 1995, through August 1, 1996; the
Corporation's indexed price performance from December 8, 1992 (the date of
the Corporation's initial public offering), to August 1, 1996, relative to
the indexed price performance of (i) Standard & Poor's industrial average
of 500 stocks (the "S&P 500"), (ii) Standard & Poor's life insurance index
(the "S&P Life Insurance Index") and (iii) the high and low prices for the
Common Stock in the 12 months ended August 1, 1996. From December 8, 1992,
to August 1, 1996, the Common Stock underperformed the S&P 500 and the S&P
Life Insurance Index. In the 12 months ended August 1, 1996, the Common
Stock closed at a high of $32.39 per share and a low of $23.50 per share.

SELECTED PUBLIC COMPANY ANALYSIS. Morgan Stanley compared certain financial
information of the Corporation with corresponding publicly available
information of eight selected publicly traded corporations in the life
insurance industry, consisting of: American General Corporation, American
National Corporation, Equitable of Iowa Companies, Jefferson-Pilot
Corporation, Protective Life Corporation, ReliaStar Financial Corporation,
SunAmerica, Inc., and US Life Corporation (the "Morgan Stanley Selected
Public Companies"). Morgan Stanley compared per share common stock market
prices of the Morgan Stanley Selected Public Companies as a multiple of (i)
actual adjusted operating earnings per share ("EPS") (excluding realized
investment gains/losses) for the 12 months ended March 31, 1996; (ii)
Institutional Brokers Estimate System ("I/B/E/S") EPS estimates for 1996;
(iii) I/B/E/S EPS estimates for 1997; and (iv) adjusted GAAP book value per
share (excluding the effects of FAS 115) as of March 31, 1996. The ranges
of multiples of actual adjusted operating EPS (excluding realized
investment gains/losses) for the 12 months ended March 31, 1996, I/B/E/S
EPS estimates for 1996, I/B/E/S EPS estimates for 1997 and adjusted GAAP
book value per share (excluding the effects of FAS 115) for the Selected
Public Companies were as follows: (i) actual operating EPS (excluding
realized investment gains/losses) for the 12 months ended March 31, 1996:
10.3x to 17.5x; (ii) I/B/E/S EPS for 1996: 9.7x to 14.5x; (iii) I/B/E/S EPS
estimates for 1997: 8.6x to 12.7x; and (iv) adjusted GAAP book value per
share (excluding the effects of FAS 115): 0.80x to 3.05x. Based on a review
of such multiples, Morgan Stanley derived an implied equity reference range
for the Corporation based on such analysis of approximately $28.00 to
$32.00 per share.

No company utilized in the Selected Public Company Analysis as a comparison
is identical to the Corporation. Accordingly, an analysis of the results of
the foregoing necessarily involves complex considerations and judgments
concerning financial and operating characteristics of the Corporation and
other factors that could affect the public trading value of the Morgan
Stanley Selected Public Companies or company to which it is being compared.
Mathematical analysis (such as determining the average or the median) is
not itself a meaningful method of using Morgan Stanley Selected Public
Company data.

SELECTED TRANSACTIONS ANALYSIS. Using publicly available information,
Morgan Stanley analyzed the purchase prices and implied transaction
multiples paid in 24 selected transactions in the life insurance industry,
consisting of (target/acquiror): Golden American Life Insurance/Equitable
of Iowa Companies, Life Partners Group, Inc./Conseco, Inc., United
Companies Life Insurance Company/Knightsbridge Capital Fund, L.P., UNUM's
Tax-

<PAGE>
Sheltered Annuity Business/Lincoln National Corporation, The Life Insurance
Company of Virginia (a subsidiary of Aon Corporation)/GECC, CalFarm Life
Insurance/SunAmerica, Inc., Ford Life Insurance Company (a subsidiary of
Ford Motor Company)/SunAmerica, Inc., Connecticut Mutual Life Insurance
Company/Massachusetts Mutual Life Insurance Company, Financial Benefit
Group Inc./Amvestors Financial Corporation, Alexander Hamilton
Life/Jefferson-Pilot Life, Laurentian Capital Corporation/American Annuity
Group, CCP Insurance, Inc. (49% owned by Conseco, Inc.)/Conseco, Inc.,
Lamar Financial Group/Life Partners Group, Inc., Bankers Life Insurance
Company (a subsidiary of Southwestern Life)/Indianapolis Life Insurance
Company, Integon Life Corporation/PennCorp Financial Group, Western
National Company (a subsidiary of American Brands)/American General
Corporation, Meridian Life Insurance Company/Intercontinental Life
Corporation, USLICO Corporation/NWNL Companies, Harcourt General Insurance
Company (a subsidiary of Harcourt General, Inc.)/GECC, Statesman
Group/Conseco Capital Partners II, L.P. (affiliate of Conseco, Inc.), First
Variable Life Insurance Company (a subsidiary of Monarch Life)/Irish Life
of North America (a subsidiary of Irish Life Assurance plc), United Pacific
Life Insurance Company (a subsidiary of Reliance Group)/GECC, and GNA
Corporation (a subsidiary of Weyerhaeuser Company)/GECC (the "Morgan
Stanley Selected Transactions"). The ranges of multiples of latest 12
months net operating earnings (excluding realized investment gains/losses)
and adjusted GAAP book value for the Morgan Stanley Selected Transactions
were as follows: (i) latest 12 months net operating earnings (excluding
realized investment gains/losses): 6.3x to 22.2x and (ii) adjusted GAAP
book value: 0.79 to 2.0x. Based on a review of such multiples, Morgan
Stanley derived an implied equity reference range for the Corporation based
on such analysis of approximately $32.00 to $36.00 per share.

No transaction utilized in the Selected Transactions Analysis is identical
to the Merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning
financial and operating characteristics of the Corporation and other
factors that could affect the acquisition value of the companies to which
it is being compared. Mathematical analysis (such as determining the
average or median) is not itself a meaningful method of using Morgan
Stanley Selected Transactions data.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all its
analyses as a whole and did not attribute any particular weight to any analysis
or factor considered by it. Morgan Stanley believes that selecting any portion
of Morgan Stanley's analyses, without considering all analyses, would create an
incomplete view of the process underlying its opinion. In addition, Morgan
Stanley may have deemed various assumptions more or less probable than other
assumptions, so that the ranges of valuations resulting for any particular
analysis described above should not be taken to be Morgan Stanley's view of the
actual value of the Corporation.

In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of the Corporation. The
analyses performed by Morgan Stanley and estimates combined therein are not
necessarily indicative of actual value or predictive of future results or
values, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as part of Morgan Stanley's
analysis of whether the Merger Consideration is fair from a financial point of
view to holders of the shares of Common Stock, and were conducted in connection
with the delivery of the Morgan Stanley Opinion. The analyses do not purport to
be appraisals or to reflect the prices at which the Corporation might actually
be sold. Accordingly, such estimates and analyses are inherently subject to
substantial uncertainty.

As described above, the Morgan Stanley Opinion and the information provided
by Morgan Stanley to the Corporation's Board of Directors were two of a number
of factors taken into consideration by the Board in making its determination to
recommend approval of the Merger Agreement and Plan of Merger and the
transactions contemplated thereby. Consequently, the Morgan Stanley analyses
described above should not be viewed as determinative of the opinion of the
entire Board or the view of the management with respect to the value of the
Corporation. The Merger Consideration was determined through negotiations
between GECC and its advisors and the Corporation, and was approved by the
Corporation's Board of Directors.

The Corporation's Board of Directors retained Morgan Stanley based upon its
experience and expertise. Morgan Stanley is an internationally recognized
investment banking and advisory firm. As part of its investment banking
business, Morgan Stanley is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuation for estate, corporate and
other purposes. In the ordinary course of its business,

<PAGE>
Morgan Stanley and its affiliates may actively trade the debt and equity
securities of the Corporation for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. In the past, Morgan Stanley has provided financial advisory and
investment banking services to the Corporation, for which services Morgan
Stanley has received customary fees.

Pursuant to an agreement between the Corporation and the Financial
Advisors, Morgan Stanley is entitled to a fee of approximately $9.2 million upon
consummation of the Merger. The Corporation has also agreed to reimburse Morgan
Stanley for its out-of-pocket expenses, including the reasonable fees of its
outside legal counsel engaged with the Corporation's consent. The Corporation
has agreed to indemnify Morgan Stanley and its affiliates, their respective
directors, officers, agents and employees, and each person, if any, controlling
Morgan Stanley or any of its affiliates against certain liabilities, including
liabilities under the federal securities laws.

NO SOLICITATION; FIDUCIARY DUTIES

The Merger Agreement provides that the Corporation will refrain from, and
cause its affiliates, officers, directors, employees, representatives or agents
to refrain from, directly or indirectly, encouraging, soliciting, participating
in or initiating discussions with, or providing any information to, any person
or entity other than GECC or Merger Subsidiary or any affiliate or designee of
GECC or Merger Subsidiary with respect to an Acquisition Proposal (as
hereinafter defined), PROVIDED THAT (i) the Corporation's Board of Directors may
take a position contemplated by Rule 14e-2 under the Securities Exchange Act of
1934 (the "Exchange Act") with regard to a tender offer; and (ii) the
Corporation may furnish information to a person or entity in response to an
unsolicited request therefor (subject to a confidentiality agreement with terms
no less favorable to the Corporation than the terms of the Confidentiality
Agreement, dated April 23, 1996, with GECC) and may participate in discussions
with such person or entity regarding an Acquisition Proposal if (i) the person
or entity has submitted an unsolicited Superior Proposal (as hereinafter
defined) and (ii) the Board of Directors of the Corporation determines in its
good faith judgment that it is required to participate in such discussions in
order to comply with its fiduciary duties to shareholders under applicable law.

The Merger Agreement also prohibits the Board of Directors of the
Corporation from (i) withdrawing its recommendation of the Merger or (ii)
approving or recommending an Acquisition Proposal; PROVIDED THAT the Board of
Directors may withdraw its recommendation or approve and recommend an
Acquisition Proposal if it determines in its good faith judgment that it is
required to do so in order to comply with its fiduciary duties under applicable
law and notifies GECC in advance of such action. An "Acquisition Proposal" is
(i) the acquisition of the Corporation or any of its subsidiaries by merger or
otherwise by any person or entity other than GECC or Merger Subsidiary or an
affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of
10% or more of the total assets or insurance in force of the Corporation and its
subsidiaries; (iii) the acquisition by a Third Party of 10% or more of the
outstanding shares of Common Stock or the outstanding capital stock of any
subsidiary of the Corporation; (iv) a tender or exchange offer for 10% or more
of the outstanding shares of Common Stock or the filing of a registration
statement in connection therewith; or (v) any public announcement of a plan to
do or an agreement to engage in any of the foregoing. A "Superior Proposal" is
any BONA FIDE proposal from a Third Party to acquire, directly or indirectly,
for cash or securities all of the outstanding Common Stock or all or
substantially all of the assets of the Corporation on terms that the Board of
Directors of the Corporation determines in its good faith judgment to be more
favorable to the Corporation's shareholders than the Merger. See " -- Terms of
the Merger - Termination."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

GENERAL. In addition to (i) shares of Common Stock held by directors and
executive officers of the Corporation for which they will receive the same
consideration as other common shareholders of the Corporation, and (ii) Stock
Options and Phantom Stock Rights granted pursuant to certain Corporation
compensation plans, which will be treated as described under " -- General,"
certain executive officers of the Corporation are parties to agreements with the
Corporation pursuant to which significant payments and other benefits may be
provided to such persons.

TERMINATION AND CHANGE IN CONTROL AGREEMENTS. On March 23, 1995, February
16, 1996, and April 2, 1996, the Corporation and 16 executive officers of the
Corporation (together, the "Executives" and individually, an "Executive")
entered into termination and change in control agreements (the "Agreements") to
encourage the Executives to remain with the Corporation during periods of
uncertainty with respect to the Corporation's ownership and to prevent the
distraction of the Executives from their operating responsibilities during such
periods. The Agreements provide each Executive with the termination of
employment benefits described below if the Executive's employment is terminated

<PAGE>
by the Corporation without Cause (as hereinafter defined) or the Executive
voluntarily terminates his employment for Good Reason (as hereinafter defined)
within the sixty month period following a Change in Control (as hereinafter
defined). The Merger will constitute a Change in Control under the Agreements.

The following termination benefits are provided for under the Agreements: a
payment equal to 1.0, 2.0 or 3.0 (depending on the Executive) of the sum of the
Executive's base salary as of his termination date and his average bonus for the
two calendar years immediately preceding the Change in Control. Any termination
benefits payable are grossed-up to the extent an Executive would be subject to
an excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended, due to the receipt thereof. The Agreements also preserve the
Executive's rights as presently defined in the Corporation's Amended and
Restated Articles of Incorporation. The Corporation's Amended and Restated
Articles of Incorporation presently require the Corporation to indemnify any
officer or director who is a party to any proceeding, including a proceeding
brought by a shareholder in the right of the Corporation or brought by or on
behalf of the Corporation, unless such person engaged in willful misconduct or a
knowing violation of the criminal law.

Cause is defined in each Agreement as (i) willful and continued failure by
the Executive to perform his duties; (ii) a material breach by the Executive of
his fiduciary duties to the Corporation; (iii) conviction of a felony; or (iv)
willful, flagrant, deliberate and repeated infractions of material published
policies and regulations of the Corporation. Good reason is defined to be any of
the following actions: (i) the failure by the Corporation's Board of Directors
to reelect the Executive to the Executive's position with the Corporation as of
the date of the Change in Control (and the Executive resigns within six months
of the failure to reelect); (ii) a material modification by the Corporation's
Board of Directors of the duties, functions and responsibilities of the
Executive in his current position without his consent; (iii) the failure of the
Corporation to permit the Executive to exercise the responsibilities that are
consistent with the Executive's position; (iv) a change in the Executive's
principal place of employment more than 50 miles from his current place of
employment; (v) the failure to make a payment to the Executive when due; or (vi)
any reduction in the Executive's base salary, incentive bonus or benefits.

If payment obligations (including estimated tax-related payments) under
their respective Agreements are triggered in connection with the Merger, an
aggregate of approximately $14.09 million would be payable to the Corporation's
current executive officers as a group. Such amounts were calculated as of
September 30, 1996.

A Change in Control will be deemed to occur if: (i) after the date of the
Agreement, any person, including a "group" as defined in section 13(d)(3) of the
Exchange Act, becomes, directly or indirectly, the beneficial owner of
Corporation securities having 30% or more of the combined voting power of the
then outstanding Corporation securities that may be cast for the election of the
Corporation's directors (other than as a result of an issuance of securities
initiated by the Corporation, or open market purchases approved by the
Corporation's Board of Directors, as long as the majority of the Board of
Directors approving the purchases are directors at the time the purchases are
made); or (ii) as the direct or indirect result of, or in connection with, a
cash tender or exchange offer, a merger or other business combination, a sale of
assets, a contested election of directors or any combination of these
transactions, the persons who were directors of the Corporation before any such
transactions cease to constitute a majority of the Board, or any successor's
board, within three years of the last of such transactions.

INDEMNIFICATION AND LIMITS ON LIABILITY. GECC has agreed to cause the
Surviving Corporation to indemnify, defend and hold harmless, to the fullest
extent permitted under law, each Indemnified Party against all losses, claims,
damages, liabilities, costs and expenses, judgments, fines and penalties arising
out of any acts or omissions by him or her in his or her capacity as such
occurring before the Effective Time in connection with the Merger, including
liabilities under the federal securities laws and state corporation laws. For a
period of six years following the Effective Time, GECC shall cause the Surviving
Corporation to keep in effect provisions in its Articles of Incorporation and
Bylaws providing for (i) exculpation of directors and officers and (ii)
indemnification of the Indemnified Parties to the fullest extent permitted by
the Virginia Act. For a period of three years following the Effective Time, GECC
shall cause directors' and officers' liability insurance to be maintained for
the Indemnified Parties who are currently covered by the Corporation's existing
directors' and officers' liability insurance policies on terms substantially no
less advantageous than such existing insurance; PROVIDED THAT GECC may reduce
such coverage if the annual premium for maintaining such coverage would exceed
two times the last annual premium paid by the Corporation for its existing
coverage.

<PAGE>
EFFECTIVE TIME OF THE MERGER

On the Closing Date (or such other date as the parties may agree), the
Corporation and Merger Subsidiary shall file: (i) Articles of Merger with the
Virginia Commission; and (ii) the Delaware Certificate with the Delaware
Secretary of State, each executed in accordance with the relevant provisions of
the Virginia Act and the DGCL, respectively. The Effective Time for the Merger
shall be upon the last to occur of (i) the issuance of a Certificate of Merger
by the Virginia Commission, (ii) the filing of the Delaware Certificate with the
Delaware Secretary of State or (iii) such later time as is specified in the Plan
of Merger. See " -- Terms of the Merger - Conditions to the Merger."

PAYMENT FOR SHARES OF COMMON STOCK

As a result of the Merger, holders of certificates formerly representing
shares of Common Stock will cease to have any equity interest in the Surviving
Corporation. After consummation of the Merger all certificates formerly
evidencing shares of Common Stock (other than shares owned by GECC, Merger
Subsidiary or any of their respective subsidiaries) will be required to be
surrendered to the Paying Agent in order to receive the Merger Consideration to
which holders thereof will be entitled as a result of the Merger. No interest
will be paid or accrued on the cash payable upon the surrender of such
certificates.

Detailed instructions with regard to the surrender of certificates,
together with a letter of transmittal, will be forwarded by the Paying Agent to
holders of certificates formerly evidencing shares of Common Stock as promptly
as practicable following the Effective Time. HOLDERS OF SHARES OF COMMON STOCK
SHOULD NOT SUBMIT THEIR CERTIFICATES TO THE PAYING AGENT UNTIL THEY HAVE
RECEIVED SUCH MATERIALS. Upon surrender of stock certificates and other required
documents to the Paying Agent, the Paying Agent, as promptly as practicable
following its receipt of the certificates, will distribute the Merger
Consideration (subject to applicable withholding taxes) for each share
represented by such stock certificates to the holder thereof.

If payment with respect to cancelled shares of Common Stock is to be made
to a person other than the person in whose name a surrendered certificate or
instrument is registered, it will be a condition to such payment that the
certificate or instrument so surrendered is properly endorsed or is otherwise in
proper form for transfer and that the person requesting such payment has paid
any transfer and other taxes required by reason of such payment to a person
other than that of the registered holder of the certificate or instrument
surrendered or has established to the satisfaction of the Surviving Corporation
or the Paying Agent that such tax is not payable.

SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.

CERTAIN OTHER EFFECTS OF THE MERGER

If the Merger is consummated, the Corporation's common shareholders will
not have an opportunity to continue their equity interest in the Corporation as
an ongoing concern and, therefore, will not share in future earnings and growth,
if any, of the Corporation.

If the Merger is consummated, public trading of the Common Stock will cease
and the Common Stock will cease to be quoted on the NYSE. Moreover, the
Surviving Corporation may be relieved of the obligation to file certain
informational reports under the Exchange Act, such as proxy statements, and its
officers, directors and more than 10% shareholders may be relieved of the
reporting requirements under, and the "short-swing" profit recapture provisions
of, Section 16 of the Exchange Act.

For information concerning the income tax consequences of the Merger, see
" -- Terms of the Merger - Certain Tax Consequences of the Merger."

GOVERNMENT AND REGULATORY APPROVALS AND FILINGS

The consummation of the Merger is subject to, among other approvals, the
prior approval of the Virginia Bureau and the New York Department and to the
expiration or early termination of the relevant waiting period under the HSR
Act. The parties have agreed to make and cause their respective subsidiaries to
make all necessary filings, as soon as practicable, including, without
limitation, those required under the HSR Act and applicable state insurance laws
in order to facilitate prompt consummation of the Merger and the other
transactions contemplated by the Merger Agreement.

<PAGE>
Definitive applications for approval were submitted by GECC to the Virginia
Bureau and the New York Department on September 4, 1996. On October 15, 1996,
the parties to the Merger Agreement were informed by the FTC that they had
received early termination of the relevant waiting period under the HSR Act with
respect to the Merger.

BENEFIT PLANS

Until December 31, 1997, GECC and its subsidiaries will maintain all
Corporation benefit plans (the "Corporation Benefit Plans") for the benefit of
employees of the Corporation and its subsidiaries immediately before the
Effective Time who are employed by GECC or its subsidiaries following the
Effective Time, with such revisions as may be required by law. The Corporation
has agreed to take all actions necessary to amend the Corporation Benefit Plans
to remove any provisions that provide any benefits that make available Common
Stock as an investment option or an investment measure or that authorize the
issuance or open market purchase of Common Stock. At the discretion of GECC,
effective January 1, 1998, employees who are employed by the Surviving
Corporation will be covered either by the Corporation Benefit Plans or by plans
maintained for similarly situated employees of the life insurance subsidiaries
of GECC. Each employee of the Surviving Corporation shall be given full credit
for his or her pre-Effective Time service with the Corporation and its
subsidiaries, subject to applicable break-in-service rules.

See " -- General" for a description of the treatment of Stock Options and
Phantom Stock Rights in the Merger.

TERMS OF THE MERGER

The terms of the Merger are set forth in the Merger Agreement that appears
as Annex I to this Proxy Statement, and the description of the Merger Agreement
contained herein is qualified in its entirety by reference to the Merger
Agreement. Shareholders are urged to review the Merger Agreement carefully.

GENERAL. The Merger Agreement sets forth the terms and conditions upon
which the Merger is to be effected. The Merger is contingent upon the approval
of the Merger Agreement and the Plan of Merger by the holders of at least two-
thirds of the shares of Common Stock at the Special Meeting and the satisfaction
or waiver of the other conditions to the obligations of the parties.

At the Effective Time, Merger Subsidiary will merge with and into the
Corporation. The Corporation will be the Surviving Corporation in the Merger.
Pursuant to the Merger, each share of Common Stock issued and outstanding at the
Effective Time will be cancelled and converted automatically into the right to
receive the Merger Consideration, other than shares owned by GECC, Merger
Subsidiary or any of their respective subsidiaries (which will be cancelled
without any payment therefor). All issued and outstanding shares of the
Preferred Stock shall remain outstanding and will not be affected by the Merger.
As a result of the Merger, common shareholders of the Corporation will cease to
have an equity interest in, or possess rights as shareholders of, the
Corporation.

AMENDMENT, EXTENSION, WAIVER. Subject to the applicable provisions of the
Virginia Act and the DGCL, at any time prior to the Effective Time, the parties
may modify or amend the Merger Agreement by written agreement executed and
delivered by duly authorized officers of the respective parties. However, after
approval of the Merger Agreement and the Plan of Merger by the common
shareholders of the Corporation at the Special Meeting, no amendment shall be
made that, under applicable law, requires the approval of such shareholders
unless such further shareholder approval shall have been obtained. The Merger
Agreement may not be amended unilaterally by any party.

At any time prior to the Effective Time, the parties may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties, (ii) waive any inaccuracies in the representations and warranties of
the other parties contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement or (iii) waive compliance with any of the
agreements or conditions of the other parties contained in the Merger Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to the Merger Agreement to assert any of its
rights under the Merger Agreement or otherwise shall not constitute a waiver of
such rights.

CONDITIONS TO THE MERGER. The respective obligations of GECC and the
Corporation to consummate the transactions contemplated by the Merger Agreement
are subject to the satisfaction or, where permissible, waiver of the following
conditions: (i) approval of the transactions contemplated by the Merger
Agreement by the requisite vote of the Corporation's shareholders; (ii) the
absence of any order, decree, law or injunction issued by any United States
court or other governmental authority prohibiting consummation of the Merger;
(iii) expiration or early termination of all applicable waiting periods under
the HSR Act, satisfaction of all applicable requirements of the Exchange Act and
the

<PAGE>
making of applicable filings under state takeover or antitrust laws; and (iv)
receipt of permits, consents and approvals of the Virginia Bureau and the New
York Department and, which permits, consents or approvals contain no condition
that in the judgment of GECC or the Corporation reasonably exercised is
reasonably likely to have a material adverse effect on the Corporation and its
subsidiaries or the Merger. On October 15, 1996, the FTC granted early
termination of the waiting period in connection with the notifications filed by
GECC and the Corporation under the HSR Act.

The obligations of the Corporation to consummate the transactions
contemplated by the Merger Agreement are also subject to the satisfaction or
waiver of the following conditions: (i) the material accuracy of the
representations and warranties contained in the Merger Agreement and the
performance, in all material respects, of the obligations and covenants made by
GECC and Merger Subsidiary in the Merger Agreement; and (ii) receipt of certain
legal opinions and closing certificates from GECC and Merger Subsidiary.

The obligations of GECC and Merger Subsidiary to consummate the
transactions contemplated by the Merger Agreement are also subject to the
satisfaction or waiver of the following conditions: (i) the absence of any
material adverse change in the business, assets, liabilities, financial
condition or results of operations of the Corporation and its subsidiaries; (ii)
the material accuracy of the representations and warranties contained in the
Merger Agreement (other than the Corporation's representation with respect to
rating agencies) and the performance, in all material respects, of the
obligations and covenants made by the Corporation in the Merger Agreement; (iii)
receipt by the Corporation of all consents and approvals required under any
material contract to which the Corporation or a subsidiary is a party; and (iv)
receipt of certain legal opinions and closing certificates from the Corporation.

CONDUCT OF BUSINESS PENDING THE MERGER. The Corporation has agreed, pending
the Effective Time, to conduct and to cause each of its subsidiaries to conduct,
their respective operations in the ordinary and usual course of business and
consistent with past practice, and to use its reasonable best efforts: (i) to
preserve intact its business organization; (ii) to keep available the services
of its present officers, employees and agents, including its current product
distribution systems; and (iii) to maintain in effect any licenses, franchises
or similar rights material to the business of the Corporation and its
subsidiaries and to preserve relationships of the Corporation and its
subsidiaries. The Corporation has agreed that, except as expressly provided in
the Merger Agreement or consented to in writing by GECC, it and each of its
subsidiaries will not, prior to the Effective Time: (i) amend its Articles of
Incorporation or Bylaws or other organizational documents; (ii) authorize for
issuance or issue, sell, pledge, dispose of or deliver shares of its capital
stock or securities, except: (A) any such issuance required by the terms of the
Stock Options or (B) the issuance of up to 3,200,000 shares of Preferred Stock;
(iii) split, combine or reclassify its outstanding capital stock or redeem or
otherwise acquire any of its securities, or declare, set aside or pay any
dividend or other distribution (except that (A) the Corporation's subsidiaries
may declare and pay dividends in the ordinary course of business consistent with
past practice, (B) the Corporation may pay quarterly dividends up to $0.115 per
share of Common Stock, (C) the Corporation may redeem the Stock Purchase Rights
and (D) the Corporation may redeem outstanding shares of Preferred Stock); (iv)
except in the ordinary course of business, incur or assume any indebtedness
(except short-term indebtedness not to exceed $10,000,000), assume, guarantee,
endorse or otherwise become liable for any debt of third parties, make any
loans, advances or capital contributions to, or investments in, any other
person, or enter into or modify any agreement other than in the ordinary course
of business; (v) except as may be required by law, take certain actions
regarding employee compensation; (vi) acquire, sell, lease or dispose of any
material assets outside the ordinary course of business; (vii) take any action
other than in the ordinary course of business and in a manner consistent with
past practice with respect to accounting practices; (viii) pay, discharge or
satisfy any material claims, liabilities or obligations other than the payment
of professional fees and payment in the ordinary course of business of
liabilities reflected on the Corporation's fiscal 1995 financial statements or
incurred in the ordinary course of business since the date of such statements;
(ix) (A) subject to applicable laws, invest certain cash funds of the
Corporation's subsidiaries in investments other than those previously disclosed
to GECC or (B) take any actions that would cause the assets of the insurance
subsidiaries of the Corporation to fail to meet certain regulatory standards;
(x) take any action that would, or is reasonably likely to, result in any of the
conditions to the Merger not being satisfied as of the Closing Date; or (xi)
agree in writing to take any of the foregoing actions.

GECC and Merger Subsidiary have agreed not to take any action, without the
prior written consent of the Corporation, that would, or is reasonably likely
to, result in any of the conditions to the Merger not being satisfied as of the
Closing Date.

TERMINATION. The Merger Agreement may be terminated and the Merger
abandoned at any time before the Effective Time (i) by mutual consent of the
Corporation and GECC; (ii) by either the Corporation or GECC if: (A) the Merger
has not been consummated on or before March 31, 1997, unless the failure to
consummate the Merger is due to the

<PAGE>
failure of the party seeking to terminate the Merger Agreement to fulfill any of
its obligations thereunder; (B) there has been a material breach by the other
party of any of its representations, warranties, covenants or agreements that is
not cured within 10 business days after receipt by the party alleged to be in
breach of written notice thereof; or (C) any court of competent jurisdiction or
other competent governmental authority has issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such action has become final and nonappealable; (iii) by GECC if (A)
the Board of Directors of the Corporation fails to call the Special Meeting or
to recommend that the Corporation's shareholders approve the Merger Agreement
and the Plan of Merger or withdraws such recommendation; (B) the Corporation's
shareholders have voted on the Merger Agreement and the Plan of Merger and the
requisite vote is not obtained; or (C) the Corporation has determined to accept
or recommend a Superior Proposal. If the Merger Agreement is terminated by GECC
for the reasons described in paragraphs (ii)(B) or (iii) in the previous
sentence, and a Superior Proposal shall have been made prior to such
termination, and such Superior Proposal is accepted within 12 months after
termination, then the Corporation shall pay GECC a fee equal to $52,500,000,
plus the Acquisition Expenses. If the Merger Agreement is terminated by GECC for
the reasons described in paragraphs (ii)(B) or (iii) above and no Superior
Proposal shall have been made, then the Corporation shall pay GECC the
Acquisition Expenses.

ANTICIPATED ACCOUNTING TREATMENT

The Merger will be accounted for by GECC as a "purchase" for accounting and
financial reporting purposes.

CERTAIN TAX CONSEQUENCES OF THE MERGER

The disposition of shares of Common Stock in the Merger will be a taxable
transaction to the holders of Common Stock for federal income tax purposes and
may also be a taxable transaction under applicable state, local, foreign or
other tax laws. Generally, a shareholder will recognize gain or loss for such
purposes equal to the difference between the tax basis for the shareholder's
shares of Common Stock and the amount of Merger Consideration payable for such
shares. For federal income tax purposes, such gain or loss generally will be a
capital gain or loss if the shares of Common Stock are a capital asset in the
hands of the shareholder, and capital gain or loss will be long-term if the
shareholder's holding period is more than one year as of the Effective Time.
There are limitations on the deductibility of capital losses.

The summary of tax consequences set forth above is for general information
only. The tax treatment of each shareholder will depend in part upon his or her
particular situation. Special tax consequences not described herein may be
applicable to particular classes of taxpayers, such as financial institutions,
broker-dealers, persons who are not citizens or residents of the United States,
shareholders who acquired the shares of Common Stock through the exercise of
Stock Options or otherwise as compensation and persons who received payments in
respect of Stock Options and Phantom Stock Rights.

ALL SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR
TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL AND FOREIGN LAWS.

DISSENTERS' RIGHTS

Under the Virginia Act, the shareholders of the Corporation, whether or not
they vote at the Special Meeting, will not be entitled to dissenters' rights and
will be bound by the terms of the Merger Agreement if the Merger is consummated.

STOCK PURCHASE RIGHTS

On or prior to the Closing Date, the Board of Directors of the Corporation
will take the steps necessary to redeem all Stock Purchase Rights.

<PAGE>
SECURITY OWNERSHIP

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The table below sets forth the beneficial ownership of Common Stock by all
persons who beneficially owned 5% or more of the Common Stock as of September 1,
1996. Unless otherwise indicated, all persons have sole voting and investment
power over all shares beneficially owned.

<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF CLASS
CLASS BENEFICIAL OWNERS BENEFICIALLY OWNED BENEFICIALLY OWNED
<S> <C> <C> <C>
Common Stock Floyd D. Gottwald, Jr., and
Bruce C. Gottwald (a)........................ 7,154,440(b)(c) 14.48%
330 S. Fourth Street
Richmond, Virginia 23219

Loomis, Sayles & Company, L.P. (d)........... 4,521,731 9.1%
One Financial Center
Boston, Massachusetts 02111

J.P. Morgan & Co. Incorporated
and related entities (e)..................... 2,974,986 5.6%
c/o J.P. Morgan & Co. Incorporated
60 Wall Street
New York, New York 10260
</TABLE>

(a) Floyd D. Gottwald, Jr., and Bruce C. Gottwald (the "Gottwalds"), together
with members of their immediate families, may be deemed to be a "group" for
purposes of Section 13(d)(3) of the Exchange Act, although there is no
agreement among them with respect to the acquisition, retention, disposition
or voting of the Common Stock. See "Special Meeting -- Vote Required" for a
description of the agreement between certain members of the Gottwald family
and GECC and Merger Subsidiary with respect to voting on the Merger
Agreement and the Plan of Merger.

(b) As of September 1, 1996, the Gottwalds, individually or collectively, have
sole voting and investment power over all of the shares disclosed except
4,042,169 shares held by wives, children and in certain trust relationships,
some of which might be deemed to be beneficially owned by the Gottwalds
under the rules and regulations of the Commission, but as to which the
Gottwalds disclaim beneficial ownership. Shares owned by the adult children
of Floyd D. Gottwald, Jr., and Bruce C. Gottwald are included in the
holdings of the Gottwalds as a group, but are not attributed to Floyd D.
Gottwald, Jr., or Bruce C. Gottwald other than in this table. This amount
includes 114,669 shares of Common Stock with respect to which Bruce C.
Gottwald, Jr., has the right to acquire beneficial ownership within 60 days
of September 1, 1996, pursuant to previously granted stock options.

(c) This amount includes any shares owned of record by Trustees under various
employee plans for the benefit of the Gottwalds and the members of their
immediate families. This amount does not include shares held by the Trustees
of such plans for the benefit of other employees. Shares held under the
Corporation's savings plan are voted by the Trustee in accordance with
instructions solicited from employees participating in the plan. If a
participating employee does not give the Trustee voting instructions, his
shares are voted by the Trustee in accordance with the Board of Directors'
recommendations to the shareholders. Because the Gottwalds are directors and
the largest shareholders of the Corporation, they may be deemed to be
control persons of the Corporation and to have the capacity to control any
such recommendation of the Board of Directors.

(d) Loomis, Sayles & Company, L.P., an investment advisor ("Loomis"), has not
indicated any present intent to acquire the shares for the purpose or effect
of changing or influencing the control of the Corporation. The information
contained herein with respect to Loomis is based on a Schedule 13G filed
with the Commission on February 13, 1996.

(e) The J.P. Morgan & Co. Incorporated related entities are Morgan Guaranty
Trust Company of New York, J.P. Morgan Investment Management, Inc., and J.P.
Morgan Florida Federal Savings Bank. The information contained herein with
respect to J.P. Morgan & Co. Incorporated and the related entities listed
herein is based on a Schedule 13G received by the Corporation on March 1,
1996. Such filing further stated that the acquisition of such shares was in
the ordinary course of business and not in connection with or as a
participant in any transaction having the purpose or effect of changing or
influencing the control of the Corporation.

<PAGE>
SECURITY OWNERSHIP OF CERTAIN MANAGEMENT OF THE CORPORATION

The table below sets forth the beneficial ownership of Common Stock by all
directors, and nominees, of the Corporation, the Chief Executive Officer and the
four next most highly compensated executive officers of the Corporation as a
group as of September 1, 1996. Unless otherwise indicated, all persons listed
below have sole voting and investment power over all shares beneficially owned.
<TABLE>
<CAPTION>
NAME OF NUMBER OF NUMBER OF
BENEFICIAL OWNER SHARES WITH SOLE SHARES WITH SHARED TOTAL NUMBER
TITLE OF OR NUMBER OF VOTING AND VOTING AND OF SHARES
CLASS PERSONS IN GROUP INVESTMENT POWER(1) INVESTMENT POWER BENEFICALLY OWNED
<S> <C> <C> <C> <C>
Common Stock Bruce C. Gottwald, Jr........ 419,781 1,252,152 1,671,933(3)
Robert E. Chappell, Jr....... 4,000 0 4,000
Ronald V. Dolan.............. 159,216 576 159,792(4)
Allen C. Goolsby............. 1,836 677 2,513
Bruce C. Gottwald............ 1,257,302 317,226 1,574,528(5)
Floyd D. Gottwald, Jr........ 1,743,742 437,266 2,181,008(6)
William M. Gottwald, MD...... 174,404 1,254,632 1,429,036(7)
Julie S. Roberts............. 0 500 500
Charles B. Walker............ 18,174 0 18,174
Peter W. Karras.............. 97,595 0 97,595
Donald W. Britton............ 120,324 0 120,324
Robert D. Shapiro............ 500 0 500
Carlos C. Whaley............. 61,217 60 61,277
Directors and executive
officers as a group
(17 persons)................. 4,317,315 2,801,757 7,119,072
--------- --------- ------------
<CAPTION>
TITLE OF PERCENT OF CLASS
CLASS BENEFICIALLY OWNED(2)
<S> <C>
Common Stock Bruce C. Gottwald, Jr. ...... 3.38%
Bruce C. Gottwald............ 3.19%
Floyd D. Gottwald, Jr. ...... 4.42%
William M. Gottwald, MD...... 2.90%
Bruce C. Gottwald, Jr........
Robert E. Chappell, Jr.......
Ronald V. Dolan..............
Allen C. Goolsby.............
Bruce C. Gottwald............
Floyd D. Gottwald, Jr........
William M. Gottwald, MD......
Julie S. Roberts.............
Charles B. Walker............
Peter W. Karras..............
Donald W. Britton............
Robert D. Shapiro............
Carlos C. Whaley.............
Directors and executive
officers as a group
(17 persons)................. 14.23%
</TABLE>

(1) The amounts in this column include shares of Common Stock with respect to
which certain persons have the right to acquire beneficial ownership within
60 days of September 1, 1996, pursuant to previously granted stock options
(Bruce C. Gottwald, Jr., 114,669 shares; Mr. Dolan, 136,889 shares; Mr.
Karras, 92,745 shares; Mr. Britton, 102,018 shares; and Mr. Whaley, 56,857
shares; and all directors and executive officers as a group, 731,685
shares).

(2) Except as indicated, each person or group owns less than 1% of the shares of
Common Stock.

(3) Bruce C. Gottwald, Jr., disclaims beneficial ownership of 1,252,152 of such
shares. This amount includes 1,065,780 shares of Common Stock that Mr.
Gottwald may be deemed to own beneficially. Such shares constitute Mr.
Gottwald's interest as beneficiary of a trust of which he is a co-trustee.

(4) Mr. Dolan disclaims beneficial ownership of 576 of such shares.

(5) Bruce C. Gottwald disclaims beneficial ownership of 317,226 of such shares.

(6) Floyd D. Gottwald, Jr., disclaims beneficial ownership of 437,266 of such
shares.

(7) William M. Gottwald, MD, disclaims beneficial ownership of 1,254,632 of such
shares. This amount includes 1,065,780 shares of Common Stock that Dr.
Gottwald may be deemed to own beneficially. Such shares constitute Dr.
Gottwald's interest as beneficiary of a trust of which he is a co-trustee.

MARKET PRICES

<PAGE>
SELECTED FINANCIAL INFORMATION CONCERNING THE CORPORATION

The selected historical consolidated financial data presented below for
each of the last five fiscal years and the six months ended June 30, 1996, and
1995, have been derived from the Corporation's historical financial statements.
This data should be read in conjunction with the consolidated financial
statements and notes thereto of the Corporation included in the Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996, which are incorporated by
reference into this Proxy Statement. See "Additional
Information -- Incorporation by Reference."

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, (UNAUDITED) YEARS ENDED DECEMBER 31,
1996 1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
Life insurance premiums................. $ 189.0 $ 164.0 $ 344.1 $ 289.7 $ 249.3 $ 212.9 $ 168.6
Life contingent annuity premiums........ 164.2 186.8 402.5 330.1 355.3 310.4 257.4
Total premiums........................ $ 353.2 $ 350.8 $ 746.6 $ 619.8 $ 604.6 $ 523.3 $ 426.0
Net investment income................... 395.2 363.5 747.0 675.1 658.5 603.8 521.6
Mortality, surrender and administrative
charges............................... 56.9 51.5 105.9 93.0 80.3 71.1 62.2
Realized gains (losses) on
investments........................... 21.3 32.4 58.9 (12.1) 216.3 84.3 23.7
Total revenues........................ $ 826.6 $ 798.2 $ 1,658.4 $ 1,375.8 $ 1,559.7 $1,282.5 $1,033.5
Total benefits and expenses............. 701.9 682.8 1,424.7 1,211.8 1,233.4 1,044.6 874.1
-------- -------- -------- -------- -------- ------- -------
Income before income taxes and
cumulative effect of accounting
changes............................... 124.7 115.4 233.7 164.0 326.3 237.9 159.4
Income taxes............................ 44.1 40.7 82.3 57.1 122.4 74.5 46.8
Net cumulative effect of accounting
changes............................... 0.3(1)
-------- -------- -------- -------- -------- ------- -------
Net income.............................. $ 80.6 $ 74.7 $ 151.4 $ 106.9 $ 203.9 $ 163.7 $ 112.6
======== ======== ======== ======== ======== ======= =======

OPERATING INCOME
Pretax operating income(2)(3)........... $ 102.9 $ 83.1 $ 174.5 $ 164.2 $ 159.2 $ 161.7 $ 135.2
After-tax operating income(2)........... 66.5 53.9 113.2 107.2 104.1 113.4 96.6

PER SHARE:(4)
After-tax operating income(2)........... 1.31 1.06 2.23 2.11 2.10 2.30 1.96
Net realized investment gains
(losses)(5)........................... 0.28 0.42 0.77 (0.01) 2.17 1.01 0.32
Other(6)................................ (0.15) 0.01
NET INCOME............................ $ 1.59 $ 1.48 $ 3.00 $ 2.10 $ 4.12 $ 3.32 $ 2.28

BALANCE SHEET DATA
(at end of period)
Total assets (including FAS 115)(7)..... $10,841.1 $10,085.0 $10,720.6 $ 9,092.2 $ 8,335.2 $7,370.7 $6,365.3
Total assets (excluding FAS 115)(7)..... 10,819.6 9,956.4 10,400.2 9,269.0 8,335.2 7,370.7 6,365.3
Long-term debt.......................... 174.9 174.8 174.8 174.8 174.8 250.0
Variable term preferred stock........... 80.0 80.0 80.0 80.0 80.0
Shareholders' equity (including FAS
115)(7)............................... 1,345.9 1,298.7 1,484.4 1,014.6 1,094.6 819.8(8) 909.9
Shareholders' equity (excluding FAS
115)(7)............................... 1,332.0 1,215.0 1,276.1 1,129.5 1,094.6 819.8(8) 909.9

BOOK VALUE PER SHARE OF COMMON STOCK
(INCLUDING FAS 115)(7)................ $ 25.61 $ 28.44
CASH DIVIDENDS DECLARED AND PAID PER
SHARE OF COMMON STOCK................. $ 0.23 $ 0.40
</TABLE>

(1) The net cumulative effect of accounting changes related to FAS
106 - Postretirement Benefits and FAS 109 - Income Taxes.
(2) Operating income represents income before income taxes, excluding realized
gains on investments and the effect of related amortization. Excluding a
guaranty fund provision, pretax operating income for the year ended December
31, 1995, was $178.5 million and after-tax operating income for the year
ended December 31, 1995, was $115.8 million, or $2.28 per share.
(3) Represents income before income taxes excluding realized investment gains
and losses and related amortization of deferred acquisition costs, value of
acquired insurance in force and reserve adjustment.
(4) The weighted average number of shares used to compute earnings per share was
49.4 million in 1995 and 49.3 million in 1994 and prior years.
(5) After income taxes, net of the effect of related amortization.
(6) Other represents a one-time adjustment (due to a change in the statutory
income tax rate) to deferred income taxes of ($0.15) per share in 1993 and
net cumulative effect of accounting changes of $0.01 per share in 1992.
(7) FAS 115 mark-to-market accounting requirements on the Corporation's
available-for-sale fixed maturity investment portfolio was adopted January
1, 1994.
(8) The Corporation borrowed $250 million of long-term debt and paid a $250
million ($5.07 per share) special dividend to then parent Ethyl Corporation
that reduced shareholders' equity.

<PAGE>
ADDITIONAL INFORMATION

INDEPENDENT ACCOUNTANTS

Upon appointment by the Corporation's Board of Directors, ratified by the
holders of the shares of Common Stock, Coopers & Lybrand, L.L.P., independent
public accountants, audited and reported on the consolidated financial
statements of the Corporation and its subsidiaries for the year ended December
31, 1995. Such financial statements have been incorporated by reference in this
Proxy Statement in reliance upon such report. The Corporation's Board of
Directors appointed Coopers & Lybrand, L.L.P., as the Corporation's independent
auditors for the year ending December 31, 1996, and the Corporation's common
shareholders ratified the appointment of auditors at the Annual Meeting of
Shareholders held May 15, 1996.

A representative of Coopers & Lybrand, L.L.P., is expected to be present at
the Special Meeting, will have an opportunity to make a statement if such
representative so desires and will be available to respond to appropriate
questions.

INCORPORATION BY REFERENCE

The following documents, filed by the Corporation with the Commission, are
incorporated herein by reference:

(i) the Corporation's Annual Report on Form 10-K filed March 29,
1996, for the year ended December 31, 1995;

(ii) the Corporation's Quarterly Reports on Form 10-Q filed May 14,
1996, and August 14, 1996, for the quarters ended March 31, 1996,
and June 30, 1996, respectively; and

(iii) the Corporation's Current Reports on Form 8-K filed February
6, 1996, May 9, 1996, June 4, 1996, and August 8, 1996, and dated
February 5, 1996, May 8, 1996, June 4, 1996, and August 4, 1996,
respectively.

All reports and definitive proxy or information statements filed by the
Corporation pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of this Proxy Statement and prior to the date of the
Special Meeting shall be deemed to be incorporated by reference into this Proxy
Statement from the dates of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated in this Proxy Statement
shall be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or supersedes such statement.

A copy of the documents incorporated herein by reference (excluding
exhibits unless such exhibits are specifically incorporated by reference into
the information incorporated herein) that are not presented herein or delivered
herewith will be provided without charge to each person, including any
beneficial owner, to whom a Proxy Statement is delivered, upon oral or written
request of any such person and by first-class mail or other equally prompt
means. Requests should be directed to:

Mr. Peter W. Karras
Secretary and Treasurer
First Colony Corporation
700 Main Street
Lynchburg, Virginia 24504

The Board of Directors of the Corporation does not intend to bring any
other matters before the Special Meeting and as of October 28, 1996, does not
know of any other matters that may be brought before the Special Meeting by
others. If any other matter should properly come before the Special Meeting, the
persons named in the enclosed proxy as proxy appointees will have discretionary
authority to vote the shares of Common Stock thereby represented in accordance
with their best judgment.

<PAGE>
SHAREHOLDER PROPOSALS

If the Merger is not consummated, the 1997 annual meeting of shareholders
of the Corporation will be held on May 15, 1997. Under regulations of the
Commission, any shareholder desiring to make a proposal to be acted upon at the
1997 annual meeting of shareholders must present such proposal to the
Corporation at its principal office in Richmond, Virginia, by November 26, 1996,
for the proposal to be considered for inclusion in the Corporation's proxy
statement.

In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder, even if the
proposal is not to be included in the Corporation's proxy statement, the
Corporation's Bylaws provide that the shareholder must give timely notice in
writing to the Secretary of the Corporation not later than 90 days prior to the
annual meeting. As to each matter, the notice must contain (i) a brief
description of the business desired to be brought before the annual meeting,
(ii) the name of, record address of and class and number of shares beneficially
owned by the shareholder proposing such business and (iii) any material interest
of the shareholder in such business.

Peter W. Karras, SECRETARY
Richmond, Virginia
October 28, 1996

<PAGE>

ANNEX I

AMENDED AND RESTATED

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

GENERAL ELECTRIC CAPITAL CORPORATION,

FCMS, INC.

AND

FIRST COLONY CORPORATION

Dated as of August 5, 1996

TABLE OF CONTENTS
<CAPTION>

PAGE

ARTICLE I
DEFINITIONS
<S> <C>
1.1. Acquiror...................................................................................... 2
1.2. Acquiror Companies............................................................................ 2
1.3. Action........................................................................................ 2
1.4. Acquisition Proposal.......................................................................... 2
1.5. Agreement..................................................................................... 2
1.6. Cap........................................................................................... 2
1.7. Certificates.................................................................................. 2
1.8. Closing; Closing Date......................................................................... 2
1.9. Code.......................................................................................... 2
1.10. Confidentiality Agreement..................................................................... 2
1.11. Contracts..................................................................................... 2
1.12. Delaware Code................................................................................. 2
1.13. Effective Time................................................................................ 2
1.14. Environmental Law............................................................................. 3
1.15. ERISA......................................................................................... 3
1.16. Exchange Act.................................................................................. 3
1.17. FCC........................................................................................... 3
1.18. FCC Benefit Plans............................................................................. 3
1.19. FCC Common Stock.............................................................................. 3
1.20. FCC Companies................................................................................. 3
1.21. FCC Disclosure Schedule....................................................................... 3
1.22. FCC Insurance Filings......................................................................... 3
1.23. FCC Licenses.................................................................................. 3
1.24. FCC Rights.................................................................................... 3
1.25. FCC Rights Agreement.......................................................................... 3
1.26. FCC SEC Reports............................................................................... 3
1.27. FCC Stock Options............................................................................. 4
1.28. FCC Stock Rights.............................................................................. 4
1.29. FCC VT Preferred Stock........................................................................ 4
1.30. First Boston.................................................................................. 4
1.31. GAAP.......................................................................................... 4
1.32. Governmental Authority........................................................................ 4
1.33. HSR Act....................................................................................... 4
1.34. Indemnified Party............................................................................. 4
1.35. IRS........................................................................................... 4
1.36. Knowledge of Acquiror......................................................................... 4
1.37. Knowledge of FCC.............................................................................. 4
1.38. Law........................................................................................... 4

- i -

<PAGE>

PAGE

1.39. Liens......................................................................................... 5
1.40. Material Adverse Effect....................................................................... 5
1.41. Merger Consideration.......................................................................... 5
1.42. Merger Subsidiary............................................................................. 5
1.43. Morgan Stanley................................................................................ 5
1.44. NYSE.......................................................................................... 5
1.45. Paying Agent.................................................................................. 5
1.46. Person........................................................................................ 5
1.47. Plan of Merger................................................................................ 5
1.48. Proxy Statement............................................................................... 5
1.49. SAP........................................................................................... 5
1.50. SEC........................................................................................... 5
1.51. Securities Act................................................................................ 5
1.52. Special Meeting............................................................................... 5
1.53. Statutory Reports............................................................................. 6
1.54. Subsidiary; Subsidiaries...................................................................... 6
1.55. Superior Proposal............................................................................. 6
1.56. Surviving Corporation......................................................................... 6
1.57. Taxes......................................................................................... 6
1.58. Tax Returns................................................................................... 6
1.59. Virginia Act.................................................................................. 6

ARTICLE II
THE MERGER

2.1. The Merger.................................................................................... 7
2.2. Exchange of Certificates...................................................................... 8

ARTICLE III
SHAREHOLDER APPROVAL; CLOSING

3.1. Shareholder Approval.......................................................................... 9
3.2. Time and Place of Closing..................................................................... 10

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR

4.1. Organization and Authority of Acquiror and Merger Subsidiary.................................. 10
4.2. Authority Relative to this Agreement.......................................................... 10
4.3. Consents and Approvals; No Violations......................................................... 10
4.4. Litigation.................................................................................... 11

- ii -

<PAGE>

PAGE

4.5. Fees and Expenses of Brokers and Others....................................................... 11
4.6. Obligation to Fund............................................................................ 11
4.7. Interim Operations of Merger Subsidiary....................................................... 12

ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF FCC

5.1. Organization and Authority of the FCC Companies............................................... 12
5.2. Capitalization................................................................................ 12
5.3. Authority Relative to this Agreement.......................................................... 13
5.4. Consents and Approvals; No Violations......................................................... 13
5.5. Reports....................................................................................... 14
5.6. Insurance Holding Company System.............................................................. 15
5.7. Absence of Undisclosed Liabilities............................................................ 15
5.8. Absence of Certain Events..................................................................... 15
5.9. Litigation.................................................................................... 16
5.10. Employee Benefit Plans........................................................................ 16
5.11. Labor Matters................................................................................. 17
5.12. Tax Matters................................................................................... 18
5.13. Compliance with Law........................................................................... 19
5.14. Fees and Expenses of Brokers and Others....................................................... 19
5.15. Accuracy of Information....................................................................... 19
5.16. Title in Properties........................................................................... 19
5.17. Contracts..................................................................................... 20
5.18. Intellectual Property......................................................................... 20
5.19. Rating Agencies............................................................................... 20
5.20. FCC Rights Agreement.......................................................................... 20
5.21. Fairness Opinion.............................................................................. 20
5.22. Vote Required................................................................................. 20
5.23. Environmental................................................................................. 20

ARTICLE VI
COVENANTS

6.1. Conduct of the Businesses of Acquiror and FCC................................................. 21
6.2. No Solicitation............................................................................... 23
6.3. Proxy Statement............................................................................... 24
6.4. Access to Information; Confidentiality Agreement.............................................. 25
6.5. Reasonable Efforts; Cooperation............................................................... 26
6.6. Consents...................................................................................... 26
6.7. Public Announcements.......................................................................... 26
6.8. Stock Options................................................................................. 27

- iii -

<PAGE>

PAGE

6.9. Employee Benefit Matters...................................................................... 27
6.10. Indemnification; Insurance.................................................................... 27
6.11. Dissenters' Rights............................................................................ 29
6.12. Redemption of FCC Rights...................................................................... 29
6.13. Notice of Certain Events...................................................................... 29
6.14. Termination and Amendment of Certain Stock-Based Plans........................................ 29
6.15. Amendment to Change in Control and Termination Agreements..................................... 29
6.16. Prepayment of FCC Credit Facilities........................................................... 30
6.17. Subsequent FCC Reports........................................................................ 30
6.18. Rating Agencies............................................................................... 30

ARTICLE VII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER

7.1. Conditions Precedent to Each Party's Obligation to Effect the Merger.......................... 30
7.2. Conditions Precedent to Obligations of FCC.................................................... 31
7.3. Conditions Precedent to Obligations of Acquiror and Merger Subsidiary......................... 31

ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER

8.1. Termination................................................................................... 32
8.2. Effect of Termination......................................................................... 33
8.3. Amendment..................................................................................... 33
8.4. Extension; Waiver............................................................................. 34

ARTICLE IX
MISCELLANEOUS

9.1. Survival of Representations and Warranties.................................................... 34
9.2. Brokerage Fees and Commissions................................................................ 34
9.3. Entire Agreement; Assignment.................................................................. 34
9.4. Notices....................................................................................... 34
9.5. Governing Law................................................................................. 36
9.6. Descriptive Headings.......................................................................... 36
9.7. Parties in Interest........................................................................... 36
9.8. Counterparts.................................................................................. 36
9.9. Specific Performance.......................................................................... 36
9.10. Fees and Expenses............................................................................. 36
9.11. Severability.................................................................................. 36

</TABLE>

- iv -

<PAGE>

EXHIBITS

Exhibit A Plan of Merger

- v -

<PAGE>

AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of August
5, 1996, by and among GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("Acquiror"), FCMS, INC., a Delaware corporation and a wholly-owned
subsidiary of Acquiror ("Merger Subsidiary") and FIRST COLONY CORPORATION, a
Virginia corporation ("FCC").

RECITALS

WHEREAS, FCC, Acquiror and GE Capital Equity Capital Group, Inc., a
Delaware corporation and a wholly-owned subsidiary of Acquiror ("GECECG"), have
entered into an Agreement and Plan of Merger (the "Prior Agreement") dated as of
August 4, 1996; and

WHEREAS, in accordance with Section 8.3 of the Prior Agreement,
pursuant to an Assignment by and between GECECG and FCMS, Inc. dated August 5,
1996, GECECG has assigned all of its rights and obligations under the Prior
Agreement to Merger Subsidiary; and

WHEREAS, FCC, Acquiror and Merger Subsidiary have agreed that the Prior
Agreement, and any exhibits and schedules thereto, shall be amended and restated
in their entirety as set forth herein; and

WHEREAS, the respective Boards of Directors of Acquiror, Merger
Subsidiary and FCC each has determined that it is in the best interests of its
respective shareholders that Merger Subsidiary shall merge with and into FCC in
accordance with the terms of the Plan of Merger (the "Plan of Merger") attached
hereto as Exhibit A and the applicable provisions of the laws of the
Commonwealth of Virginia (the "Merger"); and the Board of Directors of Merger
Subsidiary and FCC have, by resolutions duly adopted, approved the Plan of
Merger; and Merger Subsidiary and FCC have directed that the Plan of Merger be
submitted to their respective shareholders for approval; and

WHEREAS, pursuant to the Merger, each outstanding share of FCC Common
Stock (as hereinafter defined) will be converted into the right to receive the
Merger Consideration in accordance with the Plan of Merger; and

WHEREAS, pursuant to the Merger, each share of Common Stock of Merger
Subsidiary will be converted into and exchangeable for one share of FCC Common
Stock; and

NOW, THEREFORE, in consideration of the premises, which are
incorporated into and made part of this Agreement, and of the mutual
representations, warranties, covenants,

<PAGE>

agreements and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1. Acquiror. "Acquiror" shall mean General Electric Capital
Corporation, a New York corporation.

Section 1.2. Acquiror Companies. "Acquiror Companies" shall mean
Acquiror and its Subsidiaries.

Section 1.3. Action. "Action" shall have the meaning given in Section
6.10(a) hereof.

Section 1.4. Acquisition Proposal. "Acquisition Proposal" shall have
the meaning given in Section 6.2(c) hereof.

Section 1.5. Agreement. "Agreement" shall mean this Amended and
Restated Agreement and Plan of Merger, together with the Plan of Merger attached
hereto, as amended from time to time in accordance with the terms hereof.

Section 1.6. Cap. "Cap" shall have the meaning given in Section 6.10(c)
hereof.

Section 1.7. Certificates. "Certificates" shall have the meaning given
in Section 2.2(a) hereof.

Section 1.8. Closing; Closing Date. "Closing" shall mean the closing
conference held pursuant to Section 3.2 hereof, and "Closing Date" shall mean
the date on which the Closing occurs.

Section 1.9. Code. "Code" shall mean, as appropriate, the Internal
Revenue Code of 1954 or of 1986, each as amended, and the regulations
thereunder.

Section 1.10. Confidentiality Agreement. "Confidentiality Agreement"
shall mean the letter agreement, dated April 23, 1996, between FCC and Acquiror.

Section 1.11. Contracts. "Contracts" shall mean contracts, agreements,
leases, licenses, notes, indentures, reinsurance treaties, bonds, mortgages,
instruments, and other binding commitments, arrangements and understandings,
written or oral.

Section 1.12. Delaware Code. "Delaware Code" shall mean the Delaware
General Corporation Law, as amended.

Section 1.13. Effective Time. "Effective Time" shall have the meaning
given in Section 3.1(b) hereof.

- 2 -

<PAGE>

Section 1.14. Environmental Law. "Environmental Law" shall mean any
federal, state, local or foreign law (including common law), statute, code,
ordinance, rule, regulation or other requirement relating to the environment,
natural resources or public or employee health and safety.

Section 1.15. ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.

Section 1.16. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

Section 1.17. FCC. "FCC" shall mean First Colony Corporation, a
Virginia corporation.

Section 1.18. FCC Benefit Plans. "FCC Benefit Plans" shall have the
meaning given in Section 5.10(a) hereof.

Section 1.19. FCC Common Stock. "FCC Common Stock" shall mean the
common stock, without par value, of FCC.

Section 1.20. FCC Companies. "FCC Companies" shall mean FCC and its
Subsidiaries.

Section 1.21. FCC Disclosure Schedule. "FCC Disclosure Schedule" shall
mean the disclosure schedule delivered by FCC to Acquiror concurrently with the
execution and delivery of this Agreement.

Section 1.22. FCC Insurance Filings. "FCC Insurance Filings" shall mean
all reports and other filings (including all exhibits, interrogatories, notes
and schedules thereto), together with any amendments made with respect thereto
that any of the FCC Companies has been required to file with state or other
insurance and securities regulatory authorities.

Section 1.23. FCC Licenses. "FCC Licenses" shall have the meaning given
in Section 5.13 hereof.

Section 1.24. FCC Rights. "FCC Rights" shall mean the rights issued
pursuant to the FCC Rights Agreement.

Section 1.25. FCC Rights Agreement. "FCC Rights Agreement" shall mean
the Rights Agreement, dated as of December 1, 1992, between FCC and Harris Trust
and Savings Bank.

Section 1.26. FCC SEC Reports. "FCC SEC Reports" shall mean (a) FCC's
Annual Reports on Form 10-K for the fiscal years ended December 31, 1995, 1994
and 1993; (b) all documents filed by FCC with the SEC pursuant to Sections 13(a)
and 13(c) of the Exchange Act, any definitive proxy statements filed pursuant to
Section 14 of the Exchange Act and any report

- 3 -

<PAGE>

filed pursuant to Section 15(d) of the Exchange Act since January 1, 1994; and
(c) all other reports or registration statements filed by FCC with the SEC since
January 1, 1994.

Section 1.27. FCC Stock Options. "FCC Stock Options" shall mean all
outstanding options, warrants, stock appreciation rights or rights of any kind
to purchase FCC Common Stock except for the FCC Rights.

Section 1.28. FCC Stock Rights. "FCC Stock Rights" shall mean all
outstanding phantom stock or other similar rights entitling the holder thereof
to receive, upon exercise, a cash amount based upon the value of FCC Common
Stock.

Section 1.29. FCC VT Preferred Stock. "FCC VT Preferred Stock" shall
mean, collectively, the variable term cumulative preferred stock, series B and
series C, without par value, of FCC.

Section 1.30. First Boston. "First Boston" shall mean CS First Boston
Corporation.

Section 1.31. GAAP. "GAAP" shall mean generally accepted accounting
principles as in effect in the United States of America at the time of the
preparation of the subject financial statement, consistently applied throughout
the specified period and in the immediately prior comparable period.

Section 1.32. Governmental Authority. "Governmental Authority" shall
mean any, local, federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, or any court,
in each case whether of the United States, any of its possessions or
territories, or of any foreign nation.

Section 1.33. HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.

Section 1.34. Indemnified Party. "Indemnified Party" shall have the
meaning given in Section 6.10(a) hereof.

Section 1.35. IRS. "IRS" shall mean the Internal Revenue Service.

Section 1.36. Knowledge of Acquiror. "Knowledge of Acquiror" shall mean
the actual knowledge, after due inquiry, of the officers of Acquiror or Merger
Subsidiary.

Section 1.37. Knowledge of FCC. "Knowledge of FCC" shall mean the
actual knowledge, after due inquiry, of those officers of the FCC Companies
identified on Section 1.37 of the FCC Disclosure Schedule.

Section 1.38. Law. "Law" shall mean any federal, state, provincial,
local, municipal, foreign or other law or governmental requirement of any kind,
and the rules, regulations and orders promulgated thereunder, including, without
limitation, any Environmental Law.

- 4 -

<PAGE>

Section 1.39. Liens. "Liens" shall mean liens, security interests,
options, rights of first refusal, easements, mortgages, charges, debentures,
deeds of trust, rights-of-way, restrictions, agreements, encroachments,
licenses, leases, permits, security agreements or any encumbrances or other
restrictions or limitations on the use of real or personal property or
irregularities in title thereto.

Section 1.40. Material Adverse Effect. "Material Adverse Effect" shall
mean, with respect to any entity or group of entities, a material adverse
effect, individually or in the aggregate, on the business, assets, liabilities,
financial condition or results of operations of such entity or group of entities
taken as a whole.

Section 1.41. Merger Consideration. "Merger Consideration" shall have
the meaning given in Section 2.1(b) hereof.

Section 1.42. Merger Subsidiary. "Merger Subsidiary" shall mean FCMS,
Inc., a Delaware corporation and direct or indirect wholly-owned subsidiary of
Acquiror.

Section 1.43. Morgan Stanley. "Morgan Stanley" shall mean Morgan
Stanley & Co. Inc.

Section 1.44. NYSE. "NYSE" shall mean The New York Stock Exchange, Inc.

Section 1.45. Paying Agent. "Paying Agent" shall have the meaning given
in Section 2.2(a) hereof.

Section 1.46. Person. "Person" shall mean any individual or entity.

Section 1.47. Plan of Merger. "Plan of Merger" shall mean the plan of
merger of Merger Subsidiary with and into FCC in substantially the form of
Exhibit A attached hereto.

Section 1.48. Proxy Statement. "Proxy Statement" shall mean the
definitive Proxy Statement and form of proxy of FCC distributed to the holders
of FCC Common Stock in connection with the Special Meeting.

Section 1.49. SAP. "SAP" shall have the meaning given in Section
5.5(b) hereof.

Section 1.50. SEC. "SEC" shall mean the Securities and Exchange
Commission.

Section 1.51. Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.

Section 1.52. Special Meeting. "Special Meeting" shall mean the special
meeting of the holders of FCC Common Stock called pursuant to Section 3.1(a)
hereof to consider and approve the transactions contemplated herein, and any
adjournments thereof.

- 5 -

<PAGE>

Section 1.53. Statutory Reports. "Statutory Reports" shall have the
meaning given in Section 5.5(b) hereof.

Section 1.54. Subsidiary; Subsidiaries. "Subsidiary" shall mean each
entity with respect to which the specified Person (a) has the right to vote
(directly or indirectly through one or more other entities or otherwise) shares
or other ownership interests representing 50% or more of the votes eligible to
be cast in the election of directors of such entity or (b) owns a majority of
the outstanding beneficial interests, or a majority of the capital or profits
(collectively, "Subsidiaries").

Section 1.55. Superior Proposal. "Superior Proposal" shall have the
meaning given in Section 6.2(c) hereof.

Section 1.56. Surviving Corporation. "Surviving Corporation" shall mean
FCC on or after the Effective Time.

Section 1.57. Taxes. "Taxes" shall mean any and all taxes, levies,
imposts, duties, assessments, charges and withholdings imposed or required to be
collected by or paid over to any Governmental Authority or any political
subdivision thereof, including, without limitation, income, premium, gross
receipts, ad valorem, value added, minimum tax, franchise, sales, use, excise,
license, real or personal property, unemployment, disability, stock transfer,
mortgage recording, estimated, withholding or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, and including any
interest, penalties, fines, assessments or additions to tax imposed in respect
of the foregoing, or in respect of any failure to comply with any requirement
regarding Tax Returns.

Section 1.58. Tax Returns. "Tax Returns" shall mean any report, return,
information statement, payee statement or other information required to be
provided to any Governmental Authority, with respect to Taxes or the FCC Benefit
Plans.

Section 1.59. Virginia Act. "Virginia Act" shall mean the Virginia
Stock Corporation Act, as amended.

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ARTICLE II
THE MERGER

Section 2.1. The Merger.

(a) Subject to the terms and conditions of this Agreement and the Plan
of Merger, at the Effective Time, Merger Subsidiary shall be merged with and
into FCC in accordance with the provisions of, and with the effects provided in,
Section 13.1-721A of the Virginia Act and Section 259 of the Delaware Code. FCC
shall be the surviving corporation resulting from the Merger and as a result
shall become a direct or indirect wholly-owned subsidiary of Acquiror and shall
continue to be governed by the laws of the Commonwealth of Virginia. The Plan of
Merger provides for the terms and conditions of the Merger, which terms and
conditions are incorporated herein and made a part of this Agreement by
reference.

(b) Pursuant to the Merger, at the Effective Time, each share of FCC
Common Stock outstanding immediately prior to the Effective Time (other than
shares of FCC Common Stock held by Acquiror, if any, which shares shall be
canceled in the Merger) shall, by virtue of the Merger and without any action on
the part of the holder thereof, at the Effective Time, be canceled and be
converted into the right to receive $36.15 in cash, without interest thereon
(subject to adjustment as provided below, the "Merger Consideration") in
accordance with the Plan of Merger.

(c) Each share of FCC VT Preferred Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding.

(d) Pursuant to the Merger, at the Effective Time, each share of common
stock of Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted and exchangeable for one share of common
stock, no par value, of the Surviving Corporation. The separate existence and
corporate organization of Merger Subsidiary shall cease upon the Effective Time
and thereupon Merger Subsidiary and FCC shall be a single corporation.

(e) FCC, as the Surviving Corporation in the Merger, shall have
Articles of Incorporation, bylaws, directors and officers set forth in, or
determined in accordance with, the Plan of Merger.

(f) In the event of any change in the shares of FCC Common Stock
outstanding between the date of this Agreement and the Effective Time by reason
of any stock split, stock dividend, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like, the Merger
Consideration shall be adjusted proportionately.

(g) The holders of shares of FCC Common Stock shall not be entitled to
any dissenters' rights under the Virginia Act.

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(h) Acquiror and FCC agree to use their respective commercially
reasonable efforts to cause the Merger to be consummated in accordance with the
terms of the Plan of Merger.

Section 2.2. Exchange of Certificates.

(a) Prior to the Effective Time, Acquiror shall appoint a bank or trust
company reasonably acceptable to FCC to act as the paying agent in connection
with the Merger (the "Paying Agent"). From and after the Effective Time, each
holder of a certificate that immediately prior to the Effective Time represented
outstanding shares of FCC Common Stock (a "Certificate") shall be entitled to
receive (subject to applicable withholding Taxes) in exchange therefor, upon
surrender thereof to the Paying Agent, the Merger Consideration represented by
such Certificates, and such Certificates shall forthwith be canceled.
Immediately prior to the Effective Time, Acquiror will deliver to the Paying
Agent, in trust for the benefit of the holders of FCC Common Stock, cash,
representing the Merger Consideration times the number of outstanding shares of
FCC Common Stock, necessary to make the transactions contemplated by Section
hereof on a timely basis.

(b) Promptly after the Effective Time, Acquiror shall cause the Paying
Agent to mail to each holder of record of a Certificate or Certificates that
immediately prior to the Effective Time represented shares of FCC Common Stock
entitled to payment pursuant to Section hereof, a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificate(s) shall pass, only upon proper delivery of the Certificate(s) to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificate(s) in exchange for the Merger Consideration in accordance with
Section hereof. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal duly executed and any other required documents,
the holder of such Certificate shall be entitled to receive (subject to
applicable withholding Taxes) in exchange therefor the Merger Consideration
times the number of shares of FCC Common Stock represented by the Certificate,
and such Certificate shall forthwith be canceled. If any cash is to be paid to a
person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of such payment that the Certificate so
surrendered shall be properly endorsed (with such signature guarantees as may be
required by the letter of transmittal) or otherwise in proper form for transfer
and that the person requesting such payment shall pay to the Paying Agent any
transfer or other Taxes required by reason of such payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of Acquiror that such Tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section , each Certificate
shall represent for all purposes only the right to receive the Merger
Consideration times the number of shares of FCC Common Stock represented by such
Certificate, as provided in Section hereof and the Plan of Merger, without any
interest thereon.

(c) After the Effective Time, there shall be no transfers on the stock
transfer books of FCC of the shares of FCC Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for transfer, they shall
be canceled and exchanged for the Merger Consideration times the number of
shares of FCC Common Stock represented by such Certificates, as provided

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in Section 2.1(b) hereof, in accordance with the procedures set forth in this
Section 2.2 and the Plan of Merger.

(d) Any cash delivered to the Paying Agent for payment, as contemplated
herein, that remains unclaimed by the former holders of FCC Common Stock on the
date that falls six months after the Effective Time shall be delivered by the
Paying Agent to the Surviving Corporation. Any former holders of FCC Common
Stock who have not theretofore complied with this Section 2.2 shall thereafter
look only to the Surviving Corporation for satisfaction of their claim for the
Merger Consideration, without any interest thereon. Notwithstanding the
foregoing, neither Acquiror nor the Surviving Corporation shall be liable to
any holder of shares of FCC Common Stock for any consideration as
contemplated herein delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.

(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, Acquiror shall cause the
Paying Agent to issue in exchange for such lost, stolen or destroyed Certificate
the Merger Consideration deliverable in respect thereof as determined in
accordance with Section 2.1 hereof. When authorizing such payment in exchange
for any lost, stolen or destroyed Certificate, the person to whom the
Merger Consideration is to be issued, as a condition precedent to the issuance
thereof, shall give Acquiror a bond satisfactory to Acquiror in such sum as it
may direct or otherwise indemnify Acquiror in a manner satisfactory to Acquiror
against any claim that may be made against Acquiror or the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen
or destroyed.

ARTICLE III
SHAREHOLDER APPROVAL; CLOSING

Section 3.1. Shareholder Approval.

(a) Acquiror's Board of Directors has approved, and FCC's Board of
Directors shall recommend that its shareholders vote for the approval of, this
Agreement and the Plan of Merger and the transactions contemplated hereby and
thereby and shall cause to be taken such other actions as may be necessary and
appropriate to effect the transactions contemplated hereby and thereby. The
recommendation of FCC's Board of Directors shall be contained in the Proxy
Statement. As soon as practicable after the execution of this Agreement, FCC
will take all actions necessary in accordance with applicable Laws, rules of the
NYSE, this Agreement and FCC's Articles of Incorporation and bylaws, to duly
call and cause to be held a special meeting of the holders of FCC Common Stock
(the "Special Meeting"), and this Agreement and the Plan of Merger shall be
submitted by FCC for consideration and approval at the Special Meeting.

(b) On the first business day on which (i) this Agreement and the Plan
of Merger have been duly approved by the requisite vote of the holders of FCC
Common Stock and (ii) the Closing of the transactions contemplated by this
Agreement and the Plan of Merger has occurred, or such later date as shall be
agreed upon by Acquiror and FCC, articles of merger (the "Articles of Merger")
shall be filed in accordance with the Virginia Act and the Delaware

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Code, and the Merger shall become effective in accordance with the terms of this
Agreement and the Plan of Merger at the time and date contemplated therein (such
time and date being referred to herein as the "Effective Time").

Section 3.2. Time and Place of Closing. The Closing of the transactions
contemplated by this Agreement and the Plan of Merger will take place at 11:00
A.M., New York City time, on the last day of the calendar month in which the
last of the conditions to the obligations of the parties hereunder set forth in
Article VII hereof have been met. The Closing shall be at such place as may
be mutually agreed upon by the parties hereto.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR

Acquiror and Merger Subsidiary represent and warrant to FCC as follows:

Section 4.1. Organization and Authority of Acquiror and Merger
Subsidiary. Each of Acquiror and Merger Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. Each of Acquiror and the Merger
Subsidiary has full corporate power to carry on its respective business as it is
now being conducted and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and assets now are
owned, operated or held. Acquiror owns all of the outstanding capital stock of
Merger Subsidiary. Each of Acquiror and Merger Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where failure to do so is reasonably likely to have a Material
Adverse Effect on Acquiror or Merger Subsidiary.

Section 4.2. Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement and of all of the other documents and
instruments required hereby by Acquiror and Merger Subsidiary are within the
corporate power of Acquiror and Merger Subsidiary. The execution and delivery of
this Agreement and the consummation of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Acquiror and Merger Subsidiary (including by the sole shareholder
of Merger Subsidiary) and no other corporate proceedings on the part of Acquiror
or Merger Subsidiary are necessary to authorize the execution, delivery and
performance of this Agreement or to consummate the transactions contemplated
hereby. This Agreement and all of the other documents and instruments required
hereby have been or will be duly and validly executed and delivered by each of
Acquiror and Merger Subsidiary and (assuming the due authorization, execution
and delivery hereof or thereof by FCC) constitute or will constitute valid and
binding agreements of each of Acquiror and Merger Subsidiary, enforceable
against them in accordance with their respective terms, except to the extent
that their enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other Laws affecting the enforcement of creditors' rights
generally or by equitable principles.

Section 4.3. Consents and Approvals; No Violations. Except for (a) any
applicable requirements of the Exchange Act, the HSR Act and any applicable
filings under state takeover

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Laws; (b) the filing of the Articles of Merger and issuance of a certificate of
merger as required by the Virginia Act and a certificate of merger as required
by the Delaware Code; and (c) approvals of or notices to Governmental
Authorities pursuant to applicable insurance Laws, no filing or registration
with, and no permit, authorization, consent or approval of, any Governmental
Authority is necessary or required in connection with the execution and delivery
of this Agreement by Acquiror and Merger Subsidiary or for the consummation by
Acquiror and Merger Subsidiary of the transactions contemplated by this
Agreement. Assuming that all filings, registrations, permits, authorizations,
consents and approvals contemplated by the immediately preceding sentence have
been duly made or obtained, neither the execution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated hereby by
Acquiror and Merger Subsidiary will (a) conflict with or result in any breach of
any provision of the respective Articles or Certificate of Incorporation or
bylaws of Acquiror or Merger Subsidiary; (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under
or result in the loss of a benefit under, or result in the creation of a Lien on
any property or asset of Acquiror or Merger Subsidiary under, any of the terms,
conditions or provisions of any material Contract or other instrument or
obligation to which either Acquiror or Merger Subsidiary is a party or by which
either of them or any of their properties or assets may be bound; or (c) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
either Acquiror or Merger Subsidiary or any of their properties or assets;
except, in the case of subsection (c) above, for violations, breaches or
defaults that are not reasonably likely to have a Material Adverse Effect on
Acquiror or Merger Subsidiary or that will not prevent or delay the consummation
of the transactions contemplated hereby.

Section 4.4. Litigation. There is no action, suit, proceeding or
investigation pending or, to the Knowledge of Acquiror, threatened against or
relating to any of the Acquiror Companies at law or in equity, or before any
Governmental Authority, that seeks restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.

Section 4.5. Fees and Expenses of Brokers and Others. None of the
Acquiror Companies is directly or indirectly committed to any liability for any
brokers' or finders' fees or any similar fees in connection with the
transactions contemplated by this Agreement or has retained any broker or other
similar intermediary to act directly or indirectly on its behalf in connection
with the transactions contemplated by this Agreement, except that Acquiror has
engaged Goldman, Sachs & Co. to represent it in connection with such
transactions and shall pay all of Goldman, Sachs & Co.'s fees and expenses in
connection with such engagement.

Section 4.6. Obligation to Fund. Acquiror has (or will have at the
Effective Time) on hand cash or other short term investments in an amount
sufficient to pay in U.S. dollars the Merger Consideration for each share of FCC
Common Stock upon surrender of all the shares of the FCC Common Stock after
consummation of the Merger and to fund the payment of the Option Payment by FCC.
Acquiror will make such funds available to the Paying Agent at such times, in
such amounts and in such a manner as is contemplated by Section 2.2 hereof.

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Section 4.7. Interim Operations of Merger Subsidiary. Merger Subsidiary
was formed solely for the purpose of engaging in the transactions contemplated
hereby. Except in connection with its organization and this Agreement, Merger
Subsidiary has neither incurred any obligations or liabilities nor engaged in
any business or activities of any type or kind whatsoever or entered into any
agreement or arrangements with any person or entity. During the period
commencing on the date of this Agreement and ending at the Effective Time,
Merger Subsidiary shall not engage in any activities of any nature except as
provided in, or as contemplated by, this Agreement.

ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF FCC

FCC represents and warrants to Acquiror and Merger Subsidiary as
follows:

Section 5.1. Organization and Authority of the FCC Companies. Each of
the FCC Companies is duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation. Each of the FCC
Companies has full corporate power to carry on its respective business as it is
now being conducted and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and assets now are
owned, operated or held. Each of the FCC Companies is duly qualified as a
foreign entity to do business, and is in good standing, in each jurisdiction
where the failure to be so qualified would have a Material Adverse Effect on the
FCC Companies. Section 5.1 of the FCC Disclosure Schedule contains a true
and complete list of all of the FCC Companies, together with the jurisdiction
of incorporation of each such Company. The copies of the Articles of
Incorporation and bylaws of FCC and each of its Subsidiaries that have been
delivered by FCC to Acquiror are complete and correct and in full force and
effect on the date hereof.

Section 5.2. Capitalization. FCC's authorized equity capitalization
consists of 150,000,000 shares of FCC Common Stock, and 15,000,000 shares of
preferred stock, no par value, of which (i) 1,000,000 shares have been
designated as Participating Cumulative Preferred Stock, Series A; (ii) 1,600,000
shares have been designated as Variable Term Cumulative Preferred Stock, Series
B; and (iii) 1,600,000 shares have been designated as Variable Term Cumulative
Preferred Stock, Series C. As of the close of business on August 2, 1996,
49,303,281 shares of FCC Common Stock and 3,200,000 shares of FCC VT Preferred
Stock were issued and outstanding. Such shares of FCC Common Stock and FCC VT
Preferred Stock constituted all of the issued and outstanding shares of capital
stock of FCC as of such date. No Subsidiary of FCC owns, of record or
beneficially, any shares of FCC Common Stock. All issued and outstanding shares
of FCC Common Stock and FCC VT Preferred Stock have been duly authorized and
validly issued and are fully paid and nonassessable, are not subject to and have
not been issued in violation of any preemptive rights and have not been issued
in violation of any federal or state securities Laws. All of the outstanding
shares of capital stock of the Subsidiaries of FCC have been duly authorized and
are validly issued, fully paid and nonassessable and owned of record and
beneficially by FCC, directly or indirectly, free and

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clear of all Liens. Except as set forth in Section 5.2 of the FCC
Disclosure Schedule, FCC has not, subsequent to December 31,1995, declared
or paid any dividend on, or declared or made any distribution with respect to,
or authorized or effected any split-up or any other recapitalization of, any of
the FCC Common Stock, or directly or indirectly redeemed, purchased or
otherwise acquired any of the FCC Common Stock or FCC VT Preferred Stock or
agreed to take any such action and will not take any such action during the
period between the date of this Agreement and the Effective Time. Except
for the FCC Rights and as set forth in Section 5.2 of the FCC Disclosure
Schedule, there are (a) no outstanding FCC Stock Options, FCC Stock Rights,
options, warrants, subscriptions or other rights to purchase or acquire any
capital stock of any of the FCC Companies, (b) no Contracts pursuant to which
any of the FCC Companies is bound to sell or issue any shares of its
capital stock or securities convertible into or exchangeable for such
shares of capital stock and (c) no Contracts to which any of the FCC Companies
or members of the Gottwald Family (as identified on Section 5.2 of the FCC
Disclosure Schedule), is a party with respect to the voting or registration
of any shares of capital stock of any of the FCC Companies.

Section 5.3. Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement, and of all of the other documents
and instruments required hereby, by FCC are within the corporate power of FCC.
The execution and delivery of this Agreement and the consummation of the Merger
and of the other transactions contemplated hereby have been duly authorized by
the Board of Directors of FCC and no other corporate proceedings on the part of
FCC are necessary to authorize the execution, delivery and performance of this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval of this Agreement and the Plan of
Merger by the holders of at least two-thirds of the outstanding shares of FCC
Common Stock at the Special Meeting). This Agreement and all of the other
documents and instruments required hereby have been or will be duly and validly
executed and delivered by FCC and (assuming the due authorization, execution and
delivery hereof and thereof by Acquiror and Merger Subsidiary) constitute or
will constitute valid and binding agreements of FCC, enforceable against FCC in
accordance with their respective terms, except to the extent that their
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other Laws affecting the enforcement of creditors' rights
generally or by equitable principles.

Section 5.4. Consents and Approvals; No Violations. Except for (a) any
applicable requirements of the Exchange Act, the HSR Act and any applicable
filings under state takeover laws; (b) the filing and recordation of Articles of
Merger and issuance of a certificate of merger as required by the Virginia Act
and a certificate of merger as required by the Delaware Code; (c) approvals of
or notices to Governmental Authorities pursuant to applicable insurance Laws;
and (d) those required filings, registrations, consents and approvals listed in
Section 5.4 of the FCC Disclosure Schedule, no filing or registration with,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary or required in connection with the execution and
delivery of this Agreement by FCC or for the consummation by FCC of the
transactions contemplated by this Agreement. Assuming that all filings,
registrations, permits, authorizations, consents and approvals contemplated by
the immediately preceding sentence have been duly made or obtained, neither the
execution, delivery and performance of this Agreement

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nor the consummation of the transactions contemplated hereby by FCC will (a)
conflict with or result in any breach of any provision of the respective
Articles or Certificate of Incorporation or bylaws of any of the FCC Companies;
(b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the loss of a
benefit under, or result in the creation of a Lien on any property or asset of
the FCC Companies under, any of the terms, conditions or provisions of any
material Contract to which any of the FCC Companies is a party or by which it or
any of them or any of their properties or assets may be bound; or (c) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
any of the FCC Companies or any of their properties or assets; except, in the
case of subsection (c) above, for violations, breaches or defaults that are not
reasonably likely to have a Material Adverse Effect on the FCC Companies or that
will not prevent or delay the consummation of the transactions contemplated
hereby.

Section 5.5. Reports.

(a) The FCC SEC Reports complied, as of their respective dates of
filing, in all material respects with all applicable requirements of the
Exchange Act, the Securities Act and the rules and regulations of the SEC
promulgated thereunder. As of their respective dates, none of the FCC SEC
Reports, including, without limitation any exhibits thereto or financial
statements or schedules included or incorporated by reference therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements made
therein not misleading in light of the circumstances under which they were made.
Each of the balance sheets (including the related notes and schedules) included
or incorporated by reference in the FCC SEC Reports fairly presented the
consolidated financial position of the FCC Companies as of the respective dates
thereof, and the other related financial statements (including the related notes
and schedules) included or incorporated by reference therein fairly presented
the consolidated results of operations and cash flows of the FCC Companies for
the respective fiscal periods or as of the respective dates set forth therein.
Each of the financial statements (including the related notes and schedules)
included or incorporated by reference in the FCC SEC Reports (i) complied as to
form with the applicable accounting requirements and rules and regulations of
the SEC and (ii) was prepared in accordance with GAAP, except as otherwise noted
therein and subject to normal year-end and audit adjustments in the case of any
unaudited interim financial statements. Except for FCC, none of the FCC
Companies is required to file any forms, reports or other documents with the
SEC, the NYSE or any other foreign or domestic securities exchange or
Governmental Authority with jurisdiction over securities Laws. FCC has
heretofore delivered to Acquiror, in the form filed with the SEC, true and
complete copies of the FCC SEC Reports.

(b) The statutory financial statements of each of FCC's insurance
Subsidiaries for each of the three years in the three-year period ended December
31, 1995, and for the quarter ended March 31, 1996, in each case together with
the exhibits, schedules and notes thereto (the "Statutory Reports") have been
prepared in accordance with statutory accounting practices prescribed or
permitted by the insurance department of the state of domicile of such insurance
Subsidiary ("SAP"), and such accounting practices have been applied on a
consistent basis

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throughout the period involved and the immediately preceding comparable period,
except as disclosed therein. The Statutory Reports present fairly the statutory
financial condition of the applicable FCC insurance Subsidiary as of the
respective dates thereof and the statutory results of operations and changes in
such Subsidiary's financial position and cash flow for each of the periods then
ended. No material deficiency has been asserted with respect to any of the
Statutory Reports by any insurance regulatory authority that has not been cured
or otherwise resolved to the satisfaction of such insurance regulatory
authority. FCC has heretofore delivered to Acquiror true and complete copies of
all such Statutory Reports.

(c) Since December 31, 1994, each of the FCC Companies has filed all
FCC Insurance Filings, and all of the FCC Insurance Filings filed prior to the
date hereof complied, and all such filings made hereafter prior to the Effective
Time will comply, in all material respects with applicable Laws, and, except as
disclosed in Section 5.5 of the FCC Disclosure Schedule, there are no material
open or unresolved issues raised by any insurance or securities regulatory
authority with respect to any of such FCC Insurance Filings.

Section 5.6. Insurance Holding Company System. FCC and certain of its
Subsidiaries are affiliates of an insurance holding company system as defined in
the Code of Virginia, Section 38.2-1322, relating to insurance holding company
systems. FCC is a holding company and American Mayflower Company is a controlled
insurer as defined in Section 1501 of the New York Insurance Law, relating to
insurance holding companies and holding company systems.

Section 5.7. Absence of Undisclosed Liabilities. Except as disclosed in
Section 5.7 of the FCC Disclosure Schedule, neither FCC nor any of its
Subsidiaries has any liabilities of any nature, whether absolute, contingent
or otherwise, and whether due or to become due (including, without limitation,
all liabilities for Taxes) that should be reflected or reserved against (a) in
accordance with GAAP, and that are not adequately reflected or reserved
against in FCC's consolidated balance sheet as of December 31, 1995,
including the footnotes thereto, except such as have arisen in the
ordinary course of business consistent with past practice since December 31,
1995 or (b) in accordance with SAP, and that are not adequately reflected
or reserved against in the Subsidiaries' respective statutory balance
sheets as of December 31, 1995, including the notes, exhibits and schedules
thereto, except such as have arisen in the ordinary course of business
consistent with past practice.

Section 5.8. Absence of Certain Events. Except as set forth in the FCC
SEC Reports filed prior to the date of this Agreement or as otherwise
specifically disclosed in Section 5.8 of the FCC Disclosure Schedule, since
December 31, 1995, none of the FCC Companies has suffered any change in its
business, assets, liabilities, financial condition or results of operations
that has had or is reasonably likely to have a Material Adverse Effect
upon the FCC Companies. Except as disclosed in the FCC SEC Reports or in
Section 5.8 of the FCC Disclosure Schedule, or as otherwise specifically
contemplated by this Agreement, there has not been since December 31, 1995:
(a) any labor dispute that has had or is reasonably likely to have a Material
Adverse Effect upon the FCC Companies; (b) any entry by any of the FCC
Companies into any material Contract or transaction (including, without
limitation, any borrowing, capital expenditure, sale of assets or any Lien
made on any of the properties or assets of any of the

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FCC Companies) that cannot be terminated within 30 days without penalty; (c) any
change in the accounting policies or practices of FCC; (d) any damage,
destruction or loss, whether covered by insurance or not, that has had or is
reasonably likely to have a Material Adverse Effect upon the FCC Companies; (e)
any material change in underwriting, pricing, actuarial or investment practices
or policies; (f) any new, or amendment to any existing, employment, severance or
consulting Contract, the implementation of, or any agreement to implement, any
increase in benefits with respect to any FCC Benefit Plans, or any alteration of
any of the FCC Companies' employment practices or terms and conditions of
employment, in each case other than in the ordinary course of business
consistent with past practice; or (g) any agreement to do any of the foregoing.

Section 5.9. Litigation. Except as set forth in Section 5.9 of the
FCC Disclosure Schedule, there is no action, suit, proceeding or
investigation pending or, to the Knowledge of FCC, threatened against or
relating to any of the FCC Companies at law or in equity, or before any
Governmental Authority, that is reasonably likely to have a Material
Adverse Effect upon the FCC Companies or that seeks restraint, prohibition,
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.

Section 5.10. Employee Benefit Plans.

(a) For purposes of this Section, the term "FCC Benefit Plans" shall
mean all pension, retirement, profit-sharing, deferred compensation, stock
option, restricted stock, incentive compensation, employee stock ownership,
severance pay or change in control, vacation, bonus or other incentive plans and
all other employee programs, arrangements or agreements, whether arrived at
through collective bargaining or otherwise, all medical, vision, dental and
other health plans, all life insurance plans and all other employee benefit
plans or fringe benefit plans, including, without limitation, any "employee
benefit plan," as that term is defined in Section 3(3) of ERISA, adopted,
maintained by, sponsored in whole or in part by or contributed to by any of the
FCC Companies or any trade or business (whether or not incorporated) that,
together with FCC, is treated as a single employer with the FCC Companies under
Section 414(b), (c), (m) or (o) of the Code, for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries and under which current or former employees, retirees, dependents,
spouses, directors, independent contractors or other beneficiaries are eligible
to participate. Any of the FCC Benefit Plans that is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as an "FCC ERISA Plan."

(b) No FCC Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA. All FCC Benefit Plans are in compliance with
the applicable provisions (including, without limitation, any funding
requirements or limitations) of ERISA, the Code and any other applicable Laws,
the breach or violation of which would have a Material Adverse Effect on the FCC
Companies. Except as set forth on Section 5.10 of the FCC Disclosure Schedule,
no FCC ERISA Plan that is a defined benefit pension plan has any "unfunded
current liability," as that term is defined in Section 302(d)(8)(A) of ERISA,
and the present fair market value of the assets of any such plan exceeds the
plan's "benefit liabilities,"

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as that term is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if the plan terminated in accordance with all
applicable legal requirements.

(c) Section 5.10 of the FCC Disclosure Schedule contains a true and
correct list of all FCC Benefit Plans. FCC has provided Acquiror with access to
true and correct copies of each governing plan document and trust agreement
(and all amendments thereto) for each FCC Benefit Plan, together with the
most recent summary plan description, annual report, IRS determination letter,
if applicable (including all schedules and attachments thereto) and
audited financial statement for each such plan and the actuarial report for
any FCC Benefit Plan that is a defined benefit pension plan or funded welfare
benefit plan.

(d) All contributions and other payments required to be made by the FCC
Companies to or under any FCC Benefit Plan have been made in accordance with the
terms of such FCC Benefit Plan.

(e) Except as set forth in Section 5.10 of the FCC Disclosure Schedule,
none of the FCC Benefit Plans that are "welfare plans" within the meaning of
Section 3(1) of ERISA provides for any retiree benefits other than continuation
coverage required to be provided under Section 4980B of the Code or Part 6 of
Title I of ERISA.

(f) Except as set forth in Section 5.10 of the FCC Disclosure Schedule,
(i) the consummation or announcement of any transaction contemplated by
this Agreement will not (either alone or upon the occurrence of any
additional or further acts or events) result in any (A) payment (whether of
severance pay or otherwise) becoming due from the FCC Companies to any officer,
employee, former employee or director thereof or to the trustee under any
"rabbi trust" or similar arrangement, or (B) benefit under any FCC Benefit Plan
being established or becoming accelerated, vested or payable and (ii) none of
the FCC Companies is a party to (A) any management, employment, deferred
compensation, severance (including any payment, right or benefit resulting
from a change in control), bonus or other Contract for personal services
with any current or former officer, director or employee (whether or not
characterized as a plan for purposes of ERISA), (B) any consulting Contract
with any person who prior to entering into such Contract was a director or
officer of any of the FCC Companies or (C) any plan, agreement, arrangement
or understanding similar to any of the items described in clause (ii)(A) or (B)
of this sentence.

Section 5.11. Labor Matters. None of the FCC Companies is party to any
collective bargaining agreement or other labor agreement with any union or labor
organization and no union or labor organization has been recognized by the FCC
Companies as an exclusive bargaining representative for employees of the FCC
Companies. There is no current union representation question involving employees
of the FCC Companies nor does FCC have Knowledge of any significant activity or
proceeding of any labor organization (or representative thereof) or employee
group to organize any such employees. There is no unfair labor practice,
grievance, employment discrimination or other labor or employment related
charge, complaint or claim against the FCC Companies pending or, to the
Knowledge of FCC, threatened before

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any Governmental Authority that is reasonably likely to have a Material Adverse
Effect on the FCC Companies.

Section 5.12. Tax Matters. Except as set forth in Section 5.12 of
the FCC Disclosure Schedule:

(a) FCC and each of its Subsidiaries are members of the affiliated
group, within the meaning of Section 1504(a) of the Code, of which FCC is the
common parent, and such affiliated group files a consolidated federal income tax
return;

(b) each of the FCC Companies has timely filed or caused to be filed
all income and other material Tax Returns required to have been filed by or for
it, and all information set forth in such Tax Returns is accurate and complete
in all material respects;

(c) each of the FCC Companies has paid all Taxes for the periods
covered by such Tax Returns or has made full provision on its books and records
for all current and deferred Taxes for the periods covered by such Tax Returns;

(d) none of the FCC Companies has granted (or is subject to) any waiver
that is currently in effect of the period of limitations for the assessment of
any Tax; no unpaid Tax deficiency has been assessed or asserted against or with
respect to any of the FCC Companies by any Governmental Authority; there are no
Liens with respect to Taxes upon any of the assets of the FCC Companies except
for Liens for Taxes not yet due and payable; no power of attorney relating to
Taxes that is currently in effect has been granted by or with respect to any of
the FCC Companies; there are no currently pending administrative or judicial
proceedings, or any deficiency or refund litigation, with respect to Taxes of
any of the FCC Companies; and any such assertion, assessment, proceeding or
litigation disclosed in Section 5.12 of the FCC Disclosure Schedule is
being contested in good faith through appropriate measures, and its
status is described in Section 5.12 of the FCC Disclosure Schedule;

(e) none of the FCC Companies is obligated to make any payments, or is
a party to any Contract that could obligate it to make any payments, that would
not be deductible by reason of Section 162(m) or Section 280G of the Code; and

(f) except to the extent that the tax treatment of any Insurance
Contract (as hereinafter defined) issued by the FCC Companies is not materially
less favorable than the tax treatment of substantially similar products offered
by other companies, the tax treatment under the Code of existing Insurance
Contracts is and at all times has been not materially less favorable to the
purchaser thereof than the tax treatment under the Code that the FCC Companies
represented in any written materials could be obtained at the time of its
issuance, purchase, renewal, modification or exchange (the term "Insurance
Contracts" means all insurance, annuity or investment policies, plans or
Contracts, financial products, employee benefit plans, individual retirement
accounts or annuities, structured settlements or any similar or related policy,
Contract, plan or product).

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Section 5.13. Compliance with Law. The conduct of the business of each
of the FCC Companies and its use of its assets has not violated or conflicted
with or is not in violation of any Law, which violation or conflict is
reasonably likely to have a Material Adverse Effect on the FCC Companies. None
of the FCC Companies has received any notice asserting or alleging a violation
or failure to comply with any Law where such violation or failure to comply is
reasonably likely to have a Material Adverse Effect on the FCC Companies. Each
of the FCC Companies possesses all permits, licenses (including, without
limitation, insurance licenses), authorizations, certificates, franchises,
orders, consents or other indicia of authority required by any Governmental
Authority or otherwise necessary in order to conduct its business and operations
as presently conducted by the FCC Companies (the "FCC Licenses"). Each of the
FCC Companies is in material compliance with the terms and conditions of the FCC
Licenses, and all the FCC Licenses are in full force and effect. No proceeding
is pending or, to the Knowledge of FCC, threatened that is reasonably likely to
result in the suspension, revocation or limitation of any of the FCC Licenses.

Section 5.14. Fees and Expenses of Brokers and Others. None of the FCC
Companies is directly or indirectly committed to any liability for any brokers'
or finders' fees or any similar fees in connection with the transactions
contemplated by this Agreement or has retained any broker or other intermediary
to act directly or indirectly on its behalf in connection with the transactions
contemplated by this Agreement, except that FCC has engaged First Boston and
Morgan Stanley to represent it in connection with such transactions, and shall
pay all the fees and expenses to which First Boston and Morgan Stanley are
entitled in connection with such engagement. FCC has provided to Acquiror true
and complete copies of any Contracts to which any of the FCC Companies is a
party relating to the engagement of First Boston and Morgan Stanley. In
addition, set forth in Section 5.14 of the FCC Disclosure Schedule is an
estimate of the fees and expenses that will be payable by FCC to its other
advisors and intermediaries in connection with this Agreement and the
transactions contemplated hereby.

Section 5.15. Accuracy of Information. Neither this Agreement nor any
other document provided by the FCC Companies or their employees or agents to
Acquiror or any affiliate of Acquiror in connection with the transactions
contemplated hereby contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading.

Section 5.16. Title in Properties. Section 5.16 of the FCC
Disclosure Schedule contains a true and complete list of all real property
owned by FCC or any of its Subsidiaries and all leases of real property under
which FCC or any of its Subsidiaries is a lessor or lessee. FCC and each of its
Subsidiaries has good and marketable title (in fee simple absolute in the case
of real property) to all of its properties and assets, except for leased
properties and assets, as to which valid leasehold title is held, in all
cases free and clear of all Liens, except (a) as disclosed in Section 5.16 of
the FCC Disclosure Schedule, (b) Liens for current Taxes not yet due and
payable and (c) minor imperfections of title not material (individually or
in the aggregate) and not materially detracting from the value or the use
(either actual or intended) by FCC and its Subsidiaries of such assets or
properties.

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Section 5.17. Contracts. Section 5.17 of the FCC Disclosure
Schedule contains a list of all Contracts to which any of the FCC Companies
is a party that are material to the FCC Companies and that are not filed as
exhibits to the FCC SEC Reports. All such Contracts were duly and validly
executed by one of the FCC Companies. None of the FCC Companies is in breach or
default under any such Contract, except for such breaches or defaults that
would not have a Material Adverse Effect. To the Knowledge of FCC, no breach
or default under any such Contract by any party thereto other than an FCC
Company has occurred that is reasonably likely to have a Material Adverse
Effect on the FCC Companies.

Section 5.18. Intellectual Property. FCC or an FCC Company owns, has
registered or has, and after the Effective Time will have, valid rights to use,
free and clear of any Liens, such trademarks, service marks, trade names,
copyrights and computer software, programs and similar systems as are material
to the operation of the respective businesses, operations or affairs of the FCC
Companies. To the Knowledge of FCC, none of the FCC Companies is infringing upon
any third party's trademarks, service marks, trade names, copyrights or any
application pending therefor or any proprietary computer software, programs or
similar systems which infringement has or is reasonably likely to have a
Material Adverse Effect on the FCC Companies.

Section 5.19. Rating Agencies. Except as disclosed in Section 5.19
of the FCC Disclosure Schedule, since June 30, 1995, no rating agency has (a)
imposed conditions (financial or otherwise) on retaining any currently held
rating assigned to any of FCC's insurance Subsidiaries or (b) indicated to FCC
that it is considering the downgrade of any rating assigned to any of FCC's
insurance Subsidiaries.

Section 5.20. FCC Rights Agreement. The execution, delivery and
performance of this Agreement by the parties hereto has not and will not result
in Acquiror or any of its "Affiliates" or "Associates" (as such terms are
defined in the FCC Rights Agreement) being or becoming an "Acquiring Person" (as
such term is defined in the FCC Rights Agreement) under the FCC Rights
Agreement, and that no "Stock Acquisition Date" or "Distribution Date" (as such
terms are defined in the FCC Rights Agreement) will occur as a result of the
approval, execution or delivery of this Agreement or the consummation of the
Merger.

Section 5.21. Fairness Opinion. FCC has received opinions of First
Boston and Morgan Stanley, financial advisors to FCC, to the effect that, as of
the date of such opinions, the Merger is fair, from a financial point of view,
to the shareholders of FCC.

Section 5.22. Vote Required. The affirmative vote of the holders of
two-thirds of the outstanding shares of FCC Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of capital stock
of FCC necessary to approve this Agreement and the transactions contemplated
hereby.

Section 5.23. Environmental. Except as disclosed in Section 5.23 of
the FCC Disclosure Schedule, to the Knowledge of FCC, there are no facts,
circumstances or conditions relating to, arising from, associated with or
attributable to the real property owned, operated or leased by

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the FCC Companies or the facilities or operations thereon that are reasonably
likely to give rise to an environmental claim or result in liabilities under or
pursuant to Environmental Laws that are reasonably likely to have a Material
Adverse Effect on the FCC Companies.

ARTICLE VI
COVENANTS

Section 6.1. Conduct of the Businesses of Acquiror and FCC.

(a) Except as otherwise expressly provided in this Agreement, during
the period from the date of this Agreement to the Effective Time, FCC will
conduct, and will cause the FCC Companies to conduct, their respective
operations according to their ordinary and usual course of business and
consistent with past practice, and will use their respective reasonable best
efforts (i) to preserve intact, as appropriate in the ordinary course of
business consistent with past practice, their respective business organizations,
to keep available the services of their officers, employees and agents,
including without limitation their current product distribution systems, to
maintain in effect any licenses, franchises, authorizations or similar rights
material to the businesses of the FCC Companies and to preserve the goodwill of
those having relationships with any of the FCC Companies; and (ii) to cooperate
with Acquiror in jointly communicating with FCC's employees and with members of
FCC's product distribution system, including independent contractors, regarding
the Merger and continuing operations after consummation of the Merger. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, FCC will not, and will
cause its Subsidiaries not to, without the prior written consent of Acquiror,
which consent shall not be withheld unreasonably:

(i) amend its Articles of Incorporation, bylaws or other
organizational documents;

(ii) authorize for issuance or issue, sell, pledge, transfer,
dispose of or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or series or any other securities, except (A) as required by the
terms of the FCC Options or the FCC Stock Rights outstanding as of the date
hereof and disclosed pursuant to this Agreement or (B) up to an aggregate of
3,200,000 shares of the FCC VT Preferred Stock;

(iii) split, combine or reclassify any shares of its capital
stock or declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire any of its securities or any securities of
its respective Subsidiaries, except that (A) each of the Subsidiaries of FCC may
declare and pay dividends in the ordinary course of business consistent with
past practice consistent with past practice, (B) FCC may pay quarterly dividends
in an amount not to exceed $0.115 per share of FCC Common Stock, (C) FCC may
redeem the FCC Rights as provided in Section hereof and (D) FCC may redeem the
outstanding shares of FCC VT Preferred Stock.

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(iv) (A) incur or assume any indebtedness for borrowed money,
(with the exception of short-term indebtedness not to exceed $10,000,000 at any
time); (B) assume, guarantee, endorse or otherwise become liable or responsible
for the obligations of any Person, other than a direct or indirect wholly-owned
Subsidiary or the endorsement of checks in the ordinary course of business
consistent with past practice; or (C) other than in the ordinary course of
business consistent with past practice, (i) make any material loans, advances or
capital contributions to, or investments in, any other Person or (ii) enter into
any Contract, or alter, amend, modify or exercise any option under any existing
Contract, other than in connection with the transactions contemplated by this
Agreement;

(v) adopt or amend (except as may be required by Law or as
provided in this Agreement) any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock, pension,
retirement, deferred compensation, employment or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or welfare of
any director, officer or employee, or (except for annual salary increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense) increase the compensation or fringe benefits of any director, officer
or employee or pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or enter
into any Contract, agreement, commitment or arrangement to do any of the
foregoing; provided, however, that FCC may award bonuses for 1996 prior to the
Effective Time to the Chairman of the Board and the President of FCC in an
aggregate amount not to exceed the amount set forth in Section (a)(v) of the FCC
Disclosure Schedule and may award bonuses to other officers and employees of the
FCC Companies in an aggregate amount not to exceed by more than $400,000
(excluding the bonuses for the two above-designated officers) the amount paid by
the FCC Companies for bonuses for 1995;

(vi) acquire, sell, pledge, transfer, assign, license, lease
or dispose of any material assets outside the ordinary course of business
consistent with past practice;

(vii) take any action other than in the ordinary course of
business consistent with past practice and in a manner consistent with past
practice with respect to accounting policies or practices;

(viii) except for the payment of professional fees, pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business consistent with
past practice of liabilities reflected or reserved against in FCC's consolidated
financial statements for the year ended December 31, 1995, or incurred in the
ordinary course of business consistent with past practice since the date
thereof;

(ix) (A) subject to applicable Laws, invest the future cash
flow of FCC's insurance Subsidiaries, any cash from matured and maturing
investments, any cash proceeds from the sale of their respective assets and
properties, and any cash funds currently held by

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them, in any investments other than as set forth in Section 6.1 (a) of the
FCC Disclosure Schedule; or (B) take any actions that would cause, or
otherwise permit, the assets of each insurance Subsidiary of FCC that are
classified as nonadmitted under SAP or by the applicable insurance regulatory
authorities for such insurance Subsidiary to at any time exceed by a
material amount the respective amounts of nonadmitted assets for such
insurance Subsidiary in Exhibit 14 of the most recent Annual Statement filed
with the Virginia Bureau of Insurance;

(x) take any action that would or is reasonably likely to
result in any of the conditions set forth in Article VII hereof not being
satisfied as of the Closing Date; or

(xi) agree in writing or otherwise to take any of the
foregoing actions.

(b) Except as otherwise expressly provided in this Agreement, prior to
the Effective Time, neither Acquiror nor Merger Subsidiary will, without the
prior written consent of FCC, take or agree to take, any action that would or is
reasonably likely to result in any of the conditions set forth in Article VII
hereof not being satisfied as of the Closing Date.

(c) FCC will promptly advise Acquiror in writing of the occurrence of
any Material Adverse Effect, or any event or condition that is reasonably likely
to result in a Material Adverse Effect with respect to the FCC Companies.

Section 6.2. No Solicitation.

(a) Except as set forth below, FCC shall not, nor shall FCC authorize
or permit any of its affiliates, officers, directors, employees, representatives
or agents to, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
Person (other than Acquiror, Merger Subsidiary, or any affiliate or designee of
Acquiror or Merger Subsidiary) with respect to, or take any action to facilitate
any inquiries or the making of, any proposal that constitutes, or may reasonably
be expected to, any Acquisition Proposal (as defined in subsection (c) below);
provided, however, that nothing herein shall prevent FCC's board of directors
from taking, and disclosing to FCC's shareholders, a position contemplated by
Rule 14c-2 promulgated under the Exchange Act with regard to any tender offer.
FCC may, directly or indirectly, furnish information and access, in each case
only in response to unsolicited requests therefor, to any Person pursuant to
confidentiality agreements with terms no less favorable to FCC than the
Confidentiality Agreement is with respect to Acquiror, and may participate in
discussions and negotiate with such Person concerning an Acquisition Proposal,
if (i) such Person has submitted an unsolicited Superior Proposal (as defined in
subsection (c) below) to FCC's board of directors relating to any such
transaction and (ii) FCC by a majority vote of its directors determines in its
good faith judgment that it is required to do so in order to comply with its
fiduciary duties to shareholders under applicable Law. FCC's board of directors
shall notify Acquiror orally (within one business day) and in writing (as
promptly as practicable) of all of the relevant details relating to all
inquiries and proposals that it or any of its affiliates, officers, directors,
employees, representatives or agents may receive relating to any Acquisition
Proposal and, if such inquiries or proposals are in writing, FCC shall provide a
copy of any such written Acquisition Proposal and a summary of

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any oral Acquisition Proposal to Acquiror immediately after receipt thereof and
thereafter keep Acquiror promptly advised of any development with respect
thereto (including any developments regarding a determination by FCC's board of
directors to provide information and access to, or participate in discussions or
negotiations with, any Person as provided in the preceding sentence). FCC, its
affiliates, officers, directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any Acquisition Proposal.

(b) Except as set forth in this Section 6.2(b), FCC's Board of
Directors shall not withdraw its recommendation of the transactions contemplated
hereby or approve or recommend any Acquisition Proposal. Notwithstanding the
foregoing, if FCC's board of directors by a majority vote determines in
its good faith judgment that it is required to do so in order to comply with
its fiduciary duties to shareholders under applicable Law, FCC's board of
directors may withdraw its recommendation of the transactions contemplated
hereby or approve or recommend an Acquisition Proposal, but in each case only
after providing at least 48 hours prior written notice to Acquiror (a
"Notice of Superior Proposal") advising Acquiror that FCC's board of
directors has received or become aware of a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and
identifying the Person making the Superior Proposal.

(c) "Acquisition Proposal" means the occurrence of any of the following
events: (i) the acquisition of FCC or any Subsidiary by merger or otherwise by
any Person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) other than Acquiror, Merger Subsidiary or any
affiliate thereof ("Third Party"); (ii) the acquisition by a Third Party of 10%
or more of the total assets or insurance in force (including through
reinsurance) of the FCC Companies, in a single transaction or series of
transactions; (iii) the acquisition by a Third Party of 10% or more of the
outstanding shares of FCC Common Stock or the outstanding capital stock of any
Subsidiary of FCC; (iv) any tender offer or exchange offer for 10% or more of
the outstanding shares of FCC Common Stock or the filing of a registration
statement under the Securities Act in connection therewith; or (v) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. "Superior Proposal" means any bona
fide proposal from a Third Party to acquire, directly or indirectly, for
consideration consisting of cash or securities, all of the shares of FCC Common
Stock then outstanding or all or substantially all of the assets (including
through reinsurance) of FCC and otherwise on terms that FCC's board of directors
by a majority vote determines in its good faith judgment to be more favorable to
FCC's shareholders than the Merger.

Section 6.3. Proxy Statement.

(a) FCC shall, as soon as practicable following the execution of this
Agreement, prepare and file with the SEC a draft of the proxy statement together
with a form of proxy (in a form mutually agreeable to Acquiror and FCC) as
preliminary proxy materials under the Exchange Act. Acquiror and FCC shall
cooperate to respond promptly to any comments made by the SEC with respect
thereto. Each of Acquiror and Merger Subsidiary shall furnish to FCC such
information relating to it and its affiliates and the transactions contemplated
by this

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Agreement and such further and supplemental information as reasonably may be
requested by FCC to aid it in the preparation of the preliminary proxy
statement, the Proxy Statement or any amendment or supplement thereto. The Proxy
Statement shall include the recommendation of FCC's board of directors that the
holders of FCC Common Stock approve this Agreement, the Plan of Merger and the
transactions contemplated by this Agreement, in each case unless otherwise
required by the fiduciary duties of the directors under applicable Law. Each of
Acquiror and Merger Subsidiary agrees that the information provided and to be
provided by and on behalf of it, and FCC agrees that the information provided
and to be provided by and on behalf of the FCC Companies, for use in the Proxy
Statement, shall, on the date the Proxy Statement is filed with the SEC, and
first mailed to holders of FCC Common Stock, and on the date of the Special
Meeting, be true and correct in all material respects and shall not misstate or
omit to state any material fact necessary in order to make such information not
misleading, and Acquiror, Merger Subsidiary and FCC each agree to correct as
promptly as practicable any information provided by it for use in the Proxy
Statement that shall have become false or misleading in any material respect.
The Proxy Statement shall comply as to form in all material respects with all
applicable requirements of Law.

(b) Upon resolution of any SEC comments with respect to the preliminary
proxy statement, or at such other time as may be mutually determined by the
parties hereto, FCC shall cause the Proxy Statement to be filed with the SEC and
mailed to FCC's shareholders at the earliest practicable time. Unless otherwise
required by the fiduciary duties of FCC's board of directors under applicable
Law, FCC shall use commercially reasonable efforts (including, without
limitation, retention of a proxy solicitation firm of national reputation and
acceptable to Acquiror in its reasonable discretion) to solicit from holders of
FCC Common Stock proxies in favor of approval of this Agreement and the Plan of
Merger.

If, at any time when the Proxy Statement is required to be delivered
under the Exchange Act, any event occurs as a result of which the Proxy
Statement as then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading, or if it shall be necessary to supplement the Proxy
Statement to comply with the Exchange Act or the rules thereunder, Acquiror and
FCC will cooperate to permit FCC promptly to prepare and file with the SEC a
supplement that will correct such statement or omission or effect such
compliance.

Section 6.4. Access to Information; Confidentiality Agreement.

(a) Between the date of this Agreement and the Effective Time, FCC will
(i) give Acquiror and its authorized representatives reasonable access during
normal business hours, subject to coordination with FCC, to all facilities and
to the officers, employees, properties, Contracts, and books and records of the
FCC Companies, (ii) permit Acquiror to make such inspections as it may
reasonably request and (iii) cause its officers and those of its Subsidiaries to
furnish such financial and operating data and other information with respect to
its businesses and properties as from time to time reasonably may be requested.
Subject to Section hereof, all such information shall be kept confidential in
accordance with the Confidentiality Agreement.

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(b) Notwithstanding the execution of this Agreement, the
Confidentiality Agreement shall remain in full force and effect through the
Effective Time, at which time the Confidentiality Agreement shall terminate and
be of no further force and effect. Each party hereto hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the solicitation of votes of the holders of the FCC Common Stock pursuant
to the Proxy Statement and to permit consummation of the transactions
contemplated hereby. Each party further acknowledges that the Confidentiality
Agreement shall survive any termination of this Agreement pursuant to Section
hereof in accordance with its terms.

Section 6.5. Reasonable Efforts; Cooperation. Subject to the terms and
conditions herein provided and subject to fiduciary obligations under applicable
Law, each of the parties hereto agrees to use its commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable under applicable Law, to consummate and make
effective the transactions contemplated by this Agreement. Acquiror, Merger
Subsidiary and FCC will execute any additional instruments reasonably necessary
to consummate the transactions contemplated hereby. In addition, FCC agrees to
consult and work cooperatively with representatives of Acquiror with respect to
all strategic and operating plans of the FCC Companies, including but not
limited to budgets, product development, technology development and marketing.

Section 6.6. Consents. Acquiror and FCC each shall as soon as
practicable file Notification and Report Forms under the HSR Act with the
Federal Trade Commission and the Antitrust Division of the Department of Justice
and each shall use its commercially reasonable efforts to respond as promptly as
practicable to all inquiries received for additional information or
documentation in connection with such filings. Acquiror and FCC each shall use
its commercially reasonable efforts to obtain consents, approvals and
authorizations of all third parties and Governmental Authorities necessary to
the consummation of the transactions contemplated by this Agreement.

Section 6.7. Public Announcements. The parties hereto have agreed upon
the text of a joint press release announcing, among other things, the execution
of this Agreement, which joint press release shall be disseminated promptly
following the execution hereof. Acquiror and FCC will consult with each other
before issuing or making, and will provide each other the opportunity to review
and comment upon, any additional press release any additional public statement
with respect to this Agreement, the Plan of Merger, the Merger or the
transactions contemplated herein and shall not issue any such press release or
make any such public statement prior to such consultation or as to which the
other party promptly and reasonably objects, except as may be required by Law or
by obligations pursuant to any listing agreement with any national securities
exchange (in each case as determined in good faith by the party proposing to
issue the press release or public statement), in which case the party proposing
to issue such press release or make such public announcement shall use its
commercially reasonable efforts to consult in good faith with the other party
before issuing any such press release or making any such public announcement.

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<PAGE>

Section 6.8. Stock Options. FCC has advised Acquiror, and hereby
confirms, that the applicable instruments governing the FCC Stock Options issued
pursuant to the FCC Stock Plan provide for the acceleration of the
exercisability of each such option in connection with the transactions
contemplated herein. FCC shall take all actions necessary prior to the Effective
Time to assure that, at the Effective Time, each FCC Stock Option and each FCC
Stock Right shall be canceled in exchange for an amount (the "Option Payment")
in cash equal to the Merger Consideration less the applicable exercise price of
such FCC Stock Option or FCC Stock Right, subject to applicable withholding
taxes. The surrender of an FCC Stock Option or FCC Stock Right to FCC in
exchange for the Option Payment shall be deemed a release of any and all rights
the holder had or may have had in such FCC Stock Option or FCC Stock Right.

Section 6.9. Employee Benefit Matters. Except as otherwise provided in
this Section , until December 31, 1997, the Acquiror Companies will maintain the
FCC Benefit Plans for the benefit of employees of the FCC Companies immediately
prior to the Effective Time who are employed by the Acquiror Companies following
the Effective Time, with such revisions or amendments as may be required by
applicable Law. The FCC Companies shall take any and all actions necessary to
amend the FCC Benefit Plans as of the Effective Time to remove or modify all
provisions therefrom that provide benefits that make available FCC Common Stock
as an investment option or an investment measure or that authorize the issuance
or open-market purchases of shares of FCC Common Stock. Notwithstanding anything
to the contrary in this Agreement, the FCC Companies shall take any and all
actions necessary to amend or modify the FCC Benefit Plans as of the Effective
Time to comply with the provisions of this Section . At the discretion of
Acquiror, effective January 1, 1998, employees who are employed on January 1,
1998, will be covered either by the FCC Benefit Plans or by Acquiror's Benefit
Plans offered to similarly situated employees of the life insurance Subsidiaries
of Acquiror ("Acquiror Benefit Plans"). With respect to any such employee and
his beneficiaries and dependents, Acquiror's welfare benefit plans (as defined
in Section 3(1)) of ERISA (the "Acquiror's Welfare Plans") shall not include a
waiting or eligibility period or a preexisting condition restriction or
limitation and to the extent that such employees or their dependents or
beneficiaries have satisfied any internal limits, deductibles or copayment
requirements of FCC's welfare benefit plans (as defined in Section 3(1) of
ERISA), for the year, such amounts will be credited toward the satisfaction of
any such requirements under Acquiror's Welfare Plans. The Acquiror Benefit Plans
will recognize for purposes of eligibility to participate, early retirement, and
eligibility for vesting, all employees' service with the FCC Companies, subject
to applicable break-in-service rules. Employees of the FCC Companies immediately
prior to the Effective Time who are employed by the Acquiror Companies following
the Effective Time shall be eligible for consideration under General Electric
Company's stock option plan.

Section 6.10. Indemnification; Insurance.

(a) From and after the Effective Time, Acquiror shall cause the
Surviving Corporation to indemnify, defend and hold harmless to the fullest
extent permitted under applicable Law each Person who is now, or has been at any
time prior to the date hereof, an officer, director or employee of FCC (or any
Subsidiary thereof) (individually, an "Indemnified Party" and

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<PAGE>

collectively, the "Indemnified Parties"), against all losses, claims, damages,
liabilities, costs or expenses (including reasonable attorneys' fees),
judgments, fines, penalties and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such occurring prior to the Effective Time in connection with the
Merger, whether commenced, asserted or claimed before or after the Effective
Time and including, without limitation, liabilities arising under the Securities
Act, the Exchange Act and state corporation laws. In the event of any such
claim, action, suit, proceeding or investigation (an "Action"), (i) Acquiror
shall cause the Surviving Corporation to pay the reasonable fees and expenses of
counsel selected by the Indemnified Party, which counsel shall be reasonably
acceptable to the Surviving Corporation, in advance of the final disposition of
any such Action to the full extent permitted by applicable Law, upon receipt of
any undertaking required by applicable Law; and (ii) Acquiror shall cause the
Surviving Corporation to cooperate in the defense of any such matter; provided,
however, that the Surviving Corporation shall not be liable for any settlement
effected without its written consent (which consent shall not be withheld
unreasonably) and provided, further, that the Surviving Corporation shall not be
obligated pursuant to this Section to pay the fees and disbursements of more
than one counsel for all Indemnified Parties in any single Action unless there
is, under applicable standards of conduct as determined by counsel for the
Indemnified Parties, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. Any Indemnified Party wishing to claim
indemnification under this Section , upon learning of any such Action, shall
promptly notify the Surviving Corporation thereof.

(b) For a period of six years following the Effective Time, Acquiror
shall cause the Surviving Corporation to keep in effect provisions in its
Articles of Incorporation and bylaws providing for exculpation of director and
officer liability and its indemnification of the Indemnified Parties to the
fullest extent permitted under the Virginia Act, which provisions shall not be
amended except as required by applicable Law, except to make changes permitted
by Law that would enlarge the Indemnified Parties' right of indemnification or
except to make changes or amendments that would not adversely affect the rights
under this Agreement of any Indemnified Party.

(c) For a period of three years after the Effective Time, Acquiror
shall cause to be maintained officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered, in their capacities
as officers and directors, by FCC's existing officers' and directors' liability
insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance with respect to Actions arising
from facts or events that occurred before the Effective Time; provided, however,
that Acquiror shall not be required in order to maintain or procure such
coverage to pay an annual premium in excess of two times the last annual premium
paid by FCC prior to the date hereof for its existing coverage (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, Acquiror shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap.

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(d) Acquiror shall cause the Surviving Corporation to pay all expenses,
including reasonable attorneys' fees, that may be incurred by any Indemnified
Parties in enforcing the indemnity and other obligations provided for in this
Section .

(e) The rights of each Indemnified Party hereunder shall be in addition
to any other rights Indemnified Party may have under the Articles of
Incorporation or bylaws of FCC or Surviving Corporation, under the Virginia Act
or otherwise. The provisions of this Section shall survive the consummation of
the Merger and expressly are intended to benefit each of the Indemnified
Parties.

Section 6.11. Dissenters' Rights. FCC will not amend its Articles of
Incorporation or otherwise take any action that would negate the application of
Section 13.1-730C of the Virginia Act, to the effect that the shareholders of
FCC shall have no rights of dissent with respect to the Merger or the other
transactions contemplated hereby.

Section 6.12. Redemption of FCC Rights. On or prior to the Closing
Date, the Board of Directors of FCC will redeem all FCC Rights in accordance
with the terms of the FCC Rights Agreement and applicable Law.

Section 6.13. Notice of Certain Events. FCC shall give prompt written
notice to Acquiror, and Acquiror shall give prompt notice to FCC, of (a) the
occurrence or nonoccurrence of any event that would be reasonably likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (b) any
material failure of FCC, Acquiror or Merger Subsidiary, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not serve to cure such breach or non-compliance
or limit or otherwise affect the remedies available hereunder to the party
receiving such notice.

Section 6.14. Termination and Amendment of Certain Stock-Based Plans.
At or prior to the Effective Time, FCC shall take such action and, as
applicable, cause its Subsidiaries to take such action, as may be necessary to
terminate the FCC Stock Plan, the American Mayflower Life Insurance 1994 Phantom
Stock Rights Plan and the Employee Stock Purchase Plan. At or prior to the
Effective Time, FCC shall cause the FCC Savings Plan, effective April 1, 1994
(the "Savings Plan") to be amended to eliminate the FCC Common Stock fund as an
investment option.

Section 6.15. Amendment to Change in Control and Termination
Agreements. At or prior to the Effective Time, FCC shall take such action as may
be necessary to amend the Change in Control and Termination Agreements effective
March 23, 1995, as amended, between FCC and certain executive officers of FCC
and its Subsidiaries, to provide that termination compensation payable under
Section 2.4 of the Agreements shall be payable solely in cash rather than in
cash or FCC Common Stock.

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<PAGE>

Section 6.16. Prepayment of FCC Credit Facilities. At or prior to the
Effective Time, FCC shall prepay all amounts owing under, and take such actions
as may be required to terminate, (a) the Credit Facility Agreement between FCC
and NationsBank of Georgia, N.A. dated August 24, 1995; (b) the Line of Credit
between FCC and SunTrust Bank, Atlanta, executed August 16, 1994, as renewed by
letter dated March 16, 1996; (c) the Line of Credit Agreement between FCC and
Wachovia Bank of North Carolina, N.A., executed August 16, 1994, as renewed by
letter dated July 12, 1995; (d) the Line of Credit Agreement between FCC and
Credit Suisse, executed August 16, 1994, as renewed by letter dated December 20,
1995; and (e) the $10 million line of credit between American Mayflower Life
Insurance Company and Chemical Bank. FCC shall provide evidence of its
prepayment and termination of such credit agreements at or prior to the
Effective Time.

Section 6.17. Subsequent FCC Reports. FCC shall deliver, promptly upon
the filing thereof, a copy of (a) any reports, registration statements or other
documents filed by FCC with the SEC prior to the Effective Time and (b)
Statutory Reports filed by any of FCC's insurance Subsidiaries with any
insurance regulatory authority prior to the Effective Time.

Section 6.18. Rating Agencies. Prior to the Effective Time, FCC shall
notify Acquiror promptly in the event that any rating agency indicates to FCC
that it is considering the downgrade of any rating assigned to any of FCC's
insurance Subsidiaries. FCC will permit a representative of Acquiror to
accompany FCC to any discussions with the rating agency.

ARTICLE VII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER

Section 7.1. Conditions Precedent to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to consummate the Merger is
subject to the satisfaction at or prior to the Effective Time of the following
conditions precedent:

(a) the transactions contemplated in this Agreement and the Plan of
Merger shall have been approved by the affirmative vote of at least two-thirds
of the outstanding shares of FCC Common Stock in accordance with the Virginia
Act, and by Acquiror as sole shareholder of Merger Subsidiary;

(b) no order, decree, Law or injunction shall have been enacted,
entered, issued, promulgated or enforced by any court of competent jurisdiction
or any other Governmental Authority that prohibits the consummation of the
Merger; provided, however, that the parties hereto shall use their commercially
reasonable efforts to have any such order, decree or injunction vacated or
reversed;

(c) any waiting period (and extensions thereof) applicable to the
Merger under the HSR Act shall have terminated or expired, all applicable
requirements of the Exchange Act shall have been satisfied and any applicable
filings under state takeover or antitrust laws shall have been made; and

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<PAGE>

(d) there shall have been obtained permits, consents and approvals of
insurance commissions or agencies of any jurisdiction and of other Governmental
Authorities referred to in Section and Section and the other transactions
contemplated hereby will be in compliance with applicable Laws, and no such
permit, consent or approval shall contain any condition that, in the judgment of
Acquiror or FCC reasonably exercised is reasonably likely to have a Material
Adverse Effect on the FCC Companies or the transactions contemplated by this
Agreement.

Section 7.2. Conditions Precedent to Obligations of FCC. The obligation
of FCC to consummate the Merger is subject to the satisfaction or waiver at or
prior to the Effective Time of the following conditions precedent:

(a) the representations and warranties of Acquiror and Merger
Subsidiary contained in Article hereof shall be true and correct in all material
respects when made and at and as of the Effective Time with the same force and
effect as if those representations and warranties had been made at and as of
such time except (i) to the extent such representations and warranties were
given as of a specified earlier date, and (ii) as otherwise contemplated or
permitted by this Agreement;

(b) each of Acquiror and Merger Subsidiary shall, in all material
respects, have performed all obligations and complied with all covenants
necessary to be performed or complied with by it on or before the Effective
Time;

(c) FCC shall have received a certificate of the Chairman, President,
Executive Vice President or Senior Vice President of Acquiror and Merger
Subsidiary, in form satisfactory to counsel for FCC, certifying fulfillment of
the matters referred to in paragraphs (a) through (b) of this Section ; and

(d) FCC shall have received the opinion of Weil, Gotshal & Manges LLP,
counsel for Acquiror, dated the Effective Time, with respect to such matters as
FCC may reasonably request.

Section 7.3. Conditions Precedent to Obligations of Acquiror and Merger
Subsidiary. The obligation of Acquiror and Merger Subsidiary to consummate the
Merger is subject to the satisfaction or waiver at or prior to the Effective
Time of the following conditions precedent:

(a) there shall have occurred no material adverse change in the
business, assets, liabilities, financial condition or results of operations of
the FCC Companies from the date hereof to the Effective Time;

(b) the representations and warranties of FCC contained in Article V
hereof, with the exception of the representations and warranties contained in
Section hereof, shall be true and correct in all material respects when made and
at and as of the Effective Time with the same

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<PAGE>

force and effect as if those representations and warranties had been made at and
as of such time except to the extent such representations and warranties were
given as of a specified earlier date;

(c) FCC shall, in all material respects, have performed all obligations
and complied with all covenants necessary to be performed or complied with by it
on or before the Effective Time;

(d) FCC shall have performed all obligations and complied with the
covenants in Section hereof;

(e) there shall have been obtained all consents and approvals of any
third party under any Contract with any of the FCC Companies that are required
in connection with the performance by FCC of its obligations under this
Agreement, except such consents and approvals the failure of which to have so
obtained could not reasonably be expected to have a Material Adverse Effect on
the FCC Companies;

(f) Acquiror shall have received a certificate of the Chairman, the
President or the Treasurer and Secretary of FCC, in form satisfactory to counsel
for Acquiror, certifying fulfillment of the matters referred to in paragraphs
(a) through (e) of this Section ; and

(g) Acquiror shall have received the opinion of Hunton & Williams,
counsel for FCC, dated the Effective Time, with respect to such matters as
Acquiror may reasonably request.

ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER

Section 8.1. Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned, notwithstanding approval thereof by
the respective shareholders of FCC and Acquiror, at any time prior to the
Effective Time:

(a) by mutual written consent of FCC and Acquiror;

(b) by FCC or Acquiror, if the Effective Time shall not have occurred
on or before March 31, 1997, (provided that the right to terminate this
Agreement under this Section shall not be available to any party who has
breached in any material respect any of its representations, warranties,
covenants or agreements under this Agreement and such breach has been the cause
of or has resulted in the failure of the Effective Time to occur on or before
such date);

(c) by FCC if there has been a material breach by Acquiror or Merger
Subsidiary of any representation, warranty, covenant or agreement set forth in
this Agreement or any certificate or other instrument delivered or furnished to
FCC pursuant hereto or the Plan of Merger, which breach has not been cured
within ten business days following receipt by the breaching party of notice of
such breach (it being understood that disclosure after the date hereof is not
deemed to cure any such breach);

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<PAGE>

(d) by Acquiror if (i) the transactions contemplated in this Agreement
and the Plan of Merger shall have been voted on by the holders of FCC Common
Stock at a meeting duly convened therefor, and the votes shall not have been
sufficient to satisfy the condition set forth in Section hereof, (ii) there has
been a material breach by FCC of any representation, warranty, covenant or
agreement set forth in this Agreement or any certificate or other instrument
delivered or furnished by FCC pursuant hereto or the Plan of Merger, which
breach has not been cured within ten business days following receipt by FCC of
notice of such breach (it being understood that disclosure after the date hereof
is not deemed to cure any such breach), (iii) the Board of Directors of FCC
should fail to call, give notice of, convene or hold a shareholders' meeting to
vote upon the Merger, or should fail to recommend to its shareholders approval
of the transactions contemplated by this Agreement and the Plan of Merger or
such recommendation shall have been made and subsequently withdrawn, amended or
modified in a manner adverse to Acquiror, or shall have adopted a resolution to
the foregoing effect, or (iv) FCC has determined to accept or recommend a
Superior Proposal; or

(e) by FCC or Acquiror, if any court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable.

Section 8.2. Effect of Termination. If this Agreement is so terminated
and the Merger is not consummated, this Agreement shall forthwith become void
and have no effect, without any liability on the part of either party or its
directors, officers or shareholders, other than the provisions of Section
hereof, this Section and Section hereof; provided, however, that (A) in the
event that this Agreement is terminated pursuant to (y) Section hereof and a
Superior Proposal shall have been made prior to such termination, and such
Superior Proposal is thereafter accepted within 12 months of such termination,
then FCC, if requested by Acquiror, shall promptly, but in no event later than
ten days after the date of such request, pay to Acquiror a fee equal to
$52,500,000, plus the amount of all fees and expenses (including, without
limitation, the fees and expenses of Goldman, Sachs & Co. and any legal and
commitment fees and expenses) incurred by Acquiror, Merger Subsidiary or its
affiliates in connection with this Agreement and the transactions contemplated
hereby up to a maximum of $10,000,000 (the "Acquisition Expenses"), and (B) in
the event that this Agreement is terminated pursuant to Section and no Superior
Proposal shall have been made, then FCC, if requested by Acquiror, shall
promptly, but in no event later than ten days after the date of such request,
pay to Acquiror an amount equal to the Acquisition Expenses, it being understood
and agreed by the parties hereto that such amounts are intended to constitute
liquidated damages. Notwithstanding the foregoing, nothing in this Section shall
relieve any party hereto of any liability for damages that such party may have
by reason of such party's breach of any representation, warranty, covenant or
agreement in this Agreement or any certificate or other instrument delivered
pursuant hereto.

Section 8.3. Amendment. This Agreement and the Plan of Merger may be
amended by action taken by both Acquiror and FCC at any time before or after
approval of the transactions contemplated herein by the holders of FCC Common
Stock but, after any such

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<PAGE>

approval, no amendment shall be made that would have any of the effects
specified in Section 13.1-718I of the Virginia Act without the approval of the
holders of FCC Common Stock. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.

Section 8.4. Extension; Waiver. At any time prior to the Effective
Time, either party hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto by the other party
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein by the other party hereto. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.

ARTICLE IX
MISCELLANEOUS

Section 9.1. Survival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time. This Section shall not limit any covenant or agreement of the
parties that by its terms requires performance after the Closing.

Section 9.2. Brokerage Fees and Commissions. No broker, finder or
investment banker (other than First Boston and Morgan Stanley, whose fees shall
be paid by FCC) is entitled to any brokerage, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of FCC; and no broker, finder or
investment banker (other than Goldman, Sachs & Co., whose fees shall be paid by
Acquiror) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Acquiror.

Section 9.3. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes, except as set forth in Section hereof, all other
prior agreements and understandings, both written and oral, between the parties
or any of them with respect to the subject matter hereof and (b) shall not be
assigned by operation of law or otherwise.

Section 9.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:

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if to FCC:

First Colony Corporation
Riverfront Plaza, West Tower
Suite 1350
901 East Byrd Street
Richmond, Virginia 23219
Attention: Bruce C. Gottwald, Jr.
Chairman and Chief Executive Officer

with a copy to:

Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: Allen C. Goolsby, Esq.

if to Acquiror:

General Electric Capital Corporation
260 Long Ridge Road
Stamford, Connecticut 06927
Attention: General Counsel
Facsimile: (203) 357-6487

with copies to:

GNA Corporation
Two Union Square
601 Union Street
Seattle, Washington 98111-0490
Attention: General Counsel
Facsimile: (206) 516-2882

and

Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: David A. Spuria, Esq.
Facsimile: (214) 746-7777

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<PAGE>

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

Section 9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.

Section 9.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

Section 9.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except as otherwise
provided herein, nothing in this Agreement is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.

Section 9.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.

Section 9.9. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.

Section 9.10. Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs or expenses, whether or not the Merger is
consummated, except as otherwise expressly provided in Section hereof.

Section 9.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner,
to the end that the transactions contemplated hereby are fulfilled to the extent
possible.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Patrick E. Welch
Name: Patrick E. Welch
Title: Attorney-in-Fact

FCMS, INC.

By: /s/ Patrick E. Welch
Name: Patrick E. Welch
Title: President

FIRST COLONY CORPORATION

By: /s/ Bruce C. Gottwald, Jr.
Bruce C. Gottwald, Jr.
Chairman and Chief Executive Officer

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<PAGE>

Exhibit A

PLAN OF MERGER
OF
FCMS, INC.
WITH AND INTO
FIRST COLONY CORPORATION

Section 1. Corporations Proposing to Merge and Surviving Corporation.
FCMS, Inc. ("Mergersub"), a Delaware corporation and direct or indirect
wholly-owned subsidiary of General Electric Capital Corporation, a New York
corporation ("GECC"), shall be merged (the "Merger") with and into First Colony
Corporation, a Virginia corporation ("FCC"), pursuant to the terms and
conditions of this Plan of Merger (the "Plan of Merger") and of the Agreement
and Plan of Merger, dated as of August 5, 1996, by and among FCC, GECC and
Mergersub (the "Agreement"). The effective time for the Merger (the "Effective
Time") shall be set forth in the articles of merger to be filed with the
Virginia State Corporation Commission. FCC shall continue as the surviving
corporation (the "Surviving Corporation") in the Merger and the separate
corporate existence of Mergersub shall cease.

Section 2. Effects of the Merger. The Merger shall have the effects
described in this Plan of Merger and as set forth in the General Corporation Law
of the State of Delaware (the DGCL").

Section 3. Articles of Incorporation and bylaws. The Articles of
Incorporation and bylaws of FCC as in effect immediately prior to the Effective
Time shall be amended as of the Effective Time, as set forth in Exhibit A
hereto, and as so amended shall remain in effect as the Articles of
Incorporation and bylaws of the Surviving Corporation immediately following the
Effective Time until changed in accordance with their terms and Section 13.1-707
of the Virginia Code.

Section 4. Officers and Directors. The officers and directors of
Mergersub immediately prior to the Effective Time shall become the officers and
directors of the Surviving Corporation immediately following the Effective Time
until they are removed or replaced in accordance with the Articles of
Incorporation and bylaws of the Surviving Corporation and Section 13.1-680 of
the Virginia Code. The officers and directors of FCC shall not continue as
officers and directors of the Surviving Corporation.

Section 5. Conversion of Shares.

(a) At the Effective Time, each share of FCC common stock, no par value
(the "FCC Common Stock"), outstanding immediately prior to the Effective Time
(other than shares of FCC Common Stock held by GECC, if any, which shares shall
be canceled in the Merger), by virtue of the Merger and without any action on
the part of the holder thereof, shall be canceled and converted into the right
to receive $36.15 in cash (the "Merger Consideration").

<PAGE>

(b) At the Effective Time, each share of Mergersub common stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
and exchangeable for one share of Common Stock, no par value, of the Surviving
Corporation.

Section 6. No Right to Dissent. Pursuant to Section 13.1-730.C of the
Virginia Code, holders of FCC Common Stock shall have no right to dissent from
the Merger.

Section 7. Termination. Prior to the Effective Time, this Plan of
Merger shall terminate and be abandoned upon a termination of the Agreement,
notwithstanding approval of this Plan of Merger by the shareholders of FCC and
Mergersub.

Section 8. Amendment. At any time before the Effective Time, this Plan
of Merger may be amended, provided that: (i) any such amendment is approved by
the Boards of Directors of FCC and Mergersub; and (ii) no such amendment made
subsequent to the submission of this Plan of Merger to the shareholders of FCC
and Mergersub shall have any of the effects specified in Section 13.1-718.I of
the Virginia Code or Section 251(d) of the DGCL without the approval of the
shareholders affected thereby.

<PAGE>

Exhibit A

Amendments
to the
Restated Articles of Incorporation
of
First Colony Corporation
to be Effective as of the Effective Time

1. Section A(2)(c) of Article III of the Corporation's Amended and
Restated Articles of Incorporation (the "Charter") shall be amended and
restated to read in its entirety as follows:

c. An amendment or restatement of these Articles shall be
approved by a majority of the votes entitled to be cast by
each voting group that is entitled to vote on the matter;

2. Section A(2)(d) of Article III of the Charter shall be deleted in its
entirety.

3. Section A(2)(e) of Article III of the Charter shall be deleted in its
entirety.

4. Section A(2)(f) of Article III of the Charter shall be deleted in its
entirety.

5. The paragraph following Section A(2)(f) of Article III of the Charter
shall be deleted in its entirety.

6. Section B(2) of Article III of the Charter shall be deleted in its
entirety.

7. Section A of Article IV of the Charter shall be amended and restated to
read in its entirety as follows:

A. Board of Directors. Unless otherwise fixed in the bylaws,
the number of directors of the Corporation shall be three (3).

<PAGE>

Exhibit A (cont.)

Amendments
to the
Bylaws
of
First Colony Corporation
to be Effective as of the Effective Time

1. Section 8 of the Corporation's bylaws shall be deleted in its entirety.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

<PAGE>

ANNEX II-A

[CS First Boston Letterhead]

August 5, 1996

Board of Directors
First Colony Corporation
Riverfront Plaza
West Tower, Suite 1350
Richmond, VA 23219

Dear Sirs:

You have asked us to advise you with respect to the fairness to the
stockholders of First Colony Corporation (the "Company") from a financial point
of view of the consideration to be received by such stockholders pursuant to the
terms of the Amended and Restated Agreement and Plan of Merger, dated as of
August 5, 1996 (the "Acquisition Agreement"), among the Company, General
Electric Capital Corporation (the "Acquiror"), and FCMS, Inc. (the "Sub"). The
Acquisition Agreement provides for the merger (the "Merger") of the Company with
the Sub pursuant to which the Company will become a wholly owned subsidiary of
the Acquiror and each outstanding share of common stock, no par value, of the
Company will be converted into the right to receive $36.15 in cash.

In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company, as well as the
Acquisition Agreement. We have also reviewed certain other information,
including financial forecasts, provided to us by the Company and have met with
the Company's management to discuss the business and prospects of the Company.
We have also reviewed certain analyses prepared on behalf of the Company
concerning certain actuarial matters relating to the Company.

We have also considered certain financial and stock market data of the
Company, and we have compared that data with similar data for other publicly
held companies in businesses similar to those of the Company and we have
considered the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.

In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing and have relied on its being
complete and accurate in all material respects. With respect to the financial
forecasts, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the Company's
management as to the future financial performance of the Company. In addition,
we have not made an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company, nor have we been furnished
with any such evaluations or appraisals other than the actuarial analyses
prepared on behalf of the Company. For purposes of this opinion, we have also
relied without independent verification on the actuarial analyses prepared on
behalf of the Company and have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments as to
the Company's insurance in force and future business. Our opinion is necessarily
based upon financial, economic, market and other conditions as they exist and
can be evaluated on the date hereof. In connection with our engagement, we were
requested to approach third parties to solicit indications of interest in a
possible acquisition of the Company and held discussions with certain of these
parties prior to the date hereof.

We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.

In the past, we have performed certain investment banking services for the
Company and the Acquiror and have received customary fees for such services.

In the ordinary course of our business, CS First Boston and its affiliates
may actively trade the debt and equity securities of both the Company and the
Acquiror for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.

<PAGE>
It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its consideration of the Merger,
does not constitute a recommendation to any stockholder as to how such
stockholder should vote on the proposed Merger and is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
proxy statement, or in any other document used in connection with the offering
or sale of securities, nor shall this letter be used for any other purposes,
without CS First Boston's prior written consent.

Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the stockholders of the Company
in the Merger is fair to such stockholders from a financial point of view.

Very truly yours,
CS FIRST BOSTON CORPORATION

<PAGE>
ANNEX II-B

[Morgan Stanley Letterhead]

August 5, 1996

Board of Directors
First Colony Corporation
700 Main Street
Lynchburg, VA 24505-1280

Members of the Board:

We understand that First Colony Corporation ("First Colony" or the
"Company"), General Electric Capital Corp. ("GE Capital") and FCMS, Inc., a
wholly owned subsidiary of GE Capital ("FCMS") have entered into an Amended and
Restated Agreement and Plan of Merger dated August 5, 1996 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of FCMS with and into First Colony. Pursuant to the Merger, First Colony will
become a wholly owned subsidiary of GE Capital and each issued and outstanding
share of common stock, without par value, of First Colony (the "Common Stock")
other than shares held by GE Capital or First Colony or any of their
subsidiaries will be converted into the right to receive $36.15 per share in
cash. The terms and conditions of the Merger are more fully set forth in the
Merger Agreement.

You have asked for our opinion as to whether the consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders.

For purposes of the opinion set forth herein, we have:

<TABLE>
<C> <S>
(i) reviewed certain publicly available financial statements and other
information of the Company;

(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the
management of the Company;

(iii) analyzed certain financial projections prepared by the management
of the Company;

(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;

(v) reviewed the reported prices and trading activity for the Common
Stock;

(vi) compared the financial performance of the Company and the prices
and trading activity of the Common Stock with that of certain
other comparable publicly-traded companies and their securities;

(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;

(viii) participated in discussions and negotiations among representatives
of the Company, and GE Capital and their financial and legal
advisors;

(ix) reviewed the Merger Agreement and certain related documents;

(x) reviewed actuarial analyses regarding the Company prepared on
behalf of the Company; and

(xi) performed such other analyses and considered such other factors as
we have deemed appropriate.

</TABLE>

We have assumed and relied upon without independent verification on the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company; however, we have relied upon the actuarial
analyses with respect to the Company and have relied without independent
verification upon such analyses for purposes of this opinion. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof.

<PAGE>
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and GE Capital and
have received fees for the rendering of these services.

It is understood that this letter is for the information of the Board of
Directors of First Colony only and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in any filing made by First Colony or GE Capital with the Securities
and Exchange Commission with respect to the Merger. In addition, we express no
opinion and make no recommendation as to how the holders of Common Stock should
vote at the Shareholders' Meeting held in connection with the Merger.

Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such holders.

Very truly yours,

MORGAN STANLEY & CO. INCORPORATED

<PAGE>

PROXY PROXY
FIRST COLONY CORPORATION
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 1996
in Lynchburg, Virginia

This proxy is solicited on behalf of the Board of Directors.

The undersigned hereby appoints Bruce C. Gottwald, Jr., Julie S. Roberts and
Charles B. Walker, or any of them, with full power of substitution in each,
proxies (and if the undersigned is a proxy, substitute proxies) to vote all
shares of the undersigned in First Colony Corporation, at the special meeting of
shareholders to be held November 25, 1996, and at any and all adjournments
thereof.

IMPORTANT - This Proxy must be signed and dated on the reverse side.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

- --------------------------------------------------------------------------------

FIRST COLONY CORPORATION
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.

P 1. Approval of the Amended and Restated
R Agreement and Plan of Merger, dated FOR AGAINST ABSTAIN
O as of August 5, 1996, by and among
X First Colony Corporation, General
Y Electric Capital Corporation and
FCMS, Inc., and the related Plan of
Merger.
----------------------------------------

This proxy when properly executed
will be voted in the manner directed
herein by the undersigned shareholder.
If no direction is made, this Proxy
will be voted FOR Proposal 1. In their
discretion, the proxies are authorized
to vote upon such other business and
matters incident to the conduct of the
meeting as may properly come before
the meeting.

--------------------------------------
Signature

Dated: ________________, 1996

NOTE: Please sign name exactly as it appears on the stock certificate.
Only one of several joint owners need sign. Fiduciaries should give
full title.